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): October 16, 2009

VITESSE SEMICONDUCTOR CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation)

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

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

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

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

oPre-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.

On October 19, 2009, Vitesse Semiconductor Corporation (the “Company”) announced that, effective October 16, 2009, it entered into a Debt Conversion Agreement (the “Conversion Agreement”) with the beneficial owners (which we refer to collectively as the “Noteholders”) of more than 96.7% of its 1.5% Convertible Subordinated Debentures due 2024 (the “2024 Debentures”).  Additionally, the Company announced that it has entered into an amendment to the loan agreement with the lender of our $30.0 million senior secured loan to facilitate this debt restructuring.  In this Item 1.01 of this Current Report on Form 8-K, we provide a summary of the material agreements related to this debt restructuring.  For a description of the process related to the Company’s debt restructuring, please see Item 8.01 of this Current Report on Form 8-K.

Debt Conversion Agreement

Holders of the 2024 Debentures had the right to require us to repurchase the 2024 Debentures on October 1, 2009 for 113.76% of the principal amount to be purchased.  This repurchase right would have resulted in an additional payment of $13.3 million on the $96.7 million outstanding 2024 Debentures or a total amount due of approximately $110.0 million.  Under the terms of the Conversion Agreement, subject to specified closing conditions, the Noteholders have agreed to exchange their 2024 Debentures for a combination of cash, shares of common stock, new convertible debentures, and in some cases, shares of preferred stock.  The Company will use approximately $10.0 million of cash in connection with this transaction, approximately $3.6 million of which will be used to repurchase 2024 Debentures from holders that are not parties to the Conversion Agreement and approximately $6.4 million of which will be paid to parties to the Conversion Agreement in partial repayment of the 2024 Debentures.  The Company will issue the following securities in exchange for the remaining $100.0 million of 2024 Debentures:

·Approximately 173 million shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”),

·Approximately $50 million aggregate principal amount of new 8.0% Convertible Second Lien Debentures Due 2014 (the “New Notes”); and

·Approximately 771,000 million shares of new Series B Participating Convertible Non-Cumulative Preferred Stock, par value $0.01 per share (the “Preferred Stock,” and collectively with the Common Stock and the New Notes, the “New Securities”), each share of which is convertible into 100 shares of Common Stock for an aggregate of approximately 77.1 million shares of Common Stock.

Exchange for the 2024 Debentures

The Noteholders agreed to exchange approximately 50% of their 2024 Debentures (after the partial repurchase for cash described above) for shares of Common Stock at $0.20 per share, subject to a limitation on ownership of 9.9% of the outstanding shares of Common Stock.  Noteholders who would otherwise own more than 9.9% of the outstanding Common Stock following the exchange will receive a combination of Common Stock and Preferred Stock.  These Noteholders will receive one share of Preferred Stock for every 100 shares of Common Stock that they would have otherwise received in the exchange in excess of the number of shares of common stock that equals 9.9% of the outstanding shares of Common Stock.  The Preferred Stock is non-voting and has a dividend preference equal to $0.001 per share of Preferred Stock, which amount is payable when and if dividends are declared and payable with respect to the Common Stock.  The Noteholders will exchange the approximately 50% of their remaining 2024 Debentures (after the partial repurchase for cash described above) for the New Notes.  The New Notes are to be issued under an indenture to be entered into between the Company and U.S. Bank National Association, as Trustee.  All of the 2024 Debentures acquired by the Company as a result of debt restructuring transaction contemplated by the Conversion Agreement will be cancelled.  The Company expects to pay the principal amount, premium and accrued interest on any remaining 2024 Debentures immediately after the consummation of the debt restructuring transaction.

The New Notes

The Company and the Noteholders have agreed that the New Notes, if issued, would convert into shares of the Company’s Common Stock at a conversion price of $0.225 per share (equivalent to an initial conversion rate of approximately 4,444 shares per $1,000 principal amount of debentures), subject to customary adjustments. The Company may elect to deliver cash in lieu of shares of common stock if the New Notes are converted.  The Noteholders may have the right to receive additional shares of Common Stock upon conversion in connection with certain change of control events, depending upon the timing of the change of control event and the trading price of the Company’s Common Stock at the time of such change of control event.  The New Notes may not be redeemed by the Company unless, beginning two years following their issuance, the trading price of the Company’s Common Stock is at least 130% of the conversion price.  The New Notes, if issued, will be guaranteed by Vitesse Manufacturing & Development Corporation and Vitesse Semiconductor Sales Corporation and the New Notes will be secured by a second priority security interest on

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substantially all of the assets of the Company and its subsidiaries.  This second priority security interest would be subordinated to the lien created under the Loan Agreement dated August 23, 2007 between the Company, as borrower, and the lenders signatory thereto and Whitebox VSC Ltd., as a lenders and as agent for the lenders.  Pursuant to the Conversion Agreement, the Company covenants to file a Form T-3 with the Securities and Exchange Commission as soon as practical and in no event after October 25, 2009 in order to qualify the indenture that will govern the New Notes.

The Noteholders include AQR Absolute Return Master Account, L.P., Aristeia Master, L.P., Aristeia Partners, L.P., CNH Master Account, L.P., Linden Capital L.P., Whitebox Advisors, LLC, Tonga Partners, L.P., Tonga Partners QP, L.P., Anegada Master Fund, LTD., Cuttyhunk Master Portfolio and ABN AMRO Bank N.V.

Special Meeting of Stockholders to Authorize Increase in Authorized Shares of Common Stock

The Company does not currently have a sufficient amount of Common Stock authorized to permit the conversion of the New Notes. The Company has agreed to call a Special Meeting of Stockholders (the “Special Meeting”) to approve an increase to the number of the Company’s authorized shares of Common Stock to permit the full conversion of the New Notes into shares of Common Stock.  If the Company is unable to obtain stockholder approval of this increase on or prior to February 15, 2010, then on February 16, 2010 the Company will pay to the Trustee, for the benefit of the holders of the New Notes, an additional monthly payment equal to 1% of the outstanding principal amount of the New Notes, and this amount will also be due on the fifteenth day of every following month until the stockholder approval is obtained.  If the Company is unable to obtain stockholder approval of this increase prior to February 15, 2011, the holders of the New Notes will have the right to convert the New Notes into cash as more fully described in the Indenture for the New Notes.

Changes to the Board of Directors

The Company is obligated, as a condition of closing of the Conversion Agreement, to set the Board size at six directors and to appoint two qualified new directors from a list of at least four persons identified by the Noteholders prior to November 2, 2009.  These two newly appointed directors are currently expected to be appointed contemporaneously with the closing of the Conversion Agreement and they would hold office until the next stockholders’ election of directors.  In order for the Company to satisfy this requirement, two of the Company’s current directors will need to resign on or prior to the closing of the Conversion Agreement.  The Company also anticipates that the Noteholders will request that the Company appoint two additional qualified directors to the Company’s Board of Directors following the consummation of the Conversion Agreement.  These additional directors would also hold office until the next stockholders’ election of directors and could replace one or two of the current directors.  None of the current directors of the Company have submitted their resignation. The Conversion Agreement does not call for any changes to the current management team. It is anticipated that Christopher Gardner and Richard Yonker will remain in their roles as Chief Executive Officer and Chief Financial Officer, respectively. Additionally, the Conversion Agreement does not call for any changes in employee compensation.

A copy of the Conversion Agreement is attached hereto as Exhibit 10.1.  The description of the Conversion Agreement contained in this Current Report on Form 8-K is qualified in its entirety by reference to Exhibit 10.1.  The disclosure in this Current Report on Form 8-K regarding the terms of the debt restructuring, including the terms of the Preferred Stock and the New Notes, is for information purposes only and does not constitute an offer to sell, or the solicitation of an offer to purchase, any securities.  The offering and sale of the Common Stock, Preferred Stock and New Notes is being made solely to the holders of the 2024 Debentures pursuant to the terms of the Conversion Agreement and the documents executed in connection therewith.  If the Company is unable to consummate the debt restructuring transaction contemplated by Conversion Agreement, the Company intends to explore other available restructuring and reorganization alternatives, including a voluntary filing for reorganization under Chapter 11 of the U.S. Bankruptcy Code.

Extension of Forbearance Agreements Related to 1.5% Convertible Subordinated Debentures due 2024

Effective October 16, 2009, the Company entered into additional forbearance agreements (the “Forbearance Extension Agreements”), by and between the Company and more than 96.7% of the beneficial owners of the 2024 Debentures due 2024 (which we refer to collectively as the “Forbearing Debenture Holders”).  The Forbearing Debenture Holders include the parties to the Conversion Agreement.  Pursuant to these Forbearance Extension Agreements, the Forbearing Debenture Holders agreed to refrain from enforcing their respective rights and remedies under the 2024 Debentures and the Indenture governing the 2024 Debentures, dated as of September 22, 2004, between the registrant and U.S. Bank National Association, as trustee (as amended and supplemented or otherwise modified, the “Indenture”) for the duration of the extended forbearance period, which runs from October 16, 2009 through the termination of the Conversion Agreement or the consummation of the debt restructuring transaction contemplated by the Conversion Agreement.  The extended forbearance period will end earlier if the Company fails to comply with its covenants in the forbearance agreements or if the Company commences voluntary bankruptcy, insolvency, reorganization or other similar proceedings or any similar non-voluntary case or proceeding regarding the Company is commenced.

Under the Forbearance Extension Agreements, the Company agreed that interest on the 2024 Debentures held by the Forbearance Debenture Holders will accrue (payable in arrears semi-annually) at a rate of 15% per annum (the “Forbearance Interest”) from October 1, 2009 until the earliest of the date on which the principal and premium of these notes is paid in full in

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cash, the termination of the forbearance period and the date on which the debt restructuring transaction contemplated by the Conversion Agreement is consummated.  If the debt restructuring transaction is consummated on or prior to October 31, 2009, then the Forbearance Interest will be waived. If the debt restructuring transaction occurs on or after November 1, 2009, then the Forbearance Interest will be waived for the period from October 1, 2009 through October 16, 2009 and will be reduced to a rate of 8.0% per annum for the period from October 16, 2009 through the date of the debt restructuring transaction.

As a condition to the forbearance, the Company is required to enter into a supplemental indenture that amends the Indenture to, among other things, provide that all 2024 Debentures will be secured by a second priority lien on substantially all of the assets of the Company and its subsidiaries.

A form of Forbearance Extension Agreement is attached hereto as Exhibit 10.2.  The description of these forbearance extension agreements contained in this Current Report on Form 8-K is qualified in its entirety by reference to Exhibit 10.2.

Third Forbearance Agreement Related to Loan Agreement

Effective as of October 16, 2009, the Company also entered into a third forbearance agreement with Whitebox VSC Ltd. (the “Third Forbearance Agreement”), as agent under the Loan Agreement among the Company, the agent and the lenders from time to time parties thereto dated as of August 23, 2007 (the “Loan Agreement”).  Pursuant to this Third Forbearance Agreement, the lenders of the senior secured loan pursuant to the Loan Agreement agree to refrain from enforcing their rights and remedies under the Loan Agreement for the duration of a third forbearance period, which runs from October 16, 2009 through the termination of the Conversion Agreement or the consummation of the debt restructuring transaction contemplated by the Conversion Agreement.  This forbearance period will end earlier if the extended forbearance period applicable to the Forbearing Debenture Holders ends or if the Company fails to comply with its covenants in the Third Forbearance agreement or if the Company commences voluntary bankruptcy, insolvency, reorganization or other similar proceedings or any similar non-voluntary case or proceeding regarding the Company is commenced.

A copy of the Third Forbearance Agreement is attached hereto as Exhibit 10.3.  The description of this Third Forbearance Agreement contained in this Current Report on Form 8-K is qualified in its entirety by reference to Exhibit 10.3.

First Amendment to Loan Agreement

Effective as of October 16, 2009, the Company and the Lenders entered into the First Amendment to Loan Agreement (the “Loan Agreement Amendment”) with Whitebox VSC Ltd, as lender and agent (the “Agent”) under the Company’s senior secured loan agreement.  The Loan Agreement that is amended by the Loan Agreement Amendment is described in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 29, 2007, and such description is incorporated by reference herein.  By entering into the Loan Agreement Amendment, the Company obtained permission from the Agent to enter into the Conversion Agreement and consummate the debt restructuring transaction contemplated by that agreement.  Furthermore, if the Company consummates the debt restructuring on or before November 16, 2009 and satisfies certain other conditions, the Agent will waive specified defaults under the Loan Agreement that resulted from the Company’s previously reported defaults under the Indenture.

Pursuant to the Loan Agreement Amendment, the Company has agreed to pay down at least $5 million, and may pay down as much as $15 million, of the principal amount of its senior term loan under the Loan Agreement in connection with the debt restructuring transaction contemplated by the Conversion Agreement.  With each prepayment of the senior term loan, the Company will be required to pay the Agent a non-refundable prepayment fee equal to 1% of the aggregate principal amount that is prepaid.  In addition, the Loan Agreement Amendment increases the Company’s effective rate of interest under the senior term loan.  From October 1, 2009 until October 16, 2009, the effective rate is 10.5% per annum in cash.  From and after October 16, 2009, so long as the Conversion Agreement has been executed on or before such date, the effective rate will be 8.5% per annum in cash, plus 2.0%

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payment-in-kind interest, plus an additional 0.3% payment-in-kind interest for every $1 million below $15 million of the senior term loan under the Loan Agreement that is not paid down by the Company.  After the required pay-down of the senior term loan, the Company has the right to reduce the effective rate of interest by 0.3% for every $1 million of additional prepayment.

Additionally, pursuant to the Loan Agreement Amendment, the Company has agreed to use the proceeds of any sale or disposition of property to reduce the senior term loan.  The Loan Agreement Amendment also limits the Company’s ability to transfer or maintain funds other than in deposit accounts over which the Agent has control.  Furthermore, the Loan Agreement Amendment provides for an additional event of default under the Loan Agreement if an event of default occurs under the Indenture or under a new indenture pursuant to which convertible notes would be issued in connection with the debt restructuring transaction.

The Loan Agreement Amendment is attached hereto as Exhibit 10.4.  The description of the Loan Agreement Amendment contained in this Current Report on Form 8-K is qualified in its entirety by reference to Exhibit 10.4.

Third Supplemental Indenture

As of October 16, 2009, the Company and U.S. Bank National Association, as trustee (the “Trustee”) entered into a Third Supplemental Indenture (the “Third Supplemental Indenture”).  The Indenture, which is amended by the Third Supplemental Indenture, is described in the Company’s Current Reports on Form 8-K filed with the Securities and Exchange Commission on September 23, 2004, November 9, 2006 and September 27, 2007, and such descriptions are incorporated by reference herein.  The purpose of the Third Supplemental Indenture is to amend the Indenture to secure the Company’s obligations under the 2024 Debentures with a second priority security interest in substantially all of the assets of the Company and its subsidiaries.  Additionally, it provides for guarantees of the 2024 Debentures by Vitesse Manufacturing & Development Corporation and Vitesse Semiconductor Sales Corporation, each a subsidiary of the Company.  The security interest granted under the Third Supplemental Indenture is junior and subordinated to the lien granted by the Company to Whitebox VSC Ltd., its senior secured lender under the Loan Agreement dated August 23, 2007.

A copy of the Third Supplemental Indenture is attached hereto as Exhibit 4.1.  The description of the Third Supplemental Indenture contained in this Current Report on Form 8-K is qualified in its entirety by reference to Exhibit 4.1.

Subsidiary Guarantees Related to 1.5% Convertible Subordinated Debentures due 2024

As of October 16, 2009, in connection with the Company’s entry into the Third Supplemental Indenture, Vitesse Manufacturing & Development Corporation and Vitesse Semiconductor Sales Corporation, each a wholly-owned subsidiary of the Company (each a “Guarantor”), executed a Guaranty (the “Guaranty”) in favor of the Trustee.  Pursuant to the Guaranty, each Guarantor, jointly and severally, guarantees to the Trustee, the payment when due (whether at a stated maturity or earlier by reason of acceleration or otherwise) and performance of the Company’s obligations under the Indenture.

A copy of the Guaranty is attached hereto as Exhibit 10.5.  The description of the Guaranty contained in this Current Report on Form 8-K is qualified in its entirety by reference to Exhibit 10.5.

Voting and Lock-Up Agreements with the Noteholders

As of October 16, 2009, in connection with the Company’s entry into the Conversion Agreement, the Company entered into a Voting and Lock Agreement with each of the Noteholders (the “Lock-Up Agreement”).  Pursuant to the terms of the Lock-Up Agreement, for a period beginning on October 16, 2009 and ending on the earlier of (i) November 15, 2009, (ii) the record date for the Special Meeting or (iii) the date that is three weeks from the issuance of the New Securities, each Noteholder agreed, not to sell or transfer any shares of Common Stock issued to it pursuant to the Conversion Agreement, subject to specified exceptions.  Additionally, each Noteholder has agreed to vote all shares of Common Stock that they beneficially own at the Special Meeting to approve the proposal to increase the number of authorized shares of the Company’s common stock so that there is a sufficient number of authorized and unissued shares available to reserve shares of Common Stock for issuance upon conversion of the New Notes.

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A copy of the form of Lock-Up Agreement is attached hereto as Exhibit 10.6. The description of the Lock-Up Agreement contained in this Current Report on Form 8-K is qualified in its entirety by reference to Exhibit 10.6.

Item 1.02.  Termination of a Material Definitive Agreement.

On October 16, 2009 the Company and Computershare Trust Company N.A. (formerly known as Equiserve Trust Company, N.A.) entered into a Second Amendment to Rights Agreement (the “Rights Agreement Amendment”) in respect of the Rights Agreement dated as of March 3, 2003 between the Company and Equiserve Trust Company, N.A.  (the “Rights Agreement”).  The Rights Agreement is described in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 11, 2003, and such description is incorporated by reference herein.

The Rights Agreement Amendment changes the date for expiration of the rights issued pursuant to the Rights Agreement (the “Rights”) from February 7, 2013 to October 15, 2009.  Accordingly, the Rights have expired, and the Rights Agreement has been terminated.

A copy of the Rights Agreement Amendment is filed as Exhibit 4.2 to this Current Report on Form 8-K.

Item 2.03.  Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth in Item 1.01 of this Current Report on Form 8-K under the caption “Third Supplemental Indenture” and “Subsidiary Guarantees Related to 1.5% Convertible Subordinated Debentures due 2024” is incorporated into this Item 2.03 by reference.

Item 3.02.  Unregistered Sales of Equity Securities.

The information set forth in Item 1.01 of this Current Report on Form 8-K under the caption “Conversion Agreement” is incorporated into this Item 3.02 by reference.

The exchange of the 2024 Debentures for the New Securities is being consummated pursuant to an exemption from registration under Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”).  No commission or remuneration was paid or given, directly or indirectly, for soliciting the exchange transactions contemplated by the Conversion Agreement.

Item 3.03.  Material Modification to Rights of Security Holders.

Rights Agreement Amendment

The information set forth in Item 1.02 of this Current Report on Form 8-K is incorporated into this Item 3.03 by reference.

Third Supplemental Indenture and Subsidiary Guarantees

The information set forth in Item 1.01 of this Current Report on Form 8-K under the caption “Third Supplemental Indenture” and “Subsidiary Guarantees Related to 1.5% Convertible Subordinated Debentures due 2024” is incorporated into this Item 3.03 by reference.

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Item 7.01. Regulation FD Disclosure.

On October 19, 2009, the Company issued a press release announcing that it had entered into the Debt Conversion Agreement, Loan Agreement Amendment and Third Supplemental Indenture as described in this Current Report on Form 8-K.  The press release is furnished as Exhibit 99.1 to this Report.

Disclosure of Unaudited Financial Information and Operations Data

In connection with the negotiation of the restructuring, the holders of the 2024 Debentures participating in the restructuring were provided the following limited unaudited financial information and limited operating metrics for the three months ended September 30, 2009:

·Revenue for the fourth quarter of fiscal year 2009 is expected to be in the range of $38.5 to $39.5 million.

·The Company’s fourth quarter fiscal year 2009 book-to-bill ratio was greater than 1:1 and greater than the ratio for the third quarter fiscal year 2009.

·Cash was $57.5 million as of September 30, 2009.

·Inventory continued its trend of quarter-over-quarter reduction.

·Accounts receivables and accounts payables were consistent with, or slightly down from, the third quarter of fiscal year 2009.

·Operating expenditures are also consistent with the third quarter of fiscal year 2009, with the exception of extraordinary items related to the restructuring of the Company’s 2024 Debentures and $30 million senior secured loan, the return of a significant withholding tax payment and items disclosed in the Company’s quarterly report on Form 10-Q for the third quarter of fiscal year 2009.

This information was provided to the holders of 2024 Debentures participating in the debt restructuring under non-disclosure agreements between the Company and such holders.  The provision of this information to such holders of the 2024 Debentures participating was as a condition of proceeding with the transaction.  The Company is furnishing this limited disclosure of unaudited financial information and operating metric information solely for the purpose of providing the Company’s stockholders with substantially the same information regarding the Company’s operating performance during this period as provided to the holders of 2024 Debentures participating in the debt restructuring.  Although this information reflects management’s good faith belief as of the date hereof, this information has not been reviewed or audited by the Company’s auditors, and is subject to adjustment as the Company completes compilation, review and reporting process for the three months and year ended September 30, 2009.  There can be no assurance that during the preparation of the Company’s financial statements for the fiscal year ended September 30, 2009 that the Company will not discover additional information that results in substantial changes in such information.  Similarly, there can be no assurance that as part of the review and audit of the Company’s financial information that the Company will not determine that adjustments to such information are necessary in accordance with GAAP and the federal securities laws.

Because this information is being provided solely as a result of the conditions imposed by the debt restructuring participants and prior to the preparation of the Company’s audited financial statements for the fiscal year ended September 30, 2009, this information should be considered “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements include, but are not limited to, statements regarding Vitesse’s plans, intentions and expectations.  Such statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those projected.  An extensive discussion of the risk factors that could impact these areas and the Company’s overall business and financial performance can be found in the Company’s reports filed with the Securities and Exchange Commission.  The risks included above are not exhaustive.  The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which any such statement is based.

The information in Exhibit 99.1 and in this Item shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act.

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Item 8.01.  Other Events.

Process Related to Entering into the Debt Conversion Agreement

Holders of the 2024 Debentures had the right to require us to repurchase the 2024 Debentures on October 1, 2009 for 113.76% of the principal amount to be purchased. This repurchase right would have resulted in an additional payment of $13.3 million on the $96.7 million outstanding 2024 Debentures.  Because the Company did not have the resources to repay the principal amount and related premium if the 2024 Debentures were put to the Company for repayment on October 1, 2009, the Company’s Board of Directors formed a Strategic Development Committee (the “SDC”) comprised of independent Board members.  The SDC was responsible for assisting the Board in exploring potential alternative solutions to address the Company’s obligation to repay the principal and premium amount of the 2024 Debentures.

To assist with identifying and evaluating a spectrum of possible solutions, the Company, working in conjunction with the SDC, assembled a team of advisors including investment bankers, financing specialists and legal counsel. The Company and the SDC considered and evaluated a broad range of alternatives, including mergers of equals, sale of the company, restructuring of the current debt, infusions of private equity investment, taking the Company private and capital market transactions. The Company entered into discussions with over 30 parties, including over a dozen strategic buyers and over a dozen private equity investors.  Of these, seven submitted proposals to acquire or to invest in Vitesse, and five firms conducted comprehensive diligence with the intent of consummating a definitive agreement to re-finance or acquire the Company. 

The debt restructuring transaction contemplated by the Conversion Agreement, if and when consummated, will significantly reduce the total amount of debt on Vitesse’s balance sheet by replacing the Company’s approximately $110 million of convertible debt which is currently due and payable with approximately $50 million of convertible debt due in five years.

Special Meeting of Stockholders

Upon consummation of the debt restructuring transaction described under Item 1.01 of the Current Report on Form 8-K, the Company plans to call a Special Meeting of Stockholders to authorize a reverse stock-split (which may or may not be implemented) and an increase to the number of the Company’s authorized shares of common stock to permit the conversion of the new convertible notes that are contemplated by the Conversion Agreement into shares of the Company’s common stock.  The Company expects to announce the record date and meeting date for this Special Meeting as soon as practicable after the consummation of the debt restructuring transaction.  Holders of shares of the Company’s common stock on the record date, including shares of common stock issued in connection with the debt restructuring transaction, will be able to vote their shares at this Special Meeting.

This Current Report on Form 8-K contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements include, but are not limited to, statements regarding the Company’s plans, intentions and expectations. Such statements include without limitation, statements regarding the Company’s proposed restructuring transaction and the impact on the Company and its stockholders from such transaction.  Such statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those projected.  The Company cannot assure that it will be successful in completing the contemplated transaction or any other restructuring proposal, on the terms outlined in this Current Report on Form 8-K or otherwise.  A more extensive discussion of the risk factors that could impact these areas and the Company’s overall business and financial performance can be found in the Company’s other reports filed with the Securities and Exchange Commission.  The risks included above are not exhaustive.  The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which any such statement is based.

Item 9.01.  Financial Statements and Exhibits.

(d)           Exhibits

Exhibit No.	Description
4.1	Third Supplemental Indenture by and between Vitesse Semiconductor Corporation and U.S. Bank National Association, as Trustee, dated as of October 16, 2009 (supplemental to the Indenture dated as of September 22, 2004).*
4.2	Second Amendment to Rights Agreement, dated as of October 16, 2009 between Vitesse Semiconductor Corporation and EquiServe Trust Company, N.A., as Rights Agent, amending the Rights Agreement dated as of March 3, 2003.

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10.1	Debt Conversion Agreement, dated as of October 16, 2009, between Vitesse Semiconductor Corporation and AQR Absolute Return Master Account, L.P., Aristeia Master, L.P., Aristeia Partners, L.P., CNH Master Account, L.P., Linden Capital L.P., Whitebox Advisors, LLC, Tonga Partners, L.P., Tonga Partners QP, L.P., Anegada Master Fund, LTD., Cuttyhunk Master Portfolio and ABN AMRO Bank N.V.*
10.2	Form of Forbearance Agreement among Vitesse Semiconductor Corporation and the beneficial owners of 1.5% Convertible Subordinated Debentures due 2024, dated as of October 16, 2009.
10.3	Third Forbearance Agreement between Vitesse Semiconductor Corporation and Whitebox VSC Ltd., dated as of October 16, 2009.
10.4	First Amendment to Loan Agreement, dated as of October 16, 2009, among Vitesse Semiconductor Corporation, the Lenders named therein and Whitebox VSC Ltd., as agent.*
10.5	Guaranty, dated as of October 16, 2009, executed by Vitesse Manufacturing & Development Corporation and Vitesse Semiconductor Sales Corporation in favor of U.S. Bank National Association, as Trustee, under the Indenture dated September 22, 2004, governing the Vitesse Semiconductor Corporation’s 1.5% Convertible Subordinated Debentures Due 2024.*
10.6	Form of Lock-Up Agreement among Vitesse Semiconductor Corporation and the beneficial owners of 1.5% Convertible Subordinated Debentures due 2024, dated as of October 16, 2009.
99.1	Press Release dated October 19, 2009.

*              In reviewing this agreement, please remember it is included to provide you with information regarding its terms and is not intended to provide any other factual or disclosure information about the Company or the parties to the agreement.  The agreement may contain representations and warranties by each of the parties to the agreement.  These representations and warranties have been made solely for the benefit of the other party or parties to the agreement and (i) should not necessarily be treated as categorical statements of fact, but rather as a means of allocating the risk to one of the parties if those statements prove to be inaccurate; (ii) may have been qualified by disclosures that were made to the other party or parties in connection with the negotiation of the attached agreement, which disclosures are not necessarily reflected in the agreement; (iii) may apply standards of materiality in a manner that is different from what may be viewed as material to you or other investors; and (iv) were made only as of the date of the agreement or other date or dates that may be specified in the agreement and are subject to more recent developments.  Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time.

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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: October 19, 2009

VITESSE SEMICONDUCTOR CORPORATION
By:	/s/ Michael B. Green
	Michael B. Green
	Vice President, General Counsel and Secretary

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EXHIBIT INDEX

Exhibit No.	Description
4.1	Third Supplemental Indenture by and between Vitesse Semiconductor Corporation and U.S. Bank National Association, as Trustee, dated as of October 16, 2009 (supplemental to the Indenture dated as of September 22, 2004).
4.2	Second Amendment to Rights Agreement, dated as of October 16, 2009 between Vitesse Semiconductor Corporation and EquiServe Trust Company, N.A., as Rights Agent, amending the Rights Agreement dated as of March 3, 2003.
10.1	Debt Conversion Agreement, dated as of October 16, 2009, between Vitesse Semiconductor Corporation and AQR Absolute Return Master Account, L.P., Aristeia Master, L.P., Aristeia Partners, L.P., CNH Master Account, L.P., Linden Capital L.P., Whitebox Advisors, LLC, Tonga Partners, L.P., Tonga Partners QP, L.P., Anegada Master Fund, LTD., Cuttyhunk Master Portfolio and ABN AMRO Bank N.V.
10.2	Form of Forbearance Agreement among Vitesse Semiconductor Corporation and beneficial owners of 1.5% Convertible Subordinated Debentures due 2024, dated as of October 16, 2009.
10.3	Third Forbearance Agreement between Vitesse Semiconductor Corporation and Whitebox VSC Ltd., dated as of October 16, 2009.
10.4	First Amendment to Loan Agreement, dated as of October 16, 2009, among Vitesse Semiconductor Corporation, the Lenders named therein and Whitebox VSC Ltd., as agent.
10.5	Guaranty, dated as of October 16, 2009, executed by Vitesse Manufacturing & Development Corporation and Vitesse Semiconductor Sales Corporation in favor of U.S. Bank National Association, as Trustee, under the Indenture dated September 22, 2004, governing the Vitesse Semiconductor Corporation’s 1.5% Convertible Subordinated Debentures Due 2024.
10.6	Form of Lock-Up Agreement among Vitesse Semiconductor Corporation and the beneficial owners of 1.5% Convertible Subordinated Debentures due 2024, dated as of October 16, 2009.
99.1	Press Release dated October 19, 2009.

EX-4.1

Exhibit 4.1

THIRD SUPPLEMENTAL INDENTURE

by and between

VITESSE SEMICONDUCTOR CORPORATION

and

U.S. BANK NATIONAL ASSOCIATION

as Trustee

Dated as of October 16, 2009

1.50% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2024

(Supplement to the Indenture dated as of September 22, 2004)

VITESSE SEMICONDUCTOR CORPORATION

THIRD SUPPLEMENTAL INDENTURE

This Third Supplemental Indenture, dated as of October 16, 2009 (this “Third Supplemental Indenture”), is entered into by and between Vitesse Semiconductor Corporation, a Delaware corporation (the “Company”), and U.S. Bank National Association, as trustee (the “Trustee”).  Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Indenture (as defined below).

WITNESSETH:

WHEREAS, this Third Supplemental Indenture modifies and supplements the Indenture dated as of September 22, 2004, between the Company and the Trustee, as amended by that certain First Supplemental Indenture dated November 3, 2006 and that certain Second Supplemental Indenture dated September 24, 2007 (as amended and supplemented, the “Indenture”);

WHEREAS, the Company desires to make certain amendments to the Indenture as set forth herein, and pursuant to Section 7.2 of the Indenture such amendments may only be made with the written consent of the Holders of a majority in aggregate principal amount of the Outstanding Securities;

WHEREAS, the Company has obtained consent to the amendments set forth herein from Holders of a majority of the aggregate principal amount of the Outstanding Securities; and

WHEREAS, the Company hereby certifies that all covenants and conditions precedent, if any, provided for in the Indenture relating to the execution, delivery and performance of this Third Supplemental Indenture have been complied with, and all things necessary to make this Third Supplemental Indenture a valid agreement of the Company and the Trustee, in accordance with its terms, and a valid amendment of, and supplement to, the Indenture have been done;

NOW, THEREFORE, the parties hereto agree, as follows:

ARTICLE 1.

AMENDMENTS TO INDENTURE

Section 1.01Amendments.  Subject to Section 2.01, the terms of the Indenture are hereby amended, supplemented, modified or deleted as follows.

(a)Section 1.1 of the Indenture is hereby amended by adding the following definitions in alphabetical order:

“Collateral” has the meaning assigned to such term in the Second Lien Security Documents.

“Collateral Agent” means the Trustee, in its capacity as Collateral Agent under this Indenture and the Second Lien Security Documents.

“Collateral Assignment of IP” means the collateral assignment of intellectual property, dated as of the Supplemental Indenture Effective Date, delivered by the Company to the Collateral Agent, as so amended and supplemented, and as amended and supplemented hereby, or otherwise modified.

“Company Security Agreement” means the security agreement, dated as of the Supplemental Indenture Effective Date, delivered by the Company to the Collateral Agent, as so amended and supplemented, and as amended and supplemented hereby, or otherwise modified.

“Deposit Account Control Agreement” means the deposit account control agreement, dated as of the Supplemental Indenture Effective Date, among the Company, the Collateral Agent, Whitebox VSC, Ltd, as first lien agent, and Wells Fargo Bank, National Association, as depositary bank, as so amended and supplemented, and as amended and supplemented hereby, or otherwise modified.

“Domestic Subsidiary” means any Subsidiary of the Company organized or existing under the laws of the United States of America, or any state or territory thereof, or the District of Columbia.

“First Lien Loan Agreement” means that certain Loan Agreement, dated as of August 23, 2007, among the Company, the lenders from time to time parties thereto, and Whitebox VSC, Ltd., as agent, as so amended and supplemented, and as amended and supplemented hereby, or otherwise modified.

“First Lien Security Documents” means the Collateral Documents as defined in the First Lien Loan Agreement.

“Guarantor” means (a) Vitesse Manufacturing & Development Corporation, (b) Vitesse Semiconductor Sales Corporation and (c) any other Subsidiary that becomes a Guarantor pursuant to Section 16.6 hereof.

“Guarantor Security Agreement” means the security agreement dated as of the Supplemental Indenture Effective Date, delivered by each Guarantor to the Collateral Agent, as so amended and supplemented, and as amended and supplemented hereby, or otherwise modified.

“Guaranty” shall mean the guaranty agreement, dated as of the Supplemental Indenture Effective Date, delivered by each Guarantor to the Collateral Agent, as so amended and supplemented, and as amended and supplemented hereby, or otherwise modified.

“Indenture Documents” means the Indenture and the Second Lien Security Documents.

“Intercreditor Agreement” means the intercreditor agreement, dated as of the Supplemental Indenture Effective Date, between the First Lien Agent, the

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Trustee, the Company and the Guarantors, as so amended and supplemented, and as amended and supplemented hereby, or otherwise modified.

“Permitted Liens” means (a) the Security Interest, (b) the Liens granted to the First Lien Agent pursuant to the First Lien Security Documents, and (b) customary permitted Liens incurred in the ordinary course.

“Pledge Agreement” means the pledge agreement, dated as of the Supplemental Indenture Effective Date, delivered by the Company to the Collateral Agent, as so amended and supplemented, and as amended and supplemented hereby, or otherwise modified.

“Second Lien Security Documents” means the Company Security Agreement, the Pledge Agreement, the Collateral Assignment of IP, the Guaranty, the Guarantor Security Agreement and the Deposit Account Control Agreement.

“Security Interest” has the meaning assigned to such term in the Second Lien Security Documents.

“Supplemental Indenture Effective Date” means October 16, 2009, provided all of the conditions set forth in Section 2.01 of the Third Supplemental Indenture have been satisfied.

Section 4.1(d) of the Indenture is hereby amended by inserting the words “, any Indenture Document” after the word “Indenture”.

(b)Section 6.2 of the Indenture is hereby deleted in its entirety and replaced with the following:

“Section 6.2 Successor Corporation Substituted.

Upon any consolidation or merger by the Company with or into any other corporation or any conveyance, transfer or lease of the properties and assets of the Company substantially as an entirety to any Person, in accordance with Section 6.1, the successor corporation formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor corporation had been named as the Company herein, and shall expressly assume all obligations of the Company under the Indenture and the other Indenture Documents in a manner acceptable to the Holders of the Securities in their sole discretion, and thereafter, except in the case of a lease to another Person, the predecessor corporation shall be relieved of all obligations and covenants under this Indenture and the Securities (provided that all assets securing the Securities shall be transferred to the successor corporation in a manner acceptable to the Holders of the Securities in their sole discretion).”

(c)Section 7.2 of the Indenture is hereby amended by:

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(i)  deleting the period at the end of Section 7.2(k) and replace it with “; or”; and

(ii) adding the following subsection to the end of Section 7.2:

“(l) release all or substantially all of the Collateral (except as permitted under the Intercreditor Agreement) or release the Company or any Guarantor from their payment obligations under any Indenture Document.”

(d)Article 14 of the Indenture is deleted in its entirety and replaced with the following:

ARTICLE 14

INTERCREDITOR AGREEMENT

“14.1 Second Priority Nature of Liens.

The liens and security interest granted to the Collateral Agent for the benefit of the Holders pursuant to the Second Lien Security Documents and the exercise of any rights or remedies by the Collateral Agent or any Holder thereunder is subject to the provisions of the Intercreditor Agreement.”

(e)The Indenture is hereby amended and supplemented by adding the following as Article 16:

ARTICLE 16

COLLATERAL

SECTION 16.1.Security Documents.  The payment of the principal of and interest and premium, if any, on the Notes when due, whether on an interest payment date, at maturity, by acceleration, repurchase, redemption or otherwise and whether by the Company pursuant to the Notes or by the Guarantor pursuant to its Guaranty, the payment and the performance of all other obligations of the Company and the Guarantors under the Indenture, the Notes and the Guaranty are secured as provided in the Second Lien Security Documents which the Company and the Guarantor have entered into on the Supplemental Indenture Effective Date and will be secured by Second Lien Security Documents hereafter delivered as required or permitted by the Indenture (as amended on the Supplemental Indenture Effective Date).  The Company shall, and shall cause each Guarantor to, and each Guarantor shall, make all filings (including filings of continuation statements and amendments to UCC financing statements that may be necessary to continue the effectiveness of such UCC financing statements) and all other actions as are necessary or required by the Second Lien Security Documents to maintain (at the sole cost and expense of the Company and the Guarantors) the security interest created by the Second Lien Security Documents in the Collateral (other than with respect to any Collateral the security

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interest in which is not required to be perfected under the Security Documents) as a perfected security interest subject only to Permitted Liens.

SECTION 16.2.Collateral Agent.

(a)  Subject to Section 5.1, neither the Trustee nor the Collateral Agent nor any of their respective officers, directors, employees, attorneys or agents will be responsible or liable for the existence, genuineness, value or protection of any Collateral, for the legality, enforceability, effectiveness or sufficiency of the Second Lien Security Documents, for the creation, perfection, priority, sufficiency or protection of Security Interest, or for any defect or deficiency as to any such matters, or for any failure to demand, collect, foreclose or realize upon or otherwise enforce any of the Second Priority Liens or Second Lien Security Documents or any delay in doing so.

SECTION 16.3Opinions as to Recording.

(a)  Company represents that it has caused or will promptly cause to be executed and delivered, filed and recorded and covenants that it will promptly cause to be executed and delivered and filed and recorded, all instruments and documents, and represents that it has done and will do or will cause to be done all such acts and other things, at the Company’s expense, as applicable, as are necessary to subject the applicable Collateral to valid Security Interests and to perfect those Security Interests to the extent contemplated by the Second Lien Security Documents.

(b)  The Company shall furnish to the Trustee and the Collateral Agent upon the execution and delivery of this Indenture an Opinion of Counsel either (i) stating that in the opinion of such counsel all action has been taken with respect to the recording, registering and filing of this Indenture, financing statements or other instruments or otherwise necessary to make effective the Security Interests intended to be created by the Second Lien Security Documents and reciting the details of such action, or (ii) stating that, in the opinion of such counsel, no such action is necessary to make such Lien effective.  Such Opinion of Counsel may contain such qualifications, assumptions and limitations as are customary for such opinions.

(c)  The Company shall furnish to the Trustee and the Collateral Agent within three months after each anniversary of the Execution Date, an Opinion of Counsel, dated as of such date, stating either that (i) in the opinion of such counsel, all action has been taken with respect to the recording, filing, re-recording, and refilling of the Indenture and related financing statements, continuation statements and other instruments and documents as is necessary to maintain the effectiveness of the Security Interests intended to be created by the Second Lien Security Documents and reciting the details of such action or (ii) in the opinion of such counsel, no such action is necessary to maintain the effectiveness of such Security Interests.  Such Opinion of Counsel may contain such qualifications, assumptions and limitations as are customary for such opinons.

(d)  The Company and the Subsidiary Guarantors shall otherwise comply with the provisions of § 314(b) and, as applicable §§ 314(c), (d) and (e) of the TIA.

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SECTION 16.4.Authorization of Actions to Be Taken.  (a) Each Holder, by its acceptance thereof, consents and agrees to the terms of each Second Lien Security Document and the Intercreditor Agreement, as originally in effect and as amended, supplemented or replaced from time to time in accordance with its terms or the terms of the Indenture, authorizes and directs the Trustee and the Collateral Agent to enter into the Second Lien Security Documents to which it is a party, authorizes and empowers the Trustee to direct the Collateral Agent to enter into, and the Collateral Agent to execute and deliver, the Intercreditor Agreement, and authorizes and empowers the Trustee and the Collateral Agent to bind the holders of Notes and other holders of obligations as set forth in the Second Lien Security Documents and the Intercreditor Agreement and to perform its obligations and exercise its rights and powers thereunder.

(b) The Collateral Agent and the Trustee are authorized and empowered to receive for the benefit of the Holders any funds collected or distributed under the Security Documents to which the Collateral Agent or Trustee is a party and to make further distributions of such funds as permitted or required in any Second Lien Security Document or the Intercreditor Agreement.

SECTION 16.5. Release of Liens.  Subject to Section 7.2(l), Collateral may be released from the Security Interest at any time or from time to time in accordance with the provisions of the Second Lien Security Documents and the Intercreditor Agreement.  The applicable assets included in the Collateral shall be released at the Company’s sole cost and expense.

SECTION 16.6. Additional Guarantors.  If any Domestic Subsidiary of the Company shall be required to join the Security Documents (as defined in the First Lien Loan Agreement) pursuant to Section 6.5 of the First Lien Loan Agreement, such Subsidiary shall, simultaneously therewith, execute and deliver to the Collateral 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, (c) such additional documents reasonably required by the Collateral Agent, and (d) no Default of Event of Default shall result from the joinder contemplated herein.

ARTICLE 2.

MISCELLANEOUS PROVISIONS

Section 2.01Effective Date of the Third Supplemental Indenture.  If(and only if ) each of the following conditions precedent are satisfied, the provisions of Article 1 of this Third Supplemental Indenture shall be deemed to be effective as of the date first written above:

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(a)the Trustee shall have received a written direction from the Holders of a majority of the aggregate principal amount of the Outstanding Securities directing the Trustee to execute this Third Supplemental Indenture;

(b)the Trustee shall have received a copy of (i) this Third Supplemental Indenture, (ii) the Intercreditor Agreement and (iii) each Second Lien Security Document, in each case executed by each party thereto other than the Trustee;

(c)the Trustee shall have received an Officer’s Certificate stating that this Third Supplemental Indenture is authorized and permitted by the Indenture, in accordance with Sections 7.6, 15.5 and 15.6 of the Indenture; and

(d)the Trustee shall have received an Opinion of Counsel stating that this Third Supplemental Indenture is authorized and permitted by the Indenture, in accordance with Sections 7.6, 15.5 and 15.6 of the Indenture.

Section 2.02Governing Law.  This Third Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby.  In connection with any dispute arising out of or related to this Third Supplemental Indenture, the Company hereby consents to jurisdiction in the State and Federal Courts in the Borough of Manhattan.

Section 2.03Counterparts.  This Third Supplemental Indenture may be executed by facsimile signatures and/or in any number of counterparts, each of which when so executed shall be deemed to be an original but all such counterparts shall together constitute but one and the same instrument.

Section 2.04No Adverse Interpretation of Other Agreements.  This Third Supplemental Indenture may not be used to interpret another indenture, loan or debt agreement of the Company. Any such indenture, loan or debt agreement may not be used to interpret this Third Supplemental Indenture.

Section 2.05Severability.  In case any one or more of the provisions contained in this Third Supplemental Indenture shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Third Supplemental Indenture.

[Signature page to follow.]

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

VITESSE SEMICONDUCTOR CORPORATION
By:	/s/ Christopher R. Gardner
	Name:	Christopher R. Gardner
	Title:	Chief Executive Officer
U.S. BANK NATIONAL ASSOCIATION, in its capacity as Trustee
By:	/s/ Stephen Rivero
	Name:	Stephen Rivero
	Title:	Vice President

Signature Page to Third Supplemental Indenture

EX-4.2

Exhibit 4.2

SECOND AMENDMENT TO RIGHTS AGREEMENT

This Second Amendment to Rights Agreement (the “Amendment”) between Vitesse Semiconductor Corporation (the “Company”) and Computershare Trust Company N.A. (formerly known as Equiserve Trust Company, N.A.) as rights agent (the “Rights Agent”), is dated October 16, 2009 and is effective as of October 15, 2009.

WHEREAS, the Company and Equiserve Trust Company, N.A. entered into a certain Rights Agreement, dated as of March 3, 2003 (the “Rights Agreement”);

WHEREAS, the Board of Directors of the Company (the “Board”) has determined that it is in the best interest of the Company and its stockholders to amend the Rights Agreement to terminate the Rights Agreement as of the date hereof;

WHEREAS, Section 23 of the Rights Agreement provides, among other things, that prior to the occurrence of a “Section 8(a)(ii) Event” (as defined in the Rights Agreement), the Company may, and the Rights Agent shall, if the Company so directs, supplement or amend any provision of the Rights Agreement in any respect without the approval of any holders of the Company’s common stock, and that upon the delivery of a certificate from an appropriate officer of the Company which states that such supplement or amendment is in compliance with the terms of the Rights Agreement (the “Officers Certificate”), the Rights Agent shall execute such supplement or amendment;

WHEREAS, the Officer’s Certificate is being delivered to the Rights Agent concurrently with the execution and delivery of this Amendment by the Company and the Rights Agent; and

WHEREAS, all acts necessary to make this Amendment a valid agreement, enforceable according to its terms, have been done and performed, and the execution and delivery of this Amendment by the Company and the Rights Agent have been in all respects duly authorized by the Board and the Rights Agent.

NOW, THEREFORE, in consideration of the promises and the mutual agreements set forth in the Rights Agreement and this Amendment, the parties hereto agree as follows:

1.  The definition of “Final Expiration Date” in Section 1(a) of the Rights Agreement is hereby amended and restated in its entirety as follows:

“Final Expiration Date” means October 15, 2009.

2.  This Amendment shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and performed entirely within such State.

3.  This Amendment may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed an original, and all such counterparts shall together

constitute but one and the same instrument.  A signature to this Amendment transmitted electronically shall have the same authority, effect, and enforceability as an original signature.

4.  Capitalized terms used herein but not defined shall have the meanings given to them in the Rights Agreement.

5.  The Company and the Rights Agent each hereby waive any notice requirement under the Rights Agreement pertaining to this Amendment or any of the matters covered by this Amendment.

[Remainder of page intentionally left blank; signature page follows.]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed on the day and year first above written.

VITESSE SEMICONDUCTOR CORPORATION
By:	/s/ CHRISTOPHER R. GARDNER
	Name: Christopher R. Gardner
	Title:   Chief Executive Officer
COMPUTERSHARE TRUST COMPANY N.A., as Rights Agent
By:	/s/ DENNIS MOCCIA
	Name: Dennis Moccia
	Title: Manager Contracts Administration

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EX-10.1

Exhibit 10.1

DEBT CONVERSION AGREEMENT

This DEBT CONVERSION AGREEMENT (this “Agreement”) is dated as of October 16, 2009, and is among VITESSE SEMICONDUCTOR CORPORATION, a Delaware corporation (the “Company”) and the holders of the Company’s Notes (as defined below) signatory hereto (each, a “Noteholder” and collectively, the “Noteholders”).

W I T N E S S E T H:

WHEREAS, the Noteholders are the beneficial owners of 1.50% Convertible Subordinated Debentures due 2024 of the Company (the “Notes”), in the original principal amount set forth opposite such Noteholders’ names in Exhibit A, which in the aggregate total $93,547,000 in original principal amount (such Noteholders’ Notes, the “Exchanged Notes”).

WHEREAS, the Noteholders have exercised their rights to require the Company to repurchase the Exchanged Notes on October 1, 2009 pursuant to Section 11.1 of the indenture governing the Notes, dated as of September 22, 2004, between the Company and U.S. Bank National Association (as amended and supplemented, or otherwise modified,  the “Indenture”).

WHEREAS, pursuant to the Indenture, the Company was required to pay on October 1, 2009 to each of the Noteholders, in exchange for the Exchanged Notes, a repurchase price (consisting of the original principal amount of the Exchanged Notes, the put premium on such amount and accrued and unpaid interest as of October 1, 2009), and, as of the date hereof, the Company has not made such payments to the Noteholders.

WHEREAS, certain of the Noteholders and the Company have entered on October 1, 2009, and subsequently, on October 9, 2009 into forbearance agreements (the “Initial Forbearance Agreements”), with respect to certain Specified Defaults (as defined in the Initial Forbearance Agreements) of the Company, pursuant to which, the Company has requested that the Noteholders agree to forbear, and the Noteholders have agreed to forbear, from exercising their rights and remedies with respect to the Specified Defaults until October 16, 2009, under the terms and conditions set forth in the Forbearance Agreements.

WHEREAS, the Noteholders and the Company have entered into a Forbearance Agreement, dated as of October 16, 2009(the “Exchange Forbearance Agreement”), in respect of the Specified Defaults (as defined in the Exchange Forbearance Agreement), and pursuant to which, the Company has requested that the Noteholders agree to forbear, and the Noteholders have agreed to forbear, from exercising their rights and remedies with respect to the Specified Defaults, under the terms and conditions set forth therein, during the period set forth therein.

WHEREAS, the Company and the Noteholders have agreed to exchange the Exchanged Notes with New Securities and Cash Consideration, subject to the terms and conditions set forth herein.

WHEREAS, prior to and/or simultaneously with the execution and delivery of this Agreement, the Company has executed and/or is executing and delivering to the Noteholders

certain agreements including the Restructuring Agreements.

NOW, THEREFORE, in consideration of the premises and covenants set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, intending to be legally bound hereby, the parties agree as follows:

Article I.
DEFINITIONS

Section 1.01Definitions.  The following terms, as used herein, have the following meanings:“Applicable Law” means, with respect to any Person, any federal, state or local law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling or other similar requirement enacted, adopted, promulgated or applied by a Governmental Authority that is binding upon or applicable to such Person, as amended unless expressly specified otherwise.

“Cash Consideration” means an amount equal to $6,413,147.21

“Cash Consideration Portion” means, with respect to each Noteholder, the amount of cash payable to such Noteholder as set forth opposite such Noteholder’s name in Exhibit A.

“Code” shall have the same meaning as set forth in the Whitebox Loan Agreement.

“Common Stock” means the Company’s Common Stock as defined in the Certificate of Incorporation, in effect as of the date hereof.

“Contract” means any contract, agreement, arrangement or understanding, whether written or oral and whether express or implied.

“Daily Regular Interest Amount” means, with respect to each Noteholder, the amount set forth opposite such Noteholder’s name in Exhibit A.

“Denomination Cash Amount” means, with respect to each Noteholder, the cash amount payable to such Noteholder at the Closing as set forth opposite such Noteholder’s name on Exhibit A under the title “Denomination Cash Amount”.

“ERISA” shall have the same meaning as set forth in the Whitebox Loan Agreement.

“GAAP” means United States generally accepted accounting principles and practices as in effect on the date hereof.

“Global Security” shall have the meaning assigned to it in the New Indenture.

“Governmental Authority” means any transnational, domestic or foreign federal, state or local, governmental authority, department, court, agency or official, including any political subdivision thereof.

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“Guarantor” shall have the meaning set forth in the New Indenture.

“Law” means any statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or order of any Governmental Authority.

“Lien” shall have the meaning assigned to it in the New Indenture.

“Losses” means any losses, damages, liabilities, claims, interest, awards, judgments, penalties, costs and expenses (including reasonable attorneys’ fees, costs and other out-of-pocket expenses incurred in investigating, preparing or defending the foregoing).

“Majority Note holders” means Noteholders holding, in the aggregate, at least $87,800,000 of the principal amount of the Exchanged Notes.

“Material Adverse Effect” means a material adverse effect upon any of the conditions (financial or otherwise), business, assets or results of operations of the Company and its Subsidiaries taken as a whole or the ability of the Company to perform any of its obligations under this Agreement; provided, however, that Material Adverse Effect shall exclude any effect resulting or arising from (a) any change in any Applicable Law, (b) any change in economic conditions, (c) any change that is generally applicable to the industries in which the Company or any of its Subsidiaries operates, (d) any national or international political event or occurrence, including acts of war or terrorism, (e) the announcement of this Agreement and the consummation of the transactions contemplated hereby, provided that, with respect to clauses (a), (b), (c) and (d), the impact of such effect is not disproportionately adverse to the Company and its Subsidiaries taken as a whole.

“New Common Stock” means the shares of Common Stock to be issued to Noteholders under the terms hereunder.

“New Common Stock Amount” means 174,493,231shares of New Common Stock.

“New Common Stock Consideration” means, with respect to each Noteholder, the amount of New Common Stock to be issued to such Noteholder as specified opposite such Noteholder’s name in Exhibit C-1.

“New Convertible Notes” means the 8% Convertible Second Lien Debentures due 2014, issued by the Company pursuant to the New Indenture.

“New Convertible Notes Consideration” means, with respect to each Noteholder, the principal amount of New Convertible Notes to be issued to such Noteholder as specified opposite such Noteholder’s name on Exhibit C-2.

“New Indenture” means the Indenture governing the New Convertible Notes.

“Non-Participating Notes Amount” means $3,586,852.80

“New Securities” means the New Common Stock, New Convertible Notes and the Preferred Stock.

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“Other Transactions” means the transactions specifically described in the Restructuring Agreements, other than those contemplated by this Agreement.

“Person” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a Governmental Authority.

“Plan” shall have the same meaning as set forth in the Whitebox Loan Agreement.

“Preferred Stock” means the Series B Participating Non-Cumulative Convertible Preferred Stock of the Company having the rights and preferences set forth in the Certificate of Designations attached hereto as Exhibit B.

“Preferred Stock Consideration” means, with respect to each Noteholder listed on Exhibit C-3, the amount of shares of Preferred Stock set forth opposite such Noteholder’s name in Exhibit C-3.

“Real Estate Lease” means leases, including ground leases and space leases, pursuant to which the Company or any of its Subsidiaries leases or subleases any real property.

“Regular Interest Payment” means, with respect to each Noteholder, an amount equal to the product of (i) such Noteholder’s Daily Regular Interest Amount times the number of days from October 16, 2009 (inclusive) through the date hereof (inclusive).

“Reportable Event” shall have the same meaning as set forth in the Whitebox Loan Agreement.

“Restructuring Agreements” means the New Indenture, the Second Lien Security Documents (as defined in the New Indenture), and the Intercreditor Agreement (as defined in the New Indenture).

“Rights Agreement” means the Rights Agreement between the Company and EquiServe Trust Company, N.A., as Rights Agent, dated as of March 3, 2003 as amended, supplemented or restated thereafter).

“Second Lien Security Documents” shall have the meaning assigned to such term in the Indenture.

“Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations thereunder as the same shall be in effect at the time.

“Senior Lender” shall mean the Agent and the lenders under the Whitebox Loan Agreement.

“Senior Lender Paydown Amount” shall mean an amount equal $5,000,050.00, which amount includes the prepayment fee associated with a $5,000,000 paydown under the amounts due under the Whitebox Loan Agreement.

“Subsidiary” means, with respect to any Person, any other Person controlled by such

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first Person, directly or indirectly, through one or more intermediaries.

“Whitebox Loan Agreement” means that certain Loan Agreement dated as of August 23, 2007 by and among Whitebox VSC, Ltd, a limited partnership organized under the law of the British Virgin Islands, as agent thereunder (the “Agent”), the Company and certain lenders signatory thereto from time to time.

“Total Cash Consideration” means, with respect to each Noteholder, such Noteholder’s

(i)Cash Consideration Portion;

(ii)Regular Interest Payment; and

(iii)Denomination Cash Amount.

“Transfer Agent” means Computershare Investor Services.

“Trustee” shall have the meanings assigned to it in the Indenture and the New Indenture.

Each of the following terms is defined in the Section set forth opposite such term:

Term	Section
Agreement	Preamble
Balance Sheet	4.23
Board	5.03(f)
Bylaws	4.06
Certificate of Incorporation	4.06
Company	Preamble
Core Representation	7.04(a)
Closing	2.02
Closing Date	2.02
Disclosure Schedule	Article IV
DTC	2.03
Exchange	2.01(b)
Exchange Act	4.05(a)
Exchanged Notes	Recitals
Forbearance Agreement	Recitals
Indenture	Recitals
Initial Forbearance Agreement	Recitals
Intellectual Property	4.16
Litigation	4.07
Material Agreements	4.14
New Indenture	1.01
Notes	Recitals
Noteholder(s)	Preamble
Noteholder Indemnified Party	7.04(b)

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Original Repurchase Price	Recitals
SEC	Article IV
SEC Reports	Article IV
Trust Indenture Act	4.05(f)
Underlying Shares	6.04

Section 1.02Other Definitional and Interpretative Provisions.  The words “hereof,” “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof.  References to Articles, Sections, Exhibits and Schedules are to Articles, Sections, Exhibits and Schedules of this Agreement unless otherwise specified.  All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein.  Any capitalized terms used in any Exhibit or Schedule but not otherwise defined therein, shall have the meaning as defined in this Agreement.  Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular.  Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation,” whether or not they are in fact followed by those words or words of like import.  “Writing,” “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form.  References to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof; provided that with respect to any agreement or contract listed on any schedules hereto, all such amendments, modifications or supplements must also be listed in the appropriate schedule.  References to any Person include the successors and permitted assigns of that Person.  References from or through any date mean, unless otherwise specified, from and including or through and including, respectively.  References to “law,” “laws” or to a particular statute or law shall be deemed also to include any and all Applicable Law.

Article II.
EXCHANGE

Section 2.01Exchange.

(a)           Upon the terms and subject to the conditions of this Agreement, and in express reliance upon such terms and conditions and the representations, warranties and covenants of this Agreement, at the closing (the “Closing”) of the Exchange, each Noteholder shall be deemed to have exchanged the Exchanged Notes and the Company shall issue the New Securities and pay the Cash Consideration to the Noteholders (the “Exchange”) as follows:

(iv)          to each Noteholder, its New Common Stock Consideration;

(v)to each Noteholder, its New Convertible Notes Consideration;

(vi)to each Noteholder listed on Exhibit C-3, its Preferred Stock Consideration; and

(vii)to each Noteholder, its Total Cash Consideration. .

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(b)           The failure of any Person to perform the actions contemplated by this Agreement (including the failure to deliver any New Securities to the Noteholders in accordance with the terms hereof) shall not impair the rights and obligations of any party under this Agreement, and notwithstanding any such failure, except as specifically set forth in this Agreement, the parties shall endeavor in good faith to consummate the Exchange upon terms as close as practicable to those set forth herein.

Section 2.02Closing.  The Exchange shall take place at a closing (the “Closing”), and the Restructuring Agreements shall be released from escrow, to be held at the offices of Gibson, Dunn & Crutcher LLP, 200 Park Avenue, New York, NY 10166, at 10:00 a.m., on the first Business Day following the satisfaction or, to the extent permitted by Applicable Law, waiver of all conditions to the obligations of the parties set forth in Article V (other than such conditions as may, by their terms, only be satisfied at the Closing or on the Closing Date), or at such other place or at such other time or on such other date as the Company and the Noteholders mutually may agree in writing.  The day on which the Closing takes place is referred to as the “Closing Date.”

Section 2.03Delivery of the New Convertible Notes.  On or prior to the Closing Date, the Company shall deliver to the Trustee a signed Global Security, and the Company and the Noteholders shall deliver to the Trustee a written notice in the form attached hereto as Exhibit G instructing the Trustee to execute the New Indenture and to take such action as may be required to distribute the New Convertible Notes through the facilities of the Depository Trust Company (“DTC”) as set forth in Section 2.01 hereof.

Section 2.04Delivery of the New Common Stock.  At the Closing, the Company shall deliver to each of the Noteholders evidence from the DTC that the New Common Stock Consideration to which such Noteholder is entitled in accordance with Section 2.01 has been transferred from the Company’s respective accounts at DTC to the accounts of such Noteholder or its DTC participant in accordance with the terms hereof.

Section 2.05Delivery of the Preferred Stock.  At the Closing, the Company shall deliver to all Noteholders entitled to receive Preferred Stock Consideration, certificates evidencing the amount of shares of Preferred Stock to which such Noteholders are entitled.

Article III.
REPRESENTATIONS AND WARRANTIES OF THE
NOTEHOLDER

Each Noteholder, separately solely as to itself, and not jointly and severally, represents and warrants to the Company as of the date hereof and as of the Closing Date, that:

Section 3.01Existence.  The Noteholder is duly organized and validly existing under the laws of its jurisdiction of organization.

Section 3.02Authorization.  The execution, delivery and performance by the Noteholder of this Agreement and the consummation of the transactions contemplated hereby are within the Noteholder’s powers and have been duly authorized by all necessary action on the part of the Noteholder.  This Agreement constitutes a valid and binding agreement of the Noteholder.

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Section 3.03Governmental Authorization.  The execution, delivery and performance by the Noteholder of this Agreement and the consummation of the transactions contemplated hereby require no action by or in respect of, or filing with, any Governmental Authority, by the Noteholder.

Section 3.04Noncontravention.  The execution, delivery and performance by the Noteholder of this Agreement and the consummation of the transactions contemplated hereby do not and will not (i) violate the organizational documents of the Noteholder or any Applicable Law binding upon the Noteholder, or (ii) require any consent or other action by any Person under, constitute a default under, or give rise to any right of termination, cancellation or acceleration of any right or obligation of the Noteholder under any provision of any agreement or other instrument binding upon the Noteholder.

Section 3.05Ownership of Exchanged Notes.  The Noteholder is the beneficial owner of the Exchanged Notes described on Exhibit A opposite such Noteholder’s name.

Article IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Noteholder, as of the date hereof, and as of the Closing Date, that, subject in each case to any information set forth in the appropriate section of the disclosure schedule of the Company accompanying this Agreement and made a part hereof (the “Disclosure Schedule”), and the disclosure of any item in reasonable detail in the Company’s  reports on the following forms filed with the Securities and Exchange Commission (the “SEC”) since January 1, 2008 (the “SEC Reports”) (other than cautionary or hypothetical disclosures in any “Risk Factors” or any other similar sections that are predictive or forward-looking in nature): the Company’s Annual Report on form 10-K, the Company’s Quarterly Reports on form 10-Q and the Company’s Current Reports on form 8-K, which shall constitute disclosure or, as applicable, exclusion of that item for the Disclosure Schedule where the relevance of that item as an exception to (or a disclosure for the purposes of) the applicable representations and warranties and covenants is reasonably apparent to a third person who is not familiar with the Company.

Section 4.01Corporate Existence; Good Standing.  The Company, and each of its Subsidiaries, is a corporation duly incorporated, validly existing and in good standing under the laws of the incorporation and has the requisite corporate power to own, lease and operate its properties and assets and to conduct its business as it is now being conducted.  The Company, and each of its Subsidiaries, is duly qualified or licensed as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted or property owned by it makes such qualification or licensing necessary, except where the failure to be so qualified or licensed would not have a Material Adverse Effect.

Section 4.02Corporate Authorization.  The execution, delivery and performance by the Company of this Agreement and the consummation of the transactions contemplated hereby: (i) are within the corporate powers of the Company, (ii) have been duly authorized by all necessary action on the part of the Company and (iii) as of the Closing will not violate any other agreement to which the Company is a party or its assets bound, which violation could reasonably

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be expected to result in a Material Adverse Effect.  This Agreement, the Restructuring Agreements and the New Convertible Notes, each constitute a valid and binding agreement or obligation of the Company, enforceable against the Company in accordance with their terms.

Section 4.03Governmental Authorization.  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 Company to authorize, or is required in connection with the execution, delivery and performance of, or the legality, validity, binding effect or enforceability of, this Agreement, except for any necessary filing or recordation of or with respect to any of the New Securities.  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 New Securities to which it is a party, except for any necessary filing or recordation of or with respect to any of the Restructuring Agreements.

Section 4.04Noncontravention.  The execution, delivery and performance by the Company of this Agreement will not (a) violate any provision of any Applicable Law, (b) violate or contravene any provision of the Certificate of Incorporation or bylaws of the Company, 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 Company 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 Restructuring Agreement to which it is a party will not (a) violate any provision of any Applicable Law, (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 Section 4.04 of the Disclosure Schedule, neither the Company nor any Subsidiary is in default under or in violation of any such Applicable Law 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 Effect.

Section 4.05Capitalization; Issuance; Registration Exemption.

(a)           The authorized capital stock of the Company is 500,000,000 shares designated as Common Stock, of which 230,905,580 are issued and outstanding immediately prior to the Closing.  Section 4.05 of the Disclosure Schedule sets forth a complete and accurate option capitalization table identifying the number of warrants and options to acquire capital stock of the Company and the exercise price thereof.  There are no accrued but unpaid dividends or other distributions payable on the capital stock of the Company.  All of the outstanding shares of capital stock of the Company have been duly authorized and validly issued, are fully paid and nonassessable, and were not issued in violation of, and are not subject to, any preemptive or similar rights.  The Company has not issued any preferred stock.  The Company has not issued Common Stock, options, restricted stock or securities convertible into or exchangeable for Common Stock since October 1, 2009 through the date hereof.  As of the Closing Date, assuming immediate conversion of the Preferred Stock, the New Common Stock and the shares of

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Common Stock issuable upon conversion of the Preferred Stock, will in the aggregate constitute approximately 51.99% of the then issued and outstanding shares of Common Stock.

(b)           At the time of Closing, Company will have sufficient shares of unreserved and unrestricted Common Stock to allow the issuance of the New Common Stock, and the conversion of the Preferred Stock.

(c)           Upon issuance in accordance with the terms hereof, the New Common Stock and the Preferred Stock will (i) have been duly authorized by all necessary corporate action, (ii) be validly issued and outstanding, fully paid and non-assessable, free of restrictions on transfer; and each Noteholder shall receive good, valid and marketable title to their respective shares of New Common Stock and Preferred Stock, if any, delivered to such Noteholder hereunder, free and clear of any Lien.

(d)           Upon issuance in accordance with the terms hereof and authenticated by the Trustee, the New Convertible Notes will be (i) valid and binding obligations of the Company, enforceable in accordance with their respective terms, (ii) entitled to the benefits of the New Indenture, and (iii) free of restrictions on transfer; and each Noteholder shall receive good, valid and marketable title to their respective New Convertible Notes delivered to such Noteholder hereunder, free and clear of any Lien.

(e)           The shares of common stock issuable upon conversion of the Preferred Stock (the “Underlying Shares”) have been duly authorized for issuance by all necessary corporate action, and upon the issuance of the Underlying Shares upon conversion of the Preferred Stock will be validly issued and outstanding, fully paid and non-assessable, free of restrictions on transfer; and each converting holder shall receive good, valid and marketable title to their respective amount of Underlying Shares delivered to such converting holder, free and clear of any Lien.

(f)            Upon obtaining stockholder approval of an amendment to the Company’s certificate of incorporation to authorize additional shares of common stock, the shares of common stock issuable upon conversion of the New Convertible Notes will have been duly authorized for issuance by all necessary corporate action, and upon the issuance of such shares upon conversion of the New Convertible Notes will be validly issued and outstanding, fully paid and non-assessable, free of restrictions on transfer; and each converting holder shall receive good, valid and marketable title to their respective amount of such shares delivered to such converting holder, free and clear of any Lien.

(g)           The exchange of the Exchanged Notes for the New Securities and the issuance of the New Common Stock, the Preferred Stock and the New Convertible Notes will not trigger any preemptive rights or any other similar rights of any party to purchase or receive shares of capital stock or rights with respect thereof.  The Company has amended the Rights Agreement as of the date hereof so that the entry into this Agreement and the transactions contemplated hereby do not trigger any rights under the Rights Agreement and so that the Rights Agreement will terminate as of the Closing Date (the “Rights Agreement Amendment”).

(h)           The exchange of the Exchanged Notes for the New Securities is being consummated pursuant to Sections 3(a)(9) and Rule 149 of the Securities Act.  The Company has not engaged in any general solicitation or engaged or agreed to compensate any broker or agent to solicit any exchanges of securities contemplated by this Agreement.  None of the Company, its Subsidiaries,

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any of their affiliates, and any person acting on their 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 require registration of any of the New Securities under the Securities Act or cause the exchange contemplated hereunder to be integrated with prior offerings by the Company for purposes of Securities Act or any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or designated.  None of the Company, its subsidiaries, their affiliates and any person acting on their behalf will take any action or steps referred to in the preceding sentence that would require registration of any of the New Securities under the Securities Act or cause the exchange of the New Securities to be integrated with other offerings.

(i)The Company has taken all necessary action to comply in all material respects with the requirements of the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”), in connection with the New Indenture and to ensure that the New Convertible Notes will be DTC eligible.

(j)The Company is current in its filings of all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Act of 1934, as amended (the “Exchange Act”).  Upon issuance, the New Securities are eligible for sale by the Noteholders without registration under the Securities Act.

(k)Except as set forth in Section 4.05(h) of the Disclosure Schedule, the Company confirms that neither it nor any other person acting on its behalf has provided the Noteholders or their agent or counsel with any information that as of the date hereof, constitutes material, nonpublic information about the Company.

(l)The Company agrees that before the trading officially begins on the New York Stock Exchange on the first trading day following the date hereof, the Company shall file a Current Report on Form 8-K with the SEC announcing this Agreement and the transactions contemplated hereby and disclosing all material information regarding the exchange contemplated hereunder, including the information provided in Section 4.25 of the Disclosure Schedules.

Section 4.06Certificate of Incorporation and Bylaws.  True, complete and correct copies of (i) the Company’s current Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) and (ii) the Company’s current Bylaws (the “Bylaws”), are attached as Exhibits E-1 and E-2.

Section 4.07Litigation.  Except as set forth in Section 4.7 of the Disclosure Schedule, there are no actions, suits or proceedings (each a “Litigation”) pending or, to the knowledge of the Company, threatened against or affecting the Company 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 Company or any Subsidiary, would constitute a Material Adverse Effect, and there are no unsatisfied judgments against the Company or Subsidiary, the satisfaction or payment of which would constitute a Material Adverse Effect.

Section 4.08Title to Properties.  Each of the Company and the Subsidiaries has (a) good and marketable title to its real properties and (b) good and sufficient title to, or valid,

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subsisting and enforceable leasehold interest in, its other material properties, including all real properties, other properties and assets, reflected as owned by the Company and its Subsidiaries in the most recent financial statement included in the Company’s Report on Form 10-Q for the three months ended June 30, 2009 (other than property disposed of since the date of such financial statements in the ordinary course of business).  Except as set forth in Section 4.08 of the Disclosure Schedule, there are no actual, threatened or alleged defaults with respect to any leases of real property under which any Company or any of its Subsidiaries is lessee or lessor which could reasonably be expected to result in a Material Adverse Effect.  None of such properties is subject to a Lien, except for Liens permitted pursuant to Section 6.13 of the Whitebox Loan Agreement.  The Company has not subordinated any of its rights under any obligation owing to it to the rights of any other person.

Section 4.09Taxes.  Except as set forth in Section 4.9 of the Disclosure Schedule, each of the Company 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 Company).  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 Company in respect of taxes and other governmental charges are adequate and the Company knows of no proposed material tax assessment against it or any Subsidiary or any basis therefor.

Section 4.10No Material Adverse Effect.  Except as specified in Section 4.10 of the Disclosure Schedule, since January 1, 2009, there have been no events or changes in facts or circumstances affecting the business of the Company which individually or in the aggregate have had or would reasonably be expected to have a Material Adverse Effect and that have not been disclosed herein or in the Company’s SEC Reports.

Section 4.11ERISA.  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, except where the failure to be in compliance would not have a Material Adverse Effect.  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 Noteholders) of such Plan’s projected benefit obligations did not exceed the fair market value of such Plan’s assets.

Section 4.12Environmental Matters.  There does not exist any violation by the Company 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

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relating to environmental, pollution, health or safety matters which has, will or threatens to impose, a material liability on the Company or a Subsidiary or which has required or would require a material expenditure by the Company or a Subsidiary to cure.  Neither the Company 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 noncompliance or remedial action could reasonably be expected to constitute a Material Adverse Effect.  Except as set out in Section 4.12 of the Disclosure Schedule, the Company 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 Effect.

Section 4.13Subsidiaries.  Except as set forth in Section 4.13 of the Disclosure Schedule, the Company does not have any direct or indirect Subsidiaries.

Section 4.14Material Agreements.  The Company has filed with the SEC all material agreements required to be filed pursuant to Item 601(b)(4) or (10) of Regulation S-K promulgated by the Securities and Exchange Commission (the “Material Agreements”).

Section 4.15Insurance.  The properties of the Company and its Subsidiaries are insured with nationally reputable insurance companies not affiliates of the Company or its Subsidiaries, in such amounts with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Company or the applicable Subsidiary operates.

Section 4.16Intellectual Property.  Each of the Company 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 (collectively, “Intellectual Property”), without known conflict with the rights of others, except where such conflict would not result in a Material Adverse Effect.

Section 4.17Labor and Employment Matters.  There are no pending or threatened strikes, lockouts or slowdowns against the Company or any Subsidiary.  Neither the Company 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 Company 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 Company or such Subsidiary, except where the failure to do so would not have a Material Adverse Effect.  The consummation of the transactions contemplated under this Agreement 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 Company or any Subsidiary is bound.

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Section 4.18Disclosure.  Subject to the following sentence, no certificate, written statement, exhibit or report furnished by or on behalf of the Company 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 Company to the Noteholders 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 Company, and the Company has no reason to believe that such projections or forecasts are not reasonable.

Section 4.19Burdensome Restrictions.  Except as set forth in Section 4.19 of the Disclosure Schedule, neither the Company 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 that would foreseeably constitute a Material Adverse Effect.

Section 4.20Retirement Benefits.  Except as required under Section 4980B of the Code, Section 601 of ERISA or applicable state law, the Company is not obligated to provide post-retirement medical or insurance benefits with respect to employees or former employees.

Section 4.21Subsidiaries.  Section 4.21 of the Disclosure Schedule 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 Company or any Subsidiary therein, and the jurisdiction of incorporation of each Subsidiary.  As of the Closing Date, the Company and the Guarantors collectively own at least 95% of the total assets, whether tangible or intangible, of the Company and all Subsidiaries taken as a whole.

Section 4.22Solvency.  After the issuance of the New Securities 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 saleable 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 Closing Date.

Section 4.23Absence of Undisclosed Liabilities.  Except as and to the extent adequately accrued or reserved against in the balance sheet of the Company as at June 30, 2009  (such balance sheet, together with all related notes and schedules thereto, the “Balance Sheet”), the Company has no liability or obligation of any nature, whether accrued, absolute, contingent or otherwise, known or unknown and whether or not required by GAAP to be reflected on a balance sheet of the Company, except for (a) liabilities and obligations incurred in the ordinary course of business consistent with past practice since the date of the Balance Sheet that are not, individually or in the aggregate, material to the Company, and (b) the obligations under the Notes.

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Section 4.24Company SEC Reports.  Except as set forth in Section 4.24 of the Disclosure Schedule, each of the Company and the Subsidiaries has filed or furnished, as applicable, on a timely basis all SEC Reports.  Each of the SEC Reports, at the time of its filing or being furnished, complied in all material respects with the applicable requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act of 2002, and any rules and regulations promulgated thereunder applicable to the SEC Reports.  As of their respective dates (or, if amended prior to the date hereof, as of the date of such amendment), the SEC Reports did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading.

Section 4.25Financial Information Disclosure.  On or prior to the date hereof, the Company has delivered to each of the Noteholders the information set forth on Section 4.25 of the Disclosure Schedules (the “Q4 2009 Financial Information”), which information superceded any similar information previously provided to any Noteholder.  As of the date hereof, the Q4 2009 Financial Information does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading

Article V.
CONDITIONS TO CLOSING

Section 5.01General Conditions.  The respective obligations of the Company and the Noteholders to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions, any of which may, to the extent permitted by applicable Law, be waived in writing by either party in its sole discretion (provided, that each party may only waive an obligation of the other party):

(a)No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Applicable Law (whether temporary, preliminary or permanent), including any Applicable Law that may be administered by the U.S. Department of Treasury’s Office of Foreign Assets Controls that is then in effect and that enjoins, restrains, makes illegal or otherwise prohibits the consummation of the transactions contemplated by this Agreement.

Section 5.02Conditions to Obligations of the Company.  The obligations of the Company to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions, any of which may be waived in writing by the Company in its sole discretion:

(a)The Company shall have received an executed counterpart of this Agreement, signed by the Majority Noteholders;

(b)The Company shall have received an executed counterpart of each of the Restructuring Agreements, signed by the Trustee;

(c)The Noteholders shall have delivered written instructions to the Trustee to effect the delivery and exchange of the Exchanged Notes as contemplated hereby; and

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(d)The representations and warranties of the Noteholders contained in this Agreement or any certificate delivered pursuant hereto shall be true and correct both when made and as of the Closing Date, or in the case of representations and warranties that are made as of a specified date, such representations and warranties shall be true and correct as of such specified date; except where the failure to be so true and correct would not, individually or in the aggregate, be material.  Each Noteholder shall have performed all obligations and agreements and complied with all covenants and conditions required by this Agreement to be performed or complied with by it prior to or at the Closing.  The Company shall have received from each Noteholder a certificate to the effect set forth in the preceding sentences, signed by a duly authorized officer thereof.

Section 5.03Conditions to Obligations of the Noteholders.  The obligations of each Noteholder to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions, any of which may be waived in writing by such Noteholder in its sole discretion:

(a)Each Noteholder shall have received an executed counterpart of this Agreement, signed by (i) the Company and (ii) Majority Noteholders;

(b)The Noteholders shall have received an executed counterpart of each of the Restructuring Agreements, signed by (i) the Company and (ii) the Trustee;

(c)The representations and warranties of the Company contained in this Agreement or any certificate delivered pursuant hereto shall be true and correct both when made and as of the Closing Date, or in the case of representations and warranties that are made as of a specified date, such representations and warranties shall be true and correct as of such specified date, except where the failure to be so true and correct (without giving effect to any limitation or qualification for all representations and warranties other than those contained in Section 4.25 as to “materiality” or “Material Adverse Effect” set forth therein) would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  The Company shall have performed all obligations and agreements and complied with all covenants and conditions required by this Agreement to be performed or complied with by it prior to or at the Closing.  The Noteholders shall have received from the Company a certificate to the effect set forth in the preceding sentences, signed by a duly authorized officer thereof.

(d)Each Noteholder shall have received such Noteholder’s New Convertible Notes Consideration through the facilities of DTC;

(e)The Company shall have delivered, and each Noteholder shall have received, such Noteholder’s New Common Stock Consideration

(f)The Company shall have delivered to each Noteholder entitled to receive Preferred Stock Consideration, a certificate evidencing the number of shares of Preferred Stock to which such Noteholder is entitled;

(g)The Company shall have deposited by wire transfer to each Noteholder, at its designated bank account, such Noteholder’s Total Cash Consideration.

(h)Each Noteholder shall have received the accrued and unpaid Forbearance Interest (as defined in the Exchange Forbearance Agreement), if any, on the Exchanged Notes;

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(i)The Company shall have paid by wire transfer to the Senior Lender, the Senior Lender Paydown Amount.

(j)The Company shall have paid the legal fees and expenses of Gibson, Dunn & Crutcher incurred by the Noteholders in connection with the transactions contemplated hereby.

(k)The Company shall have paid by wire transfer to the Trustee of the Non-Participating Notes Amount, to allow distribution to each holder of Notes that is not a Noteholder, the amounts owned to such holder under the Notes.

(l)The Company shall have paid by wire transfer to the Trustee the Trustee’s fees and expenses (including reasonable counsel expenses) related to the transactions contemplated hereby and under the Restructuring Agreements, together with any other fees and expenses (including reasonable counsel expenses)  owed to the Trustee as of the Closing Date.

(m)The Company shall deliver the following documents prior to the Closing:

(i)written instructions signed by the Company to the Transfer Agent that instruct the Transfer Agent to issue to each Noteholder, such Noteholder’s New Common Stock Consideration;

(ii)copies, signed by the Company, of all documents necessary to execute the New Indenture, which documents are subject to the satisfaction of the Trustee, including the New Indenture, an Officers’ Certificate and Legal Opinion pursuant to Sections 15.5 and 15.6 of the New Indenture, a Legal Opinion pursuant to Section 314 of the Trust Indenture Act, the Intercreditor Agreement (as defined in the New Indenture) and all Second Lien Security Documents (as defined in the New Indenture);

(iii)a signed Global Security, accompanied by an executed written notice in the form attached hereto as Exhibit G; and

(iv)an Instruction to the Trustee to cancel the Noteholder’s Exchanged Notes;

(n)Each Noteholder shall have received a copy of the legal opinion of Perkins Coie LLP, counsel to the Company, substantially in the form attached hereto as Exhibit D;

(o)Each Noteholder shall have received resolutions or other authorizations of the Company, certified by the appropriate officers of the Company as being in full force and effect as of the time of the Closing, authorizing the entry into this Agreement by the Company, the transactions contemplated hereby and the Other Transactions and the Rights Agreement Amendment;

(p)The SEC has declared the form T-3 qualifying the New Indenture under the Trust Indenture Act;

(q)The New Convertible Notes shall have been made DTC eligible; and

17

(r)To the extent a majority of the Noteholders shall have delivered to the Company a list of candidates meeting the criteria set forth in Exhibit H hereto to be considered for appointment to the Board(the “Candidates”) prior to November 2, 2009, which list shall consist of not less than four Candidates (the “Nominee List”), the Board shall have appointed two Candidates to the Board, to hold office until the next stockholders’ election of directors and the Board shall taken all necessary action to set the size of the Board at six directors.

Article VI.
COVENANTS

Section 6.01Conduct of Business Prior to the Closing.  Between the date of this Agreement and the Closing, without the prior consent of the Noteholders (which consent shall not be unreasonably withheld), the Company shall cause the Company and its Subsidiaries not to:

(a)amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents;

(b)issue, sell, pledge, dispose of or otherwise subject to any Lien (i) any shares of capital stock of the Company or any of its Subsidiaries, or any options, warrants, convertible securities or other rights of any kind to acquire any such shares, or any other ownership interest in the Company or any of its Subsidiaries or (ii) any properties or assets of the Company or any of its Subsidiaries, other than sales or transfers of inventory or accounts receivable in the ordinary course of business consistent with past practice;

(c)declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, or make any other payment on or with respect to any of its capital stock, except for dividends by any direct or indirect wholly owned Subsidiary of the Company to the Company;

(d)reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of its capital stock or make any other change with respect to its capital structure;

(e)acquire any corporation, partnership, limited liability company, other business organization or division thereof or any material amount of assets;

(f)adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries, or otherwise alter the Company’s or a Subsidiary’s corporate structure;

(g)incur any indebtedness for borrowed money or issue any debt securities in excess of $50,000 individually or $100,000 in the aggregate;

(h)authorize, or make any commitment with respect to, any single capital expenditure that is in excess of $100,000 or capital expenditures that are, in the aggregate, in excess of $250,000 for the Company and its Subsidiaries taken as a whole;

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(i)grant or announce any increase in the salaries, bonuses or other benefits payable by the Company or any of its Subsidiaries to any of their employees, other than as required by Law, pursuant to any plans, programs or agreements existing on the date hereof or other ordinary increases not inconsistent with the past practices of the Company or such Subsidiary;

(j)take any action, or intentionally fail to take any action, that would cause any representation or warranty made by the Company in this Agreement or any Restructuring Agreement to be untrue such that the conditions set forth in Section 5.03(c) would not be satisfied or result in a material breach of any covenant made by the Company in this Agreement or any Restructuring Agreement, or that has or would reasonably be expected to have a Material Adverse Effect; or

(k)announce an intention, enter into any formal or informal agreement, or otherwise make a commitment to do any of the foregoing.

Provided, however, that notwithstanding anything to the contrary above, the Company may take any of the actions listed in clauses (g)-(j) (or in (k) to the extent it involves any of such actions) in the ordinary course of business without the Noteholder’s written consent.

Section 6.02SEC Filings.  The Company agrees and covenants to stay current from the date hereof and until the Closing Date in its filings of all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Exchange Act, as amended.  No report filed by the Company with the SEC Reports will contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading.

Section 6.03Issuance Fees.  The Company shall be responsible for the fees and expenses, including the DTC fees associated with the issuance of the New Securities hereunder.

Section 6.04Beneficial Ownership of Notes.  Each Noteholder shall deliver for exchange the Exchanged Notes held by such Noteholder free and clear of any Lien and any other limitation or restriction.  No Noteholder shall sell, transfer or dispose Exchanged Notes unless the transferee of such Exchanged Notes executed a joinder to this Agreement pursuant to which such transferee is deemed a Noteholder under this Agreement, provided that no such transfer will require the Company to issue more New Preferred Stock than is currently authorized.

Section 6.05Further Assurances.  Upon the terms and subject to the conditions hereof, each of the parties hereto shall use all commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all other things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated by this Agreement, to obtain in a timely manner all necessary waivers, consents and approvals and to effect all necessary registrations and filings, and to otherwise satisfy or cause to be satisfied all conditions precedent to its obligations under this Agreement, including not taking any action, or permitting any action to be taken or reasonable action to not be taken, which is inconsistent with this Agreement.

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Section 6.06         Filing of Form T-3 and DTC Eligibility Documents.  As soon as practical and in no event later than October 25, 2009 the Company shall file (i) with the SEC Form T-3 to qualify the New Indenture under the Trust Indenture Act, and (ii) any and all documents necessary to ensure that the New Convertible Notes will be DTC eligible.

Section 6.07         Board of Directors.  A majority of the Noteholders shall deliver the Nomineee List to the Company prior to November 2, 2009.  To the extent that a majority of the Noteholders have delivered the Nominee List by such date, the Board shall appoint two Candidates to the Board, to hold office until the next stockholders' election of directors and the Board shall take all necessary action to set the size of the Board at six directors.

Article VII.
MISCELLANEOUS

Section 7.01         Communications.  All communications and notices provided for hereunder shall be sent by personal delivery, nationally recognized overnight courier, facsimile or registered or certified mail, to the Company at the address set forth below and the Noteholders at their addresses set forth below, or to such other address with respect to any party as such party shall notify the other parties hereto in writing.  Any notice required to be given hereunder by one party to another shall be deemed to have been received (i) when delivered, if personally delivered or sent via facsimile, or (ii) one day following delivery to a nationally recognized overnight courier or (iii) on the third business day following the date on which the piece of mail containing such communication is posted, if sent by certified or registered mail.

If to the Company, to:

Vitesse Semiconductor Corporation

741 Calle Plano

Camarillo, CA  93012

Attention: General Counsel and Chief Financial Officer

Telephone:  (805) 388-3700
Facsimile:  (805) 388-7565

with a copy to:

Perkins Coie LLP

101 Jefferson Drive

Menlo Park, CA

Fax:  650-838-4350

Attention:  Bruce M. McNamara

If to the Noteholders, to the addresses specified:

Aristeia Capital LLC
136 Madison Avenue, 3rd Floor
New York, NY  10016
Fax:  212-842-8901
Attention:  Andrew Anderson

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Cannell Capital LLC’s main office is located at:
240 E. Deloney Avenue
P.O. Box 3459
Jackson, WY 83001
Fax:  415-362-8512
Attention:  Rich Van Doren

CNH Partners LLC
2 Greenwich Plaza, 1st Floor
Greenwich, CT  06830
Fax:  203-742-3072
Attention:  Todd Pulvino

Linden Advisors LP
590 Madison Avenue, 15th Floor
New York, NY  10022
Fax:  646-840-3625
Attention:  Andy Chang

Whitebox Advisors
3033 Excelsior Boulevard, Suite 300
Minneapolis, MN  55416
Fax:  612-253-6100
Attention:  Robert Vogel

RBS Global Banking & Markets

600 Washington Boulevard

Stamford, CT 06901

Attention:  Russell Brenner

Email: russell.brenner@rbs.com

with a copy to:

Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, NY  10166
Fax:  212-351-4035
Attention:  Matthew J. Williams

If to the Trustee

U.S. Bank National Association
633 West 5th Street, 24th Floor
Los Angeles, CA  90071
Fax:  213-615-6196
Attention:  Stephen Rivero

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with a copy to:

Maslon Edelman Borman & Brand, LLP
90 South 7th Street, Suite 3300
Minneapolis, MN  55402
Fax:  612-642-8342
Attention:	Kesha Tanabe
	Clark Whitmore

Section 7.02         Amendments and Waivers.

(a)           Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by each Noteholder and the Company.

(b)           No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

Section 7.03Successors and Assigns.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided that no party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of each other party hereto; provided however, that, any Noteholder may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of each other party hereto to any transferee of the Exchanged Notes that executes a joinder to this Agreement pursuant to which such transferee is deemed a Noteholder under this Agreement, provided that no such transfer will require the Company to issue more New Preferred Stock than is currently authorized

Section 7.04         Survival; Indemnification.

(a)           Survival.  The representations, warranties and covenants of the Noteholders contained in this Agreement shall survive until the fifth anniversary of the Closing.  The representations, warranties and covenants of the Company contained in this Agreement (including any schedule, certificate or other document delivered pursuant hereto or thereto) shall survive until the fifth anniversary of the Closing; provided, however, that: (i) the representations and warranties set forth in Sections 4.01 (Corporate Existence; Good Standing), 4.02 (Corporate Authorization) and 4.05 (Capitalization; Issuance; Registration Exemption) (each, a “Core Representation”) shall survive indefinitely; (ii) the representations and warranties set forth in Sections 4.09 (Taxes) and 4.12 (Environmental Matters) shall survive until the close of business on the 120th day following the expiration of the statute of limitations applicable to the liabilities described therein (giving effect to any waiver, mitigation or extension thereof); and (iii) any representation or warranty, in the case of a knowing or intentional misrepresentation, other than the Core Representations, which shall survive indefinitely in any case, shall survive until the statute of limitations expires as to such act.

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(b)           Indemnification.

(i)            Each Noteholder, solely as to its own actions and not jointly and severally, hereby indemnifies the Company and its successors and assignees (each, a “Company Indemnified Party”) against, and agrees to hold each of them harmless from, any and all Losses incurred or suffered, directly or indirectly, by the Company or any of its successors and assignees arising out of any misrepresentation or breach of warranty or breach of covenant or agreement made or to be performed by that Noteholder in this Agreement (including any schedule, certificate or other document delivered pursuant hereto or thereto).

If the transactions contemplated hereby are consummated, the Company hereby expressly reserves the right to seek indemnity or other remedy for any Losses arising out of or relating to any breach of any representation or warranty contained herein, notwithstanding any investigation by, disclosure to or knowledge of such party in respect of any fact or circumstances that reveals the occurrence of any such breach, whether before or after the execution and delivery hereof.

(ii)           The Company hereby indemnifies each Noteholder and its successors and assignees (each, a “Noteholder Indemnified Party”) against, and agrees to hold each of them harmless from, any and all Losses incurred or suffered, directly or indirectly, by that Noteholder or any of its successors and assignees arising out of any misrepresentation or breach of warranty or breach of covenant or agreement made or to be performed by the Company in this Agreement (including any schedule, certificate or other document delivered pursuant hereto or thereto).

If the transactions contemplated hereby are consummated, each Noteholder hereby expressly reserves the right to seek indemnity or other remedy for any Losses arising out of or relating to any breach of any representation or warranty contained herein, notwithstanding any investigation by, disclosure to or knowledge of such party in respect of any fact or circumstances that reveals the occurrence of any such breach, whether before or after the execution and delivery hereof.

After the Closing, this Section 7.04(b) will provide the exclusive remedy of the Company or the Noteholders for any breach of any representation, warranty, covenant or other claim arising out of or relating to this Agreement and/or the transactions contemplated hereby.

Section 7.05Termination.  This Agreement may be terminated at any time prior to the Closing:

(a)           by any Noteholder, if the Closing shall not have occurred by November 16, 2009; provided, that the right to terminate this Agreement under this Section 7.05(a) shall not be available to such Noteholder if the failure of such Noteholder so requesting termination to fulfill any obligation under this Agreement shall have been the cause of, or shall have resulted in, the failure of the Closing to occur on or prior to such date, and provided, further, that this Agreement shall not terminate, other than with respect to such terminating Noteholder(s) (and this Agreement shall be void and of no effect with respect to such terminating Noteholder), pursuant to this Section 7.05(a), if the Majority

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Noteholders inform the Company in writing within five business days of such termination that this Agreement should not terminate pursuant to this Section 7.05(a).

(b)           by any Noteholder or the Company in the event that any Governmental Authority shall have issued an order, decree or ruling or taken any other action restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement and such order, decree, ruling or other action shall have become final and nonappealable; provided, that the party so requesting termination shall have used its commercially reasonable efforts, in accordance with Section 6.05, to have such order, decree, ruling or other action vacated; or

(c)           By the Majority Noteholders, if between the date hereof and the Closing, an event or condition occurs that has or is reasonably likely to have a Material Adverse Effect.

The party seeking to terminate this Agreement pursuant to this Section 7.05 (other than Section 7.01) shall give prompt written notice of such termination to the other party.

Section 7.06         Governing Law.  This Agreement shall be governed by and construed in accordance with the law of the State of New York, without regard to the conflicts of law rules of such state that would result in the application of the law of another jurisdiction.

Section 7.07Fees and Expenses.  The Company shall pay on or prior to the Closing Date the legal fees and expenses of Gibson, Dunn & Crutcher incurred by the Noteholders in connection with the transactions contemplated hereby.

Section 7.08Jurisdiction.  Each of the parties irrevocably agrees that any legal action or proceeding arising out of or relating to this Agreement brought by the other party or its successors or assigns shall be brought and determined in any New York State or federal court sitting in the Borough of Manhattan in The City of New York (or, if such court lacks subject matter jurisdiction, in any appropriate New York State or federal court), and each of the parties hereby irrevocably submits to the exclusive jurisdiction of the aforesaid courts for itself and with respect to its property, generally and unconditionally, with regard to any such action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby.  Each of the parties agrees not to commence any action, suit or proceeding relating thereto except in the courts described above in New York, other than actions in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such court in New York as described herein.  Each of the parties further agrees that notice as provided herein shall constitute sufficient service of process and the parties further waive any argument that such service is insufficient.  Each of the parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, (a) any claim that it is not personally subject to the jurisdiction of the courts in New York as described herein for any reason, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or

24

proceeding is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.

Section 7.09Waiver of Jury Trial.  EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES (TO THE EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER, RELATING TO, OR CONNECTED WITH THIS AGREEMENT, OR ANY OTHER AGREEMENT, INSTRUMENT OR DOCUMENT CONTEMPLATED HEREBY OR DELIVERED IN CONNECTION HEREWITH AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES TO ENTER INTO THIS AGREEMENT.

Section 7.10Counterparts; Effectiveness; Third Party Beneficiaries.  This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.  This Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by all of the other parties hereto.  Until and unless each party has received a counterpart hereof signed by the other party hereto, this Agreement shall have no effect and no party shall have any right or obligation hereunder (whether by virtue of any other oral or written agreement or other communication).  No provision of this Agreement is intended to confer any rights, benefits, remedies, obligations, or liabilities hereunder upon any Person other than the parties hereto and their respective successors and assigns.

Section 7.11Entire Agreement.  This Agreement and the Restructuring Agreements constitute the entire agreement among the parties with respect to the subject matter of this Agreement and supersedes all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter of this Agreement.

Section 7.12Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other Governmental Authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.  Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

Section 7.13Specific Performance.  The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof in addition to any other remedy to which they are entitled at law or in equity.

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IN WITNESS WHEREOF, the parties hereto have caused this Debt Conversion Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

COMPANY:	Vitesse Semiconductor Corporation
	By:	/s/ Christopher R. Gardner
	Name:	Christopher R. Gardner
	Title:	Chief Executive Officer

NOTEHOLDERS:

AQR Absolute Return Master Account, L.P.
By:	/s/ Brendan R. Kalb
Name:	Brendan R. Kalb
Title:	Associate General Counsel
Aristeia Master, L.P.
By:	/s/ William R. Techar
Name:	William R. Techar
Title:	Member of the Investment Manager
Aristeia Partners, L.P.
By:	/s/ William R. Techar
Name:	William R. Techar
Title:	Member of the Investment Manager
CNH CA Master Account, L.P.
By:	/s/ Brendan R. Kalb
Name:	Brendan R. Kalb
Title:	Authorized Signatory

Linden Capital, L.P.
By:	/s/ Craig Jarvis
Name:	Craig Jarvis
Title:	Authorized Signatory
Whitebox Advisors, LLC, for and on behalf of its client accounts
By:	/s/ Jonathan Wood
Name:	Jonathan Wood
Title:	COO
Tonga Partners, L.P.
By:	/s/ J. Carlo Cannell
Name:	J. Carlo Cannell
Title:	Managing Member, Cannell Capital, LLC
Tonga Partners QP, L.P.
By:	/s/ J. Carlo Cannell
Name:	J. Carlo Cannell
Title:	Managing Member, Cannell Capital, LLC

Anegada Master Fund, LTD.
By:	/s/ J. Carlo Cannell
Name:	J. Carlo Cannell
Title:	Managing Member, Cannell Capital, LLC
Cuttyhunk Master Portfolio
By:	/s/ J. Carlo Cannell
Name:	J. Carlo Cannell
Title:	Managing Member, Cannell Capital, LLC
ABN AMRO Bank N.V., London Branch
By:	RBS Securities Inc. as agent for ABN AMRO Bank N.V., London Branch
By:	/s/ William Donzeiser
Name:	William Donzeiser
Title:	Authorized Signature

EX-10.2

Exhibit 10.2

FORM OF
FORBEARANCE AGREEMENT

THIS FORBEARANCE AGREEMENT (this “Agreement”) is entered into as of October 18, 2009, between Vitesse Semiconductor Corporation, a Delaware corporation (the “Issuer”) and the beneficial owners of the 1.50% Convertible Subordinated Debentures due 2024 (the “Notes”) signatories hereto (the “Forbearing Holders”).  Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Indenture governing the Notes, dated as of September 22, 2004, between the Issuer and U.S. Bank National Association (the “Trustee”) (as amended and supplemented, or otherwise modified, the “Indenture”).

RECITALS

WHEREAS, pursuant to the Indenture, the Issuer has issued Notes in principal amount of $96,700,000 and the Forbearing Holders hold Notes in the principal amount listed below each Forbearing Holder’s name on the signature pages hereto (the “Forbearing Notes”).

WHEREAS, the Forbearing Holders exercised their rights pursuant to Section 11.1 of the Indenture and required the Issuer to repurchase the Forbearing Notes on October 1, 2009 (the “Put Repurchase Date”).

WHEREAS, a Default has occurred and is continuing under Section 4.1(d) of the Indenture as a result of the Issuer’s failure to mail a Repurchase Event Notice pursuant to Section 11.3 of the Indenture and a Repurchase Event Purchase Notice pursuant to Section 11.4 of the Indenture or to file a Schedule TO pursuant to Section 11.7 of the Indenture (the “Existing Defaults”).

WHEREAS, the Forbearing Holders assert (and the Issuer disputes) that an Event of Default has occurred and is continuing under Section 4.1(c) of the Indenture because of the Issuer’s failure to repurchase the Forbearing Notes from the Forbearing Holders on the Put Repurchase Date at a purchase price equal to 113.76% of the principal amount of such Forbearing Notes (the “Put Repurchase Default” and together with the Existing Defaults, the “Specified Defaults”).

WHEREAS, certain of the Forbearing Holders and the Issuer have previously entered into a Forbearance Agreement, dated as of October 1, 2009, pursuant to which, among other things, such Forbearance Holders agreed to forbear from exercising any rights or remedies in connection with the Specified defaults (as defined therein) on the terms and conditions contained therein until October 9, 2009.

WHEREAS, certain of the Forbearing Holders and the Issuer have previously entered into a Forbearance Agreement, dated as of October 9, 2009, pursuant to which, among other things, such Forbearance Holders agreed to forbear from exercising any rights or remedies inconnection

with the Specified defaults (as defined therein) on the terms and conditions contained therein until October 16, 2009.

WHEREAS, the Issuer has requested that the Forbearing Holders agree to forbear, and the Forbearing Holders have agreed to forbear, from exercising their rights and remedies with respect to the Specified Defaults for the period, and on the terms and conditions, specified herein.

WHEREAS, on October 14, 2009, the Issuer delivered an irrevocable notice (the “Issuer Notice”) to the Forbearing Holders pursuant to which the Issuer agreed that through October 16, 2009 it would exclusively pursue a transaction in good faith with the Forbearing Holders pursuant to which the Issuer will exchange the Forbearing Notes for a combination of cash and new securities (the “Noteholder Transaction”).

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1Acknowledgement and Reaffirmation.  The Issuer hereby acknowledges and agrees, with respect to the Forbearing Holders only, that:

(a)The Issuer is indebted and liable to the Forbearing Holders pursuant to Section 11.1(a) of the Indenture in an amount equal to 113.76% of the principal amount of the Forbearing Notes, together with any accrued and unpaid interest and any Additional Amounts and Forbearance Interest (the “Repurchase Price”).  The Issuer acknowledges and agrees that notwithstanding the fact that the Forbearing Holders exercised their rights pursuant to Section 11.1 of the Indenture as set forth above, until such time as the Forbearing Holders receive the Repurchase Price, the Forbearing Holders will continue to be the beneficial owner of the Forbearing Notes with all rights and remedies under the Indenture;

(b)the obligations of the Issuer to the Forbearing Holders under the Indenture and hereunder constitute valid and subsisting obligations of the Issuer to the Forbearing Holders that are not subject to any credits, offsets, defenses, claims, counterclaims or adjustments of any kind; and

(c)the Forbearing Holders do not waive any of the Specified Defaults.

2Forbearance.  Subject to the terms and conditions set forth herein, from the Effective Date through the earlier of (a) the date on which the Issuer fails to comply with the covenants contained in Section 7 of this Agreement, (b) the date of the commencement by the Issuer of a voluntary bankruptcy, insolvency, reorganization or other similar proceeding or the commencement of any similar non-voluntary case or proceeding with respect to the Issuer, and (c) the termination of that certain Conversion Agreement, dated as of the date hereof, among the Issuer and the Forbearing Holders (the “Forbearance Period”), the Forbearing Holders hereby agree to forbear from exercising any and all of their rights or remedies available under the

Indenture or applicable law as a result of any Defaults or Events of Defaults; provided, however, that in each case, the Forbearing Holders shall be free to exercise any or all rights and remedies arising on account of any Default or Event of Default at the end of the Forbearance Period; provided further, that except as expressly set forth herein, this Agreement shall not operate as a waiver, amendment or modification of the Indenture.

3No Waiver of Rights or Remedies.  The Forbearing Holders and the Issuer agree that, other than as expressly set forth herein, nothing in this Agreement, or the performance by the Forbearing Holders of their obligations hereunder, constitutes or shall be deemed to constitute a waiver of any of the rights or remedies available to the Forbearing Holders under the Indenture or any applicable law, all of which are hereby reserved.

4Representations and Warranties of the Issuer.  The Issuer hereby represents and warrants to the Forbearing Holders that:

(a)No Default or Event of Default exists (or shall exist), to the knowledge of the Issuer, as of the date hereof (other than the Specified Defaults); and

(b)                The execution, delivery and performance by the Issuer of this Agreement has been duly authorized by all necessary corporate or other organizational action, and do not and will not: (i) contravene the terms of any of such Person’s organizational documents; (ii) conflict with or result in any breach or contravention of, or result in or require the creation of any Lien under, or require any payment to be made under (A) any contractual obligation to which such Person is a party or affecting such Person or the properties of such Person or any of its subsidiaries or (B) any order, injunction, writ or decree of any governmental authority or any arbitral award to which such Person or its property is subject; or (iii) violate any applicable law.  No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any governmental authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against the Issuer of this Agreement.

5Forbearance Interest.  The Forbearing Notes will accrue cash interest at the rate of 15% per annum (including the existing cash interest of 1.5% per annum), payable semi-annually in arrears (the “Forbearance Interest”), beginning on October 1, 2009 and ending on the earlier of (a) the last day of the Forbearance Period, (b) the payment in full in cash of the Repurchase Price and (c) the date on which the Noteholder Transaction (as defined above) is actually consummated.  Notwithstanding the foregoing, if the Noteholder Transaction is consummated, (i) on or prior to October 31, 2009, the Forbearing Holders shall be deemed to have waived the Forbearance Interest from the period beginning October 1, 2009 through such date that the Noteholder Transaction is consummated and (ii) on or after November 1, 2009, the Forbearance Interest shall be reduced to a rate of 8% per annum (including the existing cash interest of 1.5% per annum) for the period beginning October 16, 2009 through such date that the Noteholder Transaction is consummated; provided however, that upon consummation of the Noteholder Transaction at any time, the Forbearing Holders shall be deemed to have waived the Forbearance Interest for the period beginning October 1, 2009 through October 16, 2009.  If the Noteholder Transaction is not consummated, (i) the Forbearing Notes shall accrue the Forbearance Interest

pursuant to the first sentence of this Section 5 and (ii) thereafter, the Forbearing Notes shall accrue cash interest at the rate of 8% per annum (including the existing cash interest of 1.5% per annum) notwithstanding the termination of the Forbearance Period.  For the avoidance of doubt, the waiver of any Forbearance Interest pursuant to this Section 5 shall not effect the accrual of cash interest at the rate of 1.50% per annum pursuant to the Indenture.

6Representation and Warranty of the Forbearing Holders.  The Forbearing Holders represent and warrant to the Issuer that (a) no Default or Event of Default exists (or shall exist), to the knowledge of the Forbearing Holders, as of the date hereof (other than the Specified Defaults) and (b) the Forbearing Holders will not direct the Trustee to take any action that is inconsistent with this Agreement.

7Covenants.

(a)The Issuer shall not repay, in part or in full, any Notes that are not Forbearing Notes.

(b)The Issuer shall not incur, create, issue, assume or suffer to exist any indebtedness for borrowed money other than indebtedness existing on the Effective Date, or as expressly contemplated and authorized pursuant to the Noteholder Transaction.

(c)The Issuer shall not incur, create, assume or suffer to exist any lien on any assets or properties of the Issuer other than (i) liens existing on the Effective Date, (b) the liens granted to the Trustee, for the benefit of the Forbearing Holders, pursuant to the Third Supplemental Indenture (as defined below), and (ii) customary liens incurred in the ordinary course of business.

(d)The Issuer shall not actively solicit any transaction with a third party which, if consummated, would be in lieu of the Noteholder Transaction.  For the avoidance of doubt, it shall not be a forbearance termination event hereunder if the Issuer takes any action with respect to an unsolicitated transaction with a third party if the Issuer reasonably believes, following consultation with its legal counsel, that such action is advisable in order for the Issuer’s Board of Director to comply with its fiduciary duties under Delaware law.  For the avoidance of doubt, (i) any communications with a third party prior to the date hereof by the Issuer, its officers, directors, employees, agents or representatives shall not be deemed to be a solicitation of such third party for purposes hereof and (ii) nothing herein shall limit the Issuer’s right to waive any existing standstill agreement with a third party.

(e)Within 3 business days of receipt of reasonable documentation, the Issuer shall have shall have reimbursed, all documented and reasonable fees, costs, and expenses of Gibson, Dunn & Crutcher LLP incurred on or before the Forbearance Effective Date in connection with this Agreement and the transactions contemplated hereby.

8Conditions.  The agreement of the Forbearing Holders and the Issuer hereunder shall become effective as of the date when the following conditions shall have been satisfied (the “Effective Date”):

(a)the Forbearing Holders shall have received counterparts of this Agreement duly executed by the Issuer and each Forbearing Holder;

(b)the Forbearing Holders shall have received counterparts of the definitive documents evidencing the Noteholder Transaction duly executed by the Issuer and each Forbearing Holder;

(c)the Issuer shall have entered into a third supplement to the Indenture (the “Third Supplemental Indenture”) pursuant to which it shall grant to the Trustee, for the benefit of the Forbearing Holders, a perfected security interest, subject only to the liens securing the First Lien Loan Agreement and certain customary permitted liens; and

(d)the Issuer shall have entered into a forbearance agreement, in form and substance reasonably satisfactory to the Issuer and the Forbearing Holders, with Whitebox VSC, Ltd. with respect to the indebtedness under that certain Loan Agreement dated August 23, 2007 (the “First Lien Loan Agreement”).

9Release.  In partial consideration of the Forbearing Holders’ willingness to enter into this Agreement, the Issuer hereby releases the Forbearing Holders and the Trustee and their officers, affiliates, employees, representatives, agents, financial advisors, counsel and directors from any and all actions, causes of action, claims, demands, damages and liabilities of whatever kind or nature, in law or in equity, now known or unknown, suspected or unsuspected to the extent that any of the foregoing arises from any action or failure to act in connection with the Indenture on or prior to the date hereof.

10Counterparts.  This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument

11Effectiveness.  This Agreement shall become effective upon the execution of a counterpart hereof by each of the parties hereto and receipt by Issuer and the Forbearing Holders of written or telephonic notification of such execution and authorization of delivery thereof.

12APPLICABLE LAW.  THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

13Entirety.  This Agreement and the Indenture embody the entire agreement between the parties and supersede all prior agreements and understandings, if any, relating to the subject matter hereof.  This Agreement, together with the Indenture represent the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties.  There are no oral agreements between the parties.  In the event there is a conflict between this Agreement and the Indenture, this Agreement shall control.

14Severability.  In case any provision in or obligation hereunder shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

15Successors and Assigns; Transfers.  This Agreement shall be binding upon and inure to the benefit of each of the parties and their respective successors and assigns.  The Forbearing Holders may transfer all or any of their Forbearing Notes at any time during the Forbearance Period provided that such transferee shall agree in writing, as a condition to such transfer, to be bound by all of the provisions of this Agreement (any such transferee taking Forbearing Notes pursuant to the foregoing shall be considered Forbearing Holders as if they had been original signatories to this Agreement).

16Notices.  Any notice or other communication to any party in connection with this Agreement shall be in writing and shall be sent by manual delivery, telegram, telex, 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 telegram, telex or 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.

17Waivers and Amendments.  This Agreement can be waived, modified, amended, or terminated only explicitly in a writing signed by the Issuer and each Forbearing Holder.  A waiver so signed shall be effective only in the specific instance, and for the specific purpose given and with respect to such Forbearing Holder signatory thereto.

18Captions.  Captions in this Agreement are for reference and convenience only and shall not affect the interpretation or meaning of any provision of this Agreement.

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

VITESSE SEMICONDUCTOR CORPORATION

By:

Name:

Title:

[HOLDER]

By:

Name:

Title:

Amount of Forbearing Notes:

EX-10.3

EXHIBIT 10.3

THIRD FORBEARANCE AGREEMENT

THIS THIRD FORBEARANCE AGREEMENT (this “Agreement”) is entered into as of October 16, 2009, among Vitesse Semiconductor Corporation, a Delaware corporation (the “Borrower”), the other Loan Parties (as defined below), and Whitebox VSC Ltd., a British Virgin Islands business company (the “Agent”).  Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Loan Agreement dated as of August 23, 2007, by and among the lenders from time to time signatory thereto (collectively the “Lenders” and individually each a “Lender”), the Borrower, and the Agent, as one of the Lenders and as agent for the Lenders.

RECITALS

WHEREAS, the Borrower and U.S. Bank National Association (the “Trustee”) are parties to that certain Indenture, dated as of September 22, 2004 (the “Indenture”), which governs the Borrower’s 1.50% Convertible Subordinated Debentures due 2024 (the “Notes”).

WHEREAS, pursuant to the Indenture, the Borrower has issued Notes in principal amount of $96,700,000 and certain holders of Notes (the “Forbearing Holders”) exercised their rights pursuant to Section 11.1 of the Indenture and required the Borrower to repurchase their Notes (the “Forbearing Notes”) on October 1, 2009 (the “Put Repurchase Date”).

WHEREAS, a default has occurred and is continuing under Section 4.1(d) of the Indenture as a result of the Borrower’s failure to mail a Repurchase Event Notice (as defined in the Indenture) pursuant to Section 11.3 of the Indenture and a Repurchase Event Purchase Notice (as defined in the Indenture) pursuant to Section 11.4 of the Indenture or to file a Schedule TO pursuant to Section 11.7 of the Indenture (the “Notes Existing Defaults”).

WHEREAS, the Forbearing Holders assert (and the Borrower disputes) that an event of default has occurred and is continuing under Section 4.1(c) of the Indenture because of the Borrower’s failure to repurchase the Forbearing Notes from the Forbearing Holders on the Put Repurchase Date at a purchase price equal to 113.76% of the principal amount of such Forbearing Notes (the “Notes Put Repurchase Default” and together with the Notes Existing Defaults, the “Notes Specified Defaults”).

WHEREAS, the Borrower and the Forbearing Holders have entered into a Forbearance Agreement dated as of October 16, 2009 in substantially the form previously provided by the Borrower to the Agent (the “Indenture Forbearance Agreement”) pursuant to which the Forbearing Holders have agreed to forbear from exercising their rights and remedies with respect to the Notes Specified Defaults for a certain limited period, under the terms and conditions specified therein.

WHEREAS, the Notes Put Repurchase Default may result in an Event of Default under Section 7.1(i) of the Loan Agreement and may also result in an Event of Default under Sections 7.1(d) and (e) of the Loan Agreement (the “Loan Specified Defaults”) (it being expressly understood that the Borrower makes no admissions hereunder to any Event of Default under the Loan Agreement).

WHEREAS, the Borrower has requested that the Lenders agree to forbear, and the Lenders have agreed to forbear, from exercising their rights and remedies with respect to any Loan Specified Defaults during the Forbearance Period (as defined below) should any Loan Specified Default be determined to have actually occurred, on the terms and conditions and in consideration for the terms set forth below.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1Acknowledgement and Reaffirmation.  The Borrower hereby acknowledges and agrees that:

(a)(i) the Borrower is indebted and liable to the Lenders in the aggregate principal amount of $30,000,000 in respect of the Term Loans, plus interest, fees, expenses (including but not limited to attorneys’, advisors’ and consultants’ fees that are reimbursable under the Loan Agreement), charges and all other obligations incurred in connection therewith as provided in the Loan Agreement, and (ii) such amounts outstanding under the Loan Agreement constitute valid and subsisting obligations of the Borrower to the Agent and the Lenders that are not subject to any credits, offsets, defenses, claims, counterclaims or adjustments of any kind.  The Borrower and the undersigned Guarantors (collectively, the “Loan Parties”) hereby (i) acknowledge and affirm their obligations under the respective Loan Documents to which they are party, (ii) acknowledge and affirm the liens created and granted by the Loan Parties in the Loan Documents and (iii) agree that this Agreement shall in no manner adversely affect or impair such obligations and/or liens; and

(b)the Lenders do not waive any of the Loan Specified Defaults.

2Forbearance.  Subject to the terms and conditions set forth herein, from the Effective Date (as defined below) through the earlier of (a) the date on which the Loan Parties fail to comply with the covenants contained in Section 7 of this Agreement, (b) the date on which the “Forbearance Period” under and as defined in the Indenture Forbearance Agreement ends, and (c) the date of the commencement by the Borrower of a voluntary bankruptcy, insolvency, reorganization or other similar proceeding or the commencement of any similar non-voluntary case or proceeding with respect to the Borrower (the “Forbearance Period”), the Lenders hereby agree to forbear from exercising any and all rights or remedies available under the Loan Agreement or applicable law as a result of the Loan Specified Defaults, but only to the extent that such rights and remedies arise solely as a result of the occurrence and continuation of the Loan Specified Defaults; provided, however, that in each case, the Lenders shall be free to exercise any or all rights and remedies arising on account of any Loan Specified Default at the end of the Forbearance Period; provided further, that except as expressly set forth herein, this Agreement shall not operate as a waiver, amendment or modification of the Loan Agreement.

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3No Waiver of Rights or Remedies.  The Lenders and the Loan Parties agree that, other than as expressly set forth herein, nothing in this Agreement, or the performance by the Lenders of their obligations hereunder, constitutes or shall be deemed to constitute a waiver of any of the rights or remedies available to the Lenders or the Loan Parties under the Loan Agreement, the Loan Documents or any applicable law, all of which are hereby reserved.

4Representations and Warranties of the Loan Parties.  The Loan Parties hereby represents and warrants to the Forbearing Holders that:

(a)No Default or Event of Default exists (or shall exist), to the knowledge of the Loan Parties, as of the date hereof (other than the Specified Defaults); and

(b)The execution, delivery and performance by the Loan Parties of this Agreement has been duly authorized by all necessary corporate or other organizational action, and do not and will not: (i) contravene the terms of any of such Person’s organizational documents; (ii) conflict with or result in any breach or contravention of, or result in or require the creation of any Lien under, or require any payment to be made under (A) any contractual obligation to which such Person is a party or affecting such Person or the properties of such Person or any of its subsidiaries or (B) any order, injunction, writ or decree of any governmental authority or any arbitral award to which such Person or its property is subject; or (iii) violate any applicable law.  No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any governmental authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against the Loan Parties of this Agreement.

5Interest.  The Term Loans will accrue interest in accordance with the terms of the Loan Agreement, as amended by the First Amendment to Loan Agreement entered into by the parties as of the date hereof.

6Representation and Warranty of the Agent and the Lenders.  The Agent and the Lenders represent and warrant to the Borrower that no Default or Event of Default exists (or shall exist), to the knowledge of the Agent or such Lender, as of the date hereof (other than the Loan Specified Defaults).

7Covenants.

(a)The Loan Parties shall not repay, in part or in full, any Notes that are not Forbearing Notes.

(b)The Loan Parties shall not incur, create, issue, assume or suffer to exist any indebtedness for borrowed money other than indebtedness existing on the Effective Date, or as expressly contemplated and authorized pursuant to an exchange of the Forbearing Notes (the “Noteholder Transaction”).

(c)The Loan Parties shall not incur, create, assume or suffer to exist any lien on any assets or properties of any Loan Party other than (i) liens existing on the Effective Date, (ii) the liens granted to the Trustee, for the benefit of the Forbearing Holders, pursuant to the a third supplement to the Indenture, and (iii) customary liens incurred

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in the ordinary course of business and otherwise permitted under the Loan Agreement.

(d)The Borrower shall not actively solicit any transaction with a third party which, if consummated, would be in lieu of the Noteholder Transaction.  For the avoidance of doubt, it shall not be a forbearance termination event hereunder if the Borrower takes any action with respect to an unsolicitated transaction with a third party if the Borrower reasonably believes, following consultation with its legal counsel, that such action is advisable in order for the Borrower’s Board of Director to comply with its fiduciary duties under Delaware law.  For the avoidance of doubt, (i) any communications with a third party prior to the date hereof by the Borrower, its officers, directors, employees, agents or representatives shall not be deemed to be a solicitation of such third party for purposes hereof and (ii) nothing herein shall limit the Borrower’s right to waive any existing standstill agreement with a third party.

8Conditions.  The agreement of the Agent, the Lenders, and the Loan Parties hereunder shall become effective as of the date when the following conditions shall have been satisfied (the “Effective Date”):

(a)the Agent shall have received counterparts of this Agreement duly executed by the Loan Parties; and

(b)the Agent shall have received fully executed copies of the Indenture Forbearance Agreement (which copy may be redacted to omit confidential information concerning the Forbearing Holders from their respective signature pages), in form and substance satisfactory to the Agent in its reasonable discretion.

9Release.  In partial consideration of the Lenders’ willingness to enter into this Agreement, the Loan Parties hereby release the Lenders and the Agent and their officers, affiliates, employees, representatives, agents, financial advisors, counsel and directors from any and all actions, causes of action, claims, demands, damages and liabilities of whatever kind or nature, in law or in equity, now known or unknown, suspected or unsuspected to the extent that any of the foregoing arises from any action or failure to act in connection with the Loan Agreement or any other Loan Document on or prior to the date hereof.

10Counterparts.  This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument.

11Effectiveness.  This Agreement shall become effective upon the execution of a counterpart hereof by each of the parties hereto and receipt by the Borrower and the Agent of written or telephonic notification of such execution and authorization of delivery thereof.

12APPLICABLE LAW.  THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

13Entirety.  This Agreement and the Loan Documents embody the entire agreement between the parties and supersede all prior agreements and understandings, if any, relating to the subject matter hereof.  This Agreement together with the Loan Documents represent the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties.  There are no oral agreements between the parties.  In the event there is a conflict between this Agreement and the Loan Documents, this Agreement shall control.

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14Severability.  In case any provision in or obligation hereunder shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

15Successors and Assigns; Transfers.  This Agreement shall be binding upon and inure to the benefit of each of the parties and their respective successors and assigns.  The Lenders may transfer all or any of the Term Loans at any time during the Forbearance Period provided that the transferee shall agree in writing with the Borrower, as a condition to such transfer, to be bound by all of the provisions of this Agreement as if they had been original signatories to this Agreement.

16Notices.  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.

17Waivers and Amendments.  This Agreement can be waived, modified, amended, or terminated only explicitly in a writing signed by the parties.  A waiver so signed shall be effective only in the specific instance and for the specific purpose given.

18Captions.  Captions in this Agreement are for reference and convenience only and shall not affect the interpretation or meaning of any provision of this Agreement.

[Signature Page Follows]

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

VITESSE SEMICONDUCTOR CORPORATION
By:	/s/ Christopher R. Gardner
Name:	Christopher R. Gardner
Title:	Chief Executive Officer
VITESSE MANUFACTURING & DEVELOPMENT CORPORATION
By:	/s/ Christopher R. Gardner
Name:	Christopher R. Gardner
Title:	President
VITESSE SEMICONDUCTOR SALES CORPORATION
By:	/s/ Christopher R. Gardner
Name:	Christopher R. Gardner
Title:	President

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WHITEBOX VSC LTD., as Lender and Agent under the Loan Agreement
By:	/s/ Jonathan Wood
Name:	Jonathan Wood
Title:	Director

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EX-10.4

Exhibit 10.4

FIRST AMENDMENT TO LOAN AGREEMENT

THIS FIRST AMENDMENT TO LOAN AGREEMENT (this “Amendment”) is entered into as of October 16, 2009, among Vitesse Semiconductor Corporation, a Delaware corporation (the “Borrower”), the other Loan Parties (as defined below), and Whitebox VSC Ltd., a British Virgin Islands business company (the “Agent”).  Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Loan Agreement dated as of August 23, 2007, as amended hereby, by and among the lenders from time to time signatory thereto (collectively the “Lenders” and individually each a “Lender”), the Borrower, and the Agent, as one of the Lenders and as agent for the Lenders (the “Loan Agreement”).

RECITALS

WHEREAS, the Borrower desires to make certain amendments to the Loan Agreement as set forth herein, and pursuant to Section 9.1 of the Loan Agreement such amendments may only be made with the written consent of the Required Lenders.

WHEREAS, the Required Lenders hereby consent to such amendments as set forth herein.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1Acknowledgement and Reaffirmation.

(a)The Borrower hereby acknowledges and agrees that:

(i)The Borrower is indebted and liable to the Lenders in the aggregate principal amount of $30,000,000 in respect of the Term Loans, plus interest, fees, expenses (including but not limited to attorneys’, advisors’ and consultants’ fees that are reimbursable under the Loan Agreement), charges and all other obligations incurred in connection therewith as provided in the Loan Agreement.

(ii)The amounts outstanding and the obligations of the Borrower to the Lenders under the Loan Agreement and hereunder constitute valid and subsisting obligations of the Borrower to the Agent and the Lenders that are not subject to any credits, offsets, defenses, claims, counterclaims or adjustments of any kind.

(iii)The Loan Specified Defaults (as defined below) have not previously been waived by the Lenders.

(b)The Borrower and the Guarantors other than Vitesse International, Inc. (“VII”) (collectively, the “Loan Parties”) hereby (i) acknowledge and affirm their obligations under the respective Loan Documents to which they are party; (ii) acknowledge and affirm the liens created and granted by the Loan Parties in the Loan Documents; and (iii) agree that this Agreement shall in no manner adversely affect or impair such obligations and/or liens.

2Amendments to the Loan Agreement.

(a)Section 1.1 of the Loan Agreement is hereby amended by adding the following definitions in alphabetical order:

“Cash Pool”: As defined in Section 2.6(c) herein.

“Conversion Agreement”: That certain Debt Conversion Agreement to be entered into among the Borrower and the holders of the Borrower’s 1.50% convertible subordinated debentures due 2024.

“Exchange Documents”: The Conversion Agreement and related agreements to be entered into among the Borrower, the Trustee, and certain noteholders of notes of the Borrower, all in connection with the exchange of such notes for new notes and equity, each of which documents shall be in form and substance satisfactory to the Agent in its sole discretion.

“First Amendment”:  The First Amendment to Loan Agreement dated as of October 16, 2009.

“Foreign Subsidiary”:  Any subsidiary organized under the laws of a jurisdiction other than a State of the United States.

“Intercreditor Agreement”: The intercreditor agreement, dated as of the October 16, 2009, between the Agent and the Trustee, and any other intercreditor agreement entered into between the Agent and the Trustee in connection with New Indenture.

“Mandatory Prepayment Fee”: As defined in Section 2.6(d) herein.

“New Indenture”: That certain Indenture to be entered into between the Borrower and the Trustee with respect to the Borrower’s 8.00% convertible second lien debentures due 2014, which Indenture shall be in form and substance satisfactory to the Agent in its sole discretion.

“PIK Interest”: Payment-in-kind of interest on the Term Loans, which shall be payable by adding such interest to the principal amount of the Term Loans on each interest payment date following the execution of the Exchange Documents and in the manner set forth in Section 2.4(a) hereof.

“Trustee”: U.S. Bank National Association.

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(b)Section 1.1 of the Loan Agreement is hereby amended by deleting the existing definition of the following terms and replacing them with the following:

“Deposit Account Control Agreement (Borrower)”:  Any deposit account control agreements, each in form and substance acceptable to the Agent and executed by the Borrower, the Agent and a bank that maintains any type of deposit account on behalf of or in the name of the Borrower, each as may be amended, restated or otherwise modified from time to time.

“Deposit Account Control Agreements (Guarantor)”:  Any deposit account control agreements, 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.

“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 licensing of intellectual property in the ordinary course of business;

(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; or

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

“Securities Account Control Agreement (Borrower)”:  Any securities account control agreements, 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) that maintains a securities account (as such term is defined in Article 8 of the UCC) on behalf of or in the name of the Borrower, each as may be amended, restated or otherwise modified from time to time.

“Securities Account Control Agreements (Guarantor)”:  Any 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.

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“Subordinated Debt”:  (a) the Existing Convertible Debentures, (b) the Borrower’s 1.50% convertible subordinated debentures due 2024 issued under the New Indenture, and (c) 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.

(c)Section 2.4 of the Loan Agreement is hereby amended by adding the following to the end of subsection (a):

; provided, however, that:

(A)from October 1, 2009, until the execution of the Exchange Documents, the Term Loans shall accrue cash interest at the rate of 10.5% per annum; provided further, that if the Exchange Documents are not executed by October 16, 2009, the Term Loans shall accrue cash interest at the rate of 15% per annum from and after October 16, 2009; and

(B)from and after the execution of the Exchange Documents, the Effective Rate shall be 8.5% cash interest plus 2% PIK Interest, which will be increased by 0.30% additional PIK Interest for every $1,000,000 (rounded to the nearest $1,000,000) below $15,000,000 that is not paid down pursuant to the terms of Section 2.6(c) hereof.  (For the avoidance of doubt, if only $12,000,000 were paid down and the remaining principal balance of the Term Loans were $18,000,000, the total Effective Rate would be 11.4% (8.5% cash interest + 2.9% PIK Interest).)  Subsequent to the paydown pursuant to the terms of Section 2.6(c) hereof, the Borrower may make additional prepayments of the outstanding Term Loans, which shall cause the Effective Rate to be reduced by 0.30% additional PIK Interest for every $1,000,000 (rounded to the nearest $1,000,000) of such additional prepayments, with such reduction to be effective as of the next interest payment date, until the remaining principal balance of the Term Loans reaches $15,000,000, at which time the Effective Rate shall be 8.5% cash interest plus 2% PIK Interest provided, however, that in no event shall the Effective Rate be reduced to less than 8.5% cash interest plus 2% PIK Interest.

(d)Section 2.6 of the Loan Agreement is hereby amended by adding the following as new subsections (c) and (d):

(c)Mandatory Prepayment from Cash Pool.  Upon the consummation of the transactions contemplated by the Exchange Documents, the Borrower shall establish a cash pool of $15,000,000 (the “Cash Pool”). Any amount of the Cash Pool that is not used to pay down nonparticipating holders of notes pursuant to the Exchange Documents on the date of the consummation of the transactions contemplated by the Exchange Documents shall be immediately applied to prepay the Term Loans; provided, however, that at least $5,000,000 of the Cash Pool shall be used to prepay the Term Loans.

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

(e)Section 6.2 of the Loan Agreement is hereby amended to read in its entirety as follows:

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, the Borrower and any Subsidiary may dispose of any property as long as the proceeds thereof are applied to the Term Loan in accordance with Section 2.6(b)(i).

(f)Section 6.11(i) is amended to read in its entirety as follows:

(i)Investments (i) by the Borrower in any Guarantor and by any Guarantor in any other Guarantor, (ii) by the Borrower in any Foreign Subsidiary and existing as of the date of the First Amendment, and (iii) by the Borrower in any Foreign Subsidiary after the date of the First Amendment as long as such Investment does not cause an Event of Default under Section 6.18;

(g)Section 6.12 is hereby amended by adding the following new subsection (l):

(l)Indebtedness incurred as a result of the consummation of the transactions contemplated by the Exchange Documents in an amount not to exceed $60,000,000 and all premiums (if any), interest, fees, expenses and charges on such Indebtedness.

(h)Section 6.13 of the Loan Agreement is hereby amended by adding the following new subsection (k):

(k)Liens granted to secure the Borrower’s obligations in an amount not to exceed $60,000,000 under the Indenture and the New Indenture, provided such Liens are subject to the Intercreditor Agreement.

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(i)The Loan Agreement is hereby amended by adding a new Section 6.18 thereto to read in its entirety as follows:

Section 6.18Accounts.  The Borrower will not, nor will permit any Subsidiary to, cause or permit (a) any funds in excess of $50,000 to be transferred to or maintained in any deposit, checking, brokerage, securities or other similar account maintained by the Borrower or any Subsidiary which is not a Foreign Subsidiary unless such account is subject to an account control agreement in form and substance satisfactory to the Agent or (b) the Foreign Subsidiaries to maintain funds in an aggregate amount in excess of $3,000,000 in all deposit, checking, brokerage, securities and other similar accounts maintained by all Foreign Subsidiaries unless such accounts are subject to account control agreements in form and substance satisfactory to the Agent.

(j)Section 7.1(l) of the Loan Agreement is hereby amended by adding the following to the end thereof:

other than as a result of the consummation of the transactions contemplated by the Exchange Documents.

(k)Section 7.1 of the Loan Agreement is hereby amended by adding the following new subsection (o):

(o)Any Event of Default (as defined therein) shall occur under the Indenture or the New Indenture.

3Amendments to Security Agreements.

(a)Section 7 of the Borrower Security Agreement is amended by deleting the phrase “and in amounts not exceeding $50,000 per Account Debtor or other obligor in any calendar year”.

(b)Section 7 of the Guarantor Security Agreement is amended by deleting the phrase “and in amounts not exceeding $50,000 per Account Debtor or other obligor in any calendar year”.

4Conditions Precedent to Effectiveness of Amendment.  Other than the waiver set forth in Section 6, which shall become effective as set forth therein, the agreement of the Borrower, the other Loan Parties, the Agent and the Lenders shall become effective as of the date hereof when, and only when, each of the following conditions shall have been satisfied (it being understood that the satisfaction of one or more of the following conditions may occur concurrently with the effectiveness of this Amendment) or waived, as determined by the Agent in its sole discretion (such date, the “Amendment Effective Date”).

(a)The Agent shall have received a counterpart of this Amendment duly executed by the Borrower and each other Loan Party.

(b)The representations and warranties set forth herein shall be true and correct as of the date hereof.

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(c)The Borrower shall have received a written invoice for, and shall have reimbursed, all reasonable fees, costs, and expenses of the Agent (including filing and recording costs and fees and expenses of Dorsey & Whitney LLP, counsel to the Agent) incurred or estimated to be incurred on or before the Amendment Effective Date in connection with this Amendment and the transactions contemplated hereby.

(d)The Agent and the Trustee shall have entered into the Intercreditor Agreement.

(e)All original certificates and instruments representing or evidencing the Collateral pledged under the Borrower Pledge Agreement, except with respect to VII, and duly executed instruments of transfer or assignment in blank, shall have been delivered to the Agent.

(f)The Borrower and each Guarantor shall have executed and delivered to the Agent 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.

(g) The Agent shall have received an opinion of counsel to the Borrower and the Guarantors in form and substance satisfactory to the Agent in its sole discretion.

(h) The Agent shall have received a certificate of the secretary of each Loan Party certifying as to (i) a copy of the corporate resolutions of such Loan Party authorizing the execution, delivery and performance of this Amendment and all other documents related hereto; (ii) an incumbency certificate showing the names and titles and bearing the signatures of the officers of such Loan Party authorized to execute this Amendment and all other documents related hereto; (iii) a copy of the Articles of Incorporation of such Loan Party, with all amendments thereto, certified by the appropriate governmental official of the jurisdiction of its organization as of a date acceptable to the Agent; (iv) a certificate of good standing for such Loan Party in its jurisdiction of organization, certified by the appropriate governmental officials as of a date acceptable to the Agent; and (v) a copy of the bylaws of such Loan Party, with all amendments thereto.

5Conditions Subsequent.  Each of the following conditions shall be satisfied within seven (7) days after the date hereof:

(a)A certificate representing 650 shares of VII shall be delivered to the Agent.

(b)A deposit account control agreement in form and substance satisfactory to the Agent shall be delivered to the Agent for the account designated on Exhibit A hereto.

Any failure of such conditions to be satisfied within seven (7) days after the date hereof shall constitute an Event of Default under the Loan Agreement.

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6No Waiver of Rights or Remedies.  Certain defaults and events of default have occurred and are continuing under the Indenture, which results in an Event of Default under Section 7.1(i) of the Loan Agreement and may also result in an Event of Default under Sections 7.1(d) and (e) of the Loan Agreement (the “Loan Specified Defaults”).  Upon (a) the consummation of the transactions contemplated by the Exchange Documents by November 16, 2009, (b) receipt by the Agent of copies of the executed Exchange Documents (in form and substance satisfactory to the Agent in its sole discretion), certified as true and correct by an officer of the Borrower, and (c) receipt by the Agent of payment of all accrued and unpaid interest on the Term Loans and all reasonable fees, costs, and expenses of the Agent (including filing and recording costs and fees and expenses of Dorsey & Whitney LLP, counsel to the Agent) incurred through the date of such consummation, the Lenders shall waive the Loan Specified Defaults.  The Lenders, the Borrower and the other Loan Parties agree that, other than as expressly set forth herein, nothing in this Amendment, or the performance by the Lenders of their obligations hereunder, constitutes or shall be deemed to constitute a waiver of any of the rights or remedies available to the Lenders under the Loan Agreement, the Loan Documents, or any applicable law, including with respect to any Default or Event of Default (other than the Loan Specified Defaults, as indicated above in this Section 6), all of which are hereby reserved.

7Representations and Warranties of the Borrower.  The Borrower hereby represents and warrants to the Lenders that:

(a)To the Borrower’s Knowledge, no Default or Event of Default (other than the Loan Specified Defaults) exists under the Loan Agreement as of the date hereof.

(b)There are no Liens against any material portion of the assets of the Borrower and its subsidiaries other than (i) the Liens granted to the Trustee in connection with the Indenture, (ii) the Liens granted under the Loan Agreement, and (iii) customary permitted Liens granted in  the ordinary course.

(c)The Borrower has paid all taxes, assessments, governmental charges and levies imposed on it or any material portion of its properties and all claims or demands of any kind which, if not paid, could result in the creation of a Lien on a material portion of its property, other than any such taxes, assessments, governmental charges or levies being contested in good faith by appropriate proceedings.

(d)The execution, delivery and performance by the Borrower and the other Loan Parties of this Amendment has been duly authorized by all necessary corporate or other organizational action, and do not and will not: (i) contravene the terms of any of such Person’s organizational documents; (ii) conflict with or result in any breach or contravention of, or result in or require the creation of any Lien, or require any payment by the Borrower to be made under (A) any contractual obligation to which the Borrower is a party or affecting the Borrower or the properties of the Borrower or any of its subsidiaries or (B) any order, injunction, writ or decree of any governmental authority or any arbitral award to which the Borrower or any material portion of its property is subject; or (iii) violate any applicable law in any material respect.  No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any governmental

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authority or any other Person is necessary or required on the part of the Borrower or the other Loan Parties in connection with the execution, delivery or performance by, or enforcement against the Borrower or the other Loan Parties of, this Amendment, other than the filing of any uniform commercial code financing statements or amendments thereto and any filings required under federal securities laws.

(e)The only deposit, checking, brokerage, securities or other similar accounts maintained by the Borrower and the other Loan Parties, and their respective balances as of the Amendment Effective Date, are those listed on Exhibit A hereto.

(f)The Borrower’s cash balance as of the Amendment Effective Date is at least $45,000,000.

(g)The Borrower owns all of the intellectual property (including without limitation patent registrations, trademarks, domain names, trade names, copyright registrations or any equivalent thereof) (“Intellectual Property”) listed on Exhibit B hereto and does not own any Intellectual Property that is not so listed.

8Representations and Warranties of the Agent and Lenders.  Each of the Agent and each Lender hereby represents and warrants to the Borrower that:

(a)it hereby consents to the amendments to the Loan Agreement set forth herein; and

(b)to its Knowledge, as of the date hereof, no Default or Event of Default (other than the Loan Specified Defaults) exists under the Loan Agreement.

9Releases.

(a)In partial consideration of the Lenders’ willingness to enter into this Amendment, the Borrower and the other Loan Parties hereby release the Lenders and the Agent and their respective officers, affiliates, employees, representatives, agents, financial advisors, counsel and directors from any and all actions, causes of action, claims, demands, damages and liabilities of whatever kind or nature, in law or in equity, now known or unknown, suspected or unsuspected, to the extent that any of the foregoing arises from any action or failure to act in connection with the Loan Agreement or any other Loan Document or any document entered into in connection therewith on or prior to the date hereof.

(b)The Lenders hereby release VII from its obligations under the Guaranty and the Security Agreement, each dated as of August 23, 2007, and executed by VII in favor of the Lenders and VII’s obligations thereunder shall be of no further force and effect; provided, that such release shall not affect the obligations of any other party to the Guaranty and the Security Agreement.

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(c)Upon the execution of the Exchange Documents, the Note Purchase Agreement shall terminate and the Lenders shall release the Borrower from its obligations under the Note Purchase Agreement.

10Counterparts.  This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument

11APPLICABLE LAW.  THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

12Entirety.  This Amendment and the Loan Documents, and any documents entered into in connection herewith, embody the entire agreement between the parties and supersede all prior agreements and understandings, if any, relating to the subject matter hereof.  This Amendment, together with the Loan Documents and any documents entered into in connection herewith, represent the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties.  There are no oral agreements between the parties.  In the event there is a conflict between this Amendment and the Loan Documents or any documents entered into in connection herewith, this Amendment shall control.

13Severability.  In case any provision in or obligation hereunder shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

14Successors and Assigns; Transfers.  This Amendment shall be binding upon and inure to the benefit of each of the parties and their respective successors and assigns.

15Notices.  Any notice or other communication to any party in connection with this Amendment 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.

16Waivers and Amendments.  This Amendment can be waived, modified, amended, or terminated only explicitly in a writing signed by the Borrower and the Agent.  A waiver so signed shall be effective only in the specific instance and for the specific purpose given.

17Third Party Beneficiaries.  This Amendment is intended for the benefit of the parties hereto and their respective successors and assigns, and is not intended to be enforceable by any third parties other than any acquiring parties under a Definitive Purchase Agreement.

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18Captions.  Captions in this Amendment are for reference and convenience only and shall not affect the interpretation or meaning of any provision of this Amendment.

[Signature pages follow.]

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

VITESSE SEMICONDUCTOR CORPORATION
By:	/s/ Christopher R. Gardner
Name:	Christopher R. Gardner
Title:	Chief Executive Officer
VITESSE MANUFACTURING & DEVELOPMENT CORPORATION
By:	/s/ Christopher R. Gardner
Name:	Christopher R. Gardner
Title:	President
VITESSE SEMICONDUCTOR SALES CORPORATION
By:	/s/ Christopher R. Gardner
Name:	Christopher R. Gardner
Title:	President

WHITEBOX VSC LTD., as Lender and Agent under the Loan Agreement
By:	/s/ Jonathan Wood
Name:	Jonathan Wood
Title:	Director

EX-10.5

Exhibit 10.5

GUARANTY

THIS GUARANTY (the “Guaranty”), dated as of October 16, 2009, is executed by each of the undersigned corporations, limited liability companies, and limited partnerships (collectively the “Guarantors” and individually each a “Guarantor”), in favor of U.S. National Bank Association, acting as trustee under the Indenture defined below (in such capacity, the “Trustee”).

RECITALS

A.Vitesse Semiconductor Corporation, a Delaware corporation (the “Issuer”), and the Forbearing Holders (as defined in the Forbearance Agreement (as defined below)) have entered into that certain Forbearance Agreement dated as of the date hereof (the “Forbearance Agreement”) pursuant to which the Forbearing Holders have agreed to forbear from exercising certain of the rights and remedies available to them arising from the Specified Defaults (as defined in the Forbearance Agreement) in exchange for Issuer agreeing to enter into the Third Supplemental Indenture (as defined below).

B.The Issuer and the Trustee have entered into an Indenture dated as of September 22, 2004 (as amended by that certain First Supplemental Indenture dated November 3, 2006, that certain Second Supplemental Indenture dated September 24, 2007, and that certain Third Supplemental Indenture, dated as of the date hereof, among the Forbearing Holders (as defined therein) and the Issuer (the “Third Supplemental Indenture”), as the same may hereafter be amended, supplemented, extended, restated, or otherwise modified from time to time, the “Indenture”) pursuant to which the Issuer issued the Securities (as defined in the Indenture) to the Holders.  Capitalized terms used herein but not otherwise defined shall have the meanings assigned to them in the Indenture.

C.Each Guarantor is a subsidiary of the Issuer

D.It is a requirement of the Third Supplemental Indenture that this Guaranty be executed and delivered by each Guarantor.

E.Each Guarantor finds it advantageous, desirable and in its best interests to comply with the requirement that it execute and deliver this Guaranty to the Trustee.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the sufficiency of which the parties hereby acknowledge, the parties hereto hereby covenant and agree as follows:

Section 1.Defined Terms.  As used in this Guaranty, the following terms shall have the meaning indicated:

“Issuer” shall have the meaning indicated in Recital A.

“Indenture” shall have the meaning indicated in Recital B.

“Intercreditor Agreement” shall have the meaning given such term in the Indenture.

“Forbearance Agreement” shall have the meaning indicated in Recital A.

“Guarantor” shall have the meaning indicated in the opening paragraph hereof.

“Guaranty” shall have the meaning indicated in the opening paragraph hereof.

“Holder” shall have the meaning given such term in the Indenture.

“Indenture Documents” shall have the meaning given such term in the Indenture.

“Material Adverse Occurrence” shall mean 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 operation of the Issuer and its subsidiaries taken as a whole, (b) impair the ability of the Issuer or any subsidiary to perform its obligations under the Indenture or any writing executed pursuant thereto, (c) the validity or enforceability of the material obligations of the Issuer or any subsidiary under any Indenture Document, (d) the rights and remedies of the Holders or the Trustee against the Issuer hereunder, (e) the timely payment of the principal of and interest on the Notes or other amounts payable by the Issuer hereunder, or (f) the validity of the joint and several nature of the obligations of the Issuer with respect to all of the Obligations.

“Obligations” shall mean (a) all indebtedness, liabilities and obligations of the Issuer to the Holders of every kind, nature or description under the Indenture, including the Issuer’s obligation on any notes issued under the Indenture (including, without limitation, any obligation to pay Forbearance Interest (as defined in the Forbearance Agreement)) and any note or notes hereafter issued in substitution or replacement thereof, in all cases whether due or to become due, and whether now existing or hereafter arising or incurred and (b) any and all liabilities and obligations of the Issuer to the Holders and the Trustee of every kind, nature and description, whether direct or indirect or hereafter acquired by the Holders from any Person, absolute or contingent, regardless of how such liabilities arise or by what agreement or instrument they may be evidenced, and (c) in all of the foregoing cases whether due or to become due, and whether now existing or hereafter arising or incurred for the benefit of the Holders.

“Person” shall mean any individual, 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.

“Third Supplemental Indenture” shall have the meaning indicated in Recital B.

“Trustee” shall have the meaning indicated in the opening paragraph hereof.

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Section 2.The Guaranty.  Each Guarantor, jointly and severally, hereby absolutely and unconditionally guarantees to the Trustee, the payment when due (whether at a stated maturity or earlier by reason of acceleration or otherwise) and performance of the Obligations.

Section 3.Continuing Guaranty.  This Guaranty is an absolute, unconditional and continuing guaranty of payment and performance of the Obligations, and the obligations of the Guarantors hereunder shall not be released, in whole or in part, by any action or thing which might, but for this provision of this Guaranty, be deemed a legal or equitable discharge of a surety or guarantor, other than irrevocable payment and performance in full of the Obligations.  No notice of the Obligations to which this Guaranty may apply, or of any renewal or extension thereof need be given to the Guarantors and none of the foregoing acts shall release the Guarantors from liability hereunder.  Each Guarantor hereby expressly waives (a) demand of payment, presentment, protest, notice of dishonor, nonpayment or nonperformance on any and all forms of the Obligations; (b) notice of acceptance of this Guaranty and notice of any liability to which it may apply; (c) all other notices and demands of any kind and description relating to the Obligations now or hereafter provided for by any agreement, statute, law, rule or regulation; and (d) any and all defenses of the Issuer pertaining to the Obligations except for the defense of discharge by payment.  No Guarantor shall be exonerated with respect to such Guarantors’ liabilities under this Guaranty by any act or thing except irrevocable payment and performance of the Obligations, it being the purpose and intent of this Guaranty that the Obligations constitute the direct and primary obligations of each Guarantor and that the covenants, agreements and all obligations of the Guarantors hereunder be absolute, unconditional and irrevocable.  Each Guarantor shall be and remain liable for any deficiency remaining after foreclosure of any mortgage, deed of trust or security agreement securing all or any part of the Obligations, whether or not the liability of the Issuer or any other Person for such deficiency is discharged pursuant to statute, judicial decision or otherwise.  The acceptance of this Guaranty by the Trustee and the Holders is not intended and does not release any liability previously existing of any guarantor or surety of any indebtedness of the Issuer to the Trustee and the Holders.

Section 4.Second Priority Nature of Liens.  Notwithstanding anything herein to the contrary, the liens and security interest granted to the Collateral Agent for the benefit of the Holders pursuant to this Agreement and the exercise of any right or remedy by the Collateral Agent or any Holder hereunder is subject to the provisions of the Intercreditor Agreement.

Section 5.Other Transactions.  The Trustee and each Holder is expressly authorized (a) to exchange, surrender or release with or without consideration any or all collateral and security which may at any time be placed with it by the Issuer or by any other Person, or to forward or deliver any or all such collateral and security directly to the Issuer for collection and remittance or for credit, or to collect the same in any other manner without notice to the Guarantors and (b) to amend, modify, extend or supplement the Indenture, any note or other instrument evidencing the Obligations or any part thereof and any other agreement with respect to the Obligations, waive compliance by the Issuer or any other Person with the respective terms thereof and settle or compromise any of the Obligations without notice to any Guarantor and without in any manner affecting the absolute liabilities of any Guarantor hereunder.  No invalidity, irregularity or unenforceability of all or any part of the Obligations or of any security therefor or other recourse with respect thereto shall affect, impair or be a defense to this Guaranty.  The liabilities of each Guarantor hereunder shall not be affected or impaired by any

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failure, delay, neglect or omission on the part of the Trustee or the Holders to realize upon any of the Obligations of the Issuer to the Holders, or upon any collateral or security for any or all of the Obligations, nor by the taking by the Holders of (or the failure to take) any other guaranty or guaranties to secure the Obligations, nor by the taking by the Holders of (or the failure to take or the failure to perfect its security interest in or other lien on) collateral or security of any kind.  No act or omission of the Holder, whether or not such action or failure to act varies or increases the risk, or affects the rights or remedies of the Guarantors, shall affect or impair the obligations of the Guarantors hereunder.  Each Guarantor acknowledges that this Guaranty is in effect and binding without reference to whether this Guaranty is signed by any other Person or Persons, that possession of this Guaranty by the Trustee or any Holder shall be conclusive evidence of due delivery hereof by such Guarantor and that this Guaranty shall continue in full force and effect, both as to the Obligations then existing and/or thereafter created, notwithstanding the release of or extension of time to any other guarantor of the Obligations or any part thereof.

Section 6.Actions Not Required.  Each Guarantor hereby waives any and all right to cause a marshalling of the assets of the Issuer or any other action by any court or other governmental body with respect thereto or to cause the Trustee or any Holder to proceed against any security for the Obligations or any other recourse which the Trustee or any Holder may have with respect thereto and further waives any and all requirements that the Trustee or any Holder institute any action or proceeding at law or in equity, or obtain any judgment, against the Issuer or any other Person, or with respect to any collateral security for the Obligations, as a condition precedent to making demand on or bringing an action or obtaining and/or enforcing a judgment against, such Guarantor upon this Guaranty.  Each Guarantor further acknowledges that time is of the essence with respect to such Guarantor’s obligations under this Guaranty.  Any remedy or right hereby granted which shall be found to be unenforceable as to any Person or under any circumstance, for any reason, shall in no way limit or prevent the enforcement of such remedy or right as to any other Person or circumstance, nor shall such unenforceability limit or prevent enforcement of any other remedy or right hereby granted.

Section 7.No Subrogation.  Notwithstanding any payment or payments made by any Guarantor hereunder, each Guarantor waives all rights of subrogation to any of the rights of the Trustee or the Holders against the Issuer or any other Person liable for payment of any of the Obligations or any collateral security or guaranty or right of offset held by the Trustee or the Holders for the payment of the Obligations, and each Guarantor waives all rights to seek any recourse to or contribution or reimbursement from the Issuer or any other Person liable for payment of any of the Obligations in respect of payments made by such Guarantor hereunder.

Section 8.Application of Payments.  Any and all payments upon the Obligations made by any Guarantor or by any other Person, and/or the proceeds of any or all collateral or security for any of the Obligations, may be applied by the Trustee on such items of the Obligations as the Trustee may elect for the benefit of the Holders.

Section 9.Recovery of Payment.  If any payment received by the Trustee or any Holder and applied to the Obligations is subsequently set aside, recovered, rescinded or required to be returned for any reason (including, without limitation, the bankruptcy, insolvency or reorganization of the Issuer or any other obligor), the Obligations to which such payment was applied shall for the purposes of this Guaranty be deemed to have continued in existence,

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notwithstanding such application, and this Guaranty shall be enforceable as to such Obligations as fully as if such application had never been made.  References in this Guaranty to amounts “irrevocably paid” or to “irrevocable payment” refer to payments that cannot be set aside, recovered, rescinded or required to be returned for any reason.

Section 10.Issuer’s Financial Condition.  Each Guarantor is familiar with the financial condition of the Issuer, and each Guarantor has executed and delivered this Guaranty based on such Guarantor’s own judgment and not in reliance upon any statement or representation of the Trustee or the Holder.  The Trustee and each Holder shall have no obligation to provide the Guarantors with any advice whatsoever or to inform the Guarantors at any time of the Holder’s actions, evaluations or conclusions on the financial condition or any other matter concerning the Issuer.

Section 11.Remedies.  All remedies afforded to the Trustee and the Holders by reason of this Guaranty are separate and cumulative remedies and it is agreed that no one of such remedies, whether or not exercised by the Trustee or any Holder, shall be deemed to be in exclusion of any of the other remedies available to the Trustee or any Holder and no one of such remedies shall in any way limit or prejudice any other legal or equitable remedy which the Trustee or any Holder may have hereunder and with respect to the Obligations.  Mere delay or failure to act shall not preclude the exercise or enforcement of any rights and remedies available to the Trustee or any Holder.

Section 12.Bankruptcy of the Issuer.  Each Guarantor expressly agrees that the liabilities and obligations of such Guarantor under this Guaranty shall not in any way be impaired or otherwise affected by the institution by or against the Issuer or any other Person of any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or any other similar proceedings for relief under any bankruptcy law or similar law for the relief of debtors and that any discharge of any of the Obligations pursuant to any such bankruptcy or similar law or other law shall not diminish, discharge or otherwise affect in any way the obligations of such Guarantor under this Guaranty, and that upon the institution of any of the above actions, such obligations shall be enforceable against such Guarantor.

Section 13.Costs and Expenses.  The Guarantors jointly and severally agree to pay or reimburse the Trustee on demand for all out-of-pocket expenses (including in each case all reasonable fees and expenses of counsel) incurred by the Trustee arising out of or in connection with the enforcement of this Guaranty against the Guarantors or arising out of or in connection with any failure of any Guarantor to fully and timely perform the obligations of such Guarantor hereunder.

Section 14.Waivers and Amendments.  This Guaranty can be waived, modified, amended, terminated or discharged only explicitly in a writing signed by the Trustee.  A waiver so signed shall be effective only in the specific instance and for the specific purpose given.

Section 15.Notices.  Any notice or other communication to any party in connection with this Guaranty 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

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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.

Section 16.Guarantor Acknowledgements.  The Guarantors hereby acknowledge that (a) counsel has advised the Guarantors in the negotiation, execution and delivery of this Guaranty, (b) neither the Trustee nor any Holder has a fiduciary relationship to any Guarantor, each such relationship being solely that of obligor and creditor, and (c) no joint venture exists between any Guarantor and the Trustee or any Guarantor and any Holder.

Section 17.Representations and Warranties.  Each Guarantor hereby represents and warrants to the Trustee and the Holders that it is a corporation, limited liability company, or limited partnership, as applicable, organized, validly existing and in good standing under the laws of its jurisdiction of organization and has the power and authority and the legal right to own and operate its properties and to conduct the business in which it is currently engaged.  Each Guarantor further represents and warrants to the Trustee and the Holders that:

17(a)It has the power and authority and the legal right to execute and deliver, and to perform its obligations under this Guaranty and the other Indenture Documents to which it is a party and has taken all necessary action required by its form of organization to authorize such execution, delivery and performance.

17(b)This Guaranty and each Indenture Document to which it is a party constitutes the legal, valid and binding obligation of such Guarantor, enforceable against such Guarantor in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

17(c)The execution, delivery and performance of this Guaranty will not (i) 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 it, (ii) violate or contravene any provision of its organizational documents, or (iii) except as disclosed in the Indenture, 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 it 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 in each case of any such breach or default under this clause (iii) as would not reasonably be expected to cause a Material Adverse Occurrence.  Except with respect to or as a result of the Specified Defaults (as defined in the Forbearance Agreement), it is not 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 would reasonably be expected to cause a Material Adverse Occurrence.

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17(d)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 its part to authorize, or is required in connection with the execution, delivery and performance of, or the legality, validity, binding effect or enforceability of, this Guaranty, other than any required approvals or consents by the First Lien Agent or the First Lien Lenders (each as defined in the Intercreditor Agreement).

17(e)[Intentionally Omitted]

17(f)It expects to derive benefits from the transactions resulting in the creation of the Obligations.  The Trustee and the Holders may rely conclusively on the continuing warranty, hereby made, that it continues to be benefited by the Holders’ forbearance under the Forbearance Agreement from exercising remedies against the Issuer and neither the Trustee nor any Holder shall have a duty to inquire into or confirm the receipt of any such benefits, and this Guaranty and the Indenture Documents shall be effective and enforceable by the Trustee and the Holders without regard to the receipt, nature or value of any such benefits.

Section 18.Continuing Guaranty.  This Guaranty shall (a) remain in full force and effect until irrevocable payment in full of the Obligations, (b) be binding upon each Guarantor, its successors and assigns and (c) inure to the benefit of, and be enforceable by, the Trustee and any Holder and their successors, transferees, and assigns.  Without limiting the generality of the foregoing clause (c), any Holder may assign or otherwise transfer all or any portion of its rights and obligations under the Indenture to any other Persons to the extent and in the manner provided in the Indenture and may similarly transfer all or any portion of its rights under this Guaranty to such Persons.

Section 19.Reaffirmation.  Each Guarantor agrees that when so reasonably requested by the Trustee or any Holder from time to time it will promptly execute and deliver to the Trustee or such Holder a written reaffirmation of this Guaranty in such form as the Trustee or such Holder may reasonably require.

Section 20.Revocation.  Notwithstanding any other provision hereof, a Guarantor may revoke this Guaranty as to such Guarantor prospectively as to future transactions by written notice to that effect actually received by the Trustee and each Holder.  No such revocation shall release, impair or affect in any manner any liability hereunder with respect to Obligations created, contracted, assumed or incurred prior to receipt by the Trustee and each Holder of written notice of revocation, or Obligations created, contracted, assumed or incurred after receipt of such notice pursuant to any contract entered into by the Trustee or any Holder prior to receipt of such notice, or any renewals or extensions thereof, theretofore or thereafter made, or any interest accrued or accruing on such Obligations, or all other costs, expenses and reasonable attorneys’ fees arising from such Obligations.

Section 21.Governing Law and Construction.  THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS GUARANTY SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF.  Whenever possible, each provision of this Guaranty and any other statement, instrument or transaction contemplated

7

hereby or relating hereto shall be interpreted in such manner as to be effective and valid under such applicable law, but, if any provision of this Guaranty or any other statement, instrument or transaction contemplated hereby or relating hereto 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 Guaranty or any other statement, instrument or transaction contemplated hereby or relating hereto.

Section 22.Consent to Jurisdiction.  AT THE OPTION OF THE HOLDERS, THIS GUARANTY MAY BE ENFORCED IN ANY FEDERAL COURT OR STATE COURT SITTING IN NEW YORK, NEW YORK; AND EACH GUARANTOR CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT.  IN THE EVENT A GUARANTOR COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS GUARANTY, THE HOLDERS AT THEIR OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

Section 23.Waiver of Jury Trial.  EACH GUARANTOR, THE TRUSTEE AND EACH HOLDER, BY ITS ACCEPTANCE OF THIS GUARANTY, IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 24.Counterparts.  This Guaranty may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.

Section 25.Joinder Agreements.  Each Subsidiary of the Issuer or any Guarantor that is required to become a party to this Guaranty pursuant to Section 16.5 of the Indenture or otherwise shall become a party hereto as a Guarantor for all purposes of this Guaranty by executing and delivering to the Trustee a Joinder Agreement substantially in the form of Exhibit A attached hereto.  Upon execution and delivery, such party shall be as fully a party hereto as if such party were an original signatory hereof.  Each Guarantor expressly agrees that its obligations arising hereunder shall not be affected or diminished by the addition or release of any other Guarantor hereunder.

Section 26.General.  All representations and warranties contained in this Guaranty or in any other agreement between a Guarantor and the Holders shall survive the execution, delivery and performance of this Guaranty and the creation and payment of the Obligations.  Captions in this Guaranty are for reference and convenience only and shall not affect the interpretation or meaning of any provision of this Guaranty.  In the case of any conflict between any provision of this Guaranty and any provision of the Indenture, the provision of the Indenture

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shall govern.  Enforcement of this Guaranty against the Guarantors shall be subject to all terms, conditions, and provisions of the Indenture applicable to the enforcement against the Issuer of the Notes, provided, however, notwithstanding any provision of this Guaranty, in all cases applicable terms of this Guaranty and the Indenture are subject to the applicable terms of the Intercreditor Agreement.

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

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IN WITNESS WHEREOF, the parties hereto have caused this Guaranty to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written.

VITESSE MANUFACTURING & DEVELOPMENT CORPORATION
By:	/s/ Christopher R. Gardner
Name:	Christopher R. Gardner
Title:	President

Jurisdiction of Organization:  Delaware

Address:

741 Calle Plano
Camarillo, CA  93102

VITESSE SEMICONDUCTOR SALES CORPORATION
By:	/s/ Christopher R. Gardner
Name:	Christopher R. Gardner
Title:	President

Jurisdiction of Organization:  Delaware

Address:

741 Calle Plano
Camarillo, CA  93102

[Signature Page to Guaranty]

S-1

Address for the Trustee:

U.S. Bank National Association

EP-MN-WS3C
60 Livingston Avenue
St. Paul, Minnesota  55107-2292

Attn: Corporate Trust Department

[Signature Page to Guaranty]

S-2

EXHIBIT A TO GUARANTY

FORM OF JOINDER AGREEMENT

JOINDER AGREEMENT

This JOINDER AGREEMENT, dated as of___, 200_ (this “Agreement”), is by __________________________, a _______ _____________ formed under the laws of the State of __________________________ (the “Joining Party”), and is delivered to U.S. National Bank Association, as trustee (in such capacity, the “Trustee”) for the Holders from time to time party to the Indenture dated as of September 22, 2004 (as amended by that certain First Supplemental Indenture dated November 3, 2006, that certain Second Supplemental Indenture dated September 24, 2007, and that certain Third Supplemental Indenture, dated as of the date hereof (the “Third Supplemental Indenture”), and as the same may be further amended, restated or otherwise modified from time to time, the “Indenture”), and pursuant to Section 25 of that certain Guaranty, dated as of October 16, 2009, executed by each Guarantor party thereto in favor of the Trustee (the “Guaranty”).  Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Guaranty.

Pursuant to Section 25 of the Guaranty, by its execution of this Agreement, the Joining Party hereby becomes a party to the Guaranty bound by all of the terms and conditions thereof, and, from and after the date hereof, is a Guarantor bound by all of the obligations of a Guarantor under the Guaranty.  The Joining Party hereby acknowledges that by becoming a Guarantor, the Joining Party absolutely and unconditionally guaranties the payment and performance of the “Obligations” under the Guaranty.  The Joining Party hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms, provisions, obligations and conditions applicable to a Issuer under the Guaranty, as amended hereby.

This Agreement and any amendments, waivers, consents or supplements hereto or in connection herewith may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document.

This Agreement shall be binding upon the parties hereto and their respective executors, administrators, other legal representatives, successors and assigns, and shall inure to the benefit of the Trustee, its successors and assigns and shall be governed by the laws of the State of New York without reference to principles of conflict of laws.

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

A-1

IN WITNESS WHEREOF, the Joining Party has executed this Agreement as of the date first above written.

	[                                     ]
	By:
	Name:
	Title:
Jurisdiction of Organization:
Address:

[Signature Page to Joinder Agreement]

A-2

EX-10.6

Exhibit 10.6

Form of

Voting and Lock-Up Agreement

Vitesse Semiconductor Corporation

Debt Conversion

October 16, 2009

Vitesse Semiconductor Corporation

741 Calle Plano

Camarillo, CA  93012

Attention: General Counsel and Chief Financial Officer

Ladies and Gentlemen:

This Voting and Lock-up Agreement (this “Agreement”) is being delivered to you in connection with the Debt Conversion Agreement dated as of the date hereof (the “Conversion Agreement”) between Vitesse Semiconductor Corporation (the “Company”) and the holders of the Company’s 1.50% Convertible Subordinated Debentures due 2024 (the “Notes”) signatory thereto (each, a “Noteholder”), pursuant to which each Noteholder has agreed to exchange its Notes and the Company shall issue to each Noteholder, as applicable, a combination of cash, shares of the Company’s common stock, par value $0.01 (the “Common Stock”) and the Company’s 8% Convertible Second Lien Debentures due 2014 (the “New Notes”) and, to certain of the Noteholders, shares of the Company’s Series B Participating Non-Cumulative Convertible Preferred Stock (the “Preferred Shares” and together with the Common Stock and New Notes issued pursuant to the Conversion Agreement, the “New Securities”).

The undersigned agrees that, for a period (the “Lock-Up Period”) beginning on the date hereof and ending on the earlier of (i) the record date (the “Record Date”) (inclusive) as identified in a notice of special meeting of the stockholders to be provided to the Company’s stockholders in connection with a proposed amendment to the Company’s certificate of incorporation to increase the number of authorized shares of Common Stock (the “Amendment”), (ii) the date that is three weeks from the issuance of the New Securities or (iii) November 15, 2009, the undersigned will not, subject to the terms hereof, sell or transfer any shares of Common Stock issued to the undersigned pursuant to the Conversion Agreement (including any shares of Common Stock issued upon conversion of the New Notes or Preferred Shares) (the “Locked-Up Securities”). Notwithstanding the above, the undersigned may sell or transfer all or a portion of the Locked-Up Securities if the transferee of such Locked-Up Securities executes a Voting and Lock-Up Agreement with respect to such Locked-Up Securities substantially in the form hereof..  For the avoidance of doubt, this Agreement shall not restrict or limit in any way the pledge, sale of option or contract to purchase or sell, loan, or swap, of the Locked-Up Securities.

The undersigned further agrees, to the extent the undersigned beneficially owns, and is entitled to vote or cause to be voted, the Locked-up Securities, to vote, or cause to be voted, the Locked-Up Securities, in whatever manner as shall be necessary to ensure, that at each special meeting of the Company’s stockholders at which there is a vote to consider the proposed Amendment, the undersigned will vote to approve such Amendment.

The undersigned hereby constitutes and appoints the Chief Executive Officer and the Chief Financial Officer of the Company, and each of them, with full power of substitution, as the proxies of the parties, solely with respect to the matters set forth herein the approval of the Amendment, and hereby authorizes each of them to represent and to vote the Locked-up Securities solely with respect to the Amendment, and with respect to no other matter (and reserves the right to vote or cause the Locked-Up Securities to be voted on any other matter), if and only if the undersigned (i) fails to vote or (ii) attempts to vote (whether by proxy, in person or by written consent), in a manner which is not in favor of the Amendment, all of such party’s Locked-Up Securities (to the extent the undersigned beneficially owns, and is entitled to vote or cause to be voted, the Locked-up Securities)  in favor of the approval of the Amendment in accordance with the terms and provisions of this Agreement.  The proxy granted pursuant to the immediately preceding sentence is given in consideration of the agreements and covenants of the Company and the parties in connection with the transactions contemplated by this Agreement and, as such, is coupled with an interest and shall be irrevocable unless and until this Agreement terminates or expires pursuant its terms.  Each party hereto hereby revokes any and all previous proxies with respect to the shares of Locked-Up Securities  and shall not hereafter, unless and until this Agreement terminates or expires, purport to grant any other proxy or power of attorney with respect the Locked-Up Securities , deposit any Locked-Up Securities into a voting trust or enter into any agreement (other than this Agreement), arrangement or understanding with any person, directly or indirectly, to vote, grant any proxy or give instructions with respect to the voting of the Locked-Up Securities , in each case, with respect to any of the matters set forth herein.  For the avoidance of doubt, the undersigned may sell any or all Locked-Up Securities without any restriction after the Lock-Up Period.

The undersigned hereby acknowledges and agrees that the breach of this Agreement by the undersigned would cause irreparable damage to the Company and that the Company will not have an adequate remedy at law; therefore, the obligations of the undersigned under this Agreement shall be enforceable by a decree of specific performance issued by a court of competent jurisdiction, and appropriate injunctive relief may be applied for and granted in connection therewith.  Such remedies shall, however, be cumulative and not exclusive and shall be in addition to any other remedies which any party may have under this Agreementor otherwise.

If for any reason the Conversion Agreement shall be terminated prior to the Closing Date (as such term is defined in the Conversion Agreement), this Agreement shall likewise be terminated. Otherwise, this Agreement shall terminate on the earliest of (i) February 1, 2011 and (ii) the approval of the Amendment.

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The undersigned shall have no obligation to the Company except as expressly contained herein.  The undersigned is delivering this letter on the condition the Conversion Agreement is fully executed and effective as of the date hereof.

The undersigned further agrees and consents to the entry of stop transfer instructions with the Company’s transfer agent and registrar against the transfer of the undersigned’s shares of Locked-Up Securities except in compliance with the foregoing restrictions.

[Signature page follows]

3

IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Voting and Lock-Up Agreement as of the date first above written.

Very truly yours,
[HOLDER]
By:
	Name:
	Title:

4

EX-99.1

Exhibit 99.1

For Immediate Release

Contact:

Rich Yonker

Vitesse

+1.805.388.3700

Vitesse Announces Agreement to Restructure Debt

CAMARILLO, Calif. – October 19, 2009 – Vitesse Semiconductor Corporation (Pink Sheets: VTSS.PK), a leading provider of advanced integrated circuit solutions for Carrier and Enterprise networks, announced today that it has entered into debt restructuring agreements with its major creditors. Under one of these agreements, the holders of more than 96.7% of the Company’s 1.5% Convertible Subordinated Debentures (2024 Debentures) will exchange their 2024 Debentures for a combination of cash, equity securities, and secured convertible debentures. In addition, Vitesse reached a separate agreement with the holder of the Company’s $30 million senior secured loan to amend the terms of the loan to facilitate the debt restructuring.

To complete the agreements with the holders of the 2024 Debentures, Vitesse expects to:

·Pay approximately $6.4 million as cash consideration to the holders of 2024 Debentures that participate in the exchange and approximately $3.6 million in cash to satisfy its obligations to those holders of 2024 Debentures that are not participating in the debt restructuring transaction.

·Issue approximately $50 million in aggregate principal amount of new convertible secured debentures. These new convertible secured debentures would have a five-year term, an 8.0% annual interest rate, and a conversion price of $0.225 per share. The indebtedness under these new convertible secured debentures would be secured by a second-priority security interest in substantially all of Vitesse’s assets.

·Issue approximately 173 million shares of common stock along with approximately 771,000 shares of a new Series B Preferred Stock that will be convertible into common stock on a 100:1 basis and that will have a dividend preference relative to the common stock. The Series B Preferred Stock and the convertible secured debentures include restrictions on conversion that prohibit a holder of these securities from converting them if it would result in the holder beneficially owning more than 9.9% of Vitesse’s outstanding stock.

Assuming the full conversion of the Series B Preferred Stock into common stock, Vitesse’s outstanding shares would increase from approximately 231 million to approximately 481 million shares. The Company does not currently have a sufficient amount of common stock authorized to permit the conversion of the new convertible debentures into common stock.

The Company plans to seek shareholder approval of an increase in the authorized shares of common stock to permit the full conversion of the convertible secured debentures. If Vitesse has not obtained shareholder approval on or prior to February 15, 2010, Vitesse will pay the

debenture holders on February 16, 2010, an additional monthly payment equal to 1.0% of the outstanding principal amount of the new convertible debentures, and Vitesse will be required to pay the additional amount each month until it has obtained shareholder approval. If Vitesse has not obtained shareholder approval prior to February 15, 2011, the holders will have the option to convert the notes for cash as further described in the new Indenture.

Amendment to the Senior Secured Loan Terms

In connection with the restructuring of the 2024 Debentures, the Company will make at least a $5.0 million partial repayment of Vitesse’s senior secured loan. Beginning on October 16, 2009, the effective rate on this loan will be 8.5% per annum in cash, plus 2.0% payment-in-kind interest, plus an additional 0.3% payment-in-kind interest for every $1 million below $15 million of the senior term loan under the Loan Agreement that is not paid down by the Company.

Closing Conditions and Extended Forbearance

The restructuring is subject to a number of closing conditions, including certain regulatory approvals. Vitesse currently expects the restructuring transaction to close prior to November 16, 2009. In connection with the restructuring agreements, Vitesse entered into a forbearance agreement with the holders of the 2024 Debentures pursuant to which the forbearing holders of the 2024 Debentures have agreed to not pursue any remedies with respect to events of default under the 2024 Debentures during the period from October 16, 2009 until the termination of the restructuring agreements. Vitesse has agreed as part of this forbearance arrangement to enter into an amendment to the Indenture governing the 2024 Debentures pursuant to which Vitesse agreed to add subsidiary guarantees and to provide the 2024 Debentures with a second priority security interest in substantially all of Vitesse’s assets. Additionally, Vitesse has agreed to pay additional interest on the 2024 Debentures, which will be deemed waived in whole or in part depending on when and if the restructuring transaction closes. The Company’s Current Report on Form 8-K that the Company is filing today provides additional information about the terms of the debt restructuring agreements.

Debt Restructuring Process

In November 2008, Vitesse’s Board of Directors formed a Strategic Development Committee (SDC) for the purpose of exploring strategic alternatives to refinance the 2024 Debentures. This contemplated debt restructuring follows a thorough process undertaken by the Company, working in conjunction with the SDC, to review possible alternatives, which included discussions with numerous potential strategic and financial investors as well as the holders of the 2024 Debentures. The Company’s Current Report on Form 8-K that the Company is filing today provides additional information about the process related to this debt restructuring.

Management expects that this debt restructuring will enable a smooth resolution in the near-term of the issues relating to the Company’s debt. Management believes that the removal of the financial risk posed by the repurchase rights of the holders of the Company’s 2024 Debentures and the resulting stronger balance sheet will also reinforce confidence in the Company’s future by its stakeholders, including its employees, customers, and vendors.

The contemplated debt restructuring would only be available to, and any new securities would be offered only to, existing holders of the 2024 Debentures, all of which are accredited investors or

persons other than U.S. persons, in a transaction that is exempt from the registration requirements of the Securities Act of 1933 (the Securities Act). Any new securities issued in connection with the proposed debt restructuring have not been and will not be registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act.

This announcement does not constitute an offer to sell, or the solicitation of an offer to purchase, any securities. The contemplated transaction, or any other transaction, including any other restructuring proposal, if made, will be made pursuant to definitive documentation to be provided to eligible holders.

About Vitesse

Vitesse designs, develops, and markets a diverse portfolio of high-performance, cost-competitive semiconductor solutions for Carrier and Enterprise networks worldwide. Engineering excellence and dedicated customer service distinguish Vitesse as an industry leader in Gigabit Ethernet, Ethernet-over-SONET, Optical Transport, and other applications. Additional company and product information is available at www.vitesse.com.

# # #

Vitesse is a registered trademark in the United States and/or other jurisdictions of Vitesse Semiconductor Corporation. All other trademarks or registered trademarks mentioned herein are the property of their respective holders.

Safe Harbor Statement:

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements regarding Vitesse’s plans, intentions and expectations. Such statements include without limitation, statements regarding Vitesse’s proposed restructuring transaction and the impact on the Company and its shareholders from such transaction. Such statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those projected. Vitesse cannot assure that it will be successful in completing the contemplated transaction or any other restructuring proposal, on the terms outlined in this press release or otherwise. A more extensive discussion of the risk factors that could impact these areas and Vitesse’s overall business and financial performance can be found in Vitesse’s reports filed with the Securities and Exchange Commission. The risks included above are not exhaustive. Vitesse expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in the Vitesse’s expectations or any change in events, conditions or circumstances on which any such statement is based.