Summary of VITESSE SEMICONDUCTOR CORP

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 . . .

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 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.

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.

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.