Document:

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 in  connection

 

 

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:

 

1        Acknowledgement
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.

 

2      Forbearance.  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.

 

3      No 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.

 

4      Representations
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.

 

5      Forbearance
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.

 

6      Representation
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.

 

7      Covenants.

 

(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.

 

8      Conditions.  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”).

 

9      Release.  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.

 

10    Counterparts.  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

 

11    Effectiveness.  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.

 

12    APPLICABLE 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.

 

13    Entirety.  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.

 

 

14    Severability.  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.

 

15    Successors 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).

 

16    Notices.  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.

 

17    Waivers 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.

 

18    Captions. 
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: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:

 

1                        Acknowledgement
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.

 

2                  Forbearance.  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.

 

2

 

3                  No 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.

 

4                  Representations 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.

 

5                  Interest.  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.

 

6                  Representation 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).

 

7                  Covenants.

 

(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

 

3

 

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.

 

8                  Conditions.  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.

 

9                  Release.  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.

 

10            Counterparts.  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.

 

11            Effectiveness.  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.

 

12            APPLICABLE 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.

 

13            Entirety.  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.

 

4

 

14            Severability.  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.

 

15            Successors 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.

 

16            Notices.  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.

 

17            Waivers 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.

 

18            Captions. 
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]

 

5

 

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

  

 

1

 

	
   

  	
  WHITEBOX
  VSC LTD., as Lender and Agent under the Loan Agreement

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jonathan Wood

  
	
   

  	
  Name:

  	
  Jonathan Wood

  
	
   

  	
  Title:

  	
  Director

  

 

2

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