SENIOR UNSECURED CONVERTIBLE NOTE PURCHASE AGREEMENT

EXECUTION COPY

SENIOR UNSECURED

CONVERTIBLE NOTE

PURCHASE AGREEMENT

BY AND BETWEEN

VITESSE SEMICONDUCTOR CORPORATION

AND

WHITEBOX VSC, LTD.

August 23, 2007

SENIOR UNSECURED CONVERTIBLE NOTE PURCHASE AGREEMENT

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

RECITALS

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

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

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

AGREEMENT

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

ARTICLE I

DEFINITIONS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“ Initial Closing ” shall have the meaning ascribed to such term in Section 3.1(a).

“ Initial Closing Date ” shall have the meaning ascribed to such term in Section 3.1(a).

“ Initial Note ” shall have the meaning ascribed to such term in Section 2.1.

“ Initial Purchase Price ” shall have the meaning ascribed to such term in Section 2.1.

“ Intellectual Property ” means (i) all proprietary rights, privileges and priorities provided under U.S., state and foreign law relating to U.S. and foreign patents and patent applications, trademarks, service marks and registrations thereof and applications therefor, copyrights and copyright registrations and applications, mask works and registrations thereof, know-how, and

trade secrets; (ii) proprietary inventions, discoveries, ideas, technology, data, information, and processes; (iii) proprietary drawings, designs, licenses, computer programs and software, and technical information including but not limited to proprietary information embodied in material specifications, processing instructions, equipment specifications, product specifications, confidential data, electronic files, research notebooks, invention disclosures, research and development reports and the like related thereto; and (iv) all amendments, modifications, and improvements to any of the foregoing.

“ Intellectual Property Rights ” shall have the meaning ascribed to such term in Section 4.13.

“ Knowledge ” means actual knowledge of a fact or the knowledge which such person could reasonably be expected to have based on reasonable inquiry. The knowledge of an entity shall include the knowledge of the individuals who are executive officers of such entity at the time in question.

“ Legend Removal Date ” shall have the meaning ascribed to such term in Section 6.9(c).

“ Liens ” means liens, mortgages, charges, security interests, claims, voting trusts, pledges, encumbrances, options, assessments, restrictions, or third-party or spousal interests of any nature.

“ Material Adverse Effect ” means any effect that could reasonably be expected to materially and adversely affect (a) the business, operations, results of operations, prospects, assets (including intangible assets), liabilities or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a whole, or (b) the ability of the Company to perform its obligations under this Agreement or any of the Transaction Documents or any other agreement or instrument to be entered into in connection with this Agreement.

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

“ Permitted Acquisition ” shall mean an acquisition by the Company that meets the following criteria: (i) the acquisition is not a hostile acquisition or takeover and the acquired business is in the same line of business as the Company and (ii) no Event of Default or Default (as such terms are defined in the Loan Agreement) has occurred and is continuing or would be caused thereby under the Loan Agreement.

“ Person ” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“ Plan ” means each employee benefit plan (whether in existence on as of the date hereof or thereafter instituted), as such term is defined in Section 3 of ERISA, maintained for the benefit of employees, officers or directors of the Company or of any ERISA Affiliate.

“ Product Liability ” means any liability, claim or expense, including but not limited to attorneys’ fees and medical expenses, arising in whole or in part out of a breach of any express or implied product warranty by the Company, strict liability in tort, negligent manufacture of

product, negligent provision of services, product recall, or any other allegation of liability arising from the design, testing, manufacture, packaging, labeling (including instructions for use), or sale of products.

“ Purchased Securities ” means the Convertible Notes and the Conversion Shares.

“ Registration Rights Agreement ” means the Registration Rights Agreement among the Company and the Investor in the form attached hereto as Exhibit B .

“ Registration Statement ” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale by the Investor of the Conversion Shares.

“ Reportable Event ” means a “reportable event” as defined in Section 4043 of ERISA and the regulations issued under such Section, with respect to a Plan, excluding, however, such events as to which the PBGC by regulation has waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event; provided , that a failure to meet the minimum funding standard of Section 412 of the Code and Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any waiver in accordance with Section 412(d) of the Code.

“ Required Approvals ” shall have the meaning ascribed to such term in Section 4.5.

“ Required Minimum ” means, as of any date, the maximum aggregate number of shares of Common Stock then issued or issuable in the future pursuant to the Transaction Documents, including any Conversion Shares issuable upon exercise or conversion in full of all Notes, ignoring any conversion or exercise limits set forth therein.

“ Rule 144 ” means Rule 144 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same effect as such Rule.

“ SEC ” means the United States Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

“ SEC Reports ” means all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof.

“ Securities Act ” means the United States Securities Act of 1933, as amended, and all regulations promulgated thereunder.

“ Short Sales ” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock).

“ Subsequent Closing ” shall have the meaning ascribed to such term in Section 3.1(b).

“ Subsequent Closing Date ” shall have the meaning ascribed to such term in Section 3.1(b).

“ Subsidiary ” means any subsidiary of the Company as set forth on Schedule 4.1 and shall, where applicable, include any subsidiary of the Company formed or acquired after the date hereof.

“ Term Loan ” has the meaning set forth in the Recitals.

“ Trading Day ” means a day on which the Nasdaq Stock Market (or such other Trading Market on which the Company’s Common Stock is then listed or quoted for trading) is open for trading.

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

“ Transaction Documents ” means this Agreement, the Notes, the Registration Rights Agreement and such other documents, instruments and agreements executed in connection with the consummation of the transactions contemplated hereby.

“ Variable Rate Transaction ” shall have the meaning ascribed to such term in Section 6.8(b).

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

Section 1.2 Definitional Provisions .

(a)     The words “hereof,” “herein,” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provisions of this Agreement.

(b)     The terms defined in the singular shall have a comparable meaning when used in the plural, and vice versa. Terms referring to a masculine gender shall be deemed to refer to the feminine or neuter genders, as applicable.

(c)     References to an “Exhibit” or to a “Schedule” are, unless otherwise specified, to one of the Exhibits or Schedules attached to or referenced in this Agreement, and references to an “Article” or a “Section” are, unless otherwise specified, to one of the Articles or Sections of this Agreement.

(d)     The term “dollars” or “$” shall refer to the currency of the United States of America.

(e)     Unless otherwise specified, all references to time shall refer to Minneapolis, Minnesota time.

ARTICLE II

PURCHASE AND SALE OF CONVERTIBLE NOTES

Section 2.1 Purchase and Sale of Initial Notes . Subject to the terms and conditions of this Agreement, the Investor agrees to purchase on the Initial Closing Date, and the Company agrees to sell and issue to the Investor on the Initial Closing Date, a Note, in substantially the form attached hereto as Exhibit A , in the aggregate original principal amount of not less than $10,000,000 nor greater than $30,000,000, with the original principal amount of such Note (the “ Initial Note ”) to be determined by the Investor in its sole discretion, at a purchase price equal to 100% of the principal amount thereof (the “ Initial Purchase Price ”); provided , however , that if the Required Lenders specified in the Loan Agreement agree to exercise their option pursuant to Sections 2.1(b) and 2.2(b) of the Loan Agreement to increase the amount of the Term Loan from $30,000,000 to $45,000,000 within ninety (90) days of the closing date under the Loan Agreement, then the maximum principal amount of the Notes purchasable under this Agreement shall be increased to $45,000,000. Upon the purchase of the Initial Note, the Company shall pay down the Term Loan outstanding under the Loan Agreement by the amount of such Initial Note.

Section 2.2 Purchase and Sale of Additional Notes . Between the Initial Closing Date and the third anniversary of the closing date under the Loan Agreement, the Investor will have the option, in its sole discretion, to purchase additional Notes (the “ Additional Notes ”) in an amount not less than $5,000,000 for each such purchase of Additional Notes, with such purchase to be on the same terms and conditions specified in this Agreement with respect to the purchase of the Initial Note; provided , that the Investor may not purchase more than an aggregate of $20,000,000 of Additional Notes pursuant to this Agreement, provided further that, at no time shall the sum of (i) the principal amount of the Initial Note and (ii) the principal amount of the Additional Notes exceed $30,000,000; provided further , however , that if the Required Lenders specified in the Loan Agreement agree to exercise their option pursuant to Sections 2.1(b) and

2.2(b) of the Loan Agreement to increase the amount of the Term Loan from $30,000,000 to $45,000,000 within ninety (90) days of the closing date under the Loan Agreement, then the maximum principal amount of Notes which may be purchased under this Agreement shall be increased to $45,000,000 and the maximum principal amount of the Additional Notes which may be purchased under this Section 2.2 shall be increased to $35,000,000; provided that, at no time shall the sum of (i) the principal amount of the Initial Note and (ii) the principal amount of the Additional Notes exceed $45,000,000. The Additional Notes will be issued to the Investor in the original principal amount of such Additional Notes, at a purchase price equal to 100% of the principal amount thereof. Upon the purchase of the Additional Notes, the Company shall pay down the Term Loan outstanding under the Loan Agreement by the amount of such Additional Notes.

Section 2.3 Note Conversion . The Investor may, at its option, purchase shares of the Company’s Common Stock by converting amounts outstanding under the Initial Note or, if applicable, the Additional Notes at the applicable Conversion Price as provided therein (in each case, a “ Note Conversion Closing ”). At each Note Conversion Closing, the Company shall issue certificates representing any shares purchased under this Section 2.3 in a form acceptable to such Investor and such Investor’s counsel, and such Investor shall pay the Conversion Price of $2.00 per share (subject to adjustment as provided therein) for such shares by surrendering the applicable Note(s) to the Company.

Section 2.4 Use of Proceeds . The Company shall use the all of the cash proceeds of the sale of the Notes (including the Initial Note and any Additional Notes) to pay down the outstanding principal balance under the Term Loan.

ARTICLE III

THE CLOSING

Section 3.1 Closings .

(a)     Initial Closing . The purchase and sale of the Initial Notes shall take place at the offices of the Company and on a date (the “ Initial Closing Date ”) within ten (10) business days of the Investor’s notice to the Company, on or prior to the third anniversary of the closing date under the Loan Agreement, of the exercise of its option to purchase the Initial Note in accordance with the terms set forth in this Agreement (the “ Initial Closing ”). At the Initial Closing, the Company shall deliver to the Investor the Initial Note that such Investor is purchasing against delivery to the Company by the Investor of a check or wire transfer in the amount of such Investor’s Initial Note, payable to the Company’s order (or by wire of funds in such amount to the Company’s designated bank account).

(b)     Subsequent Closings . The purchase and sale of the Additional Notes shall occur within five (5) business days of an Investor’s notice to the Company of the exercise of its option to purchase the Additional Notes in accordance with the terms set forth in Section 2.2 of this Agreement (each such closing, a “ Subsequent Closing ” and each such closing date, a “ Subsequent Closing Date ”).

Section 3.2 Closing Deliveries .

(a)     Company Deliveries . On the Initial Closing Date, the Company shall deliver or cause to be delivered to the Investor the following:

(ii)            the Initial Note registered in the name of the Investor in the principal amount of the Initial Note, in the form attached hereto as Exhibit A ;

(iii)           the Registration Rights Agreement, in substantially the form attached hereto as Exhibit B (the “ Registration Rights Agreement ”), duly executed by the Company;

(iv)           evidence of the closing of the transactions contemplated by the Loan Agreement; and

(v)            such certificates and other documents as shall be required to consummate the transactions contemplated by this Agreement.

(b)     Investor Deliveries . On the Initial Closing Date, the Investor shall deliver or cause to be delivered to the Company the following:

(ii)            the Registration Rights Agreement duly executed by the Investor; and

(iii)           the payment of the Initial Purchase Price by the Investor, in the manner specified in Section 3.1 above.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Attached hereto as Schedule A are the Disclosure Schedules containing sections numbered to correspond to the sections of this Article IV (the “ Disclosure Schedules ”). Except as specifically set forth in the corresponding section of such Disclosure Schedules (or in any other section of the Disclosure Schedules so long as the applicability of such disclosure to the particular representation and warranty which such disclosure is intended to modify is reasonably apparent), the Company hereby represents and warrants to the Investor as follows as of the date hereof:

Section 4.1           Subsidiaries . All of the direct and indirect subsidiaries (the “ Subsidiaries ”) of the Company are set forth on Schedule 4.1 . The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.

Section 4.2           Organization and Qualification . The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. The Company and each of the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in a Material Adverse Effect, and no proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

Section 4.3           Authorization; Enforcement . The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, its board of directors or its shareholders in connection therewith other than in connection with the Required Approvals (as defined in Section 4.5 below). Each Transaction Document has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

Section 4.4           No Conflicts . The execution, delivery and performance of the Transaction Documents by the Company, the issuance and sale of the Purchased Securities and the consummation by the Company of the other transactions contemplated hereby and thereby do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals (as defined in Section 4.5 below) and the accuracy of the representations and warranties of the Investor set forth in Article V hereof, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or any Subsidiary is subject (including federal

and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

Section 4.5           Filings, Consents and Approvals . Assuming the accuracy of the representations and warranties of the Investor in Article V hereof, the Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than (i) filings required pursuant to Section 6.10 of this Agreement, (ii) the filings required or contemplated by the Registration Rights Agreement, (iii) application(s) to each applicable Trading Market for the listing of the Conversion Shares for trading thereon in the time and manner required thereby, (iv) the filing of Form D with the SEC and such filings as are required to be made under applicable state securities laws and (v) any filings required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (collectively, the “ Required Approvals ”).

Section 4.6           Issuance of the Securities . The Notes are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will constitute the valid and binding obligations of the Company enforceable against the Company in accordance with its terms except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents. The Conversion Shares, when issued in accordance with the terms of the Transaction Documents, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents. The Company has reserved from its duly authorized capital stock the number of shares of Common Stock equal to the Conversion Shares.

Section 4.7           Capitalization . The capitalization of the Company is as set forth on the Disclosure Schedules under the caption referencing this Section 4.7. The Company has not issued any capital stock since March 31, 2007, other than pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plans and pursuant to the conversion or exercise of Common Stock Equivalents outstanding as of March 31, 2007. No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as set forth on the Disclosure Schedules or as a result of the purchase and sale of the Purchased Securities, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. The issuance and sale of the

Purchased Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Investor) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any shareholder, the Board of Directors of the Company or others is required for the issuance and sale of the Purchased Securities. There are no stockholder agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party (other than those contemplated in connection with the Transaction Documents) or, to the knowledge of the Company, between or among any of the Company’s shareholders.

Section 4.8           Financial Statements . All consolidated financial statements or cash flow statements for the Company and its Subsidiaries provided to the Investor fairly present in all material respects the Company’s consolidated financial condition, results of operations and cash flows. There has not been any material deterioration in the Company’s consolidated financial condition since the date of the most recent financial statements and cash flows provided by the Company to the Investor.

Section 4.9          Material Changes; Undisclosed Events, Liabilities or Developments . Since March 31, 2007, (i) there has been no event, occurrence or development that has had or that is reasonably expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its shareholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer or director, except pursuant to existing Company stock option plans. Except for the issuance of the Purchased Securities contemplated by this Agreement or as set forth on Schedule 4.9 , no event, liability or development has occurred or exists with respect to the Company or its Subsidiaries or their respective business, properties, operations or financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least 1 Trading Day prior to the date that this representation is made.

Section 4.10        Litigation . Except as set forth in the Disclosure Schedules under the caption referencing this Section 4.10, there is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “ Action ”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Purchased Securities or (ii) involves claims for more than $250,000. Except as set forth in the Disclosure Schedules, there has not been, and to the knowledge of the Company there is not pending or

contemplated, any investigation by the SEC involving the Company or any current or former director or officer of the Company. The SEC has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.

Section 4.11        Regulatory Compliance . Except as set forth in the Disclosure Schedules, neither the Company nor any Subsidiary (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business and all such laws that affect the environment, except in each case as is not reasonably expected to result in a Material Adverse Effect. The Company is not engaged as one of its important activities in extending credit for margin stock (under Regulations T and U of the Federal Reserve Board of Governors). The Company has complied in all material respects with the Federal Fair Labor Standards Act. The Company has not violated any laws, ordinances or rules, the violation of which could reasonably be expected to have a Material Adverse Effect. Neither the Company’s nor any of its Subsidiaries’ properties or assets has been used by the Company or any Subsidiary or, to the best of the Company’s knowledge, by previous persons, in disposing, producing, storing, treating, or transporting any Hazardous Substances other than in compliance in all material respects with applicable Environmental Laws and Regulations. The Company and each of its Subsidiaries have obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all government authorities that are necessary to continue its business as currently conducted, except where the failure to obtain such consents, approvals or authorizations or make such declarations or filings would not, individually or in the aggregate, have a Material Adverse Effect.

Section 4.12        Title to Assets . The Company and each of the Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for Liens that do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance in all material respects. Except as set forth in the Disclosure Schedules, there are no actual, threatened or alleged defaults with respect to any leases of real property under which the Company or any of its Subsidiaries is lessee or lessor which could reasonably be expected to result in a Material Adverse Effect.

Section 4.13        Patents and Trademarks . The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks,

trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights necessary or material for use in connection with their respective businesses which the failure to so have could have a Material Adverse Effect (collectively, the “ Intellectual Property Rights ”). Neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of the Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person. To the knowledge of the Company, all such Intellectual Property Rights are enforceable, and there is no existing infringement by another Person of any of the Intellectual Property Rights.

Section 4.14        Insurance . The Disclosure Schedules under the caption referencing this Section 4.14 sets forth each insurance policy (including type of insurance and coverage limits) maintained by the Company. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business.

Section 4.15        Transactions With Affiliates and Employees . None of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $100,000 other than for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company.

Section 4.16        Certain Fees . Except for fees payable to Credit Suisse Securities (USA) LLC, no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Investor shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section 4.16 that may be due in connection with the transactions contemplated by the Transaction Documents.

Section 4.17        Private Placement . Assuming the accuracy of the Investor’s representations and warranties set forth in Article V, no registration under the Securities Act is required for the offer and sale of the Purchased Securities by the Company to the Investor as contemplated hereby. The issuance and sale of the Purchased Securities hereunder does not contravene the rules and regulations of the Trading Market on which the Common Stock is listed or designated.

Section 4.18        Investment Company . The Company is not, and immediately after receipt of payment for the Purchased Securities will not be, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The Company shall conduct its business in a manner so that it will not become subject to the Investment Company Act of 1940, as amended.

Section 4.19        Registration Rights . Other than the Investor, no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company, other than registration statements which have already been filed and declared effective.

Section 4.20        Exchange Act Registration . The Company’s Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the SEC is contemplating terminating such registration.

Section 4.21        Disclosure . All disclosure furnished by or on behalf of the Company to the Investor regarding the Company, its business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases and the SEC Reports filed or disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading. The Company acknowledges and agrees that the Investor are not making and has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Article V below.

Section 4.22        No Integrated Offering . Assuming the accuracy of the Investor’s representations and warranties set forth in Article V, neither the Company nor any Person acting on its behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Purchased Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of the Purchased Securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.

Section 4.23       Solvency . After the issuance of the Notes and after giving effect thereto, (a) the fair value of the assets of the Company, at a fair valuation, will exceed its debts and liabilities, subordinated, contingent or otherwise; (b) the present fair salable value of the property of the Company will be greater than the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (c) the Company will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (d) the Company will not have unreasonably small capital with which to

conduct the business in which it is engaged as such business is proposed to be conducted following the Initial Closing Date or any Subsequent Closing Date, as applicable.

Section 4.24        Tax Status and Payments; Pension Contributions . Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and each Subsidiary has filed all necessary federal, state and foreign income and franchise tax returns and has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which has been asserted or threatened against the Company or any Subsidiary. Except as set forth in the Disclosure Schedules, the Company is unaware of any claims or adjustments proposed for any of the Company’s prior tax years which could result in additional taxes becoming due and payable by the Company. The Company has paid all amounts necessary to fund all present pension, profit-sharing and deferred compensation plans in accordance with their terms, and the Company has not withdrawn from participation in, and has not permitted partial or complete termination of, or permitted the occurrence of any other event with respect to, any such plan which could reasonably be expected to result in any liability of the Company, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency.

Section 4.25        Employee Benefit Plans . Each Plan is in substantial compliance with all applicable requirements of ERISA and the Code and with all material applicable rulings and regulations issued under the provisions of ERISA and the Code setting forth those requirements. No Reportable Event has occurred and is continuing with respect to any Plan. All of the minimum funding standards applicable to such Plans have been satisfied, and there exists no event or condition which would reasonably be expected to result in the institution of proceedings to terminate any Plan under Section 4042 of ERISA. With respect to each Plan subject to Title IV of ERISA, as of the most recent valuation date for such Plan, the present value (determined on the basis of reasonable assumptions employed by the independent actuary for such Plan) of such Plan’s projected obligations did not exceed the fair market value of such Plan’s assets.

Section 4.26        No General Solicitation . Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Purchased Securities by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the Investor and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.

Section 4.27        Accountants . The Company’s accounting firm is set forth on Schedule 4.27 of the Disclosure Schedule. To the knowledge and belief of the Company, such accounting firm (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to the financial statements at September 30, 2007 and for the two years ending September 30, 2007.

Section 4.28        Acknowledgment Regarding the Investor’s Purchase of Securities . The Company acknowledges and agrees that the Investor is acting solely in the capacity of an arm’s-length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The Company further acknowledges that the Investor is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction

Documents and the transactions contemplated thereby and any advice given by such Investor or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to such Investor’s purchase of the Purchased Securities. The Company further represents to the Investor that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

Section 4.29        Acknowledgement Regarding the Investor’s Trading Activity . Anything in this Agreement or elsewhere herein to the contrary notwithstanding, it is understood and acknowledged by the Company (i) that the Investor has not been asked by the Company to agree, nor has the Investor agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Purchased Securities for any specified term; (ii) that past or future open market or other transactions by the Investor, including Short Sales, and specifically including, without limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private placement transactions, may negatively impact the market price of the Company’s publicly traded securities; (iii) that the Investor, and counter-parties in “derivative” transactions to which the Investor is a party, directly or indirectly, presently may have a “short” position in the Common Stock, and (iv) that the Investor shall not be deemed to have any affiliation with or control over any arm’s-length counter-party in any “derivative” transaction. The Company further understands and acknowledges that (a) the Investor may engage in hedging activities at various times during the period that the Purchased Securities are outstanding, including, without limitation, during the periods that the value of the Conversion Shares deliverable with respect to the Notes are being determined and (b) such hedging activities (if any) could reduce the value of the existing stockholders’ equity interests in the Company at and after the time that the hedging activities are being conducted.  The Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents.

Section 4.30        Regulation M Compliance . The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Purchased Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Purchased Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Company’s placement agent in connection with the placement of the Purchased Securities.

Section 4.31        Product Liability Claims . To the Company’s knowledge, all products manufactured, distributed or sold by or on behalf of the Company were merchantable, free from defects in design, specifications, processing, manufacture, material or workmanship, and suitable for the purpose for which they were intended. The Company has not incurred any uninsured or insured Product Liability that is reasonably expected, individually or in the aggregate, to have a Material Adverse Effect. The Company has maintained complete and accurate complaint histories regarding the Company’s products.

Section 4.32        Outstanding Borrowing . The Disclosure Schedules sets forth the amount of all indebtedness of the Company as of the date hereof, the liens that relate to such indebtedness and that encumber the Company’s assets and the name of each lender thereof. No holder of indebtedness of the Company is entitled to any voting rights in any matters voted upon by the holders of the Common Stock.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

The Investor represents and warrants to the Company for itself as follows:

Section 5.1 Authorization . Such Investor has full power and authority to enter into and perform under this Agreement in accordance with its terms. This Agreement has been duly authorized by all necessary action on the part of such Investor, has been duly executed and delivered by each such Investor, and is the valid and binding agreement of each such Investor and is enforceable against each such Investor in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and to judicial limitations on the remedy of specific enforcement and other equitable remedies.

Section 5.2 Purchase Entirely for Own Account . This Agreement is made with the Investor in reliance upon such Investor’s representation to the Company, which by such Investor’s execution of this Agreement the Investor hereby confirms, that the Purchased Securities will be acquired for investment for such Investor’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that such Investor has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, the Investor further represents that such Investor does not have any contract, undertaking, agreement or arrangement with any third party to sell, transfer or grant participations to such third party or to any third person, with respect to any of the Purchased Securities.

Section 5.3 Reliance Upon the Investor’s Representations; Restrictions on Resale . The Investor understands that none of the Notes or Conversion Shares have been registered under the Securities Act or any state securities laws by reason of their contemplated issuance in transactions exempt from the registration requirements of the Securities Act pursuant to Section 4(2) thereof or Rule 505 or 506 promulgated under the Securities Act and applicable state securities laws, and that the reliance of the Company and others upon these exemptions is predicated in part upon the representations and warranties of such Investor in this Article V. The Investor further understands that the Notes and the Conversion Shares may not be transferred or resold without (i) registration under the Securities Act and any applicable state securities laws, or (ii) an exemption from the requirements of the Securities Act and applicable state securities laws. The Investor also understands that any Conversion Shares will be issued without prior registration thereof under the Securities Act or applicable state securities laws in reliance upon Section 4(2) of the Securities Act and transactional exemptions from registration under applicable state securities laws based upon appropriate representations of the Investor. As such, the Conversion Shares will be subject to transfer restrictions similar to restrictions applicable to the Convertible Notes. The Investor understands (i) that an exemption from such registration is

not presently available pursuant to Rule 144 promulgated under the Securities Act by the SEC and (ii) that in any event such Investor may not sell any securities acquired hereunder pursuant to Rule 144 prior to the expiration of a one-year period (or such shorter period as the SEC may hereafter adopt) after such Investor has acquired such securities. The Investor understands that any sales pursuant to Rule 144 can be made only in full compliance with the provisions of Rule 144.

Section 5.4 Receipt of Information . The Investor represents that the Company has provided such Investor at a reasonable time prior to the execution of this Agreement sufficient opportunity to ask questions and receive answers from the Company’s management concerning the Company’s business, management and financial affairs and the terms and conditions of the offering of the Purchased Securities and the Conversion Shares and to obtain any additional information (which the Company possesses or can acquire without unreasonable effort or expense) as may be necessary to verify the accuracy of information furnished to such Investor. The Investor has reviewed the representations concerning the Company contained in this Agreement. The foregoing, however, does not limit or modify the representations and warranties of the Company in this Agreement or the right of the Investor to rely thereon.

Section 5.5 Investment Experience . The Investor represents that it is experienced in evaluating and investing in securities of companies in the development stage and acknowledges that it is able to fend for itself, can bear the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Notes and the Conversion Shares. If other than an individual, the Investor also represents it has not been organized for the purpose of acquiring the Notes and Conversion Shares.

Section 5.6 Accredited Investor . The Investor is an “accredited investor” within the meaning of SEC Rule 501 of Regulation D promulgated under the Act, as presently in effect.

Section 5.7 Legends . To the extent applicable, each certificate or other document evidencing any of the Purchased Securities shall be endorsed with the legends set forth in Section 6.9(b) hereof, and the Investor covenants that, except to the extent such restrictions are waived by the Company, such Investor shall not transfer the shares represented by any such certificate without complying with the restrictions on transfer described in the legends endorsed on such certificate:

The Company shall make a notation regarding the restrictions on transfer of the Conversion Shares or other Purchased Securities in its books and the Conversion Shares and other Purchased Securities shall be transferred on the books of the Company only if transferred or sold pursuant to an effective registration statement under the Securities Act covering the securities to be transferred or an opinion of counsel reasonably satisfactory to the Company that such registration is not required; provided , however , that (i) the Company will not require opinions of counsel for transactions made pursuant to Rule 144 except in unusual circumstances and (ii) the Company will not require opinions of counsel for transfers to affiliated entities managed by the same manager or managing partner or management company, or managed by an entity controlling, controlled by or under common control with such manager, managing partner or management company so long as the transferor certifies in writing to the Company that the

transferor is not receiving any consideration in connection with the transfer and so long as the transferee makes the representations and warranties contained in this Article V and will be subject to the terms of these restrictions to the same extent as if such transferee were an original Investor hereunder.

ARTICLE VI

COVENANTS

The Company covenants that for so long as any Notes remain outstanding:

Section 6.1 Financial Statements, Reports, Etc . The Company shall furnish to the Investor:

(a)     on or prior to December 31, 2009 (and as soon as available and in any event within 90 days (or such shorter period of time as shall be required by the SEC in connection with the filing of the Company’s annual reports with the SEC under the Exchange Act) after the end of each fiscal year of the Company thereafter), the consolidated financial statements of the Company and the Subsidiaries consisting of at least statements of income, cash flow and changes in stockholders’ equity for such year, and a consolidated balance sheet as at the end of such year, setting forth in each case in comparative form corresponding figures from the previous fiscal year, and the report, without qualification, of BDO Seidman LLP or other independent certified public accountants of recognized national standing selected by the Company, together with any management letters, management reports or other supplementary comments or reports to the Company or its board of directors furnished by such accountants;

(b)     as soon as available and in any event within 45 days (or such shorter period of time as shall be required by the SEC in connection with the filing of the Company’s quarterly reports with the SEC under the Exchange Act) after the end of each fiscal quarter, commencing with the fiscal quarter ending December 31, 2009, unaudited consolidated statements of income, cash flow and changes in stockholders’ equity for the Company and its Subsidiaries for such quarter and for the period from the beginning of such fiscal year to the end of such quarter, and a consolidated balance sheet of the Company as at the end of such quarter, setting forth in comparative form figures for the corresponding period for the preceding fiscal year, accompanied by a certificate signed by the chief financial officer of the Company stating that such financial statements present fairly the financial condition of the Company and the Subsidiaries and that the same have been prepared in accordance with GAAP (except for the absence of footnotes and subject to year-end audit adjustments as to the interim statements);

(c)     promptly after any officer of the Company becomes aware of any Default or Event of Default under this Agreement or the Notes, a notice describing the nature thereof and the action(s) the Company proposes to take with respect thereto;

(d)     promptly upon the mailing or filing thereof, copies of all financial statements, reports and proxy statements mailed to the Company’s stockholders, and copies of all

registration statements, periodic reports and other documents filed with the SEC (or any successor thereto) or any national securities exchange; and

(e)     promptly, from time to time, such other information regarding the business, financial condition, operations, property or affairs of the Company and its subsidiaries as the Investor may reasonably request.

Section 6.2 Inspection, Consultation and Advice . The Company shall permit the Investor and such persons as the Investor may designate, at the Investor’s expense, upon reasonable notice and at such times as the Investor may reasonably request to visit and inspect any of the properties of the Company, examine its books and records (including without limitation product complaint histories and related information) and take copies and extracts therefrom, discuss the affairs (including, without limitation, operations and relations with suppliers), finances and accounts of the Company with its officers, employees and public accountants (and the Company hereby authorizes said accountants to discuss with the Investor and any such designees such affairs, finances and accounts), and consult with the management of the Company as to such affairs, finances and accounts of the Company and its subsidiaries, all at reasonable times and upon reasonable notice; provided , that if no Default or Event of Default has occurred under the Notes and no event or circumstance that would constitute a Material Adverse Effect has occurred hereunder, the Investor shall not exercise such rights more than one (1) time during any calendar year; provided further , that upon and during the continuation of a Default or Event of Default under the Notes or upon the occurrence of an event or circumstance that would constitute a Material Adverse Effect hereunder, the Investor may exercise such inspection rights as many times as the Investor deem necessary, in their sole discretion, to protect the rights, interests and liens of the Investor.

Section 6.3 Transactions with Affiliates . Except for transactions contemplated by this Agreement or as otherwise approved by a majority of the disinterested directors on the Company’s Board of Directors, the Company shall not enter into any transaction with any director, officer, employee or holder of more than 5% of the outstanding capital stock of the Company, or to the knowledge of the Company, any member of the family of any such person, or any corporation, partnership, trust or other entity in which any such person, or member of the family of any such person, is a director, officer, trustee, partner or holder of more than 5% of the outstanding capital stock thereof, except for transactions on customary terms related to such person’s employment or service as a director of the Company. Except as specifically disclosed on Schedule 6.3 attached hereto or as otherwise required by this Agreement, the Company shall not use any proceeds of Purchased Securities to make distributions or loans to any shareholders of the Company or repay existing indebtedness for borrowed money obligations.

Section 6.4 Conditions to Closing . The Company shall use commercially reasonable efforts to cause the conditions set forth in Article VIII to be satisfied with respect to the Initial Closing or Subsequent Closing as soon as practicable.

Section 6.5 Reserve for Shares . The Company shall at all times reserve and keep available such number of its duly authorized but unissued shares of Common Stock as is necessary to comply with the terms of this Agreement and the Conversion Notes and Conversion Shares. The Company shall at all times reserve and keep available out of its duly authorized but

unissued shares of Common Stock such number of its duly authorized shares of Common Stock as is necessary to comply with the terms of this Agreement, its Certificate of Incorporation, as amended, and the Conversion Shares. If at any time the number of shares of authorized but unissued Common Stock are not sufficient to comply with the terms of this Agreement, the Convertible Notes and the Conversion Shares, the Company will promptly take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares of Common Stock as are sufficient for such purpose. The Company will obtain any authorization, consent, approval or other action by or make any filing with any court or administrative body that may be required under applicable securities laws in connection with the issuance of any shares issued by it in order to comply with the terms of this Agreement, the Convertible Notes and the Conversion Shares.

Section 6.6 Compliance with Law . The Company will conduct its business in compliance with all applicable laws, rules and regulations of the jurisdictions in which it is conducting business, including, without limitation, all applicable local, state and federal environmental laws and regulations, the failure to comply with which would have a Material Adverse Effect.

Section 6.7 Use of Proceeds . The Company shall use the cash proceeds of the Purchased Securities to pay down any outstanding principal amount remaining under the Term Loan.

Section 6.8 Dividends; Subsequent Equity Sales .

(a)     The Company shall not make any issuance whatsoever of Common Stock or Common Stock Equivalents which would cause any adjustment of the Conversion Price to the extent the holder(s) of the Notes and Conversion Shares would not be permitted to convert the outstanding Notes in full, ignoring for such purposes the conversion or exercise limitations therein. The Investor shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages.

(b)     Notwithstanding the foregoing, this Section 6.8 shall not apply with respect to an Exempt Issuance, except that no Variable Rate Transaction shall be an Exempt Issuance. “ Variable Rate Transaction ” means a transaction in which the Company issues or sells (i) any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of Common Stock either (A) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock or (ii) enters into any agreement, including, but not limited to, an equity line of credit, whereby the Company may sell securities at a future determined price.

Section 6.9 Transfer Restrictions .

(a)     The Conversion Shares may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Conversion Shares other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of an Investor or in connection with a pledge as contemplated in Section 6.9(b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Conversion Shares under the Securities Act. As a condition of transfer of Conversion Shares other than pursuant to an effective registration statement or Rule 144, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of an Investor under this Agreement and the Registration Rights Agreement.

(b)     The Investor agrees to the imprinting, so long as is required by this Section 6.9, of a legend on any of the Conversion Shares in the following form:

[NEITHER] THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE] [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY [AND THE SECURITIES ISSUABLE UPON [EXERCISE] [CONVERSION] OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

The Company acknowledges and agrees that the Investor may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Conversion Shares to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement and the Registration Rights Agreement and, if required under the terms of such arrangement, the Investor may transfer pledged or secured Conversion Shares to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company, and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required of such pledge. At the Investor’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or

secured party of Conversion Shares may reasonably request in connection with a pledge or transfer of the Conversion Shares, including, if the Conversion Shares are subject to registration pursuant to the Registration Rights Agreement, the preparation and filing of any required prospectus supplement under Rule 424(b) under the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of Selling Shareholders thereunder.

(c)     Certificates evidencing the Conversion Shares shall not contain any legend (including the legend set forth in Section 6.9(b) hereof): (i) following any sale of such Conversion Shares pursuant to the Registration Statement or Rule 144 or (ii) if such Conversion Shares are eligible for sale under Rule 144(k), or (iii) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the SEC). The Company shall cause its counsel to issue a legal opinion to its transfer agent promptly after the Effective Date if required by the transfer agent to effect the removal of the legend hereunder. If all or any portion of a Note is converted or exercised (as applicable) at a time when such Conversion Shares may be sold pursuant to the Registration Statement or under Rule 144(k) or if such legend is not otherwise required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the SEC), then such Conversion Shares shall be issued free of all legends. The Company agrees that at such time as such legend is no longer required under this Section 6.9(c), it will, no later than three Trading Days following the delivery by the applicable Investor to the Company or the transfer agent of a certificate representing Conversion Shares, as applicable, issued with a restrictive legend (such third Trading Day, the “ Legend Removal Date ”), deliver or cause to be delivered to such Investor a certificate representing such shares that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions to the transfer agent that enlarge the restrictions on transfer set forth in this Section 6.9(c). Certificates for Conversion Shares subject to legend removal hereunder shall be transmitted by the transfer agent to the applicable Investor by crediting the account of the Investor’s prime broker with the Depository Trust Company System.

(d)     In addition to the Investor’s other available remedies, the Company shall pay to the Investor, in cash, as liquidated damages and not as a penalty, for each $1,000 of Conversion Shares (based on the VWAP of the Common Stock on the date such Conversion Shares are submitted to the transfer agent) delivered for removal of the restrictive legend and subject to Section 6.9(c), $10 per Trading Day (increasing to $20 per Trading Day 3 Trading Days after such damages have begun to accrue) for each Trading Day after the second Trading Day following the Legend Removal Date until such certificate is delivered without a legend. Nothing herein shall limit any Investor’s right to pursue actual damages for the Company’s failure to deliver certificates representing any Conversion Shares as required by the Transaction Documents, and the Investor shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.

(e)     The Investor agrees that the removal of the restrictive legend from certificates representing Conversion Shares as set forth in this Section 6.9 is predicated upon the

Company’s reliance that such Investor will sell any Conversion Shares pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Conversion Shares are sold pursuant to a Registration Statement, they will be sold in compliance with the plan of distribution set forth therein.

Section 6.10 Securities Law Disclosure; Publicity . The Company shall, by 5:30 p.m. (New York City time) on the fourth Trading Day following the date hereof (or such shorter time period as shall be required by Form 8-K or otherwise agreed to by the parties), issue a Current Report on Form 8-K disclosing the material terms of the transactions contemplated hereby and attaching the Transaction Documents as exhibits thereto. The Company and the Investor shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither the Company nor the Investor shall issue any such press release or otherwise make any such public statement with respect to the transactions contemplated hereby without the prior consent of the Company, with respect to any press release of the Investor, or without the prior consent of the Investor, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not include the name of the Investor in any filing with the SEC or any regulatory agency or Trading Market, without the prior written consent of the Investor, except (i) as required by federal securities law in connection with (A) any registration statement contemplated by the Registration Rights Agreement and (B) the filing of final Transaction Documents (including signature pages thereto) with the SEC and (ii) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Investor with prior notice of such disclosure permitted under this clause (ii).

Section 6.11 Form D; Blue Sky Filings . The Company agrees to timely file a Form D with respect to the offering described herein as required under Regulation D and to provide a copy thereof, promptly upon request of the Investor. The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Notes and Conversion Shares for, sale to the Investor at the Initial Closing or Subsequent Closing, as applicable, under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request of the Investor.

Section 6.12 Listing of Shares . The Company shall, if applicable: (i) in the time and manner required by the principal Trading Market on which the Common Stock is then listed or designated, prepare and file with such Trading Market an additional shares listing application covering a number of shares of Common Stock at least equal to the Required Minimum on the date of such application, (ii) take all steps necessary to cause such shares of Common Stock to be approved for listing on such Trading Market as soon as possible thereafter, (iii) provide to the Investor evidence of such listing, and (iv) maintain the listing of such Common Stock on any date at least equal to the Required Minimum on such date on such Trading Market or another Trading Market; provided that such listing shall include any additional shares that may be issuable under the Notes as a result of any adjustments to the Conversion Price that would affect the number of Conversion Shares issuable to the Investor.

Section 6.13 Seniority of Notes . The Company hereby acknowledges that any Notes issued pursuant to this Agreement shall be senior to the 1.50% Convertible Subordinated Debentures due 2024 (the “Subordinated Debentures”) issued pursuant to that certain Indenture, dated as of September 22, 2004 (the “Indenture”), by and between the Company and U.S. Bank National Association, as Trustee.

ARTICLE VII

CONDITIONS TO OBLIGATION OF THE COMPANY

The obligation of the Company to sell the Notes to the Investor at the Initial Closing or any Subsequent Closing, as applicable, is subject to the satisfaction, on or before such Initial Closing or Subsequent Closing, as applicable, of the conditions set forth in this Article VII.

Section 7.1 Representations and Warranties . The representations and warranties contained in Article V shall be true, complete and correct as of the date hereof and, as of the Initial Closing Date or Subsequent Closing Date, as applicable, as though such representations and warranties had been made on and as of such date, and an officer of the Investor shall have certified to such effect to the Company in writing.

Section 7.2 Performance . The Investor shall have performed and complied in all material respects with all agreements contained herein, and in the agreements, documents and instruments contemplated hereby which are required to be performed or complied with by them prior to or at the date of the Initial Closing or any Subsequent Closing, as applicable, and an officer of the Investor shall have certified to such effect to the Company in writing.

Section 7.3 Required Consents . The Company shall have obtained the written consent or approval of each person whose consent or approval is required in connection with this Agreement.

Section 7.4 Litigation . No suit, action or other proceeding shall be pending or, to the knowledge of Company, threatened by any third party or by or before any court or governmental agency in which it is sought to restrain or prohibit or to obtain damages or other relief in connection with this Agreement or the consummation of the transactions contemplated hereby, and no investigation that might result in any such suit, action or other proceeding shall be pending or, to the knowledge of the Company, threatened.

Section 7.5 Legislation . No statute, rule, regulation, order, or interpretation shall have been enacted, entered or deemed applicable by any domestic or foreign government or governmental or administrative agency or court which would make the transactions contemplated by this Agreement illegal.

ARTICLE VIII

CONDITIONS TO THE OBLIGATIONS OF THE INVESTOR

The obligation of the Investor to purchase the Notes at the Initial Closing or any Subsequent Closing, as applicable, is subject to the satisfaction, on or before the Initial Closing or Subsequent Closing, as applicable, of the conditions set forth in this Article VIII.

Section 8.1 Representations and Warranties . The representations and warranties contained in Article IV shall be true, complete and correct as of the date hereof and, as of the Initial Closing Date or Subsequent Closing Date, as applicable (as though such representations and warranties had been made on and as of such date, subject to the items in the new Disclosure Schedules delivered by the Company at the Initial Closing or Subsequent Closing, as applicable), and the Chief Executive Officer and Chief Financial Officer of the Company shall have certified to such effect to the Investor in writing.

Section 8.2 Performance . The Company shall have performed and complied in all material respects with all agreements contained herein, and in the agreements, documents and instruments contemplated hereby which are required to be performed or complied with by it prior to or at the date of the Initial Closing or Subsequent Closing, as applicable, and the Chief Executive Officer and Chief Financial Officer of the Company shall have certified to the Investor in writing to such effect and to the further effect that all of the conditions set forth in this Article VIII have been satisfied.

Section 8.3 All Proceedings to be Satisfactory . All corporate and other proceedings to be taken by the Company in connection with the transactions contemplated hereby and all documents incident thereto shall be reasonably satisfactory in form and substance to the Investor and its counsel, and the Investor and its counsel shall have received all such counterpart originals or certified or other copies of such documents as they reasonably may request.

Section 8.4 Supporting Documents .

(a)     The Company shall have delivered to the Investor an opinion of counsel in form reasonably satisfactory to the Investor and covering the matters set forth in Exhibit C hereto.

(b)     The Investor and its counsel shall have received copies of the following documents:

(i)             a certificate of the Secretary of State of the State of Delaware for the Company and the state of formation or incorporation for each of its Subsidiaries dated as of a recent date prior to the Initial Closing Date or Subsequent Closing Date, as applicable, as to the corporate existence of the Company and each of its Subsidiaries and listing all documents of the Company and each of its Subsidiaries on file with such Secretary of State;

(ii)            a certificate of the Secretary of the Company dated the Initial Closing Date or Subsequent Closing Date, as applicable, and certifying: (A) the Company’s and each Subsidiary’s then-current Articles or Certificate of Incorporation and Bylaws; (B) that attached thereto is a true and complete copy of all resolutions adopted by the Board of Directors of the Company authorizing the execution, delivery and performance of this Agreement and the Transaction Documents, and the issuance, sale and delivery of the Notes and the Conversion Shares, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated by this

Agreement and the Transaction Documents; and (C) to the incumbency and specimen signature of each officer of the Company executing this Agreement, the Transaction Documents, and any certificate or instrument furnished pursuant hereto, and a certification by another officer of the Company as to the incumbency and signature of the officer signing the certificate referred to in this subsection (ii);

(iii)          in connection with the Initial Closing Date, evidence of the closing of the transactions contemplated by the Loan Agreement; and

(iv)           such additional supporting documents and other information with respect to the operations and affairs of the Company as any Investor or such Investor’s counsel reasonably may request.

Section 8.5 Required Consents . The Company shall have obtained the written consent or approval, in form and substance reasonably satisfactory to the Investor, of each person whose consent or approval is required in connection with this Agreement.

Section 8.6 Litigation . No suit, action or other proceeding shall be pending or, to the knowledge of the Company, threatened by any third party or by or before any court or governmental agency in which it is sought to restrain or prohibit or to obtain damages or other relief in connection with this Agreement or the consummation of the transactions contemplated hereby, and no investigation that might result in any such suit, action or other proceeding shall be pending or, to the knowledge of Company, threatened.

Section 8.7 Legislation . No statute, rule, regulation, order, or interpretation shall have been enacted, entered or deemed applicable by any domestic or foreign government or governmental or administrative agency or court which would make the transactions contemplated by this Agreement illegal.

Section 8.8 No Material Adverse Changes . Since the date of this Agreement, no events shall have occurred or circumstances arisen which are reasonably expected, individually or in the aggregate, to have or result in a Material Adverse Effect upon the Company. The Company shall fully cooperate as reasonably requested by the Investor to enable the Investor to determine that this condition has been satisfied.

Section 8.9 Transaction Documents . The Company and the Investor shall have executed and delivered each of the Transaction Documents to which it is a party. Each such document or agreement shall constitute the valid and binding obligation of such party, enforceable against such party in accordance with its terms.

Section 8.10 Prior Preemptive Rights . All of the Company’s obligations regarding preemptive or first refusal rights with respect to the issuance of its securities shall have been terminated in their entirety or duly waived pursuant to a written instrument in form and content satisfactory to the Investor and the Investor’s counsel with respect to (a) the issuance of the Notes and (b) the issuance of the Conversion Shares.

Section 8.11 No Default . Since the date hereof, no default (or event which, with the passage of time and/or the giving of notice, would constitute a default) of the Company shall have occurred under this Agreement or any of the Transaction Documents.

Section 8.12 Payment of Fees . The Company shall have paid the fees and expenses of the Investor’s legal counsel as required under Section 11.7.

ARTICLE IX

INDEMNIFICATION

Section 9.1 Indemnification of Investor . The Company shall indemnify, defend and hold harmless the Investor and their respective subsidiaries, officers, directors and stockholders from and against and in respect of any and all demands, claims, actions or causes of action, assessments, losses, damages, liabilities, interest and penalties, costs and expenses (including, without limitation, reasonable legal fees and disbursements incurred in connection therewith and in seeking indemnification therefor, and any amounts or expenses required to be paid or incurred in connection with any action, suit, proceeding, claim, appeal, demand, assessment or judgment) (“ Indemnifiable Losses ”), resulting from, arising out of, or imposed upon or incurred by any person to be indemnified hereunder by reason of any breach of any representation, warranty, covenant or agreement of the Company contained in this Agreement or any agreement, certificate contemplated by this Agreement or any agreement, certificate, or document executed and delivered by the Company pursuant hereto or in connection with any of the transactions contemplated by this Agreement. Any indemnification provided under this Article IX shall be limited to the aggregate principal amount of the Notes.

Section 9.2 Indemnification of the Company . The Investor shall indemnify, defend and hold harmless the Company and each of its subsidiaries, officers, directors and stockholders from and against and in respect of any and all Indemnifiable Losses resulting from, arising out of, or imposed upon or incurred by any person to be indemnified hereunder by reason of any breach of any representation, warranty, covenant or agreement by the Investor contained in this Agreement or any agreement, certificate or document executed and delivered by the Investor pursuant hereto or in connection with any of the transactions contemplated by this Agreement. Any indemnification provided under this Article IX shall be limited to the aggregate principal amount of the Notes.

Section 9.3 Third-Party Claims . If a claim by a third party is made against an indemnified party and if the indemnified party intends to seek indemnity with respect thereto under this Article IX, such indemnified party shall promptly notify the indemnifying party of such claim; provided , however , that failure to give timely notice shall not affect the rights of the indemnified party so long as the failure to give timely notice does not adversely affect the indemnifying party’s ability to defend such claim against a third party. The indemnified party shall not settle such claim without the consent of the indemnifying party, which consent shall not be unreasonably withheld or delayed. If the indemnifying party acknowledges in writing its indemnity obligations for Indemnifiable Losses resulting therefrom, the indemnifying party may participate at its own cost and expense in the settlement or defense of any claim for which indemnification is sought.

Section 9.4 Cooperation as to Indemnified Liability . Each party hereto shall cooperate fully with the other parties with respect to access to books, records, or other documentation within such party’s control, if deemed reasonably necessary or appropriate by any party in the defense of any claim which may give rise to indemnification hereunder.

ARTICLE X

TERMINATION AND DEFAULT

Section 10.1 Termination . The obligation of the parties hereto to consummate the remaining transactions contemplated hereby may be terminated and abandoned at any time at or before the Initial Closing or Subsequent Closing, as applicable, if any of the following events occurs:

(a)     by and at the written option of the Investor or the Company if (i) the Initial Closing shall not have occurred on or before 10 Trading Days after the Investor notifies the Company pursuant to Section 3.1(a) that it plans to purchase all or any portion of the Initial Notes described in this Agreement or (b) the Subsequent Closing shall not have occurred on or before 5 Trading Days after the Investor notifies the Company pursuant to Section 3.1(b) that it plans to purchase all or any portion of the Additional Notes described in this Agreement, provided that the terminating party shall not have breached in any material respect its obligations under this Agreement in any manner that shall have been the proximate cause of or resulted in, the failure to complete the Initial Closing or Subsequent Closing, as applicable, by such date; or

(b)     by the Investor if there shall have occurred any event that would constitute a Material Adverse Effect for the Company; or

(d)     if the Loan Agreement shall have been terminated in accordance with its terms prior to the Initial Closing; or

(e)     by and at the option of the Investor or the Company if any governmental authority shall have issued an order, decree, or ruling or taken any other action restraining, enjoining or otherwise prohibiting in any material respects the transactions contemplated hereby and such order, decree, ruling or other action shall have become final and nonappealable.

Section 10.2 Effect .

(a)     Upon termination of this Agreement, the Investor’s rights and obligations to purchase any Convertible Notes or Conversion Shares pursuant to Article II hereof shall terminate.

(b)     Termination of this Agreement by a party shall not relieve any other party hereto of any liability for breach of representation, warranty, covenant or agreement by such other parties including liability for monetary damages and/or specific performance.

ARTICLE XI

OTHER PROVISIONS

Section 11.1 Further Assurances . At such time and from time to time on and after the date hereof upon request by the Investor, the Company will execute, acknowledge and deliver, or will cause to be done, executed, acknowledged and delivered, all such further acts, certificates and assurances that may be reasonably required for the better conveying, transferring, assigning, delivering, assuring and confirming to the Investor, or to such Investor’s successors and assigns, all of the Conversion Shares or to otherwise carry out the purposes of this Agreement and the agreements, documents and instruments contemplated hereby.

Section 11.2 Complete Agreement . The Schedules and Exhibits to this Agreement shall be construed as an integral part of this Agreement to the same extent as if they had been set forth verbatim herein. This Agreement and the Schedules and Exhibits hereto constitute the entire agreement between the parties hereto with respect to the subject matters hereof and thereof and supersede all prior agreements whether written or oral relating hereto.

Section 11.3 Survival of Representations, Warranties and Agreements . The representations, warranties, covenants and agreements contained herein shall survive the Initial Closing or any Subsequent Closing and remain in full force and effect; provided , however , that the representations and warranties shall expire on the second anniversary of the date of the Initial Closing hereunder. No independent investigation of the Company by the Investor, its counsel, or any of its agents or employees shall in any way limit or restrict the scope of the representations and warranties made by the Company in this Agreement.

Section 11.4 Consent, Waiver, Amendment, Etc . The failure of any party hereto to enforce at any time any of the provisions of this Agreement shall not, absent an express written waiver signed by the party making such waiver specifying the provision being waived, be construed to be a waiver of any such provision, nor in any way to affect the validity of this Agreement or any part thereof or the right of the party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to be a waiver of any other or subsequent breach. Except as otherwise specifically provided herein, in each case in which approval of the Investor is required by the terms of this Agreement, such requirement shall be satisfied by a vote or the written consent of the Investor. With the written consent of the Investor, the obligations of the Company under this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), and with the same approval the Company may amend or eliminate any of the provisions of this Agreement; provided , however , that no such waiver or amendment shall, without the written consent of the holders of the Notes at the time outstanding, amend this Section 11.4. Written notice of any such waiver, amendment, or consent shall be given to the record holders of the Notes who have not previously consented thereto in writing. Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated orally, but only by a statement in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, except to the extent provided in this Section 11.4.

Section 11.5 Notices . All notices or other communications to a party required or permitted hereunder shall be in writing and shall be delivered personally or by facsimile (receipt

confirmed electronically) to such party (or, in the case of any entity, to an executive officer of such party) or shall be sent by a reputable express delivery service or by certified mail, postage prepaid with return receipt requested, addressed as follows:

if to the Investor to:

Whitebox VSC, Ltd.

Suite 300

3033 Excelsior Boulevard

Minneapolis, MN 55416

Attn: Dale Willenbring

with a copy to:

Theodore C. Cadwell, Jr., Esq.

Dorsey & Whitney LLP

50 South 6 ^th Street

Suite 1500

Minneapolis, Minnesota 55402

if to the Company to:

Vitesse Semiconductor Corporation

741 Calle Plano

Camarillo, California 93012

with a copy to:

Richard A. Boehmer

O’Melveny & Myers LLP

400 South Hope Street

Los Angeles, California 90071-2899

Any party may change the above-specified recipient and/or mailing address by notice to all other parties given in the manner herein prescribed. All notices shall be deemed given on the day when actually delivered as provided above (if delivered personally or by facsimile) or on the day shown on the return receipt (if delivered by mail or delivery service).

Section 11.6 Public Announcement . Subject to the provisions of Section 6.10, in the event any party proposes to issue any press release or public announcement concerning any provisions of this Agreement or the transactions contemplated hereby, such party shall so advise the other parties hereto, and the parties shall thereafter use their reasonable best efforts to cause a mutually agreeable release or announcement to be issued. No party will publicly disclose