Effective October 16, 2009, the Company and the Lenders entered into the First Amendment to Loan Agreement (the “Loan Agreement Amendment”) with Whitebox VSC Ltd. as lender and agent (the “Agent”) under the Company’s senior secured loan agreement.  The Loan Agreement that is amended by the Loan Agreement Amendment is described in the Company’s Current Reportannual report on Form 8-K filed with the10-K if specifically requested in writing. You can also access our Securities and Exchange Commission ("SEC") filings, including our annual reports on August 29, 2007.  By entering intoForm 10-K, and all amendments thereto filed on Form 10 K/A, on the Loan Agreement Amendment, the Company obtained permission from the Agent to enter into the Conversion Agreement as described below and consummate the debt restructuring transaction contemplated by that agreement.  So long as the Company consummated the debt restructuring on or before November 16, 2009 and satisfied certain other conditions, the Agent waived specified defaults under the Loan Agreement that resulted from the Company’s previously reported defaults under the Indenture.SEC website at www.sec.gov.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 11, 2010

        The proxy statement and annual report to stockholders are available at www.vitesse.com/2010-annual-proxy.

Pursuant
PROPOSAL ONE
ELECTION OF DIRECTORS

Nominees

        Five (5) members of our Board are to be elected at the Loan Agreement Amendment,Annual Meeting. Unless otherwise instructed, the Company agreedproxy holders will vote the proxies received by them for the nominees named below. Each nominee has consented to pay downbe named a nominee in the proxy statement and to continue to serve as a director if elected. If any nominee becomes unable or declines to serve as a director, if additional persons are nominated at least $5 millionthe meeting or if stockholders are entitled to cumulate votes, the proxy holders intend to vote all proxies received by them in such a manner (in accordance with cumulative voting) as will ensure the election of as many of the principal amount of its senior term loan undernominees listed below as possible, and the Loan Agreement in connection with the debt restructuring transaction contemplatedspecific nominees to be voted for will be determined by the Conversion Agreement.  With each prepaymentproxy holders.

        We are not aware of the senior term loan, the Company is required to pay the Agent a non-refundable prepayment fee equal to 1% of the aggregate principal amountany reason that is prepaid. In addition, the Loan Agreement Amendment increased the Company’s effective rate of interest under the senior term loan.  From October 1, 2009 until October 16, 2009, the effective rate was 10.5% per annum in cash.  From and after October 16, 2009, the effective rateany nominee will be 8.5% per annum in cash, plus 2.0% payment-in-kind interest, plus an additional 0.3% payment-in-kind interest for every $1 million below $15 millionunable or will decline to serve as a director. The term of office of each person elected as a director will continue until the senior term loan under the Loan Agreement that is not paid down by the Company.  After the required pay-downnext Annual Meeting of the senior term loan, the CompanyStockholders or until a successor has the right to reduce the effective rate of interest by 0.3% for every $1 million of additional prepayment.

Additionally, pursuant to the Loan Agreement Amendment, the Company has agreed to use the proceeds ofbeen elected and qualified or until his or her earlier resignation or removal. There are no arrangements or understandings between any saledirector or disposition of property to reduce the senior term loan.  The Loan Agreement Amendment also limits the Company’s ability to transfer or maintain fundsexecutive officer and any other than in deposit accounts over which the Agent has control.  Furthermore, the Loan Agreement Amendment provides for an additional event of default under the Loan Agreement if an event of default occurs under the Indenture or under a new indentureperson pursuant to which New Notes wouldhe or she is or was to be issuedselected as a director or officer.

        The names of the nominees, all of whom are currently directors standing for re-election, and certain information about them as of March 26, 2010 are set forth below. All of the nominees have been recommended for nomination by a majority of the Board acting on the recommendation of the Governance and Nominating Committee of the Board, which was approved by a majority vote of the members of such committee. The committee consists solely of independent members of the Board. There are no family relationships among directors or executive officers of Vitesse.

        Except as set forth below, each of our directors has been engaged in connection withhis principal occupation set forth above during the debt restructuring transaction.past five years.

10

The New Notes bear cash interest at 8.0% per annum, which will accrue interest beginning on October 30, 2009. Interest will be payableMr. Lyon is the president of Odyssey Capital Group, LLC, a financial advisory and management consulting firm, which he founded in 1998. In 2005, he served as interim Chief Financial Officer of Hypercom Corporation. Before 2005, Mr. Lyon held positions as managing director at Ernst & Young Corporate Finance, LLC, a managing member of Golf Equity, LLC, vice president, Capital Markets at Evans Withycombe Residential, Inc. He began his career at Arthur Andersen LLP, where he worked from 1987 to 1997. Mr. Lyon has been involved in corporate initiatives that have included capital acquisition, business and securities valuation, acquisitions and mergers, and bankruptcy reorganizations. Mr. Lyon is a director of Fairfield Residential LLC and Chairman of the Board of Three Five Systems, Inc. He has also served as a director of Tickets.com, Inc. Mr. Lyon holds a bachelor's degree (magna cum laude) and an MBA degree (with high distinction) from Brigham Young University. He is a Certified Public Accountant and a published author and speaker.

Edward Rogas, Jr., age 69, has been a director since January 24, 2006 and the Chairman of the Board of Directors since December 2006. Mr. Rogas is currently retired. He served as a Senior Vice President at Teradyne, Inc., an automated test equipment manufacturer, from 2000 through 2005. From 1976 to 2000, he held various management positions in the semiconductor ATE portion of Teradyne's business, including Vice President from 1984 to 2000. Prior to that, from 1973 to 1976, he served as a Vice President at American Research and Development. Mr. Rogas is currently on the New Notes semiannually in arrears on April 1Board of Vignani Technologies Pvt Ltd. (a private Indian company). Mr. Rogas holds a bachelor's degree from the United States Naval Academy and October 1an MBA (with distinction) from Harvard Business School.

        The authorized number of each year, commencing April 1, 2010.  The New Notes will mature on October 30, 2014 unless earlier converted or repurchased.  The New Notes are guaranteeddirectors under our bylaws is a minimum of five and a maximum of nine, with the exact number set by Vitesse Manufacturing & Development Corporation and Vitesse Semiconductor Sales Corporation and are secured by second priority security interests on substantially allthe Board. Currently the authorized number of the assetsdirectors of the Company and its subsidiaries.  This second priority security interest is subordinated to the lien created under the Loan Agreement.five.

The New Notes are convertible into shares of Common Stock at a conversion price of $0.225 per share (equivalent to an initial conversion rate of approximately 4,444 shares per $1,000 principal amount of New Notes), subject to customary adjustments.  Full conversion of the $49,993,000 aggregate principal amount of New Notes would result in the issuance of up to 222,191,111 shares of Common Stock.  We may elect to deliver cash in lieu of shares of Common Stock if the New Notes are converted.  The Noteholders may have the right to receive additional shares of Common Stock upon conversion in connection with certain change of control events, depending upon the timing of the change of control event and the trading price of the Common Stock at the time of such change of control event.  The maximum number of shares of Common Stock issuable upon such an event would be approximately 125 million shares if the change of control event occurred on or about November 15, 2009 and the Company’s stock price was $0.16 per share.  The holders of the New Notes have the right to receive cash in lieu of shares of Common Stock if we do not have sufficient authorized shares to permit conversion of the New Notes according to the terms of the indenture governing the New Notes.  The New Notes may not be redeemed by us unless, beginning two years following their issuance, the trading price of the Common Stock is at least 130% of the conversion price.

The indenture that governs the New Notes and that contains the conversion terms of the New Notes is attached as Annex B to this proxy statement.

Changes to the Board of Directors

As a condition to the Closing,closing of our recently announced debt restructuring transaction, the Company was obligated to set the size of the Board at six directors and to appoint two qualified new directors prior to November 2, 2009 from a list of at least four persons identified by the Noteholders prior to November 2, 2009.  In order forholders of our convertible debentures. The Company received a list of eight director candidates from the Company to satisfy this requirement, twoholders of the Company’s currentconvertible debentures, including James H. Hugar and G. Grant Lyon. Members of our Board reviewed the qualifications of each of the eight candidates and conducted interviews with four of the candidates. As per our independent directors had to resignselection process announced on or priorJuly 17, 2007, these four candidates were also vetted by an independent executive search firm, McDermott & Bull. McDermott & Bull provided an assessment of each

candidate's experience as compared to the Closing.  Effective October 30, 2009, Guy W. Adams, Willow B. Shirequalifications criteria and Robert A. Lundy resignedIndependence Standards as directorsdocumented in the Company's Corporate Governance Guidelines. This document is available on the Company's website,http://www.vitesse.com, under "Investors—Corporate Governance." McDermott & Bull also conducted a comprehensive and confidential background investigation of the Company.  Effective October 30, 2009,final candidates.

        The resignation of three of our former directors and the appointment of James H. Hugar and G. Grant Lyon to the Board to fill two of the resulting vacancies became effective on October 30, 2009, upon the closing of our debt restructuring transaction on October 30, 2009.

Director Independence

        The Board has determined that, with the exception of Mr. Gardner, all of its current members meet the criteria for independence set forth in the NASDAQ Listing Rules and the Company's Corporate Governance Guidelines. Our Corporate Governance Guidelines are posted on our website,http://www.vitesse.com, under "Investors—Corporate Governance."

Board Meetings and Committees

        The Board held a total of forty-four (44) meetings during fiscal year 2009. During fiscal year 2009, the Board had three standing committees: the Audit Committee; the Compensation Committee; and the Nominating and Corporate Governance Committee. In addition, in fiscal year 2009, the Board had one additional committee: the Strategic Development Committee. The Strategic Development Committee was dissolved effective as of October 30, 2009. Three of the members of that Committee, Guy Adams, Willow Shire and Robert Lundy, resigned from the Board effective as of October 30, 2009. Each of our incumbent directors attended at least 75% of the aggregate of all meetings of the Board and the committees of the Board upon which such director served in fiscal year 2009. Under our Corporate Governance Guidelines, the Board is required to hold an executive session at each meeting of the Board at which employee directors are not present.

Audit Committee

        The Audit Committee, which has been established in accordance with Section 3(a)(58)(A) of the Exchange Act, consists of directors Hugar, Hanson and Rogas. Mr. Hugar was appointed to the Committee as its Chairman on December 9, 2009. The Audit Committee held sixteen (16) meetings during fiscal year 2009. All of the members of the Audit Committee are "independent" as defined under rules promulgated by the SEC and meet the NASDAQ Listing Rules criteria for independence. The Board has determined that Mr. Hugar is an "audit committee financial expert" as that term is defined in Item 407(d)(5) of Regulation S-K. Among other things, the Audit Committee assists our Board of Directors in its oversight of the integrity of our financial statements, the qualifications and independence of our independent audits, the performance of our internal audit function, compliance with legal and regulatory requirements, our disclosure controls, and system of internal controls. A copy of the Audit Committee charter, including any updates thereto, is available on our website at www.vitesse.com.

Compensation Committee

        The Compensation Committee of the Board consists of directors Lyon and Rogas, both of whom were appointed to this Committee on December 9, 2009 following the resignation of directors Adams, Lundy and Shire from the Board effective as of October 30, 2009. The Compensation Committee held twelve (12) meetings during fiscal year 2009. The Compensation Committee, among other things, reviews and approves our executive compensation policies and programs, and grants stock options to our employees, including officers, pursuant to our stock option plans. See "Executive Officers and Executive Compensation—Compensation Discussion and Analysis" and "Director Compensation"

below for a description of our processes and procedures for the consideration and determination of executive and director compensation. A copy of the Compensation Committee charter, including any updates thereto, is available on our website at www.vitesse.com.

Nominating and Corporate Governance Committee

        The Nominating and Corporate Governance Committee consists of directors Hanson and Hugar. During fiscal year 2009, the Governance and Nominating Committee consisted of directors Shire, Hanson and Lundy. Mr. Hugar was appointed to the Committee on December 9, 2009. The Nominating and Corporate Governance Committee held six (6) meetings during fiscal year 2009. The Nominating and Corporate Governance Committee, among other things, assists the Board by making recommendations to the Board on matters concerning director nominations and elections, board committees and corporate governance. A copy of the Nominating and Corporate Governance Committee charter, including any updates thereto, is available on our website at www.vitesse.com.

Corporate Governance Guidelines

        The Company maintains a set of Corporate Governance Guidelines, which can also be found on our website under "Investors—Corporate Governance." The Corporate Governance Guidelines cover a range of governance-related matters, including that the Board of Directors maintain an independent Chairman of the Board and that three-fourths of the Board consist of independent members.

Codes of Business Conduct and Ethics

        We have adopted a Code of Business Conduct and Ethics for members of the Board of Directors, a Code of Business Conduct and Ethics for all officers and employees of the Company and its consolidated subsidiaries, and a Code of Ethics for the Chief Executive Officer and Senior Financial Officers that applies to our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer/Controller and persons performing similar functions. Copies of these Codes are posted on our website,http://www.vitesse.com, under "Investors—Corporate Governance." We intend to disclose any amendment to, or waiver from, the provisions of these Codes on our website under "Investors—Corporate Governance."

Attendance at Annual Meeting of Stockholders by Directors

        It is the policy of the Company that absent extraordinary circumstances each member of the Board of Directors shall attend our annual meeting of stockholders.

Process for Recommending Candidates for Election to the Board of Directors

        The Nominating and Corporate Governance Committee will consider nominees recommended by stockholders. A stockholder that desires to recommend a candidate for election to the Board must direct the recommendation in writing to us at our principal offices (Attention: Tracy Kern, Corporate Controller) and must include the candidate's name, age, home and business contact information, principal occupation or employment, the number of shares beneficially owned by the nominee, whether any hedging transactions have been entered into by the nominee or on his or her behalf, information regarding any arrangements or understandings between the nominee and the stockholder nominating the nominee or any other persons relating to the nomination, a written statement by the nominee acknowledging that the nominee will owe a fiduciary duty to the Company, if elected, and any other information required to be disclosed about the nominee if proxies were to be solicited to elect the nominee as a director. For a stockholder recommendation to be considered by the Nominating and Corporate Governance Committee as a potential candidate at an annual meeting, nominations must be received on or before the deadline for receipt of stockholder proposals for such meeting. In the event a

stockholder decides to nominate a candidate for director and solicits proxies for such candidate, the stockholder will need to follow the rules set forth by the SEC and in our bylaws. See "Information Concerning Solicitation and Voting—Deadline for Receipt of Stockholder Proposals."

        The Nominating and Corporate Governance Committee's criteria and process for evaluating and identifying the candidates that it approves as director nominees are as follows:

•

The Nominating and Corporate Governance Committee regularly reviews the current composition and size of the Board.



•

The Nominating and Corporate Governance Committee reviews the qualifications of any candidates who have been properly recommended by a stockholder, as well as those candidates who have been identified by management, individual members of the Board or, if the Nominating and Corporate Governance Committee determines, a search firm. Such review may, in the Nominating and Corporate Governance Committee's discretion, include a review solely of information provided to the Nominating and Corporate Governance Committee or may also include discussions with persons familiar with the candidate, an interview with the candidate or other actions that the Nominating and Corporate Governance Committee deems proper.



•

The Nominating and Corporate Governance Committee evaluates the performance of the Board as a whole and evaluates the performance and qualifications of individual members of the Board eligible for re-election at the annual meeting of stockholders.



•

The Nominating and Corporate Governance Committee considers the suitability of each candidate, including the current members of the Board, in light of the current size and composition of the Board. Except as may be required by rules promulgated by the NASDAQ Stock Market or the SEC, it is the current belief of the Nominating and Corporate Governance Committee that there are no specific, minimum qualifications that must be met by any candidate for the Board, nor are there specific qualities or skills that are necessary for one or more of the members of the Board to possess. In selecting new directors of the Company, consideration will be given to each individual director's personal qualities, experiences and abilities; the collective skills of all of the directors, taking into account the responsibilities of the Board; and qualifications imposed by law and regulation. As stated in the Company's Corporate Governance Guidelines, the Company has following expectations of its directors and director candidates:



•

Directors should possess the highest personal and professional ethics, integrity and values, and be committed to representing the long-term interests of the shareowners.



•

Directors must also have an inquisitive and objective perspective, practical wisdom and mature judgment.



•

The Company's directors should represent diverse experiences at a strategy/policy setting level, and should be people who have high-level managerial experience and who are accustomed to dealing with complex problems.



•

Directors must be willing to devote sufficient time to carrying out their duties and responsibilities effectively, and should be committed to serve on the Board for an extended period of time.



•

Directors should also possess a willingness to challenge and stimulate management and demonstrate the ability to work as part of a team in an environment of trust.



•

Directors should offer their resignation in the event of any significant change in their personal circumstances, including a change in their principal job responsibilities.

The Nominating and Corporate Governance Committee may, from time to time, establish additional qualifications for directors as it shall deem appropriate.

•

In evaluating the qualifications of the candidates, the Nominating and Corporate Governance Committee considers many factors, including, issues of character, judgment, independence, age, expertise, diversity of experience, length of service, other commitments and the like. The Nominating and Corporate Governance Committee evaluates such factors, among others, and does not assign any particular weighting or priority to any of these factors. The Nominating and Corporate Governance Committee considers each individual candidate in the context of the current perceived needs of the Board as a whole. While the Nominating and Corporate Governance Committee has not established specific minimum qualifications for director candidates, the Nominating and Corporate Governance Committee believes that candidates and nominees must reflect a Board that is comprised of directors who (i) are predominantly independent, (ii) are of high integrity, (iii) have qualifications that will increase the overall effectiveness of the Board, and (iv) meet other requirements as may be required by applicable rules, such as financial literacy or financial expertise with respect to audit committee members;



•

In evaluating and identifying candidates, the Nominating and Corporate Governance Committee has the authority to retain and terminate any third party search firm that is used to identify director candidates and has the authority to approve the fees and retention terms of any search firm.



•

After such review and consideration, the Nominating and Corporate Governance Committee recommends the slate of director nominees to the full Board for its approval.

        The Nominating and Corporate Governance Committee will endeavor to notify, or cause to be notified, all director candidates, including those recommended by a stockholder, of its decision as to whether to nominate such individual for election to the Board.

Stockholder Communication with the Board of Directors

        We believe that management speaks for Vitesse. Any stockholder may contact any of our directors by writing to them by mail, c/o our Corporate Secretary, at our principal executive offices, the address of which appears on the cover of this proxy statement.

        Any stockholder may report to us any complaints regarding accounting, internal accounting controls, or auditing matters. Any stockholder who wishes to so contact us should send such complaints to the Audit Committee c/o James H. Hugar, at our principal executive offices, the address of which appears on the cover of this proxy statement.

        Any stockholder communications that the Board is to receive will first go to our Corporate Secretary, who will log the date of receipt of the communication as well as the identity and contact information of the correspondent in our stockholder communications log. After logging the communication, our Corporate Secretary will forward the communication to the Chairman of the Board (in the case of communications directed to the whole Board) or to the applicable individual director(s) addressed in the correspondence.

        In the case of any complaints, the appropriate committee of the Board will review and, if appropriate, investigate the complaint in a timely manner. In the case of accounting or auditing related matters, a member of the Audit Committee, or the Audit Committee as a whole, will review the summary of the communication, the results of the investigation, if any, and, if appropriate, the draft response. The summary and response will be in the form of a memo, which will become part of the stockholder communications log that the Corporate Secretary maintains with respect to all stockholder communications.

Compensation of Directors

        Effective April 1, 2010, after consultation with its independent compensation consultant, DolmatConnell & Partners, the Board of Directors adopted the following compensation package for directors:

          (i)  directors receive an annual retainer of $30,000, paid monthly;

         (ii)  the Chairperson of the Board (or Independent Lead Director if the Chairperson of the Board is an executive of the Company) receives an additional annual retainer of $20,000;

        (iii)  the Chairperson of the Audit Committee receives an additional annual retainer of $20,000 and each other member of the Audit Committee receives an additional annual retainer of $8,000;

        (iv)  the Chairperson of the Compensation Committee receives an additional annual retainer of $12,000 and each other member of the Compensation Committee receives an additional annual retainer of $6,000;

         (v)  the Chairperson of the Nominating and Corporate Governance Committee receives an additional annual retainer of $8,000 and each other member of the Nominating and Corporate Governance Committee receives an additional annual retainer of $4,000;

        (vi)  directors receive an additional $1,500 for each in-person Board meeting and $750 for each scheduled conference call Board meeting that they attend and each member of a Board Committee receives $1,000 for each in-person Committee meeting and $500 for each scheduled conference call Committee meeting that they attend; and

       (vii)  new directors appointed or elected to the Board of Directors after April 1, 2010 will receive restricted stock units on the date of their appointment or election to the Board of Directors with a value of $100,000 while continuing directors will receive an annual grant of restricted stock units with a value of $55,000 on the second Monday in January.

        In October 2008, the Board of Directors formed the Strategic Development Committee. This Committee initially consisted of Edward Rogas, Jr., Steven Hanson and former director Guy Adams. The function of this Committee was to seek and evaluate various alternatives to refinancing the 2024 Debentures. The Strategic Development Committee received a monthly retainer of $10,000. In July 2009, the Board of Directors made the decision to expand the Strategic Development Committee to include directors Robert Lundy and Willow Shire. The Strategic Development Committee was dissolved upon the successful completion of the debt restructuring on October 30, 2009.

Director Compensation Table for Fiscal Year 2009

        The following table presents information regarding the compensation earned during fiscal year 2009 by members of our Board of Directors who were not also our employees (referred to as "Non-Employee Directors"). The compensation paid to Mr. Gardner, who is employed by us, is presented below in the Summary Compensation Table and the related explanatory tables. Directors who

are also officers or employees of the Company or its subsidiaries receive no additional compensation for their services as directors.

Vote Required

        If a quorum is present, the five (5) nominees receiving the highest number of votes will be elected to the Board. See "Information Concerning Solicitation and Voting—Quorum; Abstentions; Broker Non-Votes."

12THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE FIVE NOMINEES
PRESENTED HEREIN.

Table of Contents

PROPOSAL TWO

Voting and Lock-Up AgreementsAPPROVAL OF THE VITESSE SEMICONDUCTOR CORPORATION 2010 INCENTIVE PLAN

        Our board of directors believes that the effective use of stock-based, long-term incentive compensation is vital to our ability to achieve continued strong performance in the future by providing a direct link between executive compensation and long-term stockholder value creation. Accordingly, we are seeking stockholder approval of the Vitesse Semiconductor Corporation 2010 Incentive Plan, or the "2010 Incentive Plan." The board adopted the 2010 Incentive Plan, upon recommendation of its Compensation Committee, subject to stockholder approval at the Annual Meeting.

        If the 2010 Incentive Plan is approved by stockholders, it will replace the Vitesse Semiconductor Corporation 2001 Stock Incentive Plan, which we refer in this proposal as the "Current Incentive Plan" and in the text of the 2010 Incentive Plan as the "Prior Plan." If stockholders approve the 2010 Incentive Plan, no new awards will be granted under the Current Incentive Plan. If stockholders do not approve the 2010 Incentive Plan, the Current Incentive Plan will remain available for new grants until it expires on October 17, 2010.

        The 2010 Incentive Plan authorizes the issuance of 50,000,000 shares of our common stock. As of October 16,March 26, 2010, 4,957,794 shares were available for issuance under the Current Incentive Plan, and these shares will be cancelled if the stockholders approve the 2010 Incentive Plan. The Board believes that these additional reserved shares are required in order for us to have an appropriate reserve of equity incentives to recruit, hire and retain the top talent that we will require to successfully execute our business strategy.

        As of March 26, 2009, we had outstanding 404,841,802 shares of our common stock. The new shares authorized for issuance under the 2010 Incentive Plan represent approximately 11.1% of our shares of common stock currently outstanding. We anticipate granting awards for up to approximately 3.7% of the outstanding shares per year, as compared to the average run rate of 3% to 4% for our industry group. We anticipate that with the additional shares for which we are seeking stockholder approval, we will have sufficient shares reserved for our equity compensation program through fiscal year 2012, and that we will need to seek stockholder approval for additional shares at our 2012 annual stockholders meeting.

        While authorizing these additional shares for issuance under the 2010 Incentive Plan will increase the potential dilution represented by equity compensation awards, the potential dilution represented by our current outstanding equity compensation awards is very small relative to our peer group companies. The primary reason for this is that we have granted equity compensation awards with respect to relatively few shares over the past three years. In addition, a significant number of our outstanding stock options are "underwater" (the exercise prices are above the current market price of our common stock), which means that these stock options are unlikely to be exercised before they expire.

        In addition to the new shares authorized for issuance under the 2010 Incentive Plan, up to 40,577,825 shares subject to awards outstanding under the Current Incentive Plan may become available for issuance under the 2010 Incentive Plan to the extent that these shares on or after the date of stockholder approval of the 2010 Incentive Plan, cease to be subject to the awards (such as by expiration, cancellation or forfeiture of the awards).

        Although currently our common stock is not listed on any stock exchange, we are voluntarily soliciting stockholder approval of the 2010 Incentive Plan to provide the Compensation Committee with the flexibility to grant incentive stock options to employees under the 2010 Incentive Plan and certain awards that qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code. See "U.S. Federal Income Tax Information."

        The principal features of the 2010 Incentive Plan are summarized below. This summary does not contain all information about the 2010 Incentive Plan. A copy of the complete text of the 2010 Incentive Plan is included as Appendix A to this proxy statement, and the following description is qualified in its entirety by reference to the text of the 2010 Incentive Plan.

DESCRIPTION OF THE 2010 INCENTIVE PLAN

Purpose

        The purpose of the 2010 Incentive Plan is to attract, retain and motivate our employees, officers and directors by providing them with the opportunity to acquire a proprietary interest in the Company and to align their interests and efforts to the long-term interests of our stockholders. The 2010 Incentive Plan would also allow us to provide the same opportunity to consultants, agents, advisors and independent contractors.

Administration

        The Compensation Committee of our Board of Directors will administer the 2010 Incentive Plan, except that the board will administer the 2010 Incentive Plan with respect to our non-employee directors. The Board or the Committee may delegate administration of the 2010 Incentive Plan in accordance with its terms. References to the "Committee" in this Proposal Two are, as applicable, to the Compensation Committee, the Board or other delegate, including an officer of the Company authorized by the board or Compensation Committee to make grants to certain eligible employees of the Company.

Eligibility

        Awards may be granted under the 2010 Incentive Plan to employees, officers, directors, consultants, agents, advisors and independent contractors of the Company and its subsidiaries and affiliates. As of March 26, 2009, approximately 439 employees, 3 executive officers, and 4 non-employee directors were eligible to receive awards under the 2010 Incentive Plan.

Number of Shares

        The number of shares of common stock authorized for issuance under the 2010 Incentive Plan is 50,000,000. In addition, any shares subject to outstanding awards under the Current Incentive Plan as of the date of stockholder approval of the 2010 Incentive Plan that cease to be subject to these awards (other than from exercise or settlement of the awards in shares) will automatically become available for issuance under the 2010 Incentive Plan, up to an aggregate maximum of up to 40,577,825 shares. The maximum number of shares of common stock that may be issued pursuant to the exercise of incentive stock options is the same as the total number of shares authorized under the 2010 Incentive Plan.

        The following shares will be available again for issuance under the 2010 Incentive Plan:

•

shares subject to awards that lapse, expire, terminate or are canceled prior to issuance of the underlying shares;



•

shares subject to awards that are subsequently forfeited to or otherwise reacquired by us;



•

shares related to an award that is settled in cash or in another manner where some or all of the shares covered by the award are not issued; and



•

shares subject to an award that are tendered or withheld in payment of purchase price or tax withholding obligations.

        Awards granted in assumption of or substitution for previously granted awards in acquisition transactions will not reduce the number of shares authorized for issuance under the 2010 Incentive Plan.

        If any change in our stock occurs by reason of any stock dividend, stock split, spin-off, recapitalization, merger, consolidation, combination or exchange of shares, distribution to stockholders other than a normal cash dividend or other change in our corporate or capital structure, the Committee will make proportional adjustments to the maximum number and kind of securities (a) available for issuance under the 2010 Incentive Plan, (b) issuable as incentive stock options, (c) issuable to certain individuals subject to Code Section 162(m), and (d) subject to any outstanding award, including the per share price of such securities.

Types of Awards

        The 2010 Incentive Plan permits the grant of any or all of the following types of awards.

        Stock Options.    The Committee may grant either incentive stock options, which must comply with Code Section 422, or nonqualified stock options. The committee sets option exercise prices and terms, except that the exercise price of stock options granted under the 2010 Incentive Plan must be at least 100% of the fair market value of the common stock on the date of grant, except in the case of options granted in connection with assuming or substituting options in acquisition transactions. At the Company’s entry intotime of grant, the Conversion Agreement,Committee determines when stock options are exercisable and when they expire, except that the Company entered intoterm of a Votingstock option cannot exceed ten years. Unless the committee otherwise determines, fair market value means, as of a given date, the closing price of our common stock.

        Stock Appreciation Rights (SARs).    The committee may grant SARs as a right in tandem with the number of shares underlying stock options granted under the 2010 Incentive Plan or on a stand-alone basis. SARs are the right to receive payment per share of an exercised SAR in stock or cash, or a combination of stock and Lock-Up Agreement with eachcash, equal to the excess of the Noteholders (the “Lock-Up Agreement”).  Pursuantshare's fair market value on the date of exercise over its fair market value on the date the SAR was granted. Exercise of an SAR issued in tandem with stock options will result in the reduction of the number of shares underlying the related SAR to the extent of the SAR exercised. The term of a stand-alone SAR cannot be more than ten years, and the term of a tandem SAR will not exceed the term of the related option.

        Stock Awards, Restricted Stock and Stock Units.    The Committee may grant awards of shares of common stock, or awards designated in units of common stock, under the 2010 Incentive Plan. These awards may be made subject to repurchase or forfeiture restrictions at the Committee's discretion. The restrictions may be based on continuous service with us or the achievement of specified performance criteria, as determined by the Committee.

        Performance Awards.    The Committee may grant performance awards in the form of performance shares or performance units. Performance shares are units valued by reference to a designated number of shares of common stock, and performance units are units valued by reference to a designated amount of cash. Either may be payable in stock or cash, or a combination of stock and cash, upon the attainment of performance criteria and other terms and conditions as established by the committee.

        Other Stock or Cash-Based Awards.    The Committee may grant other incentives payable in cash or in shares of common stock, subject to the terms of the Lock-Up Agreement, for a period beginning on October 16, 20092010 Incentive Plan and ending onany other terms and conditions determined by the earliest of (i) November 15, 2009, (ii) the record date for the Special Meeting and (iii) the date that is three weeks from the issuance of the New Securities, each Noteholder agreed not to sell or transfer any shares of Common Stock issued to it pursuant to the Conversion Agreement, subject to specified exceptions.  Additionally, each Noteholder has agreed to vote all shares of Common Stock that it beneficially owns at the Special Meeting to approve Proposal 1.Committee.

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VITESSE SEMICONDUCTOR CORPORATION

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS

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VITESSE SEMICONDUCTOR CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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VITESSE SEMICONDUCTOR CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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and post-reverse stock split Common Stock shares as capital assets for tax purposes.  This section does not apply to you if you are a member of a class of holders subject to special rules, such as (i) a dealer in securities, (ii) a trader in securities that elects to use a mark-to-market method of accounting for your securities holdings, (iii) a bank, (iv) a tax-exempt organization, (v) a person that owns Common Stock shares that are a hedge of, or that are hedged against, the risks of price movements in our Common Stock, or that has recently purchased, will soon purchase, is committed to purchase, or has an option to purchase our Common Stock shares in a transaction that would be a “wash-sale” for U.S. federal income tax purposes, (vi) a person that owns our Common Stock shares as part of a straddle or conversion transaction for tax purposes, (vii) a person whose functional currency for tax purposes is not the U.S. dollar or (viii) a person that has acquired his or her Common Stock shares upon exercise of an employee stock option or otherwise as compensation.  This section is based on the Internal Revenue Code of 1986, as amended its legislative history, existing(the "Code"), the performance goals selected by the Committee may be based on the attainment of specified levels of one, or any combination, of the following performance criteria for the Company as a whole or any business unit, as reported or calculated by the Company: cash flows (including, but not limited to, operating cash flow, free cash flow or cash flow return on capital); working capital; earnings per share; book value per share; operating income (including or excluding depreciation, amortization, extraordinary items, restructuring charges or other expenses); revenues; operating margins; return on assets; return on equity; debt; debt plus equity; market or economic value added; stock price appreciation; total stockholder return; cost control; strategic initiatives; market share; net income; return on invested capital; improvements in capital structure; or customer satisfaction, employee satisfaction, services performance, subscriber, cash management or asset management metrics.

        The performance goals also may be based on the achievement of specified levels of performance for the Company as a whole or any business unit or applicable affiliate under one or more of the performance goals described above relative to the performance of other corporations.

        The Committee may provide in any award that any evaluation of performance may include or exclude any of the following events that occur during a performance period: asset write-downs, litigation or claim judgments or settlements, the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results, any reorganization and proposed regulationsrestructuring programs, extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 and/or in Management's Discussion and Analysis of Financial Condition and Results of Operations appearing in the Company's annual report to stockholders for the applicable year, acquisitions or divestitures, foreign exchange gains and losses, and gains and losses on asset sales.

        Adjustments and Certification.    The Committee may adjust the amount payable pursuant to an award under the Internal Revenue Code, published rulings and court decisions, all2010 Incentive Plan that is intended to qualify as currently"performance-based compensation" under Section 162(m) downward, but not upward. The Committee may not waive the achievement of performance goals related to an award except in effect.  These laws are subject to change, possibly on a retroactive basis.

PLEASE CONSULT YOUR OWN TAX ADVISOR CONCERNING THE CONSEQUENCES OF A REVERSE STOCK SPLIT IN YOUR PARTICULAR CIRCUMSTANCES UNDER THE INTERNAL REVENUE CODE AND THE LAWS OF ANY OTHER TAXING JURISDICTION.

If a partnership (or other entity classified as a partnership for U.S. federal income tax purposes) is the beneficial owner of our Common Stock, the U.S. federal income tax treatmentcase of a partnerparticipant's death or disability. Section 162(m) requires that the Committee certify that performance goals were achieved before the payment of the "performance-based compensation."

        Limitations.    Subject to certain adjustments, participants who are granted awards intended to qualify as "performance-based compensation" under Section 162(m) may not be granted awards, other than performance units, for more than 5,000,000 shares of common stock in any calendar year, except that additional awards for up to 5,000,000 shares may be granted to newly hired or promoted individuals in any calendar year. The maximum dollar value payable to any participant with respect to performance units or other awards payable in cash that are intended to qualify as "performance-based compensation" cannot exceed $3,000,000 in any calendar year.

Change of Control

        Under the 2010 Incentive Plan, unless otherwise provided in the partnershipinstrument evidencing an award or in a written employment, services or other agreement between the participant and us, in the event of a change of control:

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Upon certain changes of control, such as specified reorganizations, mergers or consolidations, the awards will generally depend onbecome fully and immediately exercisable, and all applicable deferral and restriction limitations or forfeiture provisions will lapse, only if and to the statusextent the awards are not converted, assumed or replaced by a successor company. Except for such specified types of changes of control, all outstanding awards, other than performance shares and performance units, will become fully and immediately exercisable and all applicable deferral and restriction limitations or forfeiture provisions will lapse, immediately prior to the change of control and the awards will terminate at the effective time of the partnerchange of control.



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All performance shares and the activitiesperformance units will be payable based on targeted performance being attained as of the partnership.  Partnershipseffective date of the change of control and will be paid in accordance with the payout schedule for the award.



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In the event of certain reorganizations, mergers or consolidations, the Committee may, in its discretion, instead provide that hold our Common Stocka participant's outstanding awards will be cashed out.

        Definition of Change of Control.    Unless the committee determines otherwise with respect to an award at the time it is granted or unless otherwise defined for purposes of an award in a written employment, services or other agreement between a participant and us, a change of control of the Company generally means the occurrence of any of the following events:

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an acquisition by any individual, entity or group of beneficial ownership of 40% or more of either (a) the then outstanding shares of common stock or (b) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (excluding generally any acquisition directly from the Company, any acquisition by the Company, any acquisition by any employee benefit plan of the Company or an affiliate, or the completion of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company pursuant to which specific requirements are met);



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a change in the composition of the board of directors in any two-year period with the result that the incumbent board members cease to constitute at least a majority of the board (not including directors whose election, or nomination for election by stockholders, was approved by a majority of the incumbent board); or



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completion of specified reorganizations, mergers or consolidations or other disposition of all or substantially all of the assets of the Company.

Amendment and partners in such partnerships, should consult their own tax advisors regardingTermination

        The Board of Directors or the committee may amend the 2010 Incentive Plan, except that if any applicable statute, rule or regulation requires stockholder approval for an amendment to the 2010 Incentive Plan, then to the extent so required, stockholder approval will be obtained. The Board or the Committee may also suspend or terminate all or any portion of the 2010 Incentive Plan at any time, but any suspension or termination may not, without a participant's consent, materially adversely affect any rights under any outstanding award. Unless sooner terminated by the Board or Committee, the 2010 Incentive Plan will terminate ten years after the date of stockholder approval of the 2010 Incentive Plan.

U.S. Federal Income Tax Information

        The following is a brief summary of the U.S. federal income tax consequences of the Reverse Stock Split.

U.S. Federal Income Tax Consequences2010 Incentive Plan generally applicable to us and to participants in the 2010 Incentive Plan who are subject to U.S. Holdersfederal taxes. The summary is based on the Code, applicable Treasury Regulations and administrative and judicial interpretations thereof, each as in effect on the date of this proxy statement and is, therefore, subject to future changes in the law, possibly with retroactive effect. The summary is general in nature and does not purport to be legal or tax advice. Furthermore, the summary does not address issues relating to any U.S. gift or estate tax consequences or the consequences of any state, local or foreign tax laws.

        Nonqualified Stock Options.A U.S. holder,participant generally will not recognize income upon the grant or vesting of a nonqualified stock option with an exercise price at least equal to the fair market value of our common stock on the date of grant and no additional deferral feature. When a nonqualified stock option is exercised, a participant generally will recognize compensation taxable as used herein, is a shareholder that is: (i) a citizen or residentordinary income in an amount equal to the difference between the fair market value of the United States, (ii)shares underlying the option on the date of exercise and the option exercise price. When a domestic corporation, (iii) an estate whose income is subject to United States federal income tax regardless of its source,participant sells the shares, the participant will have short-term or (iv) a trust if a United States court can exercise primary supervision over the trust’s administration and one or more United States persons are authorized to control all substantial decisions of the trust.

Other than with respect to any cash payments received in lieu of fractional shares discussed below, nolong-term capital gain or loss, willas the case may be, recognized by a U.S. holder upon such holder’s exchange of pre-reverse stock split shares for post-reverse stock split shares pursuantequal to a reverse stock split.  The aggregatethe difference between the amount the participant received from the sale and the tax basis of the post-reverseshares sold. The tax basis of the shares generally will be equal to the greater of the fair market value of the shares on the exercise date or the option exercise price.

        Incentive Stock Options.    A participant generally will not recognize income upon the grant of an incentive stock split shares receivedoption. If a participant exercises an incentive stock option during employment as an employee or within three months after his or her employment ends (12 months in the reverse stock split (including any fractioncase of a new share deemed to have been received)permanent and total disability), the participant will benot recognize income at the same as the holder’s aggregate tax basis in the pre-reverse stock split shares exchanged therefor.  In general, U.S. holders that receive cash in exchangetime of exercise for their fractional share interests in the post-reverse stock split shares as a result of a reverse stock split will be deemed forregular U.S. federal income tax purposes to have first received(although the fractional share interestsparticipant generally will recognize income for alternative minimum tax purposes at that time as if the option were a nonqualified stock option). If a participant sells or otherwise disposes of the shares acquired upon exercise of an incentive stock option after the later of (a) one year from the date the participant exercised the option and then to have had those fractional share interests redeemed for cash.  The U.S. holder’s holding period for(b) two years from the post-

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