formsc13d.htm

Exhibit B

Robert L. Chapman, Jr.

Managing Member

July 7, 2006

Mr. John C. Lewis

Chairman (70; ~ 0.1% owner¹)

Vitesse Semiconductor Corporation

741 Calle Plano

Camarillo, CA 93012

Director, Pinnacle Systems Inc.

Director, Cypress Semiconductor Corp.

Fmr. Director, Infinity Financial Tech., Inc.

Fmr. Ch./CEO/Pres., Amdahl Corp.

Office: (805) 388-3700

Facsimile: (805) 987-5896

Mr. Edward Rogas, Jr. (65; 2000)	Mr. Louis R. Tomasetta (57; 1987)	Mr. Moshe Gavrielov⁴ (51; 04/05)
Director, Vitesse (~ 0% owner²)	Director, Vitesse (~ 0.4% owner³)	Director, Vitesse (~ 0% owner⁵)
741 Calle Plano	3651 Via De Costa	EVP/Gen. Mgr., Cadence, Inc.
Camarillo, CA 93012	Thousand Oaks, CA 91360	2655 Seely Avenue
Fmr. SVP, Teradyne, Inc.	Co-Fdr.,Fmr. CEO/Pres., Vitesse Corp.	San Jose, CA 95134
Fmr. Dir. Unit Instruments, Inc.	Fmr. Pres., Vitesse Integ. Circuits Div.	Fmr. Dir., CEO, Verisity Ltd.
Fmr. Dir. Autoclave Engineers Inc.	Fmr. Dir. Maker Comm. Inc.	Office: (408) 943-1234 Ext. 6802
Office: (805) 388-3700	Office: (805) 493-0160	Facsimile: (408) 428-5001
Facsimile: (805) 987-5896	Facsimile: (805) 987-5896	mary.macdonald@teradyne.com

¹John C. Lewis ownership stake: 115,000 shares per Vitesse 2006 Proxy Statement dated December 19, 2005. Total outstanding share count of 219,882,044 as of November 30, 2005.

² Messrs. Gavrielov and Daly have their names boldfaced due to their comprising the Special Committee of the Board of Directors.

³ Edward Rogas, Jr. ownership stake: unmentioned in Vitesse 2006 Proxy Statement, in which Mr. Rogas is first nominated to the Board.

⁴ Louis R. Tomasetta ownership stake: 924,459 shares per Vitesse 2006 Proxy Statement.

⁵ Moshe Gavrielov ownership stake: approximately “—” shares per Vitesse 2006 Proxy Statement.

Dr. Vincent Chan, Phd. (57; 2000)	Mr. James A. Cole, (63; 1987)	Mr. Alex Daly (44; 1988)
Director, Vitesse (~ 0% owner⁶)	Director, Vitesse (~ 0.1% owner⁷)	Director, Vitesse (~ 0% owner⁸)
Director, MIT Lab for Info & Dcns.	M/G. Partner, Windward Vent., L.P.	Founder, Ch./CEO, Nutrophy, Inc. ⁹
77 Massachusetts Ave., Bldg. 32	P.O. Box 7688	7003 N Waterway Dr., Suite 222
Cambridge, MA 02139	Thousand Oaks, CA 91359	Miami, FL 33155
Fmr. Head, Comm. & I.T. Div., MIT	Director, Giga-Tronics, Inc.	Ch. Fmr. /Pres./CEO, ArcSight, Inc.
Office: (617) 253-2142	G.P., Spectra/New Enter. Ass.	Office: (305) 260-0883
Facsimile: (805) 987-5896	Founder, Pres., Amplica, Inc	Facsimile: (305) 260-9395
	Fmr. Dir. Spectrian Corp.
	Office: (805) 497-3222
	Facsimile: (805) 497-9331

Via U.S. Postal Service & United Parcel Service

Dear Mr. Lewis (and the Vitesse Board of Directors):

Chap-Cap Partners II and Chap-Cap Activist Partners (the “Chap-Cap Funds”), advised by Chapman Capital L.L.C., own over 16 million common shares, or 7.3%, of Vitesse Semiconductor Corporation (“Vitesse”, the “Company”). To put this ownership stake into perspective, our hedge funds’ financial interest in Vitesse’s common equity now exceeds Vitesse’s Board of Directors’ ownership by a factor of 13-to-1¹⁰ and is over twice the ownership position of Vitesse’s second largest reported shareholder.¹¹ Despite Chapman Capital’s foremost ownership in the Company, you would be well advised not to mistake it for a vote of confidence in you (as Vitesse’s “superintendent”) or the balance of the Board. To the contrary, Chapman Capital believes that after treating backdated stock options tied to the success of Vitesse’s computer chips like past-expiration bags of stale potato chips, the Board’s stewardship shall be proven grossly negligent, if not fraudulent.

Chapman Capital demands that Vitesse, following financial restatement and rescission of all improperly granted stock options, conclude a full scale auction of the Company, which we estimate would value Vitesse in excess of $4.50 per share as part a strategic bidder’s post-merger business model. Vitesse’s market capitalization today stands at just over $300 million,¹² which when combined with its approximately $97 million in convertible,¹³ subordinated debt and approximately $50 million drawn from the Tennenbaum facility (offset by the cash itself and other net working capital¹⁴) values the enterprise at approximately two times its estimated $200 million (~ $0.90/share) in estimated CY2006 revenues.¹⁵ Importantly, Vitesse itself has forecast gross margins to settle at 50%,¹⁶ led by 60% networking margins that ratchet up 50% SAS and 40% Ethernet product margins. Strategic/horizontal mergers often are driven by procurement-related and redundant

⁶ Vincent Chan ownership stake: 30,000 shares per Vitesse 2006 Proxy Statement.

⁷ James A. Cole ownership stake: 193,700 shares per Vitesse 2006 Proxy Statement.

⁸ Alex Daly ownership stake: approximately “—” shares per Vitesse 2006 Proxy Statement.

⁹ Nutrophy, Inc. is an online “personalized nutrition” provider; see http://www.nutrophy.com.

¹⁰ Vitesse Board of Directors owns 1,263,159 shares per Vitesse 2006 Proxy Statement.

¹¹ Source: SEC Schedule 13F filed by Kopp Investment Advisors Inc., reporting ownership of 7.4 million shares of Vitesse as of March 31, 2006.

¹² Vitesse’s equity market capitalization of $310 million as of July 6, 2006, is based on a share price of approximately $1.40.

¹³ Vitesse’s 1 ½% debt is convertible at $3.92/share, may be put or called in October 2009, and matures on October 1, 2024; Lehman Brothers served as lead manager; the conversion price may be subject to downward renegotiation as a result of recent corporate developments.

¹⁴ Chapman Capital believes that Vitesse’s cash crunch that precipitated the ultra-high yielding Tennenbaum facility was caused primarily by Vitesse’s a) overreaction to lengthening lead times and resultant excessive wafer inventory build-up, and b) distributor channel stuffing as implied by the Company’s revenue recognition related commentary.

¹⁵ Vitesse reportedly had been guiding toward $230-250 million in CY2006 revenues as of February 2006, with a ramp-up to just under $70 million in 1QFY2007 (ending December 31, 2006) revenues estimated by various sellside analysts.

¹⁶ Gross margins in Vitesse’s 1QFY2006 (ending December 31, 2005), 4QFY2005, 3QFY2005 and 2QFY2005 were 57%, 55%, 54% and 56% respectively, making reasonable our acceptance of Vitesse’s 50% long-term gross margin estimate.

SG&A savings that macerate otherwise fat gross margins such as those forecasted by Vitesse. A strategic buyer with its own R&D/general/administrative capabilities and overlapping sales force should be able to focus on Vitesse’s revenues and gross income when valuing this uniquely positioned Company. Until the most recently reported quarter, Vitesse’s R&D expense alone consumed nearly 100% of the Company’s gross income,¹⁷ with approximately $13 million of quarterly SG&A expense thereafter tanking operating income deep into the red as far back as a shareholders’ red eyes can see. Estimating conservatively that Vitesse’s CY2007 revenues will equate to at least $1.00/share and thereafter generate $0.50/share in gross income, a mere ten multiple applied to the latter escalates Vitesse’s private market value to $4.50 per share,¹⁸ over three times today’s depressed market price.

Vitesse’s well-planned redesign into the sweet spot of the low-cost Gigabit Ethernet¹⁹ upgrade cycle,²⁰ combined with pent up demand driving double digit growth for its Network products²¹ from merging and recovering U.S. and Asian²² telecommunications equipment customers, makes the Company an ideal acquisition candidate. Octal PHY competitors such as Marvell Technology Group Ltd., also caught up in this option backdating fiasco, have reported as much as 40% revenue growth in recent quarters.²³ In storage, Vitesse’s 2 Gigabit Fibre Channel-SAS transition currently should be ramping up, though the loss of EMC for the Company’s 4 Gigabit solution was disappointing.²⁴ Even after discounting Vitesse’s own $750 million and $450 million acquisitions of Sitera Inc.²⁵ and Orologic Inc.²⁶ respectively due to their top-of-the-bubble timing, the Company’s micro-capitalization status begins to look absurd. Layered on top of those acquisitions was Vitesse’s $275 million²⁷ deal to buy Versatile Optical Networks in 2001, followed more recently by the announcement of Vitesse’s $66 million cash deal for Cicada Semiconductor Corporation.²⁸ While the acquisitions mentioned above have contributed mightily to Vitesse’s intangible (and thus valuation-light) goodwill of nearly a quarter of a billion dollars, Chapman Capital is confident that Vitesse’s resultant line-up of leading products will lead to an auction met with high demand from U.S., European and Asian bidders.

¹⁷ R&D expense consumed gross income in Vitesse’s 1QFY2006 (ending December 31, 2005), 4QFY2005, 3QFY2005 and 2QFY2005 at the rate of 74%, 95%, 87%, and 98% respectively.

¹⁸ $4.50 equity PMV estimate = (($0.50 gross income x 10) - $0.50 net debt) = (($1.00 revenue x 5)) - $0.50 net debt).

¹⁹ Cisco/Linksys is estimated as a 7-10% customer in Vitesse’s Ethernet business; Vitesse’s E-StaX-34 Low Cost Stackable Layer-2 GbE Smart Switch is the industry’s first low cost stackable Layer-2 GbE smart switch, eliminating the need for Fast Ethernet stackable products.

²⁰ Chapman Capital itself upgraded its LAN from 10/100 Mb/sec to 1000 Mb/sec this past March 2006 using Linksys switches that utilize Vitesse technology.

²¹ Vitesse has design wins with 8 of the top 10 Ethernet over SONET customers, a group that includes Lucent/Alcatel, Siemens, Tellabs, Nortel, Marconi, Huawei, ZTE, JDS Uniphase and Ciena; Vitesse’s 10GbE transceiver solutions, showcased at Interop on May 2-4, 2006, enhance and enable the latest high-speed signals and protocols in Metro, enterprise and storage equipment; Networking competitors include PMC-Sierra, Inc. and Agere Systems Inc. in Transport, and Maxim Integrated Products, Inc. (also under backdated option investigation) plus Mindspeed Technologies Inc. in PHY.

²² Asian customers include Huawei Technologies, which had doubled its October 2005 forecasts as of January 2006.

²³ Marvell Technology reported April 2006 quarterly revenues of $521 million vs. $365 million the previous year.

²⁴ Chapman Capital believes it is reasonable to expect SAS products such as the VSC7250/VSC7251, assuming $17-45/port pricing, to grow into a $5 million/quarter revenue line by year end 2006. Orders from other storage customers such as Hewlett-Packard, IBM, Hitachi and Brocade should lead to a stabilization in storage revenues.

²⁵ Sitera stock (vs. cash) acquisition was announced on April 20, 2000 and consummated on June 2, 2000; Vitesse advisors were Lehman Brothers and Davis Polk.

²⁶ Orologic stock (vs. cash) acquisition was announced on March 27, 2000 and consummated on March 31, 2000; Vitesse advisors were Lehman Brothers and Davis Polk.

²⁷ Versatile Optical Networks acquisition value was $275 million at the June 4, 2001, announcement date but had fallen to $125 million by its consummation on July 31, 2001; Vitesse advisors were Lehman Brothers and Davis Polk.

²⁸ Cicada cash acquisition announced December 29, 2003 and consummated February 4, 2004.

The Special Committee of the Board of Directors²⁹ must take any and all actions necessary to obtain the rescission of former management’s unexercised, backdated stock options,³⁰ and disgorgement of all ill-gotten profits from those that have been converted to capital gains via option-related stock sales. In an April 2006 press release and related SEC filing,³¹ Vitesse announced that its Board had appointed a “Special Committee of independent directors to conduct an internal investigation relating to past stock option grants, the timing of such grants and other related accounting and documentation issues.” In the same company filing, Vitesse admitted that “in the course of its investigation, issues have arisen relating to the integrity of documents concerning the Company’s stock option grants.” As the Special Committee surely must have learned by this time, in order for backdated stock options to be legal³² the following circumstances must be present: 1) Vitesse’s formal plan under which the stock options were issued³³ permits stock option backdating; 2) Vitesse’s income statements and balance sheets are properly reported in the Company’s quarterly SEC filings, reflecting compensation and tax expenses or liabilities arising from the grant of “in-the-money” options; and 3) Vitesse’s annual proxy statements and periodic SEC insider filings³⁴ disclose any backdated nature of granted stock options. It is Chapman Capital’s belief that Vitesse’s Special Committee found cause to terminate Messrs. Tomasetta, Hovanec, and Mody (hereinafter, “The Three Stooges”) following an investigation into potential securities violations. Given that the Three Stooges may face civil and criminal penalties including criminal liability for fraud or income tax evasion, they may be well advised to disgorge voluntarily any illegally obtained gains and allow for the rescission of any improperly granted, unexercised stock options as a starting point to any plea agreement with the United States Securities and Exchange Commission and Department of Justice.

²⁹ The Special Committee of the Board of Directors is comprised of Messrs. Rogas and Gavrielov.

³⁰“Backdating” is the deliberate act of moving the grant and/or effective date of a stock option grant to a prior date during which the market price for the underlying shares was lower than the market price on the actual date that the stock options were awarded, typically via compensation committee meeting or approval by unanimous written consent in lieu of such meeting

³¹ Source: Vitesse Form 8-K dated April 27, 06.

³² The specific laws that regulate the granting and disclosure of stock options are the Securities Exchange Act of 1934 (Section 10(B) regarding making a material misrepresentation of a known fact; Section 10b-5 regarding using material, non-public information for financial gain to the detriment of counterparties; and Section 20(a) regarding individuals using their positions of power/control over corporate directives to present false or misleading information), the Sarbanes-Oxley Act of 2002 (Section 906 regarding the requirement by CEOs and CFOs to certify periodic SEC filings that fairly represent the company’s financial condition; and Section 302 regarding certifications with respect to the disclosure in a company’s SEC filings), the Foreign Corrupt Practices Act (USC Section 78(m) regarding falsification of a corporate document used to permit access to corporate assets), the Internal Revenue Code (Section 162(m) regarding the $1,000,000 limitation on the tax deductibility of compensation paid to certain executive officers by a publicly-held corporation, unless that compensation is performance-based -- stock options are exempted from this section if their exercise price is equal to the fair market value of the stock on the date of the grant; and Section 409A regarding discounted options and the related need to modify an options plan by year-end to avoid punitive taxation on below-market grants of options); and state regulations regarding breach of fiduciary duty, waste of corporate assets and potentially an usurpation of a corporate opportunity, depending on jurisdiction.

³³ Vitesse has issued free stock/stock options under its 2001 Stock Incentive Plan, 1999 International Stock Option Plan, 1991 Stock Option Plan, 1991 Directors’ Stock Option Plan, 1989 Stock Option Plan, and 1991 Employee Stock Purchase Plan.

³⁴ SEC Form 4 references in its “**” footnote that “intentional misstatements or omissions of facts constitute Federal Criminal Violations. See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a)”.

The wealth scalped from the skulls of Vitesse’s owners by the “throttled threesome” should supply ample liquidity for these disgraced executives to begin restoring their lost honor. Former CEO Tomasetta, EVP/Finance Hovenac³⁵ and CFO Mody have sold Vitesse shares for estimated amounts exceeding $42 million,³⁶ $15 million, and $2 million³⁷ respectively from 1999-2005. Due to these three executives’ potential breach of their fiduciary duties to Vitesse’s owners, the Company’s market value has fallen so precipitously that this aforementioned nearly $60 million total now approximates 20% of Vitesse’s entire market capitalization, which itself has lost an estimated $300 million on the backs of these individuals’ potential transgressions. Unless those guilty of such potential infractions seek to take the "perp walk" down the path that expires where Kenneth Lay now lies scattered in ashes, I expect that option cancellation³⁸ would be a welcomed part of any plea bargain agreement. On March 18, 2006, Vitesse Compensation Committee member Daly told the Wall Street Journal that “a review of the grants found ‘nothing extraordinary’ about their timing, and ‘absolutely no grants have been made to anyone, least of all the CEO, that are out of sequence with our normal grant policy.’” Chapman Capital hopes that Mr. Daly is more diligent in pursuing any remuneration to Vitesse’s owners than he was when investigating the acts themselves.

³⁵ Mr. Hovanec served as CFO from 1993-2005 before being promoted to EVP of Finance.

³⁶ In a watershed event, the Wall Street Journal broke the story on Vitesse’s potentially backdated stock options on March 18, 2006; according to that article, Mr. Tomasetta “reaped tens of millions of dollars from stock options … [despite the fact that Vitesse’s shares] now rest at about the level of a decade ago.” Specifically, the WSJ cited a March 1997 option grant that, “adjusted for later stock splits, gave [Tomasetta] the right to buy 600,000 shares at $5.625 each. The date they were priced coincided with a steep fall in Vitesse's stock, to what turned out to be its low for the year. He pocketed $23.1 million in profit when he exercised most of these options between 1998 and 2001.” The WSJ further reported, “In eight of Mr. Tomasetta's nine option grants from 1994 to 2001, the grants were dated just before double-digit price surges in the next 20 trading days. The odds of such a pattern occurring by chance are about one in 26 billion.”

³⁷ Source: The Washington Service.

³⁸ Chapman Capital demands cancellation of, and disgorgement of improperly obtained capital gains from, all improperly granted stock options.

Fortunately for Vitesse’s Board, extensive precedent now exists in the public markets for the canceling, rescission, renunciation and voiding of all improperly granted stock options, and disgorgement of any unlawfully obtained gains related thereto. Specifically, the list below details how certain rehabilitated public company directors have dealt with this issue by obtaining the restitution for, or any rescission of, illegally or improperly backdated stock options, in some cases negating the need for any financial restatement whatsoever.

*Mercury Interactive* (Nasdaq: MERQ)	Perhaps making itself the gold standard for backdated stock option restitution, Mercury declared void and unenforceable an aggregate of 2,625,416 vested and unexercised options granted between 1997 and 2002 to former CEO Amnon Landan.³⁹ Furthermore, Mercury determined that Mr. Landan had been terminated for cause and was therefore not entitled to receive severance benefits under his Employment Agreement.⁴⁰ Additionally, Mercury re-priced the existing stock options of former CFO Doug Smith to the day the grants actually were granted, and, with regard to exercised options, forced Smith to pay the difference between the exercise price of the options and the closing price of the company’s stock on the day in which the grants were actually determined.⁴¹
*Apple Computer* (Nasdaq: AAPL)	Cancelled backdated stock option grant to CEO Steve Jobs.⁴²
*Brooks Automation* (Nasdaq: BRKS)	Implicated Directors chose to resign from the Board, and to voluntarily renounce all their current stock options and restricted stock awards, whether or not vested.⁴³
*Comverse Technology* (Nasdaq: CMVT)	Settled an agreement with implicated and subsequently resigned CEO and President Kobi Alexander stipulating that:“Mr. Alexander will not be entitled to receive any stock options, restricted stock, stock appreciation rights or any equity or other incentive compensation under any plan or other arrangement of the Company, no previously granted stock options, restricted stock, stock appreciation rights or other equity compensation shall vest and the Alexander Employment Term shall not count towards vesting. In addition, Mr. Alexander agreed not to exercise or transfer any outstanding options during the Alexander Employment Term.”⁴⁴ In April 2006, Comverse said some option-grant dates used in its accounting “differed” from the actual grant dates, and that it would restate more than five years of financial results.
*Analog Devices* (NYSE: ADI)	Acknowledged having granted options just ahead of good news (spring-loading) and agreed with the SEC to re-price options granted to Mr. Fishman (President and CEO) and other directors. Mr. Fishman also agreed to make a disgorgement payment with respect to options granted in certain years.⁴⁵

³⁹ Source: Mercury Interactive Corporation Form 8-K dated June 9, 2006.

⁴⁰ Source: Mercury Interactive Corporation Form 8-K dated May 19, 2006.

⁴¹ Source: Mercury Interactive Corporation Form 8-K dated November 3, 2005.

⁴² Source: Apple Computer Press Release dated June 29, 2006; http://www.apple.com/pr/library/2006/jun/29stock.html

⁴³ Source: Brooks Automation Press Release dated May 18, 2006. http://investor.brooks.com

⁴⁴ Source: Comverse Technology, Inc. Form 8-K dated April 28, 2006.

⁴⁵ Source: Analog Devices, Inc. Press Release, November 15, 2005; http://www.analog.com/en/press/0,2890,3%255F%255F88325,00.html

Your apparent greed and lax oversight while serving as Chairman of the Board of Amdahl Corporation⁴⁶ and stock option insouciance as a director of Cypress Semiconductor Corporation compound our concerns regarding your past and future stewardship of Vitesse in a similar capacity. In a May 18, 1992, article entitled “Stock Giveaways Serve as ‘Golden Handcuffs,” the San Francisco Chronicle highlighted you personally as one of the beneficiaries of one of the largest free stock or stock option giveaways.⁴⁷ Renowned compensation consultant Graef Crystal was quoted in that article saying, “You tell the shareholders you are aligning the guy's interest with that of the company, but it's purely a giveaway. It's the closest thing in the executive suite to union featherbedding.” Matching our concerns regarding free stock options or restricted stock, Jim Kuhns further remarked, “You get the stock no matter what you do. All you have to do is make sure you don’t lose your job before the restrictions lapse.” Local San Francisco Bay executives must have taken notice of your stock/option promiscuousness, for the very next year Cypress Semiconductor CEO and shameless stock option junkie T.J. Rodgers expressed ecstasy when he announced your addition to his Board of Directors on November 10, 1993. In Cypress’ announcement of Mr. Lewis’ instatement as director, Rodgers exclaimed that he“look[ed] forward to having this industry legend on the Cypress team.”⁴⁸ One wonders, given your disturbing participation in a company notorious among the investment community for “getting huge cash compensation to employees in somewhat of a cloaked fashion,”⁴⁹ how you possibly can be trusted to wean Vitesse executives away from sucking on its own stock options areola.

As Chairman of the Board of Directors of Vitesse, you cannot escape blame for weak oversight of a partially-expelled executive management team that dwelled far too long in the abyss of confident incompetence. It may have seemed like an expeditious exercise in denunciation to fire the Three Stooges, but expulsion to their respective cages after they committed their allegedly improper acts is no substitute for fulfilling your duty of due care to prevent them from happening in the first place. Vitesse’s Board may have become insensitive to the financial agony being felt by the Company’s owners due to the Board’s near failure to qualify as owners themselves. As the advisor to Vitesse’s largest owner, Chapman Capital will not allow you to pretermit its demands for a sale of the Company. Indeed, our firm intends to initiate a full scale investigation of you and the balance of the Board, utilizing an in-house private investigator (and former Marine who has returned from battle in the Balkans) who will be directed to shadow your past, present and prospective activities as they potentially affect our ownership interest in the Company. We may seek to obtain intimate knowledge of all aspects of your life that may indicate an adverse effect or risk to our investment. In essence, you should live and breathe under the cloud that your past failures to regulate the Three Stooges have subjugated the Board and executive management into a state of perpetual audit.

Vitesse CEO Chris Gardner appears to Chapman Capital to be emotionally estranged from and morally misaligned with the Company’s Owners. In what may be the most untimely display of disregard for owner interests that I ever have witnessed, it has been reported to the SEC that in the midst of Vitesse’s recently facing NASDAQ delisting, delay and

⁴⁶ Mr. Lewis served as Amdahl Corporation President from 1977-1983, CEO/President from 1983-1987, Chairman/CEO from 1987-1992, Chairman from 1992-1996, Chairman/CEO/President from 1996-1998, and Chairman from 1998-2001; prior to his lengthy tenure at Amdahl, Mr. Lewis was a salesman at IBM Service Bureau Corporation (1960-1970), held various positions at Computer Sciences Corporation (1970), and advanced to the position of Xerox Corporation President (1976-1977).

⁴⁷ In a table entitled “LARGEST CORPORATE GIFTS,” the San Francisco Chronicle cited the value of restricted stock given to Mr. Lewis, “generally at no cost or for a token sum,” at $621,075.

⁴⁸ Source: Business Wire, November 10, 1993.

⁴⁹ Statements made by Ken Broad, fund manager at Transamerica Investment Management. Source: TheStreet.com, October 3, 2003.

restatement of financial statements, and a rescue financing that had depressed the market value of its shares, Mr. Gardner was granted 400,000, ten-year⁵⁰ stock options struck at the depressed price of $1.53/share. However, the grant alone is not the primary source of Chapman Capital’s outrage. As shocking as this will be for Vitesse owners to read, these 400,000 free stock options were not priced on or as of May 15, 2006, the date on which Vitesse appointed Mr. Gardner CEO⁵¹ and that Vitesse shares traded $1.72-1.84/share,⁵² but instead were priced on June 21, 2006, at a $1.53/share strike price and not the 12-20% higher market price that existed at the time of his May 15, 2006 appointment. As we now know that Vitesse’s Compensation Committee seems to have possessed no compunction against backdating stock options (particularly when the back-market price was significantly lower), why didn’t the Compensation Committee backdate Mr. Gardner’s 400,000 stock options to the higher market price of the date he was appointed? It should be noted further that Mr. Gardner received 625,000 free stock options in FY2003, FY2004 and FY2005 combined, on top of 600,000 free stock options from FY1998-FY2001⁵³, leaving Chapman Capital doubtful that Mr. Gardner’s hands are clean of the insidious ink potentially used to corruptly backdate his peers’ stock option grants during that same period. After joining Vitesse in 1986, Mr. Gardner served as Vitesse’s Chief Operating Officer from 2000-2002, arguably as the second in command within the entire corporate structure. We ask the Company’s Board of Directors to explain the circumstances that led to Mr. Gardner’s apparent demotion from Chief Operating Officer to General Manager of the Transport division⁵⁴ in June 2002, and why it believes he is the best choice to lead a now more complicated Vitesse today.⁵⁵

The Compensation Committee of Vitesse, comprised of co-directors Cole, Daly and Chan, surely understands its fiduciary responsibility to a) tie pay to performance, and b) ensure that management is rewarded primarily when (and not irrespective of) shareholder capital gains. However, despite evidence to the contrary, Vitesse's disgraced former CFO, Yatin Mody, reportedly told the Wall Street Journal,“the grants were ‘reviewed and approved’ by the compensation committee, and the exercise price set as of the date of the approval, as documented by the related minutes.” Mr. Tomasetta confirmed this story, telling the WSJ,“the grants were ‘approved by the board and the price set at the close of the day of approval.’ ” I refuse to believe thatMr. Louis R. Tomasetta (Fmr. CEO; 924,459-share/$1,284,998 ownership vs. $388,076 compensation and grants in 2005 of 1,800,000 shares with a potential value of $7,401,340⁵⁶), Eugene F. Hovanec (Fmr. EVP, Finance; 528,014-share/$733,939 ownership vs. $246,154 compensation and grants in 2005 of 450,000 shares with a potential value of $1,850,335⁵⁷), Yatin D. Mody (Fmr. VP, Finance and CFO; 87,079-share/$121,039 ownership vs. $196,000 compensation and grants in 2005 of 400,000 shares with a potential value of $1,644,742⁵⁸), Christopher R. Gardner (CEO; 186,234-share/$258,865 ownership vs. $216,923 compensation and grants in 2005 of 300,000 shares with a potential value of $1,233,557⁵⁹), or Ira Deyhimy (VP; 434,774-share/$604,336 ownership in 2005 vs. $175,000 total compensation and grants in 2004 of 75,000 shares with a potential value of $833,129⁶⁰), are in the least bit inept or indolent in performing their duties to the Company’s owners given the non-aligning ratio of their ownership stake in the Company to their annual compensation.⁶¹ I am sure they all have excellent explanations besides the fact that they receive free handouts of free stock options authorized by the Compensation Committee.

⁵⁰ Source: Vitesse Form 4 signed June 22, 2006, by Mr. Gardner; the options are “exercisable as to 25% of total number of underlying securities on each of June 21, 2007, June 21, 2008, June 21, 2009, and June 21, 2010.”

⁵¹ Source: Vitesse Form 8-K dated May 18, 2006; such filing states, “On May 15, 2006, Christopher R. Gardner, the Acting Chief Executive Officer of the Company, was appointed Chief Executive Officer.”

⁵² Source: Bloomberg.

⁵³ Source: Vitesse proxy statements.

⁵⁴ Transport markets long-haul and Metro products, and along with PHY, Framers/Mappers, switch fabrics, network processors, and datacom optical now are part of the Network Products Division.

⁵⁵ In addition to Mr. Gardner’s insensitivity to the stock option related carnage of Vitesse’s owners, despite having notified Mr. Gardner nearly two months ago of the Chap-Cap Funds’ having become the Company’s largest reported shareholder group, Mr. Gardner has not returned Chapman Capital’s calls or otherwise reached out to its largest owner.

⁵⁶ Source: Vitesse 2006 Proxy Statement dated December 19 2005. Proxy includes information on potential realizable value of options granted at an assumed annual rate of 10% stock price appreciation for option term.

⁵⁷ Ibid.

⁵⁸ Ibid.

⁵⁹ Ibid.

⁶⁰ Source: Vitesse 2005 Proxy Statement dated December 17, 2004.

⁶¹ Vitesse shares owned by executives valued at $1.39/share.

KPMG, LLP, Vitesse’s “independent registered public accounting firm” that issued the unreliable⁶² report relating to the effectiveness of the Company’s internal controls over financial reporting and management’s assessment thereof,⁶³ also should be “persuaded” to help reimburse Vitesse’s owners for any services not rendered. It was the responsibility of KPMG, before issuing such a report, to audit (that is why they are called “auditors”) Vitesse’s policies and controls over recognizing revenues from distributors that may have submitted conditional purchase orders for the Company’s products. Section 404 of the Sarbanes-Oxley Act of 2002 requires the Company's auditor to attest to, and report on management's assessment of the effectiveness of, the Company's internal controls and procedures for financial reporting in accordance with standards established by the Public Company Accounting Oversight Board. Essentially, KPMG’s duty was to discover if Vitesse corruptly engaged in “practices in connection with credits issued to or requested by customers (for returned products or otherwise) and the related accounting treatment, as well as the application of payments received to the proper accounts receivable,” as now appears to be the case by Vitesse’s own admission.⁶⁴ Obviously such practices may have led to Vitesse’s “accounts receivable and revenues [being] misstated,”⁶⁵ something that Vitesse’s owners never should have to fear due to proper auditing by KPMG. If KPMG was aware of the stock option backdating, it may have been a participant in fraudulent and unlawful conduct.⁶⁶ If KPMG was unaware of this practice, one must question whether they were grossly negligent in auditing and subsequently uncovering Vitesse’s potentially unlawful acts.

Vitesse’s extraordinarily expensive in-sourced Acting CFO⁶⁷ gives the Company yet another reason to complete its restatements and conclude an auction expeditiously. While we have been impressed with Mr. Hassel’s credentials⁶⁸ and no-nonsense focus on putting Vitesse back on firm footing, paying over $1 million/year⁶⁹ to a 35-year-old⁷⁰ Acting CFO who is a) commuting to/from Arizona on weekends, and b) claims minor experience with integrated circuit companies⁷¹ is an extraordinary expenditure of corporate funds. Should Vitesse’s Special Committee confirm that excommunicated former CEO Tomasetta, former EVP Hovanec and former CFO Mody are guilty of illegal or otherwise prohibited acts that in essence forced Vitesse to retain such high priced, emergency talent, Chapman Capital believes that the Three Stooges should be convinced of the prudence of including in their plea agreements the reimbursement to Vitesse of all extraordinary expenses. This would include not only Mr. Hassel’s seven-figure annualized compensation, but also any other extraordinary option and restatement-related expenses to attorneys and consultants charging high-end prostitute levels of hourly compensation. With FY2003-FY2005⁷² total cash compensation for Messrs. Tomasetta, Hovanec and Mody of $1,294,326, $831,154 and $831,154 respectively, these three corporate rejects should have ample cash and other personal assets to cover the fumigation of Vitesse’s house of cards.

⁶² Source: Vitesse Form 8-K dated April 27, 2006.

⁶³ The KPMG Report, along with the Management Report on Internal Control over Financial Reporting as of September 30, 2005, was included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2005.

⁶⁴ Source: Vitesse Form 8-K dated April 27, 2006.

⁶⁵ Ibid.

⁶⁶ Accounting firms are required to report unlawful corporate activity to the Public Company Accounting Oversight Board.

⁶⁷ Shawn C.A. Hassel was retained from Alvarez & Marsal, LLC, in the wake of departing CFO Yatin Mody.

⁶⁸ Source: Vitesse Form 8-K dated April 27, 2006; Mr. Hassel, a Managing Director with Alvarez & Marsal, possesses 12 years of experience as an interim manager and financial advisor to under-valued or under-performing companies and companies in transition.

⁶⁹ Ibid.; the arrangement between Vitesse and Alvarez & Marsal calls for the former to pay the latter $90,000 per month, plus all of its related out-of-pocket expenses and an undisclosed “success fee”, for the services provided to the Company by Mr. Hassel.

⁷⁰ Source, Vitesse Form 8-K dated May 1, 2006; since July of 2001, Mr. Hassel has been a Managing Director with A&M, specializing in developing operational and financial solutions to underperforming or overleveraged companies in an effort to maximize value for their stakeholders. Prior to joining A&M, Mr. Hassel spent seven years in Phoenix, Arizona at Arthur Andersen's corporate finance and turnaround division where he served as a Director. Mr. Hassel earned his B.S. degree in Finance and Accounting from the University of Arizona. He is a licensed Certified Accountant.

⁷¹ Mr. Hassel served as an an advisor via A&M to ON Semiconductor in 2000 and to Read Rite in 2002.

⁷² The three fiscal years ended September 30, 2005, 1QFY2006 and possibly earlier periods, are those now requiring financial restatement.

Any takeover defense by Vitesse’s management counterclaiming that Chapman Capital is “attacking” or otherwise adverse to the best interests of the Company (as compared to its management’s careers) is patently preposterous. On behalf of our own partners and shareholders, Chapman Capital has expended over $24 million to purchase in excess of 7% of the Company, ample incentive to protect rather than penalize our investment. Yet, despite a virtually unblemished activist track record and near doubling (on average) of our targets’ stock prices following fifteen completed activist campaigns of “Owner Liberation,” I have been confronted repeatedly with four management/director defenses. Accordingly, in order to head off certain tutelary tactics on your part, I hereby articulate Chapman Capital’s rebuttals to the baseless accusations I anticipate:

Baseless Accusation #1: Chapman Capital has made personal attacks against Vitesse and its management;

Cogent Rebuttal #1: The fustigation contained herein targets exclusively Vitesse management and directors’ professional actions or inactions (i.e., backdating stock option grants). We are entirely complimentary of the Company’s products, services and non executive employees, while we neither know nor care little about the personal lives, habits or attributes of Vitesse’s management or Board to the extent such deportment does not affect our investment in the Company. Once again, expression of our negative opinion⁷³ of your behavior in your capacity as a professional fiduciary does not constitute a personal attack.

Baseless Accusation #2: Chapman Capital is acting in concert with other Vitesse owners;

Cogent Rebuttal #2: No member of Chapman Capital has engaged in any prohibited discussion or alternate form of communication regarding Vitesse with any other owner of Vitesse.Moreover, should Vitesse General Counsel Sharon Drew take a few minutes to review Securities Exchange Act of 1934, Section 13(d)(3) and related Rule 13d-3, she will realize that legal constitution of a “group” requires the exceptionally high hurdle that “two or more persons act as a partnership, limited partnership, syndicate, or other group for the purpose of acquiring, holding or disposing of securities of an issuer,” with the list of beneficial owners belonging to such group only including “any person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has or shares voting or investment power” in the Issuer. Lastly, as I am sure Vitesse’s lawyers will inform you, since 1992,⁷⁴ two shareholders of any size, amounting to any combined percentage of Vitesse, can debate or otherwise discuss amongst themselves the Company’s merits and pitfalls, intentions or expectations regarding matters of his/her own portfolio management, research, trading, or corporate governance involving the Company. Thus, at the risk of being officious, please take this word of advice: when the angry masses inevitably come huffing and puffing on the door of 741 Calle Plano, crying wolf pack will only enrich the Company’s attorneys and delay the unavoidable destiny of a public company whose majority ownership wants it sold to the highest bidder.

⁷³ None of Chapman Capital L.L.C., its owners, affiliates or employees ever has been sued for defamation, libel or other such spurious claim, protected by the free speech rights bestowed by the First Amendment to the United States Constitution; all negative commentary contained herein, unless otherwise qualified, should be considered the opinion of Chapman Capital L.L.C. alone and not of any other party.

⁷⁴ In 1992, the SEC, under pressure from CalPERS et. al., revised its proxy rules to allow shareholders to communicate with each other without going through elaborate and expensive filing procedures. See Exchange Act Release No. 31326 (Regulation of Communications Among Shareholders; Oct.16, 1992), 57 Fed. Reg. 48276.

Baseless Accusation #3: Chapman Capital seeks short term, “quick-buck” profits at the expense of long term Vitesse shareholders;

Cogent Rebuttal #3: Vitesse’s long term shareholders seem to have paid dearly for believing in your long term plans for the Company. One by one, whether it be onetime 4.2 million shareholder Goldman Sachs or any of a handful of others that punted their ownership stake in just the past several, bloody months (to Chapman Capital and others), those owners who imbibed Lou Tomasetta’s Long-Term Value Cool Aid now have “fool poisoning.” Clearly, after decimating long term shareholders’ vestigial trust in the Board’s oversight and numerous dead-end paths to profitability, Vitesse’s distressed stock price speaks for itself. Moreover, we look forward to transitioning our ownership into what the U.S. government defines as “long-term” status on Day 366 of our holding period. Nothing would please our firm more than selling our entire position above $4.50/share, as legal “long-term shareholders,” at the conclusion of a successful auction in 2007.

Baseless Accusation #4: Chapman Capital’s low cost basis deprives it of the right to excoriate Vitesse’s Board and management for the stock price destruction that preceded our share accumulation;

Cogent Rebuttal #4: When Chapman Capital purchased greater than 16 million shares of Vitesse, attached to that 7% block of the Company’s shareholder equity was the blood, sweat and tears of all those previous owners who surrendered rather than fight. Each of the shares owned by the investment funds that Chapman Capital manages is 100% identical to those purchased by Kopp Investment Advisors Inc. (3.4% owner),⁷⁵ Barclays Global Investors UK Holdings Ltd. (2.9% owner),⁷⁶ Frontier Capital Management Company Inc. (2.5% owner),⁷⁷ Franklin Advisers Inc. (2.1% owner),⁷⁸ and Vanguard Group Inc. (2.0% owner),⁷⁹ among other investors unfortunate enough to have trusted the Board to fulfill its fiduciary duty of due care. In summary, the price one pays for his ownership stake, whether it be $115/share in March 2000, or $1.51/share in June 2006, is totally irrelevant to his rights to protect and defend his capital from any future neglect of fiduciary duties by Vitesse’s Board of Directors.

If our ownership stake in Vitesse leaves you tossing and turning through sleepless nights, we recommend that you pick up a copy of insomnia-killer The Modern Corporation and Private Property by Adolph Berle and Gardiner Means. Printed 3 years before you were born, this corporate governance suspense thriller spells out Berle and Means’ view of how modern capitalism is characterized by pervasive oligopoly and the separation of management from ownership. For a decade now, I have lamented publicly via Schedule 13D filings how fragmented equity ownership converts capital-risking “Owners” into un-concentrated, faceless, DTC-coded “shareholders.” In this conflicted world of “Agency Capitalism,” a board and its hired hands (together, the “Agents”) conveniently lose sight of the most important fact of their corporate lives: the Agents work for the Owners, and should such Agents differ in opinion from the majority of Owners regarding strategic and operational direction, it is incumbent upon those Agents to convert dissident Owners to management’s disparate views rather than simply state, “We possess better information and/or judgment than the Owners who hired us.” Importantly, for the Agents’ intransigent approach to have any legitimacy, this “better information” must be material in its relevance to a rational investor in his making a decision to buy or sell the company’s shares. If such “information” is in fact “material” by the SEC’s definition thereof, then under Regulation FD the Company has a responsibility to make “fair disclosure” of any such information promptly via an 8-K filing (possibly accompanied by a press release), thus feeding the process of informing Owners of any non-disclosed material developments that the Agents feel, by such non-disclosure, have hindered Owner comprehension. In essence, Agents must make their alternate case public and subsequently convince the Owners that their own views are either out-of-date or simply irrational. We are watching this play out now in the battle for Board control of H.J. Heinz Company, as both incumbent and agitator have campaigned their cost cutting platforms to the entire Ownership base. Yet, if Agents truly were beholden to public company Owners rather than the executives to whom they often owe their directorship in the first place, there would be no need for proxy contests whatsoever as directors exercising due care would mediate the conflict between management’s plans and those of the Owner majority. While such mediation requires a director

⁷⁵ Source: SEC Schedule 13F filed as of March 31, 2006.

remaining able and willing to communicate with Owners, any director unable or unwilling to commit such time to fulfill his fiduciary duties simply should resign his directorship.

I must reiterate that Chapman Capital has absolutely no interest in obtaining Board seats at Vitesse Corporation. As noted in our recent Schedule 13D filings in two other shareholder-unfriendly public companies,⁸⁰ we have no interest in being shackled by the membership rules of a Club Vitesse “insider”. Chapman Capital is a “Berle and Gardiner Shareholder Activist,” yearning for the ephemerally salubrious separation of management from ownership. To be honest, I swelter at the thought of driving north along the Pacific Coast Highway only to arrive as a minority director and have the fresh ocean breeze replaced by all the hot air bellowing from your crusty mouth. I have nightmares of sitting across from Mr. Tomasetta as he explains to me how amazingly lucky he was to have his options priced near pinpointed lows in Vitesse’s trading history.⁸¹ I ponder why any Owner should become fearfully compelled to have its representative serve on the Company’s board of directors – you and the rest of the Vitesse gang are being paid annually cash of $30,000- $40,000 per year plus 40,000-60,000 free stock options⁸² to maximize (and certainly not destroy) the value of the Owners’ investments. Essentially, the Owners gave Mr. Tomasetta a lease on Vitesse, but that lease ran out March 18, 2006, when the Wall Street Journal’s Charles Forelle and James Bandler broke the story on the backdated option scandal. On that day, when your and Mr. Tomasetta’s ability to point to the “long term shareholders” for support lapsed as their ownership interests were puked into a market valuing Vitesse’s shares near all-time lows, the “two minute warning” on your career as a public company fiduciary began ticking away. However, I pray you do not rest peacefully at night dreaming of a world free of proxy fights. Should another shareholder determine to follow our lead, “shadow 13D” our filing, and propose an alternative slate of directors, consider your eviction notice served.

In conclusion, Chapman Capital, on behalf of what it believes is a majority of Vitesse’s owners, demands that the Company’s Agents consummate an auction of Vitesse Corporation immediately following its financial restatements. As a microcap public company forced to wade through public beach waters infested with the dorsal fins of Messrs. Sarbanes, Oxley, and Chapman, Vitesse should be able to command a sizable premium (to public market) valuation from a strategic buyer capable of deriving management accountability and performance attainable only when management knows its bosses are neither faceless nor feckless. While the sale of Vitesse at our estimated valuation may not be the lottery ticket to which Mr. Tomasetta has become accustomed, I am sure you realize that the Three Stooges have only themselves to blame for the rare expiration of any non-rescinded stock options in “out of the money” form. As for you, Mr. Lewis, to quote you personally, “You live by the sword and you die by the sword.”⁸³ We suggest that, figuratively speaking, you draw yours and fall upon it before Vitesse’s owners are forced to do so themselves.

Sincerely,

/s/ Robert L. Chapman, Jr.

Robert L. Chapman, Jr.

⁸⁰ Chapman Capital filed Schedule 13Ds on Carreker Corporation and Sunterra Corporation on June 8, 2006, and June 28, 2006, respectively.

⁸¹ In March 1997, Vitesse granted Mr. Tomasetta options struck at the stock’s lowest price for the year; eight of Mr. Tomasetta’s nine grants from 1994 to 2001 were dated just before double-digit price gains in the next twenty trading days; Source: Wall Street Journal dated May 19, 2006.

⁸² Source: Vitesse 2006 Proxy Statement. In accordance with the Company’s 2001 Stock Incentive Plan, in 2005 grants of 40,000 options shares, with Chairman receiving 60,000, were provided to John C. Lewis, Vincent Chan, James A. Cole, and Alex Daly at an exercise price of $3.53. Similarly, Moshe Gavrielov was granted 40,000 at an exercise price of $2.15.

⁸³ Source: Fortune article entitled “The Game Has Changed in Big Computers” dated January 25, 1982.

Exhibit C

[CHAPMAN CAPITAL L.L.C. LOGO]

PRESS RELEASE

CHAPMAN CAPITAL DEMANDS RESIGNATION OF VITESSE SEMICONDUCTOR CORPORATION DIRECTOR JAMES A. COLE

LOS ANGELES, CA. - DECEMBER 6, 2006 ... Chapman Capital L.L.C. today announced that it has filed an amended Schedule 13D with the United States Securities and Exchange Commission demanding the resignation of Camarillo, CA based Vitesse Semiconductor Corporation (Fmr. NASDAQ: VTSS) director James A. Cole, co-founder and General Partner of Windward Ventures, L.P. (http://www.windwardventures.com).

Robert L. Chapman, Jr., Managing Member of Chapman Capital L.L.C., commented, “Having conducted its own investigation of the Compensation Committee that seems to have approved the issuance of backdated stock options to former senior executives of Vitesse, Chapman Capital has followed a trail of circumstantial evidence and now finds itself on the doorstep of 20-year Vitesse director and Compensation/Audit Committees member Jim Cole. Clearly, we are not alone in forming our opinion, with the majority of callers who spoke on Vitesse’s fourth fiscal quarter conference call referencing Mr. Cole’s prospective resignation from the Board. Moreover, should the Vitesse Special Committee headed by former Teradyne senior executive Edward Rogas, Jr. have accumulated evidence that exposes Mr. Cole as having committed or been illicitly complicit in any criminal act, Chapman Capital demands that such information be turned over to federal authorities so that Mr. Cole may serve any prison sentence that may be dictated by the laws regulating such professional deportment.”

Chapman Capital L.L.C. is a Los Angeles, CA based investment advisor focusing on takeover and turnaround investing. The firm currently manages over $300 million as the registered investment advisor to Chap-Cap Partners II Master Fund, Ltd. and Chap-Cap Activist Partners Master Fund, Ltd., the combined owners of over 5% of Vitesse Corporation common shares. Over the past ten years, Chapman Capital has agitated successfully for the restructuring or sale of over seventeen publicly-traded companies. Mr. Chapman previously was employed by Goldman Sachs & Co., Scudder Stephens, & Clark, and NatWest Bank USA. Interested parties should contact Mr. John Matthews at (310) 662-1900 and refer to http://www.hedgefunds.com or http://www.chapmancapital.com.

Vitesse Semiconductor Corporation designs, develops and markets a diverse portfolio of high-performance, cost-competitive semiconductor solutions for communications and storage networks worldwide. Engineering excellence and dedicated customer service distinguish Vitesse as an industry leader in Gigabit Ethernet LAN, Ethernet-over-SONET, Advanced Switching, Fibre Channel, Serial Attached SCSI (SAS), Optical Transport and other applications. Vitesse innovation empowers customers to deliver superior products for Enterprise, Access, Metro and Core applications. Vitesse news releases, as well as additional information on the Company, can be found at http://www.vitesse.com

CONTACT:

John K. Matthews

Phone: (310) 662-1900 x 102

E-Mail: matthews@chapcap.com

Exhibit D

[CHAPMAN CAPITAL L.L.C. LOGO]

Robert L. Chapman, Jr.

Managing Member

December 6, 2006

Mr. John C. Lewis	Mr. Edward Rogas, Jr. (65; 2000)
Chairman, Vitesse (~ 0.1% owner¹⁾	Director, Vitesse (~ 0% owner²)
17616 Eaton Lane	1351 Blue Sail Circle
Monte Sereno, CA 95030	Westlake Village, CA 913361
Director, Pinnacle Systems Inc.	Fmr. SVP, Teradyne, Inc.
Director, Cypress Semiconductor	Fmr. Dir. Unit Instruments, Inc.
Fmr. Ch./CEO/Pres., Amdahl Corp.	Fmr. Dir. Autoclave Engineers Inc.
Office: (408) 354-4328	Office: (805) 379-9822
Facsimile: (805) 987-5896	E-mail: edrogas@aol.com

Via U.S. Postal Service & United Parcel Service

Messrs. Lewis and Rogas:

Chap-Cap Partners II and Chap-Cap Activist Partners (the “Chap-Cap Funds”), advised by Chapman Capital L.L.C., continue to own the largest reported stake³ in Vitesse Semiconductor Corporation (hereinafter, “Vitesse”, or the “Company”). Having filed its original Schedule 13D with the United States Securities and Exchange Commission some five months ago, Chapman Capital has been uncharacteristically patient in awaiting decisive actions by Vitesse’s Board of Directors (hereinafter, the “Board”) to rectify accounting, corporate governance, and legal besetments. Since July 2006, Chapman Capital has conveyed telephonically and via E-mail (see attached compilation of the latter) its recommendations regarding Vitesse’s prospective financial restatement, governance remediation, and M&A participation (as a target vs. acquirer) to Vitesse CEO Christopher Gardner, Tennenbaum-contracting CFO Shawn Hassel, and the Board via Mr. Edward Rogas, Jr. However, despite thus far paying Alvarez & Marsal over $150,000/month⁴ plus 150,000 stock warrants (for in-sourced CFO Hassel), Vitesse continues with neither restated financials nor a reconfigured board of directors, and remains un-attached via a premium change of control (as compared to competitor Agere Systems, Inc., which has announced it will be acquired by LSI Logic Corporation).

______________________

¹John C. Lewis ownership stake: 115,000 shares per Vitesse 2006 Proxy Statement dated December 19, 2005. Total outstanding share count of 219,882,044 as of November 30, 2005.

² Edward Rogas, Jr. ownership stake: unmentioned in Vitesse 2006 Proxy Statement, in which Mr. Rogas is first nominated to the Board.

³ Source: Form 13-F filings for period ending September 30, 2006.

⁴ Source: Form 8-K filed October 5, 2006; Alvarez & Marsal, LLC, since April 27, 2006, has been paid $90,000 per month, plus $300,000 with respect to the financing from Tennenbaum Capital Partners, LLC, plus $150,000 upon the setting of terms for the settlement of a dispute with holders of the Company’s 1.5% Convertible Subordinated Debentures due 2024; Amkor Technology, Inc., a semiconductor industry participant with a $1.8 billion market capitalization and similar options backdating issues and related debt renegotiations, last reported paying its CFO $293,000 in annual compensation.

Chapman Capital’s public face of quietude has not been motivated by altruism, but instead its desire to allow - without any public dissent - Messrs. Gardner and Hassel to confirm Vitesse’s health to the Company’s outstanding customers, suppliers, and employees. Consequently, it is our understanding that Vitesse has suffered not a single customer loss, and has celebrated several key design wins, including a notable deal in Serial Attached SCSI (SAS) announced with the Hewlett-Packard Company just this week. Following last month’s release and discussion of Vitesse’s encouraging fourth fiscal quarter 2006 financial metrics, and positive channel checks that Vitesse’s customers and suppliers remain increasingly comfortable with the Company as business counterparty, Chapman Capital feels sufficient stabilization has been attained to allow it to move forward with share maximizing efforts.

In order for any public company to transcend the turmoil created by past corporate transgressions, those individuals involved in any illegal or otherwise deviant acts must be removed from any association with the Company. Although the employments of former Vitesse CEO Lou Tomasetta, EVP/Finance Gene Hovenacand CFO Yatin Mody have been terminated, perplexingly Mr. Tomasetta remains a member of the Company’s Board of Directors. However, it appears that his continued Board membership is not the one most disconcerting to Vitesse’s owners. Having conducted its own investigation of the Compensation Committee that seems to have approved the issuance of backdated stock options to former senior executives of Vitesse, Chapman Capital has followed a trail of circumstantial evidence and now finds itself on the doorstep of 20-year Vitesse director Mr. James A. Cole, founder and General Partner of Windward Ventures, L.P. As a senior member of the a) Compensation and b) Audit Committees, and nonsensically c) the Chairman of the Nominating and Corporate Governance Committee, Mr. Cole serves on or chairs all three committees directly responsible for preventing a) the alleged options backdating, b) false revenue recognition, and c) lax corporate oversight actions (or inactions) that appear to have put Vitesse in its currently compromised position.

Based on public outcry from a multitude of Vitesse’ owners, Chapman Capital is not alone in forming its opinion that Mr. Cole’s resignation from Vitesse’s Board is long overdue. No less than a majority of callers who spoke on Vitesse’s fourth fiscal quarter conference call held on November 6, 2006, referenced Mr. Cole’s prospective resignation from the Board. Fortunately, it is our understanding that the Vitesse special committee (the “Special Committee”) headed by former Teradyne senior executive Edward Rogas, Jr. belatedly has completed Vitesse’s resource-depleting investigation, including reviewing potentially complicit actions and negligent inactions of all members of the Compensation and Audit Committees. Should the Special Committee have accumulated evidence that exposes Mr. Cole as having committed, or been illicitly complicit in, any criminal act, Chapman Capital demands that such information be turned over to federal authorities so that Mr. Cole may serve any possible prison sentence that may be dictated by the laws regulating such professional deportment.

The volume of disconcerting data we have accumulated regarding Mr. Cole’s interesting professional background may overwhelm any reviewer thereof. Should Chapman Capital be forced to take further actions to remove Mr. Cole, it intends to make full disclosure of the results of that investigation. Until such time, I present herein certain troubling items related to Mr. Cole’s dossier for your consideration:

Cole Committee Membership or Chairmanship of Three Crippling Groups: Mr. Cole served on the Compensation Committee that allegedly issued backdated stock options, served on the Audit Committee that allegedly signed off on potentially misstated audited financials, and chaired the Nominating and Corporate Governance Committee that seems to have allowed corporate oversight to run terribly awry.

Cole Personal Relationship with Mr. Tomasetta and Hovenac: Mr. Cole, according to detailed background information provided by a variety of parties who have contacted Chapman Capital, enjoyed a close (and thus potentially compromising) personal relationship with Mr. Tomasetta (and reportedly with Mr. Hovenac), in our view making suspect his options-granting actions and inactions as a member of the Compensation Committee.

Cole Potential Conflicts of Interest between Mr. Tomasetta and Vitesse: Mr. Cole and Mr. Tomasetta shared a potentially-conflicting business relationship outside of Mr. Cole’s fiduciary duty of oversight of Mr. Tomasetta as CEO of Vitesse, evidenced by Mr. Tomasetta serving with Mr. Cole on the board of directors of at least one Windward Ventures’ portfolio company, Troika Networks, Inc.⁵ Chapman Capital, amongst other significant owners of Vitesse, finds it a dubious proposition that Vitesse director Cole, properly and without conflict, could oversee, reward and discipline Mr. Tomasetta while the latter served as a director himself of a private company in which Mr. Cole, via Windward Ventures, had a sizable financial and voting interest.

Cole Potential Conflicts of Interest between Mr. Hovenac and Vitesse: Mr. Cole and Mr. Hovenac shared a potentially-conflicting business relationship outside of Mr. Cole’s fiduciary duty of oversight of Mr. Hovenac as EVP of Vitesse, evidenced by their co-defendant status in litigation involving privately held KOR Electronics (Superior Court of California, County of Orange - Case No. 06CC07881)⁶. Chapman Capital, amongst other significant owners of Vitesse, finds it a dubious proposition that Vitesse director Cole, properly and without conflict, could oversee, reward and discipline Mr. Hovenac while the latter served as a director himself of a private company in which Mr. Cole, via Spectra Enterprise Associates, L.P., had a sizable financial and voting interest.

Chapman Capital believes that Messrs. Tomasetta and Cole are perpetuating their tenures on the Vitesse Board of Directors merely out of self serving (i.e., non-fiduciary) personal risk management. With ongoing investigations into whether both individuals either a) committed, b) were complicit in, or c) were negligent to prevent illegal or otherwise improper corporate acts, we believe their refusal to quit their residual affiliations with Vitesse is driven by the circumstance that this very Board essentially has been charged with policing itself. However illegitimate their directorships may be, Chapman Capital believes that Messrs. Tomasetta and Cole have ulterior (non-fiduciary) motives to keep their “sheriff badges” pinned onto their pinstriped lapels, and as such do not appear willing to resign on their own volition. On behalf of Vitesse’s entire ownership base, Chapman Capital demands that Mr. Lewis, as Chairman of the Board, immediately take actions to call a Special Meeting of shareholders to remove Messrs. Tomasetta and Cole from the Board. I have little doubt that requisite votes shall be tallied in support of such a referendum.

Sincerely,

/s/ Robert L. Chapman, Jr.

Robert L. Chapman, Jr.

______________________

⁵ Internet link for supporting evidence: http://64.233.161.104/search?q=cache:lH9FcfBVbrMJ:www.larta.org/lavox/articlelinks/2004/040712_rizzone.asp+windward+ventures+tomasetta&hl=en&gl=us&ct=clnk&cd=1.

⁶ Source: http://www.korlitigation.com/Complaint.pdf

Exhibit E

From: Robert L. Chapman, Jr.

Sent: Tuesday, November 21, 2006 8:32 AM

To: 'Edward Rogas Jr. (edrogas@aol.com)'

Cc: 'Christopher R. Gardner (crg@vitesse.com)'; 'Shawn C. A. Hassel (shassel@alvarezandmarsal.com)'

Subject: Chapman Capital Activism: Vitesse Semiconductor (VTSS): Trident Microsystems Example

November 21, 2006

Mr. Edward J. Rogas, Jr.

1351 Blue Sail Circle

Westlake Village, CA 913361

Office: (805) 379-9822

E-mail: edrogas@aol.com

On November 16, 2006, I transmitted the attached correspondence to you as head of the Vitesse Semiconductor Corporation (hereinafter, “Vitesse” or “the Company”) Special Committee, CEO Christopher Gardner and CFO Shawn Hassel. Such correspondence reiterated Chapman Capital’s unwillingness to accept the long overdue completion of at least a preliminary report regarding the stock options backdating issues plaguing Vitesse and its market valuation. As I have stated repeatedly, many months and millions of professional expense dollars ago, Vitesse should have identified all parties who contributed to the options backdating violations, either via complicity (i.e., shirking their fiduciary duty of good faith) or negligence (i.e., shirking their fiduciary duty of due care), and subsequently remove them from any involvement with the Company. High on the list of suspects was Vitesse’s Compensation Committee, with a particularly spotlight being shined on long-time committee member Mr. James A. Cole given his close personal and outside business relationships with Messrs. Louis Tomasetta and Eugene Hovanec. Vitesse’s Board of Directors (hereinafter, “the Board”) wasted no time throwing under the bus Messrs. Tomasetta, Hovanec and Mody; however, the Board is proving to be far more hesitant policing and punishing itself.

On May 20, 2006, one month after Vitesse’s Special Committee had been appointed to “conduct an internal investigation relating to past stock option grants, the timing of such grants and related accounting,” Trident Microsystems, Inc. (TRID) began a similar process. Yet, despite TRID’s having a smaller business (in revenues) than Vitesse, it announced today (well before Vitesse’s estimated December target) that a preliminary report had been provided to TRID’s Board of Directors allowing the latter to remove complicit parties.

The timeline related to the TRID special committee process below exhibits the relative expediency undertaken by TRID’s Board of Directors:

1.	5/20/2006: Trident announces that as of Friday afternoon, May 19, 2006, they became aware of a stock option pricing practices article to be published in the WSJ that mentions the Co.

2.	5/22/2006: WSJ publishes article titled , and surveys SEC filing s going back 5-10 years when the company was still a struggling graphics chip enterprise.

3.	6/16/2006: Trident Microsystems announces additional inquiries into stock options practices, by the U.S. Attorneys offices for Southern District of New York.

4.	9/13/2006: Trident files to Delay their Form 10-K for the fiscal year ending 06/30/2006. Filing date had been 09/13/2006.

5.	10/25/2006: Trident announces stock option grants special committee has not completed its work, nor reached final conclusion.

6.	11/20/2006: Trident announces that on 11/14/2006, the special committee provided a preliminary report to the Board of Directors on the investigation into the Co’s historical stock option practices. Company announced departure of its CEO, and adoption of interim action.

The model of survival/success for a public company afflicted with back dated options violations is simple;

1.	Find the perpetrators through expedient and thorough investigation, report to a special committee, and immediately address accountability.

2.	Remove/punish those Executives involved that either directly participated or were complicit in its occurrence, or were negligent in preventing it;

3.	Refocus of new management team and board of directors on core business, financial resolution/restatement, and business model moving forward.

Please see below how Wall Street research analysts reacted today to TRID’s resolution.

Jefferies & Co.

TRID :Option Overhang Largely Resolved as CEO Resigns, Restatement remaining hurdle

Trident announced after market close that its CEO and Chairman, Frank Lin, has resigned, effective Nov 15, Glen Antle was appointed as the interim CEO and Chairman of the Board, effective Nov 14, 2006. Mr. Antle has served as a director of Trident since July 1992. The Board of Directors intends to initiate a search for a new CEO. Mr. Lin will act as a consultant to assist the company with the executive transition and assist with respect to key customer and supplier relationships. Special Committee's review expected to be complete shortly with restatement completion likely not until February or March. Trident's Special Committee provided a preliminary report to the Board of Directors on Nov.14th. In the report, the Committee concluded that incorrect measurement dates were used in the accounting of some option grants and Trident now expects to record a non-cash charge in a range of approximately $40-50MM in the periods between 1994 and 2006. Although Trident's Special Committee expects to complete its review shortly, the process is now expected to extend beyond the time Trident would ordinarily report its FQ2 (Dec) earnings in January. TRID also announced that it plans to adopt a series of interim actions, best practices, and governance policies in response to the findings. * Option overhang largely resolved as management uncertainty is now lifted with restatement only remaining issue. We believe that the combination of Mr. Lin's resignation and the completion of the Special Committee's review shortly, should likely resolve the option issue for the most part with investors. Although we do not expect Trident to fully complete its restatement with the SEC until the February or March time frame, we believe investor concerns have largely been focused on potential management changes. Although we believe Mr. Lin's departure has been largely anticipated, we believe the resolution of this issue has been what investors have been waiting for before re-entering the stock.

CIBC

TRID: Trident Microsystems: Option overhang set to lit as CEO resigns and new

measures adopted

CIBC notes the resignation of TRID's CEO, the announcement of est options related charges, the adoption of corrective measures, and the imminent conclusion of the TRID Board's options review should bring firm's favorite DTV stock nicely back into favor. Firm says TRID ests non-cash charges related to the option grant review at $40-$50 mln over the 12 years 1994-2006. TRID also announced a series of corrective procedures related to the review. Based on the release, firm believes the options issue will be resolved in short order. At approx 16x their Y07 EPS of $1.30, TRID trades 25% below peers' 22x. As the options specter fades, TRID should rebound with a vengeance driven by surging sales in a 4Q rife with DTV promotions, rising top OEM penetration (especially

newly won Phillips) and share gains by TRID's top customers.

Please share this (and all past correspondences) with the other members of the Special Committee.

Robert L. Chapman, Jr.

Managing Member

Chapman Capital L.L.C.

Pacific Corporate Towers

222 N. Sepulveda Blvd.

El Segundo, CA 90245

Office: (310) 662-1900

Web: http://www.hedgefunds.com

From: Robert L. Chapman, Jr.

Sent: Sunday, November 19, 2006 9:48 AM

To: 'Christopher R. Gardner (crg@vitesse.com)'

Cc: 'Shawn C. A. Hassel (shassel@alvarezandmarsal.com)'

Subject: RE: Chapman Capital Activism: Vitesse Semiconductor (VTSS): Recoup Legal Expenses

November 19, 2006

Mr. Christopher R. Gardner

Chief Executive Officer

Vitesse Semiconductor Corporation

741 Calle Plano

Camarillo, CA 93012

Office: (805) 388-7551

Chris,

On the November 6, 2006 “business results and trends” conference call sponsored and led by Vitesse Semiconductor (hereinafter, “Vitesse” or “the Company”), you announced Vitesse “demonstrate[d] best in class performance in dealing with the legal and financial restatement issues that face the Company,” sought to “perform this complex process as efficiently and cost effective as possible,” and were “pleased with the results we report today,” including the following two 4QFY2006 results:

1) Cash burn: “during the fourth quarter our cash burn was $2.8 million.”

2) “Professional” Expenses: this cash burn came after “spending $4.9 million on professionals, specifically associated with Vitesse’s current situation.”

Thus, the extraordinary “professional expense” of $4.9 million (or nearly $20 million annually, just under 10% of a revenue base over $200 million per year) caused Vitesse to be cash flow negative in the 4QFY2006. As pleased as I may be with the Company’s estimated level of sales and gross income under your leadership, I must ask you how literally can you be “pleased with the[se] results”? I remain confused as to how Vitesse has demonstrated “best in class performance” when nearly $20 million annually of its owners’ scarce cash is being spent to rectify alleged improprieties of identified fiduciaries and current Compensation Committee members (e.g. James A. Cole) of Vitesse’s Board of Directors (hereinafter “Board”) who were negligent, if not complicit, in crimes against the Company. Chapman Capital has provided you (and Messrs. Shawn Hassel as CFO, and Edward Rogas as Special Committee head) with a variety of financial news reports wherein members of “the ‘class’ of option backdaters” (which now exceeds 130 and has seen over 50 top executives and directors resign) were able to obtain disgorgement of ill-gotten profits. Not only has Vitesse not received any such disgorgement, but, adding insult to injury, the Company essentially may be paying the legal bills of those who should return these falsely-obtained profits. While I am aware of indemnification clauses that are standard in directors’ agreements, typically no company would be negligent enough to sign one that indemnifies directors who committed civil or criminal acts that were detrimental to the company employing and trusting these miscreants.

Vitesse’s Board also should be aware that “best in class performance in dealing with legal and financial restatement issues” now includes the Company suing executives and directors to recoup legal fees (see attached WSJ article relating to this matter at Computer Associates). Vitesse’s Board continues to leave virtually unprotected the Company’s open wallet on the desks of countless attorneys, accountants (e.g., KPMG) and other “professionals who have been engaged by the Special Committee” to clean up the mess made by past and current Company executives and directors, either via their complicity in committing or negligence in preventing various violations. As Vitesse’s largest owner of record, Chapman Capital can say with confidence that all of Vitesse’s owners expect that you and the Board are forwarding copies of these extraordinary bills to the privately-retained and paid attorneys of Messrs. Tomasetta, Hovanec, Mody, and Cole so that they may begin raising the necessary funds to reimburse Vitesse’s owners for these astoundingly large cash draw downs, which may exist only due to the allegedly improper actions of these potentially corrupt fiduciaries themselves.

Late yesterday, I returned your voice message (left on the line of my executive assistant) to call me regarding these matters. I appreciate your calling me back, and taking the time to review and respond to this correspondence. Furthermore, please forward this correspondence to Mr. Ed Rogas (for whom I have left a voice message) and the other members of the Special Committee.

Robert L. Chapman, Jr.

Managing Member

Chapman Capital L.L.C.

Pacific Corporate Towers

222 N. Sepulveda Blvd.

El Segundo, CA 90245

Office: (310) 662-1900

Web: http://www.hedgefunds.com

cc: Shawn C.A. Hassel

CA Sues Ex-CEO

To Recoup Legal Fee

By WILLIAM M. BULKELEY

November 17, 2006; Page B2

CA Inc. is suing convicted former Chief Executive Officer Sanjay Kumar for repayment of the $14.9 million it fronted for his defense, and a court agreed to lay claim to his house, sports cars, yacht and other assets as security that he will be able to repay the sum if he loses the suit.

Software maker CA, formerly Computer Associates International Inc., also said it plans to seek additional restitution.

CA filed suit against Mr. Kumar Nov. 9 in New York State Supreme Court for Nassau County in Mineola. Late Wednesday, Judge Stephen A. Bucaria granted CA a motion for an order of attachment. It covers Mr. Kumar's $9 million house in Upper Brookville, N.Y., two Ferrari 550 Maranello sports cars from the 1999 and 2001 model years and a 57-foot Italian Azimut yacht as well as a Land Rover and a Volvo.

The order also attached $9 million that the Islandia, N.Y, company says Mr. Kumar is owed by his mentor and predecessor, CA founder Charles B. Wang, in payment for a stake that Mr. Kumar owned in the New York Islanders hockey team. It also attached Mr. Kumar's bank accounts.

The total value of the properties sought in the attachment appears to exceed CA's demand for $14.9 million, but it isn't clear whether Mr. Kumar holds sole title to all of them. Jack Cooney, Mr. Kumar's attorney with the law firm Davis Polk and Wardwell, declined comment on the attachment order.

Mr. Kumar, 44 years old, was sentenced this month to 12 years in prison on charges of financial and securities fraud and obstruction of justice.

Gary Brown, director of litigation for CA, said the demand for repayment of legal expenses is a prelude to a more complex claim involving restitution to CA, its shareholders and other investors for damages caused by Mr. Kumar's actions in running a $2.2 billion accounting fraud and an elaborate scheme to mislead Justice Department investigators. Kenneth Handal, CA's general counsel, said in an affidavit that the restitution claim will probably top $100 million, "an amount that most likely he is unable to pay."

Federal prosecutors are due to file another restitution claim against Mr. Kumar in January, with U.S. District Court Judge I. Leo Glasser in Brooklyn, N.Y. Judge Glasser oversaw the criminal case. He fined Mr. Kumar $8 million but said the sum might be adjusted to make money available for restitution. The restitution would be made to victims of his crime, possibly including CA itself, shareholders and former shareholders.

The federal restitution claim is likely to have priority over CA's legal-fees request, according to one person familiar with the case. "We're making every effort we can to work with the government for the best interests of shareholders," Mr. Brown said.

Mr. Brown said CA has paid $225 million into a restitution fund for investors and $174 million in settlement of a class-action suit. He said that CA itself is a victim of Mr. Kumar's criminal actions, and he said payments to the company by Mr. Kumar will enhance the value of the company and benefit longtime shareholders. Its largest shareholder, Swiss investor Walter Haefner, has maintained his 22% stake even as the stock was buffeted by the aftershocks of the accounting manipulations.

CA said the order of attachment was necessary, based on evidence it found that Mr. Kumar had frequently transferred assets to his family members. CA said he transferred a $20 million bond portfolio to his wife in 2002, the day after a New York Times article revealed that the Securities and Exchange Commission had started an investigation of CA's accounting practices.

CA said it has paid $14.9 million to Mr. Kumar's law firm, Davis Polk, since November 2003, including $4.3 million in April shortly before Mr. Kumar surprised prosecutors by pleading guilty.

CA said, under New York state law, it was obligated to pay the legal expenses of Mr. Kumar and other defendants during investigations and court cases "if the person acted in good faith...and had no reasonable cause to believe the conduct was unlawful."

Mr. Brown said case law in Delaware, where CA is incorporated, "establishes that a person who is convicted in a criminal case is not entitled to indemnification" for legal costs.

Defense attorneys said such claims for repayment of legal fees are rare, in part because victims seldom have sufficient assets to pay for a major case.

Mr. Kumar's assets appear sufficient to at least cover the legal costs. Mr. Handal said Mr. "Kumar has taken and will continue to take steps," to move assets out of CA's view.

Write to William M. Bulkeley at bill.bulkeley@wsj.com

From: Robert L. Chapman, Jr.

Sent: Thursday, November 16, 2006 11:34 AM

To: 'Christopher R. Gardner (crg@vitesse.com)'

Cc: 'Shawn C. A. Hassel (shassel@alvarezandmarsal.com)'

Subject: RE: Chapman Capital Activism: Vitesse Semiconductor (VTSS): Disgorgement Issues

November 16, 2006

Mr. Christopher R. Gardner

Chief Executive Officer

Vitesse Semiconductor Corporation

741 Calle Plano

Camarillo, CA 93012

Office: (805) 388-7551

Chris,

Seven months ago, Vitesse Semiconductor Corporation (hereinafter, “Vitesse”) formed a special committee (the “Special Committee”) to investigate, among other matters, the potential, illegal backdating of stock option grants to various members of Vitesse’s management and Board of Directors (the “Board”). Since that time, a multitude of other similarly positioned public company committees have concluded their investigations, at times announcing the disgorgement of profits ranging from $13 million (KB HOME) to $300 million (UnitedHealth Group). Given the relative simplicity of examining the paperwork underlying an option grant, followed up with basic interviews of parties related thereto, I am incredulous of any story as to why the Special Committee has not identified those parties culpable (through fraud, negligence or other breach) and removed them from any affiliation with Vitesse or related entities.

I have made crystal clear my view that Mr. James A. Cole, as a member of the Compensation Committee who authorized the purportedly illegally backdated stock options and personal friend of both Mr. Louis Tomasetta and Eugene Hovenac, is highly suspect in these matters. We have compiled a dossier on Mr. Cole’s past business dealings (including his co-defendant status with Mr. Hovenac in the KOR Electronics litigation - Superior Court of California, County of Orange - Case No. 06CC07881), which when combined with his former-Vitesse management affiliations outside of Vitesse, and exhibited deportment with the media and Vitesse’s owners, lead us to conclude that Mr. Cole’s continuation on Vitesse’s Board of Directors is egregiously inappropriate. By this point in time seven months after starting this investigation, I strongly believe that the Special Committee has adequate information to lead it to the same conclusion.

According to SEC filings made as of September 30, 2006, Chapman Capital oversees entities that comprise the largest ownership base of Vitesse, with over 18 million shares owned. As such, Chapman Capital believes that it may not in Vitesse’s best short-term interests for a public battle to erupt involving Mr. Cole’s directorship. However, as Chapman Capital does not believe that Vitesse long-term cannot transcend its past transgressions (and thus obtain the long-term confidence of Wall Street) without the removal of all guilty parties, we are at a crossroads on what actions (e.g., Schedule 13D amendment with Cole dossier disclosure, Form 14A filing) we will take in order to a) protect our investment from clear Board conflicts of interest, and b) allow our investment’s value to be maximized via incremental public investment by prospective investors who currently may be unwilling to buy Vitesse shares given the status quo nature of the Board.

Earlier today, I left you a voice message to call me regarding these matters. I will appreciate your calling me back, and taking the time to review and respond to this correspondence. Furthermore, please forward this correspondence to Mr. Ed Rogas (for whom I have left a voice message) and the other members of the Special Committee.

Robert L. Chapman, Jr.

Managing Member

Chapman Capital L.L.C.

Pacific Corporate Towers

222 N. Sepulveda Blvd.

El Segundo, CA 90245

Office: (310) 662-1900

Web: http://www.hedgefunds.com

cc: Shawn C.A. Hassel

From: Robert L. Chapman, Jr.

Sent: Tuesday, November 14, 2006 3:58 PM

To: 'Shawn C. A. Hassel (shassel@alvarezandmarsal.com)'

Subject: Chapman Capital Activism: Vitesse Semiconductor (VTSS): KB Home CEO $13 MM Disgorgement

November 14, 2006

Mr. Shawn C. A. Hassel

Chief Financial Officer

Mr. Edward Rogas, Jr.

Chairman, Special Committee

Vitesse Semiconductor Corporation

741 Calle Plano

Camarillo, CA 93012

Shawn,

Please forward to Mr. Rogas the attached article regarding Mr. Bruce Karatz's $13 million disgorgement "in gains from the backdating" that was part of an agreement between him and KB Home. Clearly, disgorgement has become a standard starting point in the process of rectifying ill-gotten gains from illegally backdated stock options.

As always, please confirm this has been done.

Robert L. Chapman, Jr.

Managing Member

Chapman Capital L.L.C.

Pacific Corporate Towers

222 N. Sepulveda Blvd.

El Segundo, CA 90245

Office: (310) 662-1900

Web: http://www.hedgefunds.com

==========

KB Home CEO Resigns

Over Backdated Options

Bruce Karatz Will Forfeit

About $13 Million in Gains;

2 Other Executives to Leave

By JAMES BANDLER and CHARLES FORELLE

November 13, 2006; Page A3

The stock-options fraud scandal claimed one of the nation's most successful and highly paid chief executives, KB Home's Bruce Karatz, who agreed to leave the company after an internal investigation found that he backdated his own option grants to increase his pay.

KB Home, a home-construction company once known as Kaufman & Broad, said Mr. Karatz would immediately leave his posts as president, CEO and chairman. He will forfeit about $13 million in gains from the backdating as part of an agreement with the company, based in Los Angeles.

Also departing is Richard B. Hirst, executive vice president and chief legal officer, and Gary A. Ray, the head of human resources. Mr. Hirst resigned, and Mr. Ray was terminated, the company said. A person familiar with the investigation said both Mr. Karatz and Mr. Hirst cooperated with the internal investigation.

Messrs. Karatz, Hirst and Ray couldn't be reached to comment.

Mr. Karatz is one of the highest-profile casualties of the stock-options scandal, which has now claimed the jobs of more than 50 executives and directors, including William McGuire, the chief executive of UnitedHealth Group Inc. More than 130 companies, including KB Home, are under federal investigation in a wide government action. Five former executives at the companies have been charged with criminal wrongdoing.

KB Home didn't detail how the backdated options came to pass, though it said Mr. Karatz and Mr. Ray selected the dates for the options. A person familiar with the matter said that an investigation by KB Home's board determined that the dates were selected retroactively by the two men without permission of the board, though this person said the investigation didn't conclude that there had been intentional wrongdoing. The company said the misdated options were granted between 1998 and 2005.

KB Home said Mr. Karatz would be succeeded as CEO by Jeffrey T. Mezger, the company's chief operating officer. The company said Mr. Mezger wasn't involved in any options troubles. KB Home said it created the new post of nonexecutive chairman, and will conduct a search for the position.

Mr. Mezger takes the helm of the company amid a slow housing market, which has caused KB Home's sales and those of other home builders to plummet. He said in an interview that he expects the options investigation won't have any long- term effect on the company's operations or reputation and that its home-building brand remains "extremely strong." "I think this will be a seamless transition,'' Mr. Mezger said last night. "We see business as usual going forward."

MORE ON OPTIONS

• Options Scorecard: Companies under scrutiny

• Perfect Payday: Complete coverage

Options allow recipients to buy stock at a preset exercise price, generally set at the market price on the day they were granted. Backdating involves pretending that an option was granted on an earlier date when the market price was lower, conveying an opportunity for extra profit. The practice can lead to overstated profits and significant tax problems for the companies and executives involved.

Mr. Karatz, a 34-year veteran of KB Home, has been its chief executive since 1986. He has overseen tremendous growth, shepherding KB Home through a burgeoning real-estate market that had it building houses at a fast clip. From the end of 1995 through the end of last year, KB Home shares climbed tenfold. The company's stock has dived 40% this year as the property market rapidly chilled.

Along the way, Mr. Karatz has been among the nation's most highly compensated corporate executives. Since 1992, he has reaped nearly $180 million from exercising options, according to Standard & Poor's ExecuComp, a service that tracks executive compensation. Last year, he made more than $150 million from salary, bonus, restricted stock grants and options exercises, according to ExecuComp. The options exercises accounted for the bulk of his pay.

The backdating appears to have begun in 1998, when Mr. Karatz received more than 450,000 options. That year also apparently marked a shift to much larger options awards -- in each of several previous years, Mr. Karatz had received 100,000 options or fewer.

His grants between 1998 and 2001 appeared particularly well-timed. In that period, he recorded one grant dated the day the stock touched its lowest closing price of the year, another at a quarterly low, and two more at monthly lows.

One grant of 450,000 shares carried the date of Oct. 25, 1999, and an exercise price of $17.75, the year's lowest close. KB Home shares subsequently rocketed upward, rising 25% by the end of November.

KB Home disclosed in August it was conducting an internal probe of its options grants, after being contacted by The Wall Street Journal about an unusual pattern of well-timed grants. The company also was the target of a shareholder lawsuit filed in July in Los Angeles County Superior Court alleging manipulation of past stock-options awards. The company has said it is studying the suit.

KB Home appears to have concentrated its options grants at the top. Mr. Karatz received 500,000 options in 2000, which was 30.9% of all the awards to employees. They were dated at a monthly low. Mr. Karatz has cashed all of those options out, for a total profit of about $54 million.

The $13 million he will forfeit is part of an agreement reached to refund the excess profit from backdating to the company, KB Home said. Mr. Karatz will repay the company to cover extra profit on already-cashed-out options, and his remaining outstanding options will be repriced.

The company said that it and Mr. Karatz haven't negotiated any terms of his departure other than the agreement to repay profits from backdating. To correct its accounting for the backdating, KB Home said it expected to take charges of no more than $50 million.

As of Nov. 30, 2005, Mr. Karatz had options for about three million KB Home shares, of which about 2.2 million he could immediately exercise, according to securities filings. The negotiations with the company over his departure will likely determine how much of that total he will walk away with. Under his employment agreement, some of his options remain in force if his departure is deemed a retirement. If he is terminated for cause, he could lose at least some of his outstanding options. Other severance terms also depend on how his departure is characterized.

The home-building industry isn't typically known for flash, but Mr. Karatz cultivated a high profile. He made a name for himself in the 1970s building a model house on the top of a department store in Paris to promote the company's homes in France.

Last year, he was instrumental in partnering with Martha Stewart to build and market homes together -- a move seen as increasing KB Home's name recognition in an industry that isn't known for having well-known brand names.

November 13, 2006, 9:03 am

Backdating Scandal Fells Top Homebuilding CEO

Posted by Peter Lattman

The backdating scandal has claimed Bruce Karatz, the highly paid and high-profile CEO of KB Home. Karatz agreed to leave the homebuilder after an internal investigation found he backdated his own option grants to increase his pay. The L.A.-based KB Home said Karatz will forfeit about $13 million in gains from backdating options. Here’s the WSJ story.

Since 1992, Karatz has made nearly $180 million from exercising options, according to S&P’s ExecuComp. Last year, his total compensation came to $150 million. According to the WSJ, negotiations with KB Home over his departure will likely determine how much of that total he will walk away with.

Also resigning: Richard Hirst, KB Home’s chief legal officer. Gary Ray, the head of human resources, was terminated. None could be reached for comment. Hirst’s bio has already been scrubbed from KB Home’s Web site, but according to Forbes, he joined KB Home in 2004 after GC stints at Burger King and the Minnesota Twins.

Karatz has a legal background. According to a 1994 profile in Los Angeles Business Journal (link unavailable), Karatz graduated from USC Law School and became a securities lawyer before moving in-house, joining billionaire Eli Broad at Kaufman & Broad (which became KB Home). He became K&B’s corporate counsel before moving to the operations side. Said Karatz: “I was always more interested in helping my clients make their business deals and looking at how the deals affected them,” than in the legal issues involved.

Irell & Manella served as the board committee’s outside counsel in the internal investigation

From: Robert L. Chapman, Jr.

Sent: Thursday, November 09, 2006 10:16 AM

To: 'Christopher R. Gardner (crg@vitesse.com)'

Cc: 'Shawn C. A. Hassel (shassel@alvarezandmarsal.com)'

Subject: Chapman Capital Activism: Vitesse Semiconductor (VTSS): Disgorgement of Profits

November 9, 2006

Mr. Christopher R. Gardner

Chief Executive Officer

Vitesse Semiconductor Corporation

741 Calle Plano

Camarillo, CA 93012

Office: (805) 388-7551

Chris,

I am attaching today’s Wall Street Journal article regarding the forfeiture of $390 million in stock-option compensation by two top executives of UnitedHealth Group. The implications vis-à-vis Vitesse are obvious, particularly in light of Chapman Capital’s public demands to that effect in our original Schedule 13D filing dated July 7, 2006.

Please forward this correspondence to Mr. Ed Rogas and the other members of the Special Committee.

Robert L. Chapman, Jr.

Managing Member

Chapman Capital L.L.C.

Pacific Corporate Towers

222 N. Sepulveda Blvd.

El Segundo, CA 90245

Office: (310) 662-1900

Web: http://www.hedgefunds.com

cc: Shawn C.A. Hassel

=============

UnitedHealth Executives

Forfeit $390 Million in Options

By STEVE STECKLOW and VANESSA FUHRMANS

November 9, 2006; Page B1

The two top executives of UnitedHealth Group Inc. agreed to forfeit about $390 million in stock-option compensation, by far the biggest sum returned to a company under scrutiny for backdating options

The giveback was announced at the same time the giant health insurer disavowed more than a decade's worth of earnings statements.

Last month, an internal inquiry found that the two executives -- outgoing Chief Executive William W. McGuire and his successor, Stephen J. Hemsley -- received options that carried dates prior to the dates on which they were actually granted, making them more valuable than they otherwise would have been.

Other senior UnitedHealth executives will also return unspecified options gains. Paul Hodgson, senior research associate at Corporate Library, a corporate-governance research group in Portland, Maine, said the $390 million giveback by Dr. McGuire and Mr. Hemsley may be the largest voluntary forfeiture by corporate executives ever. "This is certainly the biggest that I'm aware of," he said.

UnitedHealth is one of the largest companies to be ensnared in the options-backdating scandal, in which companies manipulated the dates that options were awarded to provide additional compensation to executives. More than 130 companies are under investigation by the Securities and Exchange Commission, and many of those are also being probed by the Justice Department.

UnitedHealth also disclosed that it would have to take "significantly greater" charges related to its backdated stock options than it had previously estimated and that it expects the charges to affect the past 12 years of previously reported earnings. The Minnetonka, Minn.-based health-insurance giant didn't specify what the new charges would be. It had previously said it might have to restate up to $286 million in earnings, stemming from three years' worth of earnings.

UnitedHealth also said its chief financial officer, Patrick Erlandson, resigned his post and will be succeeded by G. Mike Mikan, the company's senior vice president of finance. Mr. Erlandson will be reassigned to other "operational duties," the company said. A UnitedHealth spokesman declined to say whether Mr. Erlandson's move was related to the stock-options issue.

More than 40 executives have lost their jobs to date in the options imbroglio, including Dr. McGuire, who agreed last month to step down as UnitedHealth's chairman. He will leave his post as chief executive by Dec. 1, after 15 years at the company. UnitedHealth's internal probe concluded that Mr. Hemsley, the company's chief operating officer, received backdated grants, but it made no finding that he had a role in their creation.

UnitedHealth's options troubles followed a page-one article in The Wall Street Journal in March that showed that Dr. McGuire had received stock options grants at favorable times, including awards received in 1997, 1999 and 2000 whose dates coincided with those years' lowest closing share price. The article reported that the odds of such a favorable pattern occurring by chance were at least one in 200 million. At the time, UnitedHealth called its options-granting process "appropriate."

Options are intended to give recipients the opportunity to profit if the company's share price rises in the future. Usually, the recipient can buy shares in the future at the price of the stock on the day the option was awarded. Backdating involves pretending that the grant was awarded on an earlier day, when the share price was lower, giving the recipient the potential for greater profit. If not disclosed to shareholders, the practice can result in serious accounting and tax consequences.

UnitedHealth, in fact, faces a slew of noncash charges related to stock-based compensation, as well as cash charges resulting from tax liabilities. It said yesterday it would have to further delay filing its third quarter Form 10-Q to the SEC.

Both Mr. Hemsley and Dr. McGuire agreed last month to allow the exercise prices of previously granted options to be reset to the highest share price during the grant year after a board-commissioned review concluded that several option grants had likely been backdated.

The company said Mr. Hemsley and other unnamed senior executives had agreed not only to give up paper gains on unrealized stock options with questionable grant dates, but also to forfeit some money already made on previously exercised options. For Mr. Hemsley, the actions -- including forfeiting a complex tranche of grants that were suspended and then reactivated in August 2000 -- will reduce his past stock compensation by $190 million in both unrealized gains and money he would return. "My decision is in keeping with my personal goal of avoiding even the appearance of any unintended benefit from any past option grants to me," he said in a statement. Before joining UnitedHealth in 1997, Mr. Hemsley was chief financial officer at the accounting firm Arthur Andersen LLP.

Dr. McGuire has also agreed not to benefit from any grants with problematic dates that he has already exercised, although it isn't yet clear how this will be done, according to a person familiar with the situation. His attorney, David Brodsky, said, "Dr. McGuire is pleased to have reached an agreement to reprice his options. The agreement to forgo approximately $200 million means that Dr. McGuire will receive no benefit at all from dating issues in connection with his options."

But Dr. McGuire hasn't yet agreed to forfeit the reactivated options in which he and other employees were effectively able to get the same options twice, at favorable prices. For Dr. McGuire alone, those extra options are now valued at about $250 million. The issue of those options hasn't been resolved between Dr. McGuire and the company, according to people familiar with the situation.

At the end of 2005, Dr. McGuire had a cache of unexercised options valued at $1.78 billion. Mr. Hemsley's options at the time were valued at more than $650 million.

UnitedHealth spokesman Mark Lindsay wouldn't provide any details on the formula the company is using to determine how much executives have to return to the company from previously exercised grants. He added that the company was still working out the details on how the money would be paid back.

However the payback is handled, executive compensation experts said the move to undo past compensation is likely to complicate the tax liabilities that UnitedHealth faces from backdated grants. "The IRS doesn't like that sort of thing," said James Reda, managing director of a New York-based pay consulting firm James F. Reda & Associates.

The company's board also set new rules for its independent directors, prohibiting business relationships that involve payments from company executives or any direct compensation from the company, other than for board service, within the prior three years. That is tougher than New York Stock Exchange requirements, which limit other direct compensation for independent directors to less than $100,000. The more stringent rules come amid the resignation last month of William Spears, a UnitedHealth board member for 15 years, after the company's probe revealed undisclosed financial entanglements with Dr. McGuire.

UnitedHealth also said it reached a new, four-year employment agreement with Mr. Hemsley that is remarkably spartan compared with his and Dr. McGuire's previous contracts. Under its terms, Mr. Hemsley will receive a base salary of $1.3 million, $1 million less than Dr. McGuire earned as CEO. Far from the power Dr. McGuire enjoyed to negotiate and, in some years, set the date for his own option awards, Mr. Hemsley's contract doesn't set any minimum or target level for bonuses or other incentive-linked compensation. Rather, any additional bonuses are "solely at the discretion" of the board's compensation committee, the company reported in a filing with the SEC. "It's unusual for someone to relinquish that much control over how his bonus gets set," Mr. Reda said.

Shares in UnitedHealth fell $1.57 to $48 in 4 p.m. composite trading on the New York Stock Exchange.

From: Robert L. Chapman, Jr.

Sent: Wednesday, November 08, 2006 12:11 PM

To: 'Christopher R. Gardner (crg@vitesse.com)'

Cc: 'Shawn C. A. Hassel (shassel@alvarezandmarsal.com)'

Subject: Chapman Capital Activism: Vitesse Semiconductor (VTSS): Cole Resignation

November 8, 2006

Mr. Christopher R. Gardner

Chief Executive Officer

Vitesse Semiconductor Corporation

741 Calle Plano

Camarillo, CA 93012

Office: (805) 388-7551

Chris,

As we have spoken on this matter extensively, I will not expound on it herein. Compensation Committee member and long-time personal friend of ousted Vitesse Semiconductor Corporation (“Vitesse” or “the Company”) CEO Louis R. Tomasetta must resign his seat on the Company’s Board of Directors. Vitesse will not be able to move forward into a healthy future until this cancer of its past has been removed. The fact that a majority of this week’s conference call participants cited Mr. Cole’s removal as a desirable event, combined with the views of the retail investor forum (as excerpted below), should telegraph the importance of accomplishing this “milestone.”

For the benefit of the Company’s owners, vendors, customers and employees, it is my sincere hope that you and the Special Committee will accomplish this outcome without my having to file an amended Schedule 13D disclosing the results of our ongoing investigation into Mr. Cole past and present business transgressions.

Please forward this correspondence to Mr. Ed Rogas and the other members of the Special Committee.

Robert L. Chapman, Jr.

Managing Member

Chapman Capital L.L.C.

Pacific Corporate Towers

222 N. Sepulveda Blvd.

El Segundo, CA 90245

Office: (310) 662-1900

Web: http://www.hedgefunds.com

cc: Shawn C.A. Hassel

Excerpt from E-mail from the “Public Vitesse Forum” - 11/08/2006

[Phobos]: I try to do four things when I invest. Two of the four are buy low and sell high. For me, the jury is still out on one of these counts, since my cost basis for my VTSS holding is $2.07, and where I sell will determine the outcome. I think my cost basis is still reasonable (of course, I wish I had bought at $0.68, but who of us has a working crystal ball?).

The third thing I try to do is know the business. . .know what is reasonable to expect, and try to know a little something about the business of that company that the Market, in general, would not know, thus giving me an edge as an investor. In other words, I try to find companies with beaten down prices, whose core business is strong, and whose value has not yet been recognized, or is otherwise mis-priced by the Market.

The fourth thing I try to cultivate in selecting an investment candidate is to be intuitive in terms of my selection process. This is a little hard to explain, but I also try to assimilate the subjective impressions that I might have while assessing the company more concretely. Some of these might be subjective impressions of various things, or the coalescing of seemingly disparate bits of information.

Anyway. . .I was listening to the Conference Call from work, and as Robert Chapman (who doesn't seem to be quite so gung-ho for a sale any more) and others slammed Jim Cole, my mind kept drifting to the scene in "The Godfather," where Tom Hagen and Vito Corleone are returning from their "sit-down" with the heads of the other five Mafia families to bring the gang war to an end. Tom Hagen asks if he should insist that all the people that Tataglia has dealing drugs should have clean criminal records, and Vito says to mention it, but don't insist, because Barzini is a man who will know this without being told. Tom Hagen then says: "You mean Tataglia?", to which the Don (Corleone) replies: "Tattaglia's a pimp. He never could've outfought Santino, but I didn't know until this day that it was Barzini, all along."

My mind then drifted to Geshe's impromptu interview with Tomasetta at his home, soon after the debacle, and at the time, I remember thinking that Lou gave the impression of a deer in the headlights, which I and others attributed to having to keep quiet for legal reasons. What if he was keeping quiet for legal reasons, but what if there is a little more to the story. Quickly and easily throwing Tomasetta "under the bus" would provide Cole with needed cover, while the Board orchestrated things behind the scenes. Tomasetta couldn't say anything, because the outcome of future legal action against him might depend upon him keeping quiet. Cole did not value Tomasetta as a CEO; in fact, during Cole's interview, Cole had nothing nice to say about Tomasetta. Some snippets are: "He (Lou) liked to play in the sandbox too much," and "Lou really screwed up this time." . . .But, Cole was on the Compensation committee. How could any of this take place without Cole's knowledge?

I don't see an engineer (Lou)--who was probably naive in the ways of business, whether MIT-trained or not--as pulling the wool over the eyes of Jim Cole. Even if you use an old dictum and "follow the money," the trail still leads to Jim Cole as a member of the Board, and a member of the Compensation committee. If Cole didn't know what was going on (I would personally find this hard to believe), then he should be fired for incompetence. It's his job to know what's going on, and if he DID know what was going on, then he should be prosecuted to the fullest extent of the law. In fact, I think that my last statement should apply to the entire Board. Whether they were asleep at the switch or enriching themselves with other people's money, they should all be one thing; GONE!

...It was Cole, all along.

[Par4crsfl]: Excellent post--my personal choice for "post of the day"! Guilty or "stupid," either way, we can & should do better! Let's clean up the Board & move on. Par

[Hoseaye123]: Par. . . three Conference Call questioners seriously after Jim Cole's bung hole; he's history and doesn’t even know it. Yes, Virginia, we would have been cash-positive this quarter, if not for the larceny. What I didn't understand--Colorado facility in late stage of a sale, but Chris said its sale would not meaningfully add to the bottom line. Am i missing something? Do the owe a lot on it?--The other Joe

[Cvh427]: Joe, the question was asked that if sold, how it would affect the operating cost. Chris answered by stating that the fab 2 facility in C. Springs was decommissioned several years ago; no product was running at fab, and it was only being used an an office space. Depending on who they sell the fab to, Vitesse may be leasing or renting some space back. Overall, the effect was net positive, but not material to the balance sheet. I had thought this fab was paid off. Anyone else have any comments on this?

[Sharpinvestments]: Excellent post, Phobos. The fact that Cole admitted that at least 2 of the 3 Amigos were investors in his fund raises questions. I do think he's covering his own ass. He gave Lou an "eyes closed green light," IMO, for years, and Lou took advantage. I think Cole is history. Judging by his personality type, he'll not resign, but will need to be kicked out. The sooner the better.

From: Robert L. Chapman, Jr.

Sent: Sunday, October 29, 2006 12:21 PM

To: 'Shawn C. A. Hassel (shassel@alvarezandmarsal.com)'

Subject: Chapman Capital Activism: Vitesse Semiconductor (VTSS): Self Policing Issues

October 29, 2006

Shawn,

Please forward to the entire VTSS Board this weekend’s WSJ story questioning whether those culpable (i.e., Vitesse’s Compensation Committee) will be punished legally given the self policing approach. Rest assured, Chapman Capital intends to make a “books and records” demand to obtain the investigation’s final report (and supporting documents).

Please confirm this E-mail was forwarded to the entire Board.

Robert L. Chapman, Jr.

Managing Member

Chapman Capital L.L.C.

Pacific Corporate Towers

222 N. Sepulveda Blvd.

El Segundo, CA 90245

Office: (310) 662-1900

Web: http://www.hedgefunds.com

Legal Aid

In Options Probes,

Private Law Firms

Play Crucial Role

As More Than 130 Companies

Come Under Scrutiny,

Government Relies on Help

Questions About Fairness

By JAMES BANDLER and KARA SCANNELL

October 28, 2006; Page A1

With more than 130 companies under federal scrutiny, the investigation into stock-option backdating has rapidly become one of the broadest corporate scandals in decades. It is so broad, in fact, that federal authorities can't possibly do thorough examinations of every company.

Instead, they outsource a big chunk of the job.

Regulators and prosecutors are relying on suspect companies to investigate themselves by hiring outside law firms. The firms are supposed to hand over their findings to the Securities and Exchange Commission or federal prosecutors, who then use them to help decide which cases to pursue further. The feds often ask for any especially incriminating documents to be delivered in a handy folder they call a "hot binder."

That has long been a common practice for companies in potential legal trouble, partly because it can lead to leniency as reward for a self-examination well done. But not since the overseas bribery scandal of the 1970s have so many public corporations been in trouble at the same time. The federal investigation has enveloped icons of success like Apple Computer Inc., Home Depot Inc., giant insurer UnitedHealth Group Inc., and dozens of Silicon Valley companies.

"The sheer magnitude of the numbers of companies, executives and corporate boards that have disclosed options-related investigations is mind-boggling -- unequaled in recent years," says Lynn Turner, a former chief accountant for the SEC.

The mass exercise in self-policing already has produced some dramatic results. More than 40 executives or directors have resigned or been pushed out in the wake of internal probes that found options backdating problems. The most prominent is William McGuire, chief executive of UnitedHealth, who is leaving his post by Dec. 1. Outside lawyers hired by the company found evidence of rampant backdating of options that enriched him and other insiders. Dr. McGuire, who has said he did nothing improper, stands to lose more than $100 million alone after agreeing to reprice his options.

Nearly 70 companies already have said they will need to restate or otherwise reduce profits after acknowledging that faulty accounting of options had inflated the numbers, according to a tally by shareholder advisers Glass Lewis & Co. The firm put the total shaved off at $5.3 billion.

Still, the deputizing approach raises questions about how evenly justice will be applied. Such investigations are typically overseen by outside directors who may have close ties to the company's management -- and who may themselves have been involved in making the option grants at issue. The government risks focusing not on the worst offenders, critics say, but on those companies honest or frightened enough to perform scrupulous self-examinations.

In at least one case, federal officials have stepped in when they felt an internal probe wasn't getting to the bottom of the matter, according to a person familiar with the circumstances. At Affiliated Computer Services Inc., a Dallas-based technology outsourcing company, executives benefited from a tremendously unlikely pattern of timing grants. A Wall Street Journal analysis last March put the odds at 300 billion to one that the dates on which grants purportedly had been awarded to the company's former CEO were chosen randomly. The company used its longtime outside counsel to conduct the probe.

PERFECT PAYDAY

• Options Scorecard

• Complete coverage

In May the company announced a preliminary finding that there was no intentional backdating to enrich executives. Government officials prodded ACS to look harder, and the company hired a new team of lawyers with no connection to the firm. "From day one ACS has expected its legal counsel to leave no stone unturned and conduct a thorough, objective, and complete investigation of all the facts, and that is exactly what is occurring," said spokesman Michael Buckley.

In some cases, the outsourcing approach has allowed the government to move unusually swiftly. In August, prosecutors filed criminal charges against three former executives of Comverse Technology Inc., only five months after private lawyers had begun an internal options probe at the New York maker of telecommunications software. The outside lawyers found a key witness, obtained dramatic confessions from the three executives, unearthed a secret options "slush fund" -- and kept government officials informed every step of the way.

Federal officials say it is too early to predict how many cases they will bring. But the government has made it clear it won't pursue every backdater. With so many potential defendants, the government has decided to zero in on the most egregious, those involving self-enrichment by top executives, big sums of money, or brazen efforts to deceive directors, auditors and shareholders.

While the government has long had internal policies that permit it to reward companies for their cooperation, the expectations have been ratcheted up in recent years. Under controversial Justice Department policies in place since 2003, companies are more susceptible to criminal charges unless they are viewed as doing a good job on "cooperation and voluntary disclosure."

The threat of criminal prosecution "is a lot like the guillotine - it tends to focus the mind," says Joseph Grundfest, a former SEC commissioner and a professor of law at Stanford University. "Here you have over 140 companies spending millions each doing the equivalent of Maoist self-criticisms and turning the results over to the authorities."

Critics of the approach say using private lawyers to investigate on behalf of the government can place employees in an unfair position: talk, or you'll lose your job. When speaking to private lawyers hired by the company, employees don't have the legal protections -- against self-incrimination, for instance -- that apply in some government proceedings. The government has relied on internal probes at least since the 1970s bribery scandal, which resulted in hundreds of companies stepping forward, and led to enactment of the Foreign Corrupt Practices Act.

The current investigations are focusing on whether executives improperly enriched themselves through surreptitious backdating of stock options. Options give their recipient the right to buy a stock at a fixed price, and typically allow the recipient to profit if the market value of the stock rises from the day the option was granted. But it turns out many companies cheated by pretending that their options were granted on earlier dates, when the stock price was much lower, a practice that gives an instant paper profit for the grant recipients.

Backdating is illegal if not properly disclosed to shareholders. It also can cause serious accounting and tax problems for companies and executives. To date, five former executives have been charged with criminal fraud violations in connection with the practice, including the three at Comverse.

The government began to cast its eye on the timing of option grants more than three years ago, when the SEC's then-enforcement director, Stephen Cutler, read a news account suggesting that executives had issued grants just prior to the release of favorable news that caused a jump in their company's share prices.

SEC officials gradually began to suspect that something more nefarious was going on. A small number of academic researchers also were suggesting that backdating might explain the happy timing of many grants. An SEC unit in Washington began a limited probe, focusing on fewer than a dozen companies. Federal prosecutors in San Francisco also started examining one case, Brocade Communications Systems Inc., assigning a single prosecutor and one FBI agent.

Last March, The Wall Street Journal reported that statistical evidence strongly suggested backdating had taken place at six companies. Among them: UnitedHealth, ACS and Comverse. The Journal article sent the federal probe into high gear, officials say. All the companies got subpoenas. It also sparked unusual territorial skirmishes between rival U.S. Attorney's offices eager to show they were cracking down on the latest corporate scandal.

An initial volley came from federal prosecutors in Brooklyn, N.Y., who moved quickly to subpoena Comverse, which until recently was headquartered in its district. That prompted the office's crosstown rival in Manhattan to follow suit. Some companies ended up receiving subpoenas from more than one U.S. Attorney looking for the same information about options. Eventually, senior Justice Department officials ruled that cases generally would be handled along geographic lines.

Prosecutors in San Francisco were initially miffed that prosecutors in New York were reaching across the country to subpoena Silicon Valley companies. "Our preference here generally is to try and create a cooperative environment with the firm and entity we're looking at so we don't have to start the relationship with grand jury subpoenas," says Kevin Ryan, U.S. Attorney for the Northern District of California, who e didn't directly criticize his counterparts.

Last spring as waves of companies began to step forward to admit options troubles, Mr. Ryan contemplated his office's response. His thinking crystallized while on a family vacation this summer in southern France. There, he sounded out his father-in-law, James Klingbeil, a prominent San Francisco real-estate investor. While the pair sipped wine under an oak tree, Mr. Klingbeil told his prosecutor son-in-law that the arguments by some companies that backdating was acceptable "didn't pass the smell test," both men recall.

While in France, Mr. Ryan fired off a series of urgent emails to his deputy, Eumi Choi, saying that the office needed to jump on the matter. Soon after, the office formed a special task force of prosecutors and agents of the Federal Bureau of Investigation, an idea Mr. Ryan says he'd been weighing before the France trip.

Of more than two dozen cases his office is investigating, Mr. Ryan says "15% to 20% have raised serious issues. We're going to really drill down on those." An FBI agents on his task force, Brian Wickham, says that in the case of one company he declined to identify, an executive's calendar showed him to be out of the country when other documents claimed he was at a board meeting.

Nationally, at least nine U.S. Attorneys offices are probing backdating, assisted by agents with the FBI, Internal Revenue Service and the U.S. Postal Service. The SEC, which is taking the lead on most of the investigations, has assigned more than 150 lawyers and accountants to the task.

The scandal also has been a bonanza for law firms and forensic accountants. UnitedHealth's internal probe looked at almost four million documents and included more than 80 interviews of employees and other witnesses. Another company -- Mercury Interactive Corp. -- said the cost of its internal probe amounted to about $70 million.

The internal probes appear to run the gamut from exhaustive efforts to ferret out wrongdoing to more minimal examinations aimed mostly at correcting the mess backdating makes of a company's financial statements, say lawyers involved. Federal officials say they're well aware of the varying levels of depth of the in-house probes. "We critically evaluate the quality of the investigation. We don't just take their word for it," says Walter Ricciardi, a deputy director of enforcement at the SEC.

The SEC launched a computer-tracking system this week to help it keep tabs on lawyers conducting the probes. The idea is to let government investigators share information with each other about how responsive, independent and thorough they believe private lawyers have been, so the government can judge their credibility of their findings.

At Comverse, confessions elicited by outside lawyers from three senior executives sealed their fates. The company had for many years granted options to senior executives that bore unusually beneficial dates, just ahead of sharp increases in the company's stock price. The Journal story in March said the odds of that happening randomly were one in six billion. In March, a special board committee hired Howard Schiffman, a securities lawyer with the Washington, D.C., law firm of Dickstein Shapiro LLP, to head an internal investigation.

Dickstein put eight senior lawyers on the case and brought in AlixPartners, a forensic-accounting firm. Dozens of Dickstein associates were detailed to perform electronic searches through e-mails and other records.

Within days the Dickstein lawyers began summoning senior Comverse executives to the law firm's midtown Manhattan offices for sometimes grueling interviews. The lawyers spent hours with the company's then-chief executive, Kobi Alexander. At one of these sessions, he admitted to having backdated options grants, according to the government's later criminal case against him.

The private lawyers also found a key witness in Fran Rail, a stock-option administrator, who described efforts by the chief financial officer to hide a secret slush fund from the company's outside auditor. Under sharp questioning from the Dickstein lawyers, the executive, David Kreinberg, said he'd been instructed by Mr. Alexander to keep the account secret, according to a person familiar with Mr. Kreinberg's statements. Earlier this week, he pleaded guilty to fraud charges. Ms. Rail couldn't be reached for comment.

The Dickstein lawyers held regular meetings with the SEC to keep the government briefed on their findings. There was a "daily feeding of information -- millions of documents," says one person involved in the probe. This person said that after the Dickstein lawyers interviewed a key witness, the government had the information in "real-time."

The Dickstein probe was still going on in late July, when government investigators grew concerned that Mr. Alexander -- an Israeli citizen and U.S. resident -- would flee the country. Federal prosecutors rushed to file criminal charges before several important witnesses were called for interviews. The criminal charges rested on information from the Dickstein lawyers, including purported confessions from all three senior executives who were charged. The government hadn't yet interviewed any of them.

Mr. Alexander later was arrested in the African country of Namibia, where he is facing extradition proceedings.

--Charles Forelle contributed to this article.

Write to James Bandler at james.bandler@wsj.com and Kara Scannell at kara.scannell@wsj.com

From: Robert L. Chapman, Jr.

Sent: Wednesday, October 11, 2006 5:26 PM

To: 'Shawn C. A. Hassel (shassel@alvarezandmarsal.com)'

Subject: Chapman Capital Activism: Vitesse (VTSS): McAfee Chairman Resigns Due to Accountability

October 11, 2006

Shawn,

Please forward this to Vitesse's Board (with emphasis to the Compensation Committee), noting that the Chairman resigned due to his "regret that some of the stock-option problems identified by the special committee occurred on [his] watch."

Robert L. Chapman, Jr.

Managing Member

Chapman Capital L.L.C.

Pacific Corporate Towers

222 N. Sepulveda Blvd.

El Segundo, CA 90245

Office: (310) 662-1900

Web: http://www.hedgefunds.com

McAfee Replaces Chief, to Restate 10 Years of Results (Update3)

2006-10-11 10:34 (New York)

By Rebecca Barr

Oct. 11 (Bloomberg) -- McAfee Inc., the second-biggest maker

of anti-virus software, replaced its top two executives and will

restate 10 years of results by as much as $150 million to account

for backdated stock options.

President Kevin Weiss was fired, and Chairman and Chief

Executive Officer George Samenuk retired, McAfee said in a

statement today. Board member Dale Fuller will take over as

president and interim CEO until a replacement is found. Director

Charles Robel will become non-executive chairman.

Samenuk and Weiss join at least 28 other executives or

directors who have lost their jobs in connection with the

widening scandal over stock options. Cnet Networks Inc. also

announced the resignation of its CEO today. McAfee decided to

replace management after presenting the findings of an internal

review of grant practices to the board.

``It's the first step for the company out of the penalty

box,'' said Daniel Ives, a New York-based analyst with Friedman

Billings Ramsey, He has an ``outperform'' rating on the stock.

``Investors can start focusing on the fundamentals again.''

Shares of Santa Clara, California-based McAfee rose 69

cents, or 2.7 percent, to $26.48 at 10:29 a.m. in New York Stock

Exchange composite trading. The stock had fallen 4.9 percent this

year before today.

McAfee Chief Financial Officer Eric Brown during a

conference call declined to elaborate on the firing of Weiss, 50.

The company has appointed a committee to find a new CEO and said

it will evaluate both internal and external candidates.

Scandal Widens

``I regret that some of the stock-option problems identified

by the special committee occurred on my watch,'' Samenuk, 51,

said in a statement today.

At least 140 companies have disclosed internal or federal

probes into whether they retroactively granted options to

coincide with dates when the stock price was low, creating a

built-in profit for recipients. The scandal has primarily

embroiled technology companies, which used options grants in the

1990s to lure new employees.

The results of McAfee's probe revealed errors went back

further than previously estimated. The company said in August

that an adjustment for the three years ended 2005 was likely

after starting the internal review of stock options in May.

The company also announced in May that it was in informal

talks with the SEC on the issue and fired general counsel Kent

Roberts in connection with the investigation. In June the SEC

subpoenaed McAfee and a formal probe began.

The investigation is now largely over and the company now

plans to file restated results ``as soon as practicable,'' Brown

said on the call today. McAfee won't buy back any more shares

until the restatement is complete, he said.

`Fresh Start'

Samenuk, hired in 2001, in previous years cleaned up

McAfee's accounting and settled lawsuits that claimed former CEO

William Larson misstated the company's financial condition. He

tightened financial controls and restated results almost every

year since 2002.

The former International Business Machines Corp. executive

also cut losses and won a reputation for beating forecasts.

``Samenuk has been the main ingredient for the success of

the company,'' Ives said. ``That said, some investors may think

the company deserves a fresh start.''

McAfee, which ranks behind Symantec Corp. in security

software, reported in July that second-quarter profit fell 25

percent to $31.4 million, or 19 cents a share, because of stock-

option costs. Sales rose 13 percent to $277.4 million.

Fuller said he doesn't expect the management changes to

affect growth at the company. The CEO spent last night and this

morning speaking to his senior management team and he plans to

spend this morning talking to McAfee customers, he said.

``McAfee has had to make some difficult decisions in the

last 24 hours, but they are in the best interests of the

shareholders,'' Fuller said on the conference call.

--With reporting by Ville Heiskanen and Ron Day in New York.

Editor: Sondag (tlb)

From: Robert L. Chapman, Jr.

Sent: Tuesday, October 10, 2006 1:23 PM

To: 'Shawn C. A. Hassel (shassel@alvarezandmarsal.com)'

Subject: Chapman Capital Activism: Vitesse (VTSS): Executive Plea Bargains

October 10, 2006

Shawn,

Please forward article below to the Board.

Robert L. Chapman, Jr.

Managing Member

Chapman Capital L.L.C.

Pacific Corporate Towers

222 N. Sepulveda Blvd.

El Segundo, CA 90245

Office: (310) 662-1900

Web: http://www.hedgefunds.com

==========

Ex-Comverse Executives May Plead Guilty, U.S. Prosecutors Say

2006-10-10 15:35 (New York)

By Patricia Hurtado

Oct. 10 (Bloomberg) -- Two former Comverse Technology Inc.

executives charged with stock-option manipulation are in

negotiations to plead guilty, U.S. prosecutors said in court

filing.

David Kreinberg, 41, Comverse's former chief financial

officer, and William Sorin, 56, its former director and general

counsel, were charged in an Aug. 9 complaint with backdating

stock options so employees could buy shares at low prices.

Assistant U.S. Attorney Linda Lacewell asked for and got a month

delay in the Oct. 9 deadline to formally indict the men,

according to a court filing that disclosed the negotiations.

Lacewell said in a letter to a magistrate in charge of the

case that the Brooklyn U.S. Attorney's Office and lawyers for

Kreinberg and Sorin ``are engaged in plea negotiations which they

believe are likely to result in a disposition of this case

without trial,'' according to the filing, made public today.

The charges against the two executives and Comverse's former

chief executive officer are the most wide-ranging from more than

130 inquiries started by U.S. authorities and companies into

manipulations of stock-options timing. Comverse CEO Jacob

``Kobi'' Alexander is fighting extradition from Namibia to face

the charges in New York. Sorin and Kreinberg might agree to

testify against him as part of their negotiations.

Alexander, 54, was freed Oct. 3 by a Namibian judge on N$10

million ($1.3 million) bail as he fights extradition. A 32-count

indictment was unsealed against him Sept. 27. It doesn't name

Kreinberg or Sorin.

Sorin's lawyer, James Brochin declined comment. Kreinberg's

lawyer, Matthew Lang, didn't return a call seeking comment.

Reasonable Likelihood

Lacewell wrote in her Oct. 6 letter to the magistrate that

the defendants and their lawyers needed more time ``in order to

focus efforts on plea negotiations,'' according to the filing.

She said there was a ``reasonable likelihood'' that the

negotiations would result in pleas. The documents were approved

by U.S. Magistrate Judge Joan Azrack, the filing shows.

Scott Christie, a former federal prosecutor who is now a

lawyer at McCarter & English in Newark, New Jersey, said when

prosecutors seek such delays, it's a sign that the defendants

could plead guilty.

``Normally when you have a series of delays like this, it's

a strong indication there are serious discussions under way,'' he

said. ``Plea discussions are discussed as are forfeiture issues

and cooperation. The parties feel they need a little extra time

to finalize such issues.''

Another Sign

Christie said the fact that prosecutors indicted Alexander

and only charged Kreinberg and Sorin was another method

prosecutors use in a case to secure pleas.

``If the government believes there is a possibility of

working out a plea deal, they will hold off on indicting

someone,'' Christie said. ``Sometimes what they will do is to

show they're serious, they'll indict one of the co-conspirators

and speak to others and say, `You're next. Let's talk about

resolving your criminal liability or you'll face the same

fate.'''

At a hearing in August, Lacewell told U.S. District Court

Judge Nicholas Garaufis, who is presiding over a securities fraud

civil case against Comverse, that her office had agreed with

lawyers for Kreinberg and Sorin to extend the deadline until Oct.

9 on whether to indict the two men.

Alexander, Kreinberg and Sorin were accused in a criminal

complaint unsealed on Aug. 9 of backdating ``millions of stock

options'' so employees of the New York-based company could buy

shares at low prices. Both men pleaded not guilty and are free on

$1 million bail.

Under federal law, prosecutors had 30 days after filing the

criminal complaint to bring a criminal indictment Christie said.

They got a month delay of that first deadline.

Comverse is the second company whose executives have been

criminally charged over stock-option fraud. Former Brocade

Communications Systems Inc. Chief Executive Officer Gregory Reyes

was the first executive charged with securities fraud in a

growing U.S. probe into illegal options backdating.

The U.S. court case is U.S. v. Alexander, 06-CR-00628, U.S.

District Court, Eastern District of New York (Brooklyn).

--Editor: Oster

From: Robert L. Chapman, Jr.

Sent: Friday, October 06, 2006 5:14 AM

To: 'Shawn C. A. Hassel (shassel@alvarezandmarsal.com)'

Cc: 'Edward Rogas Jr. (edrogas@aol.com)'

Subject: Chapman Capital Activism: Vitesse (VTSS): A&M Incentive Compensation

October 6, 2006

Mr. Shawn C. A. Hassel

Chief Financial Officer

Vitesse Semiconductor Corporation

741 Calle Plano

Camarillo, CA 93012

Shawn,

Chapman Capital just reviewed the Form 8-K (attached below) finally describing A&M’s incentive compensation award.

As hard/smart as you seem to be working, I thought A&M’s $90,000/month in compensation was priced at high enough a level that it was assumed (i.e., included) that such extraordinarily-priced talent (i.e., many CFO’s at $300 MM market cap companies make that in a full year) would accomplish the financing (high priced as well) w/ Tennenbaum, complete financial restatements, implement a remediation plan and settle with the bond holders. What is most concerning about this incentive agreement is that there is no “quality test” of each of these “achievements”; instead, irrespective of high expensive the rescue financing, how long it takes to restate, how effective the remediation plan or how expensive the bond settlement, A&M gets paid in full.

Who specifically at VTSS negotiated this with A&M?

Robert L. Chapman, Jr.

Managing Member

Chapman Capital L.L.C.

Pacific Corporate Towers

222 N. Sepulveda Blvd.

El Segundo, CA 90245

Office: (310) 662-1900

Web: http://www.takeovers.com

=============

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_____________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 2, 2006

VITESSE SEMICONDUCTOR CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation)

1-31614 77-0138960

(Commission File Number) (IRS Employer Identification No.)

741 Calle Plano, Camarillo, California 93012

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (805) 388-3700

Not applicable

Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to

simultaneously satisfy the filing obligation of the registrant under any

of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act

(17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act

(17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the

Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the

Exchange Act (17 CFR 240.13e-4(c))

<PAGE>

Item 1.01 Entry into a Material Definitive Agreement.

On October 2, 2006, Vitesse Semiconductor Corporation (the "Company")

entered into an agreement (the "Agreement") with Alvarez & Marsal, LLC

("A&M"). The Company and A&M previously entered into an agreement, dated

April 27, 2006, pursuant to which, among other things, A&M agreed to

provide the services of Shawn C.A. Hassel as Chief Financial Officer of

the Company. The April 27, 2006 agreement provided that the parties would

negotiate to reach agreement regarding certain incentive compensation to

be received by A&M for its services. This incentive based compensation

was partially in consideration for a negotiated discount for ongoing fees.

The Agreement is the result of those negotiations.

Pursuant to the Agreement, a copy of which is included in this Form 8-K

as Exhibit 10.1 and incorporated hereby by reference, the Company has

agreed, among other things, to:

(1) issue to A&M warrants to acquire 150,000 shares of the Company's

Common Stock at a price of $1.20 per share, subject to adjustment.

The warrants will expire five years from the date of issue;

(2) issue to A&M warrants to acquire an additional 150,000 shares of

the Company's common stock at a price of $1.20 per share, subject

to adjustment. These warrants will be issued to A&M at the earlier

of the delivery of financial statements of the Company to KPMG LLP,

the Company's independent public accountants, or the occurrence of

an event that would give A&M the right to put the warrants back to

the Company as described below. The warrants will expire five years

from the date of issue;

(3) enter into a Warrant Registration Right Agreement pursuant to which

the Company will agree, among other things, to register the resale

of the shares of the Company's Common Stock issuable upon exercise

of the warrants and the Company will grant to A&M the right to put

the warrants back to the Company under certain circumstances set

forth in the Agreement at a price equal to the difference between

the then trading price of the Company's Common Stock and the

exercise price under the warrants; and

(4) pay to A&M (i) $250,000 upon execution of the Agreement as

compensation with respect to the completed financing with affiliates

of Tennenbaum Capital Partners, LLC; (ii) $50,000 upon completion

of a second financing of $25 million as permitted by the loan

agreement with the affiliates of Tennenbaum Capital Partners LLC;

(iii) $150,000 upon setting the terms for a proposed settlement of

a dispute with the holders of the Company's 1.5 % Convertible

Subordinated Debentures due 2024; (iv) $75,000 upon the approval

and implementation of a remediation plan resulting from the internal

investigation being conducted by the Special Committee of the Board

of Directors of the Company; and (v) up to $125,000 upon delivery

of financial statements of the Company to KPMG LLC.

<PAGE>

Item 9.01 Financial Statements and Exhibits

(d) Exhibits.

Item No. Description

10.1 Letter Agreement, dated October 2, 2006,

between Vitesse Semiconductor Corporation

and Alvarez & Marsal, LLC.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,

the Registrant has duly caused this report to be signed on its behalf by the

undersigned, hereunto duly authorized, in the City of Camarillo, State of

California, on October 5, 2006.

VITESSE SEMICONDUCTOR CORPORATION

By: /s/ Christopher Gardner

Christopher Gardner

Chief Executive Officer

<PAGE>

EXHIBIT INDEX

Item No. Description

10.1 Letter Agreement, dated October 2, 2006,

between Vitesse Semiconductor Corporation

and Alvarez & Marsal, LLC.

From: Robert L. Chapman, Jr.

Sent: Tuesday, September 26, 2006 7:12 AM

To: 'Shawn C. A. Hassel (shassel@alvarezandmarsal.com)'

Subject: Chapman Capital Activism: Vitesse Semiconductor (VTSS): FBI Promises Crackdown

September 26, 2006

Shawn,

Please forward this to Vitesse's entire Board of Directors, particularly the Compensation Committee (particularly Jim Cole).

Robert L. Chapman, Jr.

Managing Member

Chapman Capital L.L.C.

Pacific Corporate Towers

222 N. Sepulveda Blvd.

El Segundo, CA 90245

Office: (310) 662-1900

Web: http://www.hedgefunds.com

==================

FBI Promises Crackdown on Stock-Option Fraud as Cases Increase

2006-09-26 00:16 (New York)

By Robert Schmidt

Sept. 26 (Bloomberg) -- The FBI is conducting probes of 52

companies that may have illegally backdated stock options and

more cases are on the way, its new criminal investigative chief

said.

The number of criminal cases has increased 16 percent in

less than two months, said Chip Burrus, an assistant director of

the Federal Bureau of Investigation. ``We're going to knock that

pretty good,'' he said in an interview. ``We're going to go after

those.''

Burrus signaled the Justice Department will oppose efforts

to water down the corporate-governance overhaul adopted in the

wake of the scandals involving Enron Corp., WorldCom Inc. and

others. In the interview, he praised the 2002 Sarbanes-Oxley

accounting law, which has been under attack from business groups

and Wall Street, and said the FBI is paying close attention to

fraud in the $1.2 trillion hedge-fund industry.

The FBI is investigating 486 corporate fraud cases this

fiscal year, up from 423 in 2005, according to the agency. It has

also opened 1,160 securities fraud probes, compared with 1,139

last year. Twenty of the bureau's corporate-fraud cases allegedly

involve more than $1 billion.

``There is a general idea that this has sort of gone away,''

Burrus said. ``It's not going away.''

The bureau works closely with the Securities and Exchange

Commission, U.S. attorneys' offices, the Justice Department's

fraud section and other agencies.

Burrus's comments echo those of Deputy Attorney General Paul

McNulty, who said in a June 29 interview that corporate fraud

remains a priority for the Justice Department.

FBI at the Door

For executives, Burrus said, a knock on the door from an FBI

agent sends a strong message.

``I'm not interested in civil fines,'' he said. ``If I'm

coming in and I'm looking, there are allegations of criminal

misconduct. There's obviously a different pucker factor that

comes when you start talking to an FBI agent.''

Illegal manipulation of stock options is one of the biggest

growth areas, Burrus said. Backdating occurs when companies

reward executives by retroactively setting the grant date to a

time when the stock was cheap, increasing the potential for

profit. At least 130 companies have disclosed internal probes or

federal investigations into their options practices.

The first criminal charges in the options scandal were

brought against former executives of Brocade Communications

Systems Inc., based in San Jose, California, and New York-based

Comverse Technology Inc.

Admit Wrongdoing

Burrus said the Justice Department is encouraging companies

to come forward and admit wrongdoing.

``Honest corporate executives want fast resolution to this

so they can move on with what they do best, and that's the

business that they're in,'' he said. ``If we linger around these

things, then it's not good for them, it's not good for us.''

On hedge funds, Burrus said the FBI is concerned about the

number of smaller investors gaining access, mostly through

pension funds, to the private partnerships meant for the wealthy.

President George W. Bush's corporate fraud task force, including

the FBI, has identified hedge funds as ``an emerging threat.''

The assets of largely unregulated hedge funds have more than

doubled over the past five years. An attempt by the SEC to set up

minimal requirements for the investment pools, such as periodic

inspections, was struck down in June by a federal appeals court

in Washington.

`Emerging Threat'

``It is an emerging threat because of the dollar value and

the number of institutions that are actively taking a look at

this,'' Burrus said. ``People that maybe aren't expecting to have

this type of a risky investment in their portfolio end up taking

a bath.''

Several high-profile hedge funds have collapsed in the past

two years, including Stamford, Connecticut-based Bayou Management

LLC and Atlanta-based International Management Associates LLC,

which counted professional football players among its investors.

Earlier this month, Greenwich, Connecticut-based Amaranth

Advisors LLC informed clients that it lost $6 billion on natural

gas trades.

As the Justice Department's investigative arm, the FBI has

some 260 agents working on corporate, securities and commodities

fraud cases.

Still, business investigations take a back seat to terrorism

and counter-intelligence probes. In Burrus's own division,

corporate fraud ranks third in importance behind combating gangs

and investigating public corruption, he said.

White-Collar Crime

That doesn't deter Burrus, 49, who said he ``cut his teeth''

at the bureau on white-collar criminal investigations in the

1980s and 1990s, especially bank fraud. He joined the FBI in 1983

and rose to head its office in Salt Lake City. Burrus became

acting head of the criminal investigative division in February

and was appointed to the permanent job last month by FBI Director

Robert Mueller.

``Our goal has always been to maintain the integrity of the

markets to protect the average investor,'' Burrus said, citing

retirees who ``just get fleeced right and left'' and those who

lose their jobs due to corporate malfeasance.

Burrus said the agency learned valuable lessons from the

accounting scandals, including where to locate resources. Most of

the bureau's financial expertise is in major cities like New

York, Los Angeles and San Francisco, and the agency was forced to

play ``catch up'' in places like Clinton, Mississippi, home to

WorldCom, and in Houston, where Enron had its headquarters.

``It took us a while to get peddling on Enron and

WorldCom,'' Burrus said.

Response Teams

Karen Spangenberg, chief of the FBI's financial crimes

section in Burrus's division, has created four, 10-person

regional response teams. They include lawyers, accountants,

financial analysts and asset forfeiture specialists. They can be

deployed at the first sign of trouble.

``In corporate fraud cases, especially ones that are

disintegrating in front of your eyes, there is a real need to

quickly get all the evidence,'' Burrus said.

He also said the 2002 Sarbanes-Oxley law, which increased

penalties for financial fraud and required executives to certify

that their books are in order, ``has been a big help.''

The law ``brings a seriousness to the company's financial

statements, where corporate executives are held accountable,''

Burrus said. ``It puts some real teeth into what they knew, when

they knew it. And I think it does a great service to the American

investor.''

--Editor: Rubin (jto).

From: Robert L. Chapman, Jr.

Sent: Saturday, August 19, 2006 5:42 PM

To: 'Shawn C. A. Hassel (shassel@alvarezandmarsal.com)'

Cc: 'Edward Rogas Jr. (edrogas@aol.com)'

Subject: Chapman Capital Activism: Vitesse (VTSS): Compensation Committees Scrutinized in Barrons

August 19, 2006

Mr. Shawn C. A. Hassel

Chief Financial Officer

Vitesse Semiconductor Corporation

741 Calle Plano

Camarillo, CA 93012

Shawn,

Compensation Committees (and not just executives or boards of directors as a whole) are finding themselves getting more media attention. Please forward to Vitesse's Compensation Committee (and Mr. Chris Gardner) the attached article in this weekend's Barron's regarding one such committee member.

As I have stated before, it is my belief that, as Managing Member of the firm that oversees the largest block of Vitesse Semiconductor, Mr. James Cole should resign from the Board immediately. At the appropriate time, I intend to make my case to the public via a Schedule 13D amendment and communications with the financial press.

Robert L. Chapman, Jr.

Managing Member

Chapman Capital L.L.C.

Pacific Corporate Towers

222 N. Sepulveda Blvd.

El Segundo, CA 90245

Office: (310) 662-1900

Web: http://www.takeovers.com

Meet Mr. Generosity

By JIM MCTAGUE

JAMES JOHNSON, A FORMER CHAIRMAN of Fannie Mae, just can't stay away from boardrooms. He sits on the boards of no fewer than six corporations, and is chairman of the compensation committees of five of them. That's a full plate for anyone in these times of increased scrutiny of boards' actions. Only 350 of the nation's 50,000 corporate directors sit on four boards, and most are content with one.

But that's not all that makes Johnson's board work stand out. When Johnson joins a board, executive compensation controversies often follow. The executive-pay practices of five of the companies where he serves have been criticized by two research groups on corporate governance, mostly for being insufficiently tied to performance. In other words, the presence of the legendary executive on a board may be shaping up as a warning sign for investors.

The companies, including such well-known ones as Gannett (ticker: GCI), Goldman Sachs (GS) and Temple Inland (TIN), defend their compensation practices -- and stand by Johnson. But it's hard to overlook the frequency of the criticisms. Even Johnson's tenure at Fannie Mae (FNM) in the 1990s has come under fire this year, with the mortgage giant's regulator contending he contributed to the colossal accounting debacle that came to a head under his successor, Franklin D. Raines.

Johnson, who declined to comment for this story, has mostly led a charmed career. Now 62, he rose to prominence in politics, becoming a top adviser to former Vice President Walter Mondale. That was followed by a princely - at Fannie, from 1991 through 1998. He greatly expanded the quasi-governmental company, became one of the most prominent executives in America and collected $21 million a year. He still draws $1 million annually in pension payments and consulting fees from the company, according to a regulatory report.

Next came a few years at the helm of the prestigious Kennedy Center in Washington, D.C., a glamorous gig that cinched his election to the American Academy of Arts and Sciences. Now, in addition to his six boards, he is active in at least four major civic enterprises and serves as a vice chairman of the merchant bank Perseus Capital, also based in the nation's capital.

Johnson's image took its first big hit earlier this year, as a result of disclosures of possible backdating of stock options awards at UnitedHealth Group (UNH), where he has been a board member since 1993 and chairman of the compensation committee since 2004.

The Wall Street Journal reported in April that a board committee at UnitedHealth including Johnson was looking into possible backdating of $1.8 billion in options awarded to Chairman William McGuire from 1994 through 2002. The implication was that the board had acted only after being nudged by the SEC.

The dating of the options awards in several cases coincided with lows for the stock during the period, meaning higher eventual gains for McGuire. The odds of randomly selecting the profitable grant dates in advance were thought to be about one in 200 million.

McGuire picked the dates for options awards himself, and the board later approved them. Shares of UnitedHealth Group plunged after the disclosures and now trade 24% below their 52-week high. Some big institutional investors have filed a class-action suit in federal court in Minnesota, alleging breech of fiduciary duty and other violations of law. The suit names Johnson and most other directors as defendants, since they voted to approve the options grants. Minnesota's attorney general is also investigating the case.

UnitedHealth Group has said it won't comment until Johnson's committee has finished its investigation.

In a less-publicized instance earlier this year, Institutional Shareholders Services, which researches corporate governance for big investors, recommended that its clients who own shares of KB Home (KBH) withhold their votes for Johnson, who is a compensation-committee member, because KB's bonus plans are too generous and lead to "runaway compensation."

Bruce Karatz, chairman and CEO of the home builder, received $45 million in 2005. ISS says Karatz's compensation isn't linked directly to the relative performance of the company, but rather to the performance of the overall housing market. Thus, Karatz, whose company was only the fifth-best performer in its industry, received $32 million more than did Donald Tomnitz, CEO of D.R. Horton, the top-performing home builder in 2005.

Table: Multitasking in the Boardroom

Karatz, for his part, maintains the pay scheme is "totally performance-based," and he credits Johnson with "exceptional judgment." He adds that Johnson could not have dictated higher CEO remuneration by himself. "It's a committee action," Karatz says. "It was implemented many years ago, and it's a very mathematical, performance-based system."

Rockville, Md.-based ISS, which covers some 3,500 companies worldwide, each year accuses only about 2% of them of paying compensation that's out of whack with performance. But Gannett and Temple Inland were among that group in 2005, and Johnson is the head of both companies' compensation committees. The two corporations' option and stock awards weren't tied closely enough to performance, ISS maintains. Shareholders ignored the warning and didn't support pay changes.

The Corporate Library, another top source of corporate-compensation data, has raised a similar objection about the pay at Goldman Sachs, where Johnson has been a board member since 1999 and chairs the compensation committee. Remuneration at Goldman rises and falls with the markets and doesn't track performance versus its peers, says Paul Hodgson, a senior research associate of the Corporate Library. Former CEO Henry Paulson was making about $42 million a year when he left to become U.S. Treasury Secretary. The median pay for his peer group is $11.5 million, says ISS.

A spokesman for the investment bank said only that Johnson is "a valued member of the Goldman Sachs board."

The sole Johnson company that hasn't come under fire from critics is Target (TGT). Johnson has been a director of the retailer since 1996 and, yes, chairs its compensation committee.

THE SHEER VOLUME of Johnson's board work is cause for concern in some quarters. "We start raising a red flag when we see a director on four boards," says Hodgson.

The ISS sees the limit as seven. But since the implementation of the Sarbanes-Oxley law, which increases director workloads substantially, it has become increasingly rare for anyone to serve on more than two corporate boards, says ISS Executive Vice President Patrick McGurn.

But if the high number of boards Johnson serves on is an anomaly, his apparent taste for generous pay packages might not be. Academic research suggests that when highly compensated CEOs and former chief executives become board members, they favor generous pay packages for other CEOs.

Amir Barnea and Ilan Guedj, finance professors at the University of Texas' McCombs School of Business, examined data on the companies in the Standard & Poor's 1500. They found that directors who are, or were, highly paid chief executives and who know lots of other powerful, high-paid people tend to approve pay packages 10% to 13% richer than those at companies that appoint non-CEOs as directors.

The researchers also found -- perhaps to no great surprise -- that directors who approve generous pay packages at one company are likely to be awarded more directorships in the future.

The past, however, sometimes catches up with overly generous directors.

The Bottom Line

Two top research groups have criticized the executive-pay practices at several of the firms at which Johnson serves.

Though Fannie Mae's stock price soared by more than 700% during Johnson's seven-year tenure, federal regulators in May criticized him for allegedly creating a culture that had contributed to the company's subsequent fall from grace. After regulators uncovered accounting manipulations in 2004, Fannie Mae admitted to overstating income by $11 billion in past years.

In a recent interview with Barron's, James Lockhart, executive director of the Office of Federal Housing Enterprise Oversight, Fannie Mae's regulator, said: "Cultures grow over time and, obviously, in my mind, Johnson was very much involved in starting a culture of arrogance at the organization, which eventually led to all of the problems they had and are still having."

That hardly sounds like a good candidate for a board. But don't be shocked if some needy CEO recommends the generous Mr. Johnson for a director's seat over the next few years.

From: Robert L. Chapman, Jr.

Sent: Saturday, August 12, 2006 12:28 PM

To: 'Shawn C. A. Hassel (shassel@alvarezandmarsal.com)'

Cc: 'Edward Rogas Jr. (edrogas@aol.com)'

Subject: Chapman Capital Activism: Vitesse (VTSS): Board Conflicts of Interest in Investigation

August 12, 2006

Mr. Shawn C. A. Hassel

Chief Financial Officer

Mr. Edward Rogas, Jr.

Chairman, Special Committee

Vitesse Semiconductor Corporation

741 Calle Plano

Camarillo, CA 93012

Gentlemen,

Please E-mail the attached WSJ article to the full Board of Directors of Vitesse Semiconductor Corporation. The article deals with the very issue I have raised with you both, and Chris Gardner. In essence, we question how Vitesse's owners can be confident that the Special Committee's investigation will treat properly potential/probable violations by Mr. James Cole and the rest of the Compensation Committee?

Due to these obvious conflicts of interest, Chapman Capital shall demand a copy of the final report covering the back dated stock options, and should Mr. Cole's potential/probable involvement not result in his being indicted along with the fraud's beneficiaries (assuming he did not benefit directly), we intend to bring private legal action ourselves. In addition, we shall be working with the WSJ's leading reporters (on backdated options; Messrs. Bandler and Forelle) to convey our views on Mr. Cole's complicity. At the appropriate time, you should expect an article therein and in other publications.

RLCjr

========================== WSJ Link ========================== http://online.wsj.com/article/SB115525929078232930-email.html

==============================================================

Interest Parties:

In Internal Probes

Of Stock Options, Conflicts Abound

Directors' Ties Can Complicate

Job of Assuring the Public

Investigation Is Thorough

Sorting It Out at UnitedHealth

By JAMES BANDLER and CHARLES FORELLE

August 11, 2006; Page A1

The board of UnitedHealth Group Inc. met on May 1 to deal with questions about unusually well-timed stock-option grants to top executives such as Chief Executive William McGuire. The gathering heard a briefing from a lawyer who was running UnitedHealth's internal probe of how the options were dated.

One director whose recollections would be important to the investigation was Thomas H. Kean, a former New Jersey governor who had served on the compensation committee that approved options grants.

The same day as the board meeting, some UnitedHealth directors and executives were supporting a campaign by Mr. Kean's son for a U.S. Senate seat from New Jersey. Some of them attended a fund-raiser for Tom Kean Jr. that day, in UnitedHealth's home state of Minnesota. It isn't clear whether Dr. McGuire and his wife attended, but each donated $2,000 to the cause. So did Richard T. Burke, who sits on a special board committee that is overseeing the options investigation. All told, UnitedHealth-affiliated donors have contributed $25,000 to the campaign.

The donations were just one instance of overlapping relationships and potential conflicts of interest that exist at some companies conducting investigations of their own stock-option practices. The various relationships don't necessarily mean board members can't be fully objective. But governance experts warn that, at the least, the ties are likely to hinder public confidence in the thoroughness of some of the inquiries.

These internal probes are important in the unfolding scandal over the dating of stock-option grants. Options are meant to pay off for an executive only if the stock price rises from its level when they are granted. If it is found that a company played around with grant dates so that options showed a paper profit from the start, the company may face a range of knotty problems, from allegations of false disclosure to the need to restate past financial results. In recent weeks former executives of two companies, Brocade Communications Systems Inc. and Comverse Technology Inc., have faced criminal charges.

With options under scrutiny at more than 80 companies so far, regulators and prosecutors haven't the resources to conduct full-blown forensic probes of every company. They often rely on companies' own internal inquiries to do the initial digging that helps authorities decide whom to pursue most vigorously. In addition, the companies themselves rely on these internal probes, either to show the public they've been diligent or to defend against shareholder suits.

In these probes, "if the government catches wind of issues affecting independence, they will naturally be more skeptical and less trusting of the process and the results," said W. Scott Sorrels, an Atlanta attorney who has conducted investigations for corporate boards in the past. Mr. Sorrels, not speaking of any particular firm, said: "We advise companies to avoid any appearance of impropriety so you don't have the situation blow up in your face six months down the road after the investigation is done."

At UnitedHealth, a spokeswoman said neither the company, directors nor executives would comment on potential conflicts of interest. Efforts to reach directors separately drew no response or were referred to the company. UnitedHealth has hired former Securities and Exchange Commission enforcement chief William McLucas to conduct the board probe.

When the donations to the Kean Senate campaign were described to former SEC Chairman Harvey Pitt, he said they struck him as "ill-advised and strange" and something that could be seen as an attempt to influence a witness because of the senior Mr. Kean's role on the compensation committee. A spokeswoman for the Kean campaign said the fund raising came at a "UnitedHealth breakfast" hosted by Minnesota Republican Sen. Norm Coleman, and there was absolutely no effort to curry favor with the elder Mr. Kean. The former New Jersey governor didn't return calls seeking comment.

UnitedHealth shows a variety of ties among directors or between directors and executives. One director is a trustee of a nonprofit to which Dr. McGuire and his wife gave $4 million from their family foundation, while another is a former head of that charity's board. Another director appears to manage money for the foundation, according to its tax filings. And Mr. Burke, who is on the special committee investigating options grants, was himself a member of the board committee that made options grants for a time in the early 1990s.

At Linear Technology Corp., some directors got options on the same beneficial dates as executives. Typically, directors' and executives' option grants occur on different cycles. Robert Swanson, Linear's chairman, said directors and executives receive options at pre-set cycles that sometimes coincide. A Louisiana pension fund that is suing Linear over its options-dating practices claims that directors can't fairly judge whether there was any impropriety because they got options on the same dates.

The suit, filed in state court in Santa Clara County, Calif., by Louisiana Municipal Police Employees' Retirement System, alleges that Linear sustained substantial harm because of the executive and directors' actions. Linear is a semiconductor company in Milpitas, Calif.

Mr. Swanson said two independent directors are overseeing the internal investigation. While acknowledging that the two probably received some of the option grants in question, he said the directors could fairly evaluate what happened. He said the facts would show there was no impropriety, adding that the board was "aware of everything we did. Nobody is having amnesia."

Mr. Swanson said that to assist the board, Linear is using one of its regular outside law firms, the prominent Silicon Valley firm of Wilson Sonsini Goodrich & Rosati. Some legal experts say a truly independent corporate probe would use a law firm with which the company has had no prior ties. Mr. Swanson said it would be "kind of an admission something's wrong if you have to go outside." A Wilson Sonsini spokeswoman said the firm isn't conducting an independent review but is representing Linear in its dealings with prosecutors, regulators and litigants.

At Affiliated Computer Services Inc., a technology outsourcer in Dallas, the board is probing a pattern of unusually well-timed options grants to former Chief Executive Jeffrey Rich and others. The grants allowed Mr. Rich to earn millions of dollars in profits. His grants often were dated just ahead of steep rises in the company's stock. A March analysis by The Wall Street Journal found that the likelihood of such propitious grant dates occurring by chance was approximately one in 300 billion. The grants are under scrutiny by federal authorities as well.

Whereas many companies mounting an internal probe ask a small committee of independent directors to oversee it, ACS has put its entire seven-member board in charge of the process, assisted by outside legal counsel. So the oversight group includes board Chairman Darwin Deason. Mr. Deason both received some of the options in question and had a role in their timing, the company has said. ACS says its four member audit committee also is monitoring the situation.

Of the six other directors overseeing the probe, two received some of the well-timed options in question. Two others, who are outside, independent directors, were on the compensation committee that approved grants. The remaining two directors, also independent, are men with whom Mr. Deason has had various past ties.

One is J. Livingston Kosberg. He and Mr. Deason go way back. In the late 1980s, the two were entangled in the collapse of a Texas savings-and-loan institution of which Mr. Kosberg was chairman. In winding up the matter, ACS paid a fine and Mr. Kosberg also paid money to federal regulators. Neither was charged with wrongdoing.

In 1998, Mr. Kosberg joined the board of a company that ACS spun off, Precept Business Services Inc. Mr. Deason was the controlling shareholder of Precept and Mr. Kosberg served on its compensation and audit committees.

Precept filed for bankruptcy protection in 2001. In a lawsuit in federal bankruptcy court in Dallas, a bankruptcy trustee criticized Precept directors for allowing Mr. Deason and relatives of his to -- as the trustee put it -- "systematically loot" the company. The suit, singling out Mr. Kosberg and other directors for particular criticism, alleged that the publicly held company had picked up the tab for a range of Deason-family personal expenses, from country-club memberships and luxury cars to cosmetic surgeries, maids, bodyguards, dry cleaning and limousine service.

Both Mr. Deason and Mr. Kosberg settled with the trustee, Mr. Deason for more than $3 million. He didn't return a call seeking comment. An ACS spokesman said that Mr. Deason continues to deny the trustee's looting allegations and that Mr. Deason personally guaranteed more than $2 million in Precept loans and ultimately bore their cost.

Mr. Kosberg, in an interview, said the Precept board functioned well and "there was no looting." As for the S&L collapse, Mr. Kosberg said he didn't remember the details. "We all walked the plank," he said. He said his relationship with Mr. Deason over the years has been "pure business" and sometimes "strained."

Mr. Kosberg said the ACS board would sort out the stock-options issues: "I know what an independent board is and what a crony board is, and I'm confident that this is an independent board that has the willingness and ability to turn over every rock." He said he is confident in the company's integrity and believes regulators probing for any wrongdoing will "come up empty."

The seventh director of ACS, Dennis McCuistion, a professional speaker, consultant and television producer, also has had longstanding ties to ACS and Mr. Deason. ACS invested $25,000 in a partnership Mr. McCuistion set up to produce a TV show in the late 1980s, said people familiar with the situation, and Mr. Deason later was on the board of a nonprofit television company started by the director. Mr. McCuistion also consulted for one of Mr. Deason's earlier companies, but the people familiar with the matter said any business involvement between the two men ended 17 years ago.

ACS, after being asked by The Wall Street Journal in January about its past options grants, initially said there were no problems. The board later launched its internal probe, calling on its longtime outside legal counsel, Baker Botts LLP, to lead the effort.

In May, the company reported some preliminary findings: While some options grants may have been given incorrect dates, no officer or director had engaged in any intentional backdating, and any accounting adjustments were likely to be minor.

Earlier this week, ACS backtracked from that statement, too, saying investors shouldn't rely on its disclosures about the preliminary findings. ACS said it had hired two more outside law firms to help with the probe.

A company spokesman said ACS has directed lawyers to "do whatever is necessary to objectively reach all the facts." The spokesman said all of the independent directors meet the New York Stock Exchange standards for independence and added: "To suggest that the investigation will be anything other than thorough and objective would be inaccurate and grossly unfair."

At UnitedHealth, which is under both criminal and civil investigation at the federal level, an internal board inquiry has been in progress since at least April. The CEO, Dr. McGuire, is widely praised for molding UnitedHealth into a major force in health insurance in his 15 years as the helm, during which the share price has soared. But questions have been raised about his large option grants, which as of the end of 2005 showed gains from unexercised options of about $1.8 billion. Each of the 12 grants Dr. McGuire got between 1994 and 2002 was dated just before a run-up in the share price, a statistically extraordinary pattern.

In May, the company said the board's review had found some problems with past option grants and that the company might have to restate financial results for the prior three years. The announcement left unanswered questions, including whether any options had actually been backdated and whether anybody in top management or the board had been involved. This week, UnitedHealth said it was delaying filing its second-quarter report over the options issue.

As with any probe of options grants, investigators are likely to be keenly interested in the history of interactions between major recipients such as Dr. McGuire and the compensation-committee members who approved the grants. UnitedHealth has described those members as independent. A close look shows various ties between them and Dr. McGuire or UnitedHealth -- ties that don't necessarily compromise their independence under regulatory standards but that might raise questions about how arms-length they could be. A July article in BusinessWeek noted some of the connections between UnitedHealth directors and management.

One longtime UnitedHealth comp-committee member, William G. Spears, is a money manager with the New York firm Spears Grisanti & Brown LLC. The firm appears to manage money for Dr. McGuire's family foundation. In tax filings covering two recent years, the foundation put the name of Mr. Spears' firm atop a list of its securities transactions. A partner in the firm, Christopher Grisanti, said privacy regulations barred him from saying whether the foundation was a client. Mr. Spears didn't return messages seeking comment.

Another longtime member of the health insurer's compensation panel is Mary O. Mundinger, dean of the Columbia University nursing school. Ms. Mundinger has championed the idea that nurse practitioners can provide high-quality primary care, and in the mid-1990s she shepherded a pioneering project to create a nurse-practitioner clinic in New York. The support of health insurers was critical to getting patients to use it, and UnitedHealth was among several insurers to sign on. In media interviews at the time, UnitedHealth officials spoke approvingly of her project.

Three UnitedHealth board members serve on a special committee that is overseeing the internal investigation of stock-options grants. One of them, James Johnson, is a trustee and another, Douglas Leatherdale, a former board chairman of the University of Minnesota Foundation, a university fund-raising arm. The family foundation of Dr. McGuire, who attended college in Texas, made a $4 million gift to the University of Minnesota Foundation earlier this year to support scholarships and mentoring.

Mr. Burke, the third member of the board committee overseeing the internal probe, is UnitedHealth's founder and a former chief executive. Proxy filings indicate that his wife received stock options as a UnitedHealth employee.

Write to James Bandler at james.bandler@wsj.com and Charles Forelle at charles.forelle@wsj.com

From: Robert L. Chapman, Jr.

Sent: Wednesday, August 09, 2006 11:02 AM

To: 'Edward Rogas Jr. (edrogas@aol.com)'

Subject: FW: Chapman Capital Activism: Vitesse (VTSS): Comverse Former Executives to be Indicted

August 9, 2006

Ed,

Please see the E-Mail below.

RLCjr

-----Original Message-----

From: Robert L. Chapman, Jr.

Sent: Wednesday, August 09, 2006 7:44 AM

To: 'Shawn C. A. Hassel (shassel@alvarezandmarsal.com)'

Subject: Chapman Capital Activism: Vitesse (VTSS): Comverse Former Executives to be Indicted

August 9, 2006

Shawn,

Please E-mail this to the full Board of Vitesse. Obviously, the implications to Tomasetta et. al. are dire, and Vitesse's (damaged) owners expect this will help the Special Committee obtain full restitution from those three individuals.

RLCjr

====================

Charges Are Likely

In Comverse Probe

Prosecutors Have Scrutinized

Options-Granting Practices

Of Three Top Ex-Executives

By CHARLES FORELLE and JAMES BANDLER

August 9, 2006; Page A3

Federal prosecutors are expected today to levy criminal charges related to stock-option manipulation against three former executives of Comverse Technology Inc., including the company's co-founder and longtime chief executive officer, people familiar with the matter said.

The three men -- former CEO Kobi Alexander, former finance chief David Kreinberg and former senior general counsel William Sorin -- resigned from their posts in May following revelations of improbable option-grant dates that suggested the grants had been manipulated to confer extra profit to executives.

The expected criminal actions would mark the second time in recent weeks that prosecutors have reached high into the executive suite to charge offenses related to stock-option manipulation. Last month, prosecutors in San Francisco charged two former executives of Brocade Communications Systems Inc., including ex-CEO Gregory Reyes, with participation in a scheme to backdate employee stock options to make them more valuable. Federal authorities are probing more than 80 companies in a widespread investigation.

Robert Morvillo, a lawyer for Mr. Alexander, couldn't be reached to comment. A lawyer for Mr. Kreinberg declined to comment. Mr. Sorin declined to be interviewed. "I have nothing to say to you," he said. A spokesman for the U.S. attorney's office for the Eastern District of New York in Brooklyn, which is handling the case, didn't immediately return a phone message. It wasn't clear what charges the former Comverse executives would face. A person familiar with the matter said prosecutors are expected to charge the men by criminal complaint.

Comverse, based in New York but with significant operations in Long Island and Israel, is a leader in voicemail and voice-messaging software. Founded in the early 1980s by Mr. Alexander and others, under his stewardship the company successfully took on much larger rivals, grew handsomely and survived the telecom collapse. It has a market capitalization of about $4 billion.

Between 1995 and Jan. 31, 2005, Mr. Alexander realized $135 million in gains from exercising options; he had $50 million in unrealized gains left at the end of that period. But a portion of those gains materialized because his options were habitually dated ahead of sharp gains in the company's share price, sometimes at or near the bottom of steep declines. The fortuitous dates meant the options carried low "strike prices." Options are commonly structured so that the recipient can profit from a rise in share price over the strike price, which is generally set at the stock's market value on the date of the grant.

A Wall Street Journal story in March detailed patterns of fortuitously timed option grants to the top executives of several companies, among them Mr. Alexander. The Journal's analysis figured that the likelihood of his grant dates having fallen as they did by chance was about one in six billion. Comverse said in April that it had found accounting problems with its options and planned to restate years of results.

Write to Charles Forelle at charles.forelle@wsj.com and James Bandler at james.bandler@wsj.com

From: Robert L. Chapman, Jr.

Sent: Thursday, August 03, 2006 6:57 AM

To: 'Shawn C. A. Hassel (shassel@alvarezandmarsal.com)'

Subject: Chapman Capital Activism: Vitesse (VTSS): Molex Executives Backdating Article

August 3, 2006

Shawn,

Please forward this to the Special Committee (more evidence of disgorgement, etc.).

Also, M-Systems (FLSH) and Mercury Interactive (MERQ) are now two companies that have sold themselves despite unresolved backdating matters.

Lastly, Applied Micro (AMCC) paid $75MM for Quake today. Their quarterly conf. call is this afternoon at 2:00 PM PST. Someone from VTSS should be on that call.

RLCjr

Attachment: VTSS Molex Execs Repay Options Loans in WSJ.doc

From: Robert L. Chapman, Jr.

Sent: Tuesday, July 18, 2006 6:03 AM

To: Shawn C. A. Hassel (shassel@alvarezandmarsal.com)

Subject: RE: Chapman Capital Activism: Vitesse Semiconductor (VTSS): CIBC Downgrade & Brocade Indictment

July 18, 2006

Shawn,

Furthermore, I am confident that each and every senior executive and Board member has the 15 minutes required to read this research report. I expect you have already forwarded it to each of them and asked them to read it.

Our investigation of all Board members continues, and has uncovered a variety of concerning matters, all expected to be disclosed in my next 13D filing with the S.E.C.

Please also see WSJ Page A3 today (copies below). Federal prosecutors are expected to bring criminal charges against Brocade Communications Systems' former CEO, Gregory Reyes, over options granting. I am increasingly convinced that subject company Boards, with particular focus on Compensation Committees, will be held accountable.

RLCjr

=================

Brocade's Ex-CEO

Could Face Criminal Charges

In Options-Timing Case,

U.S. Prosecutors Warn

Reyes of a Possible Action

By JAMES BANDLER and KARA SCANNELL

July 18, 2006; Page A3

Federal prosecutors have warned the former chief executive of Brocade Communications Systems Inc. that he could face criminal charges related to stock options timing practices at the storage-networking firm, according to a person familiar with the situation.

If criminal charges are filed, they would be the first related to the options-backdating scandal, in which federal investigators are probing scores of companies.

Gregory Reyes, the former CEO of Brocade, San Jose, Calif., has also received formal notification from the Securities and Exchange Commission that he could face civil charges, according to this person. Mr. Reyes received the notice last year or early this year.

SCHEDULE 13D CUSIP No. 928497106

1	NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
	Chap-Cap Activist Partners Master Fund, Ltd. - 98-0486684
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See instructions)
	(a) x
	(b) ¨
3	SEC USE ONLY

4	SOURCE OF FUNDS (SEE INSTRUCTIONS)

	WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)		¨
	Not Applicable
6	CITIZENSHIP OR PLACE OF ORGANIZATION

	Cayman Islands
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7 SOLE VOTING POWER

		0
		8 SHARED VOTING POWER

		8,233,973 Common Shares
		9 SOLE DISPOSITIVE POWER

		8,233,973 Common Shares
		10 SHARED DISPOSITIVE POWER

		0

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
	8,233,973 Common Shares
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)	¨

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	3.7%
14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)

	CO

SCHEDULE 13D CUSIP No. 928497106

1	NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
	Chap-Cap Partners II Master Fund, Ltd. - 98-0486687
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
	(a) x
	(b) ¨
3	SEC USE ONLY

4	SOURCE OF FUNDS (SEE INSTRUCTIONS)

	WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)		¨
	Not Applicable
6	CITIZENSHIP OR PLACE OF ORGANIZATION

	Cayman Islands
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH _______________		7 SOLE VOTING POWER

		0
		8 SHARED VOTING POWER

		5,980,017 Common Shares
		9 SOLE DISPOSITIVE POWER

		5,980,017 Common Shares
		10 SHARED DISPOSITIVE POWER

		0

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
	5,980,017 Common Shares
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)	¨

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	2.7%
14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)

	CO

SCHEDULE 13D CUSIP No. 928497106

1	NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
	Chapman Capital L.L.C. - 52-1961967
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
	(a) x
	(b) ¨
3	SEC USE ONLY

4	SOURCE OF FUNDS (SEE INSTRUCTIONS)

	WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)		¨
	Not Applicable
6	CITIZENSHIP OR PLACE OF ORGANIZATION

	Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH _______________		7 SOLE VOTING POWER

		0
		8 SHARED VOTING POWER

		14,213,990 Common Shares
		9 SOLE DISPOSITIVE POWER

		0
		10 SHARED DISPOSITIVE POWER

		14,213,990 Common Shares

05/10/07	CS	40,200	$ 1.16
05/10/07	CS	73,800	$ 1.15
05/11/07	CS	87,000	$ 1.15
05/14/07	CS	87,100	$ 1.15
05/15/07	CS	77,400	$ 1.17
05/15/07	CS	46,000	$ 1.17
05/15/07	CS	24,600	$ 1.17
05/16/07	CS	24,500	$ 1.18
05/16/07	CS	1,300	$ 1.18
05/16/07	CS	80,200	$ 1.17
05/16/07	CS	24,500	$ 1.18
05/17/07	CS	90,000	$ 1.18
05/17/07	CS	168,300	$ 1.18
05/18/07	CS	135,000	$ 1.18
05/18/07	CS	27,000	$ 1.17
05/18/07	CS	164,500	$ 1.17
05/21/07	CS	61,900	$ 1.19
05/21/07	CS	3,500	$ 1.18
05/22/07	CS	10,800	$ 1.21
05/23/07	CS	12,200	$ 1.23
05/23/07	CS	19,600	$ 1.20
05/23/07	CS	21,800	$ 1.20
05/24/07	CS	155,100	$ 1.19
05/25/07	CS	43,200	$ 1.18
05/25/07	CS	58,800	$ 1.19
05/29/07	CS	49,100	$ 1.18
05/29/07	CS	46,800	$ 1.17
05/30/07	CS	41,600	$ 1.17
05/30/07	CS	14,200	$ 1.16
05/31/07	CS	75	$ 1.16
05/31/07	CS	9,800	$ 1.16
05/31/07	CS	19,700	$ 1.16
06/01/07	CS	73,200	$ 1.17
06/01/07	CS	25,740	$ 1.16
06/05/07	CS	24,400	$ 1.19
06/05/07	CS	42,400	$ 1.19
06/06/07	CS	17,100	$ 1.18
06/06/07	CS	9,400	$ 1.18
06/06/07	CS	26,900	$ 1.18
06/07/07	CS	27,000	$ 1.19
06/07/07	CS	4,900	$ 1.19
06/08/07	CS	9,000	$ 1.19
06/08/07	CS	85,000	$ 1.19
06/11/07	CS	18,000	$ 1.19
06/11/07	CS	4,700	$ 1.17
06/11/07	CS	45,000	$ 1.19
06/12/07	CS	81,900	$ 1.18
06/13/07	CS	19,500	$ 1.18
06/13/07	CS	26,400	$ 1.19
06/14/07	CS	9,700	$ 1.18
06/14/07	CS	24,300	$ 1.18
06/14/07	CS	34,600	$ 1.18
06/18/07	CS	31,500	$ 1.19
06/19/07	CS	48,900	$ 1.19
06/20/07	CS	4,900	$ 1.18
06/20/07	CS	10,000	$ 1.19
06/21/07	CS	49,000	$ 1.19
06/21/07	CS	16,200	$ 1.18
06/25/07	CS	6,100	$ 1.14
06/25/07	CS	121,600	$ 1.14
06/26/07	CS	17,500	$ 1.15
06/26/07	CS	15,000	$ 1.14
06/26/07	CS	27,600	$ 1.14
06/27/07	CS	3,600	$ 1.15
06/27/07	CS	3,000	$ 1.17
06/28/07	CS	10,000	$ 1.15
06/28/07	CS	650	$ 1.16
06/28/07	CS	6,947	$ 1.14
06/29/07	CS	15,600	$ 1.15
06/29/07	CS	45,000	$ 1.15
06/29/07	CS	8,700	$ 1.15
06/29/07	CS	126,000	$ 1.16
06/29/07	CS	360,000	$ 1.16
07/02/07	CS	4,500	$ 1.15
07/02/07	CS	45,000	$ 1.15
07/02/07	CS	6,300	$ 1.14
07/02/07	CS	17,600	$ 1.15
07/03/07	CS	14,200	$ 1.16
07/03/07	CS	24,400	$ 1.16
07/03/07	CS	4,900	$ 1.16
07/03/07	CS	2,900	$ 1.15
07/05/07	CS	17,600	$ 1.16
07/06/07	CS	4,900	$ 1.16
07/06/07	CS	8,700	$ 1.15

05/10/07	CS	74,800	$ 1.16
05/10/07	CS	137,200	$ 1.15
05/11/07	CS	89,750	$ 1.15
05/14/07	CS	90,400	$ 1.15
05/15/07	CS	80,000	$ 1.17
05/15/07	CS	47,500	$ 1.16
05/15/07	CS	25,400	$ 1.17
05/16/07	CS	25,500	$ 1.18
05/16/07	CS	1,300	$ 1.18
05/16/07	CS	83,500	$ 1.17
05/16/07	CS	25,500	$ 1.18
05/17/07	CS	10,000	$ 1.18
05/17/07	CS	18,700	$ 1.18
05/18/07	CS	15,000	$ 1.18
05/18/07	CS	3,000	$ 1.17
05/18/07	CS	18,300	$ 1.17
05/21/07	CS	64,100	$ 1.19
05/21/07	CS	3,600	$ 1.18
05/22/07	CS	11,200	$ 1.21
05/23/07	CS	12,800	$ 1.23
05/23/07	CS	20,400	$ 1.20
05/23/07	CS	22,800	$ 1.20
05/24/07	CS	161,574	$ 1.19
05/25/07	CS	44,678	$ 1.18
05/25/07	CS	61,200	$ 1.19
05/29/07	CS	50,900	$ 1.18
05/29/07	CS	48,600	$ 1.17
05/30/07	CS	43,500	$ 1.16
05/30/07	CS	14,800	$ 1.16
05/31/07	CS	75	$ 1.16
05/31/07	CS	10,200	$ 1.16
05/31/07	CS	20,700	$ 1.16
06/01/07	CS	76,800	$ 1.17
06/01/07	CS	25,740	$ 1.16
06/05/07	CS	25,600	$ 1.19
06/05/07	CS	44,500	$ 1.18
06/06/07	CS	17,900	$ 1.18
06/06/07	CS	9,800	$ 1.18
06/06/07	CS	28,100	$ 1.18
06/07/07	CS	28,600	$ 1.19
06/07/07	CS	5,100	$ 1.19
06/08/07	CS	1,000	$ 1.19
06/08/07	CS	9,400	$ 1.19
06/11/07	CS	2,000	$ 1.19
06/11/07	CS	500	$ 1.17
06/11/07	CS	5,000	$ 1.19
06/12/07	CS	9,100	$ 1.18
06/13/07	CS	20,500	$ 1.18
06/13/07	CS	27,600	$ 1.19
06/14/07	CS	10,300	$ 1.18
06/14/07	CS	25,700	$ 1.18
06/14/07	CS	36,500	$ 1.17
06/18/07	CS	3,500	$ 1.19
06/19/07	CS	51,100	$ 1.19
06/20/07	CS	5,100	$ 1.18
06/20/07	CS	10,000	$ 1.19
06/21/07	CS	51,000	$ 1.19
06/21/07	CS	16,800	$ 1.18
06/22/07	CS	30,000	$ 1.18
06/22/07	CS	59,000	$ 1.18
06/25/07	CS	6,400	$ 1.14
06/25/07	CS	126,400	$ 1.14
06/26/07	CS	157,500	$ 1.15
06/26/07	CS	135,000	$ 1.14
06/26/07	CS	248,000	$ 1.14
06/27/07	CS	32,400	$ 1.15
06/27/07	CS	27,000	$ 1.17
06/28/07	CS	90,000	$ 1.15
06/28/07	CS	5,600	$ 1.17
06/28/07	CS	62,500	$ 1.14
06/29/07	CS	1,750	$ 1.15
06/29/07	CS	5,000	$ 1.15
06/29/07	CS	1,000	$ 1.15
06/29/07	CS	14,000	$ 1.16
06/29/07	CS	40,000	$ 1.16
07/02/07	CS	500	$ 1.15
07/02/07	CS	5,000	$ 1.15
07/02/07	CS	700	$ 1.14
07/02/07	CS	1,951	$ 1.15
07/03/07	CS	14,814	$ 1.15
07/03/07	CS	25,600	$ 1.16
07/03/07	CS	5,100	$ 1.16
07/03/07	CS	3,100	$ 1.15
07/05/07	CS	18,289	$ 1.16
07/06/07	CS	5,100	$ 1.16
07/06/07	CS	9,208	$ 1.15

Exhibit A		Joint Filing Agreement, dated July 7, 2006, among Chap-Cap Partners II Master Fund, Ltd., Chap-Cap Activist Partners Master Fund, Ltd., Chapman Capital L.L.C., and Robert L. Chapman, Jr.
Exhibit B		Letter dated July 7, 2006, from Robert L. Chapman, Jr., as Managing Member of Chapman Capital L.L.C., demanding a full scale auction of the Company following a financial restatement and rescission of all improperly granted stock options.
Exhibit C		Press release dated December 6, 2006, from Chapman Capital demanding resignation of Issuer's Director, James A. Cole.
Exhibit D		Letter dated December 6, 2006, from Robert L. Chapman, Jr., as Managing Member of Chapman Capital L.L.C., to Mr. John C. Lewis and Mr. Edward J. Rogas, Jr., Chairman and Director respectively of the Board of Directors of the Issuer.
Exhibit E		Correspondences from Mr. Chapman to Issuer's management including Mr. Edward J. Rogas, Jr., Chairman of the Issuer, Mr. Christopher R. Gardner, CEO of the Issuer, and Shawn C. Hassel, CFO of Issuer.
Exhibit F		Press release dated June 15, 2007, from Chapman Capital demanding that Vitesse Semiconductor hold an annual meeting.
Exhibit G		Letter dated June 15, 2007, from Mr. Chapman to the Issuer's Board and addressed to Mr. Rogas, now Chairman of the Issuer.
Exhibit H		Press release dated June 27, 2007, from Chapman Capital supporting the termination of James A. Cole's membership from Issuer's Board of Directors.
Exhibit I		Correspondence dated July 7, 2007, from Mr. Chapman to Issuer's management and Board of Directors reiterating July 31, 2007 deadline for progress on Board reconstitution.

Dated: July 9, 2007	Chap-Cap Partners II Master Fund, Ltd.
	By: Chapman Capital L.L.C.,
	as Investment Manager

	By:	/s/ Robert L. Chapman, Jr.
		Name: Robert L. Chapman, Jr.
		Title: Managing Member


Dated: July 9, 2007	Chap-Cap Activist Partners Master Fund, Ltd.
	By: Chapman Capital L.L.C.,
	as Investment Manager

	By:	/s/ Robert L. Chapman, Jr.
		Name: Robert L. Chapman, Jr.
		Title: Managing Member


Dated: July 9, 2007	CHAPMAN CAPITAL L.L.C.

	By:	/s/ Robert L. Chapman, Jr.
		Name: Robert L. Chapman, Jr.
		Title: Managing Member

Dated: July 9, 2007	/s/ Robert L. Chapman, Jr.
	Robert L. Chapman, Jr.

Mr. Edward Rogas, Jr. (65; 2006) Chairman, Vitesse (~ 0% owner[¹]) Dir., Photon Dynamics Inc. Fmr. SVP, Teradyne, Inc. Fmr. VP, American R&D Fmr. Dir. Unit Instruments, Inc. Fmr. Dir. Autoclave Engineers Inc. 1351 Bluesail Circle Westlake Village, CA. 913361 Office: (805) 379-9822 Facsimile: (805) 987-5896 E-mail: edrogas@aol.com	Mr. Louis R. Tomasetta (57; 1987) Director, Vitesse (~ 0.4% owner[²]) Co-Fdr.,Fmr. CEO/Pres., Vitesse Corp. Dir. Santur Corporation Fmr. Pres., Vitesse Integ. Circuits Div. Fmr. Dir. Maker Comm. Inc. Fmr. Dir. Troika Networks Fmr. Dir. Mobilian Corporation Fmr. Dir. T-Networks, Inc. Fmr. Dir of ATI dept at Rockwell Intl. 3651 Via De Costa Thousand Oaks, CA 91360 Office: (805) 493-0160 Facsimile: (805) 987-5896 E-mail: ltomasetta@santurcorp.com	Mr. Moshe Gavrielov[1] (51; 2005) Director, Vitesse (~ 0% owner[³]) EVP/Gen. Mgr., Cadence, Inc. Fmr. Dir., CEO, Verisity Ltd. Fmr. Dir., Xpedion Design Systems Inc Fmr. Dir., Elec. Dsgn Auto. Consortium 2655 Seely Avenue San Jose, CA 95134 Office: (408) 943-1234 Ext. 6802 Facsimile: (408) 428-5001 E-mail: mosheg@cadence.com
Dr. Vincent Chan, Phd. (58; 2000) Dir. Vitesse (~ 0% owner[⁴]) Dir. MIT Lab for Info & Dcns. Fmr. Mbr Tech Adv. Bd.(Agility Com.) Fmr. Head, Comm. & I.T. Div., MIT 77 Massachusetts Ave., Bldg. 32 Cambridge, MA 02139 Office: (617) 253-2142 Facsimile: (805) 987-5896 E-mail: chan@mit.edu	Mr. James A. (Hole)Cole, (64; 1987) Director, Vitesse (~ 0.1% owner[⁵]) M/G. Partner, Windward Vent., L.P. Director, Giga-Tronics, Inc. G.P., Spectra/New Enter. Ass. Founder, Pres., Amplica, Inc Fmr. Dir. Spectrian Corp. Fmr. Dir. Troika Networks P.O. Box 7688 Thousand Oaks, CA 91359 Office: (805) 497-3222 Facsimile: (805) 497-9331 E-mail: cole@windwardventures.com	Mr. Alex Daly (45; 1988) Director, Vitesse (~ 0% owner[⁶]) Founder, Ch./CEO, Nutrophy, Inc. Fmr. Ch./Pres./CEO, ArcSight, Inc Fmr. VP, C-Cube Microsystems 1643 Brickell Ave Miami, FL. 33129 Office: (305) 858-8369 Facsimile: (805) 987-5896 E-mail: admin@alexdaly.com