<PAGE>

                                                                    EXHIBIT 10.3

                        LSI LOGIC STORAGE SYSTEMS, INC.
                          EMPLOYEE STOCK PURCHASE PLAN
<PAGE>
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                                                                               .
                                                                               .

                               TABLE OF CONTENTS

<Table>
<Caption>
                                                                             PAGE
                                                                             ----
<C>            <S>                                                           <C>
 SECTION 1     Purpose.....................................................     1
 SECTION 2     Definitions.................................................     1
         2.1   "1934 Act"..................................................     1
         2.2   "Board".....................................................     1
         2.3   "Code"......................................................     1
         2.4   "Committee".................................................     1
         2.5   "Common Stock"..............................................     1
         2.6   "Company"...................................................     1
         2.7   "Compensation"..............................................     1
         2.8   "Eligible Employee".........................................     1
         2.9   "Employee"..................................................     2
         2.10  "Employer" or "Employers"...................................     2
         2.11  "Enrollment Date"...........................................     2
         2.12  "Enrollment Window".........................................     2
         2.13  "Grant Date"................................................     2
         2.14  "IPO Date"..................................................     2
         2.15  "Parent"....................................................     2
         2.16  "Participant"...............................................     2
         2.17  "Plan"......................................................     2
         2.18  "Purchase Date".............................................     2
         2.19  "Share".....................................................     2
         2.20  "Subsidiary"................................................     2
 SECTION 3     Shares Subject to the Plan..................................     2
         3.1   Number Available............................................     2
         3.2   Adjustments.................................................     2
 SECTION 4     Enrollment..................................................     3
         4.1   Participation...............................................     3
         4.2   Payroll Withholding.........................................     3
 SECTION 5     Options to Purchase Common Stock............................     3
         5.1   Grant of Option.............................................     3
         5.2   Duration of Option..........................................     3
         5.3   Number of Shares Subject to Option..........................     4
         5.4   Other Terms and Conditions..................................     4
 SECTION 6     Purchase of Shares..........................................     4
         6.1   Exercise of Option..........................................     4
         6.2   Delivery of Shares..........................................     4
         6.3   Exhaustion of Shares........................................     5
 SECTION 7     Withdrawal..................................................     5
         7.1   Withdrawal..................................................     5
 SECTION 8     Cessation of Participation..................................     5
         8.1   Termination of Status as Eligible Employee..................     5
</Table>

                                        i
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<Table>
<Caption>
                                                                             PAGE
                                                                             ----
<C>            <S>                                                           <C>
 SECTION 9     Designation of Beneficiary..................................     5
         9.1   Designation.................................................     5
         9.2   Changes.....................................................     5
         9.3   Failed Designations.........................................     5
SECTION 10     Administration..............................................     6
        10.1   Plan Administrator..........................................     6
        10.2   Actions by Committee........................................     6
        10.3   Powers of Committee.........................................     6
        10.4   Decisions of Committee......................................     6
        10.5   Administrative Expenses.....................................     6
        10.6   Eligibility to Participate..................................     6
        10.7   Indemnification.............................................     7
SECTION 11     Amendment, Termination, and Duration........................     7
        11.1   Amendment, Suspension, or Termination.......................     7
        11.2   Modifications to Prevent Adverse Accounting.................     7
        11.3   Duration of the Plan........................................     7
SECTION 12     General Provisions..........................................     7
        12.1   Participation by Subsidiaries...............................     7
        12.2   Inalienability..............................................     7
        12.3   Severability................................................     8
        12.4   Requirements of Law.........................................     8
        12.5   Compliance with Rule 16b-3..................................     8
        12.6   No Enlargement of Employment Rights.........................     8
        12.7   Apportionment of Costs and Duties...........................     8
        12.8   Construction and Applicable Law.............................     8
        12.9   Captions....................................................     8
EXECUTION..................................................................     9
</Table>

                                        ii
<PAGE>

                        LSI LOGIC STORAGE SYSTEMS, INC.

                          EMPLOYEE STOCK PURCHASE PLAN

                                   SECTION 1

                                    PURPOSE

     LSI Logic Storage Systems, Inc. hereby establishes the LSI Logic Storage
Systems, Inc. Employee Stock Purchase Plan, effective as of March 1, 2004, in
order to provide eligible employees of the Company and its participating
Subsidiaries with the opportunity to purchase Common Stock through payroll
deductions. The Plan is intended to qualify as an employee stock purchase plan
under Section 423(b) of the Code.

                                   SECTION 2

                                  DEFINITIONS

     2.1  "1934 Act" means the Securities Exchange Act of 1934, as amended.
Reference to a specific Section of the 1934 Act or regulation thereunder shall
include such Section or regulation, any valid regulation promulgated under such
Section, and any comparable provision of any future legislation or regulation
amending, supplementing or superseding such Section or regulation.

     2.2  "Board" means the Board of Directors of the Company.

     2.3  "Code" means the Internal Revenue Code of 1986, as amended. Reference
to a specific Section of the Code or regulation thereunder shall include such
Section or regulation, any valid regulation promulgated under such Section, and
any comparable provision of any future legislation or regulation amending,
supplementing or superseding such Section or regulation.

     2.4  "Committee" shall mean the committee appointed by the Board to
administer the Plan. Any member of the Committee may resign at any time by
notice in writing mailed or delivered to the Secretary of the Company. As of the
effective date of the Plan, the Plan shall be administered by the Compensation
Committee of the Board.

     2.5  "Common Stock" means the Class A common stock of the Company.

     2.6  "Company" means LSI Logic Storage Systems, Inc., a Delaware
corporation.

     2.7  "Compensation" means a Participant's regular and recurring straight
time earnings, payments for overtime, shift premium, incentive compensation,
incentive payments, bonuses and commissions, but exclusive of other
compensation. The Committee, in its discretion, may (on a uniform and
nondiscriminatory basis) establish a different definition of Compensation prior
to an Enrollment Date for all options to be granted on such Enrollment Date.

     2.8  "Eligible Employee" means every Employee of an Employer, except (a)
any Employee who immediately after the grant of an option under the Plan, would
own stock and/or hold outstanding options to purchase stock possessing five
percent (5%) or more of the total combined voting power or value of all classes
of stock of the Company or of any Subsidiary or Parent of the Company (including
stock attributed to such Employee pursuant to Section 424(d) of the Code), or
(b) as provided in this Section 2.8. The Committee, in its discretion, from time
to time may, prior to an Enrollment Date for all options to be granted on such
Enrollment Date, determine (on a uniform and nondiscriminatory basis) that an
Employee shall not be an Eligible Employee if he or she: (1) has not completed
the required length of service with the Company, if any, as such length may be
determined by the Committee in its discretion (such length of required service
not to exceed two years), (2) customarily works not more than 20 hours per week
(or such lesser period of time as may be determined by the Committee in its
discretion), (3) customarily works not more than 5 months per calendar year (or
such lesser period of time as may be determined by the Committee in its
discretion), (4) is an officer or other manager, or (5) is a highly compensated
employee under Section 414(q) of the Code. An Employee who otherwise is an
Eligible Employee shall be treated as continuing to be such while the Employee
is on sick leave or other leave of absence approved in writing by the Employer,
except that if the period of

                                        1
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leave exceeds ninety days and the Employee's right to reemployment is not
guaranteed by statute or contract, he or she shall cease to be an Eligible
Employee on the 91st day of such leave.

     2.9  "Employee" means an individual who is a common-law employee of any
Employer, whether such employee is so employed at the time the Plan is adopted
or becomes so employed subsequent to the adoption of the Plan. With respect to a
particular Participant, Employer means the Company or Subsidiary (as the case
may be) that directly employs the Participant.

     2.10  "Employer" or "Employers" means any one or all of the Company and
those Subsidiaries which, with the consent of the Board or the Committee, have
adopted the Plan.

     2.11  "Enrollment Date" means such dates as may be determined by the
Committee (in its discretion and on a uniform and nondiscriminatory basis) from
time to time.

     2.12  "Enrollment Window" means a period of ten (10) business days
beginning on the effective date of the Form S-8 registration statement with
respect to the issuance of Common Stock under the Plan

     2.13  "Grant Date" means any date on which a Participant is granted an
option under the Plan.

     2.14  "IPO Date" means the effective date of the first registration
statement that is filed by the Company and declared effective pursuant to
Section 12(g) of the Securities Exchange Act of 1934, as amended, with respect
to any class of the Company's securities.

     2.15  "Parent" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if each of the
corporations (other than the Company) in the unbroken chain then owns stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.

     2.16  "Participant" means an Eligible Employee who (a) has become a
Participant in the Plan pursuant to Section 4.1 and (b) has not ceased to be a
Participant pursuant to Section 8 or Section 9.

     2.17  "Plan" means the LSI Logic Storage Systems, Inc. Employee Stock
Purchase Plan, as set forth in this instrument and as hereafter amended from
time to time.

     2.18  "Purchase Date" means such dates on which each outstanding option
granted under the Plan shall be exercised (except in such instance in which the
Plan has been terminated), as may be determined by the Committee (in its
discretion and on a uniform and nondiscriminatory basis) from time to time prior
to an Enrollment Date for all options to be granted on such Enrollment Date.

     2.19  "Share" means a share of Common Stock

     2.20  "Subsidiary" means any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.

                                   SECTION 3

                           SHARES SUBJECT TO THE PLAN

     3.1  Number Available.  A maximum of 1,500,000 Shares shall be available
for issuance pursuant to the Plan. Shares sold under the Plan may be newly
issued Shares or treasury Shares.

     3.2  Adjustments.  In the event of any reorganization, recapitalization,
stock split, reverse stock split, stock dividend, combination of Shares, merger,
consolidation, offering of rights or other similar change in the capital
structure of the Company, the Committee may make such adjustment, if any, as it
deems appropriate in the number, kind and purchase price of the Shares available
for purchase under the Plan and in the maximum number of Shares subject to any
option under the Plan.

                                        2
<PAGE>

                                   SECTION 4

                                   ENROLLMENT

     4.1  Participation.  Each Eligible Employee may elect to become a
Participant by enrolling or re-enrolling in the Plan effective as of any
Enrollment Date. In order to enroll, an Eligible Employee must complete, sign
and submit to the Company an enrollment form in such form, manner and by such
deadline as may be specified by the Committee from time to time (in its
discretion and on a nondiscriminatory basis). Any Participant whose option
expires and who has not withdrawn from the Plan automatically will be re-
enrolled in the Plan on the Enrollment Date immediately following the Purchase
Date on which his or her option expires. However, unless otherwise determined by
the Committee, an Eligible Employee may elect to become a Participant for the
option period beginning on the IPO Date only if such Eligible Employee submits
to the Company an enrollment form (i) no earlier than the effective date of the
Form S-8 registration statement with respect to the issuance of Common Stock
under this Plan and (ii) no later than the end of the Enrollment Window. An
Eligible Employee's failure to submit the enrollment form to the Company during
the Enrollment Window shall result in the automatic termination of such
individual's participation in such option period.

     4.2  Payroll Withholding.  On his or her enrollment form, each Participant
must elect to make Plan contributions via payroll withholding from his or her
Compensation. Pursuant to such procedures as the Committee may specify from time
to time, a Participant may elect to have withholding equal to a whole percentage
from 1% to 15% (or such lesser percentage that the Committee may establish from
time to time for all options to be granted on any Enrollment Date). If permitted
by the Committee, a Participant instead may elect to have a specific dollar
amount withheld (subject to such uniform and nondiscriminatory rules as the
Committee in its discretion may specify). A Participant may elect to increase or
decrease his or her rate of payroll withholding (but not below 1% or such lesser
percentage that the Committee may establish from time to time for all options to
be granted on any Enrollment Date) by submitting a new enrollment election in
accordance with such procedures as may be established by the Committee from time
to time. A Participant may stop his or her payroll withholding, thereby
withdrawing from the Plan, by submitting a new enrollment form in accordance
with Section 7 and such procedures as may be established by the Committee from
time to time. In order to be effective as of a specific date, an enrollment
election must be received by the Company no later than the deadline specified by
the Committee, in its discretion and on a nondiscriminatory basis, from time to
time. Any Participant who is automatically re-enrolled in the Plan will be
deemed to have elected to continue his or her contributions at the percentage
last elected by the Participant. Notwithstanding the foregoing, to the extent
necessary to comply with Section 423(b)(8) of the Code and Section 5.3 of the
Plan, the Company may automatically decrease a participant's payroll deductions
to 0% at any time during an option period. Under such circumstances, payroll
deductions shall recommence at the rate provided in such participant's
enrollment form at the beginning of the first Purchase Period which is scheduled
to end in the following calendar year, unless terminated by the participant as
provided in Section 7 of the Plan.

                                   SECTION 5

                        OPTIONS TO PURCHASE COMMON STOCK

     5.1  Grant of Option.  On each Enrollment Date on which the Participant
enrolls or re-enrolls in the Plan, he or she shall be granted an option to
purchase Shares. Notwithstanding the foregoing, unless otherwise determined by
the Committee, each Eligible Employee shall be automatically granted an option
in the Plan on the IPO Date, subject to the provisions of the Section 4.1.

     5.2  Duration of Option.  Subject to Section 4.1 (relating to options
granted for the option period beginning on the IPO date that automatically
expire upon the close of the Enrollment Window), each option granted under the
Plan shall expire on the earliest to occur of (a) the completion of the purchase
of Shares on the last Purchase Date occurring within an option period, as such
option period may be established by the Committee from time to time prior to an
Enrollment Date for all options to be granted on such Enrollment Date, or (b)
the date on which the Participant ceases to be such for any reason. Until
otherwise determined by

                                        3
<PAGE>

the Committee for all options to be granted on an Enrollment Date, the period
referred to in clause (a) in the preceding sentence shall mean the period from
the applicable Enrollment Date through the last business day prior to the
Enrollment Date that is approximately 12 months later.

     5.3  Number of Shares Subject to Option.  The number of Shares available
for purchase by each Participant under the option will be established by the
Committee from time to time prior to an Enrollment Date for all options to be
granted on such Enrollment Date. Until otherwise determined by the Committee,
the number of Shares available for purchase by each Participant on any Purchase
Date shall in no event exceed 1,000 Shares. In addition and notwithstanding the
preceding, to the extent required under Section 423(b) of the Code, an option
(taken together with all other options then outstanding under this Plan and
under all other similar employee stock purchase plans of the Employers and any
Parent or Subsidiary) shall not give the Participant the right to purchase
Shares at a rate which accrues in excess of $25,000 of fair market value at the
applicable Grant Dates of such Shares in any calendar year during which such
Participant is enrolled in the Plan at any time.

     5.4  Other Terms and Conditions.  Each option shall be subject to the
following additional terms and conditions:

          (a) payment for Shares purchased under the option shall be made only
     through payroll withholding under Section 4.2;

          (b) purchase of Shares upon exercise of the option will be
     accomplished only in accordance with Section 6.1;

          (c) the price per Share under the option will be determined as
     provided in Section 6.1; and

          (d) the option in all respects shall be subject to such other terms
     and conditions (applied on a uniform and nondiscriminatory basis), as the
     Committee shall determine from time to time in its discretion.

                                   SECTION 6

                               PURCHASE OF SHARES

     6.1  Exercise of Option.  Subject to Section 6.2, on each Purchase Date,
the funds then credited to each Participant's account shall be used to purchase
whole Shares. Any cash remaining after whole Shares have been purchased or that
exceed the $25,000 cap described in Section 5.3 above shall be refunded to the
Participant following the Purchase Date, subject to earlier withdrawal by the
Participant as provided in Section 7 of the Plan. The price per Share of the
Shares purchased under any option granted under the Plan, other than any option
granted on the IPO Date, shall be eighty-five percent (85%) of the lower of:

          (a) the closing price per Share on the Grant Date for such option on
     the Nasdaq National Market; or

          (b) the closing price per Share on the Purchase Date on the Nasdaq
     National Market.

The price per Share of the Shares purchased under any option granted under the
Plan on the IPO Date shall be eighty-five percent (85%) of the lower of:

          (c) the initial public offering price per share of the Company's
     Common Stock in the Company's initial public offering; or

          (d) the closing price per Share on the Purchase Date on the Nasdaq
     National Market.

     If a closing price is not available on the Grant Date or Purchase Date,
then the closing price per Share referred to in 6.1(a), (b) and (d), above,
shall refer to the closing price per Share on the last Nasdaq National Market
trading day immediately preceding the Grant Date or Purchase Date, respectively.

     6.2  Delivery of Shares.  As directed by the Committee in its sole
discretion, Shares purchased on any Purchase Date shall be delivered directly to
the Participant or to a custodian or broker (if any) designated by

                                        4
<PAGE>

the Committee to hold Shares for the benefit of the Participants. As determined
by the Committee from time to time, such Shares shall be delivered as physical
certificates or by means of a book entry system.

     6.3  Exhaustion of Shares.  If at any time the Shares available under the
Plan are over-enrolled, enrollments shall be reduced to eliminate the
over-enrollment, as the Committee determines (in a uniform and nondiscriminatory
manner). For example, the Committee may determine that such reduction method
shall be "bottom up", with the result that all option exercises for one Share
shall be satisfied first, followed by all exercises for two Shares, and so on,
until all available Shares have been exhausted. Any funds that, due to
over-enrollment, cannot be applied to the purchase of whole Shares shall be
refunded to the Participants (without interest thereon).

                                   SECTION 7

                                   WITHDRAWAL

     7.1  Withdrawal.  A Participant may withdraw from the Plan by submitting a
withdrawal form to the Company in such form and manner as the Committee may
specify. A withdrawal will be effective only if it is received by the Company by
the deadline specified by the Committee (in its discretion and on a uniform and
nondiscriminatory basis) from time to time. When a withdrawal becomes effective,
the Participant's payroll contributions shall cease and all amounts then
credited to the Participant's account shall be distributed to him or her
(without interest thereon).

                                   SECTION 8

                           CESSATION OF PARTICIPATION

     8.1  Termination of Status as Eligible Employee.  A Participant shall cease
to be a Participant immediately upon the cessation of his or her status as an
Eligible Employee (for example, because of his or her termination of employment
from all Employers for any reason). As soon as practicable after such cessation,
the Participant's payroll contributions shall cease and all amounts then
credited to the Participant's account shall be distributed to him or her
(without interest thereon).

                                   SECTION 9

                           DESIGNATION OF BENEFICIARY

     9.1  Designation.  Each Participant may, pursuant to such uniform and
nondiscriminatory procedures as the Committee may specify from time to time,
designate one or more Beneficiaries to receive any cash amounts credited to the
Participant's account at the time of his or her death. Notwithstanding any
contrary provision of this Section 9, Sections 9.1 and 9.2 shall be operative
only after (and for so long as) the Committee determines (on a uniform and
nondiscriminatory basis) to permit the designation of Beneficiaries.

     9.2  Changes.  A Participant may designate different Beneficiaries (or may
revoke a prior Beneficiary designation) at any time by delivering a new
designation (or revocation of a prior designation) in like manner. Any
designation or revocation shall be effective only if it is received by the
Committee. However, when so received, the designation or revocation shall be
effective as of the date the designation or revocation is executed (whether or
not the Participant still is living), but without prejudice to the Committee on
account of any payment made before the change is recorded. The last effective
designation received by the Committee shall supersede all prior designations.

     9.3  Failed Designations.  If a Participant dies without having effectively
designated a Beneficiary, or if no Beneficiary survives the Participant, the
Participant's Account shall be payable to his or her estate.

                                        5
<PAGE>

                                   SECTION 10

                                 ADMINISTRATION

     10.1  Plan Administrator.  The Plan shall be administered by the Committee.
The Committee shall have the authority to control and manage the operation and
administration of the Plan.

     10.2  Actions by Committee.  Each decision of a majority of the members of
the Committee then in office shall constitute the final and binding act of the
Committee. The Committee may act with or without a meeting being called or held
and shall keep minutes of all meetings held and a record of all actions taken by
written consent.

     10.3  Powers of Committee.  The Committee shall have all powers and
discretion necessary or appropriate to supervise the administration of the Plan
and to control its operation in accordance with its terms, including, but not by
way of limitation, the following discretionary powers:

          (a) To interpret and determine the meaning and validity of the
     provisions of the Plan and the options and to determine any question
     arising under, or in connection with, the administration, operation or
     validity of the Plan or the options;

          (b) To determine any and all considerations affecting the eligibility
     of any employee to become a Participant or to remain a Participant in the
     Plan;

          (c) To cause an account or accounts to be maintained for each
     Participant;

          (d) To determine the time or times when, and the number of Shares for
     which, options shall be granted;

          (e) To establish and revise an accounting method or formula for the
     Plan;

          (f) To designate a custodian or broker to receive Shares purchased
     under the Plan and to determine the manner and form in which Shares are to
     be delivered to the designated custodian or broker;

          (g) To determine the status and rights of Participants and their
     Beneficiaries or estates;

          (h) To employ such brokers, counsel, agents and advisers, and to
     obtain such broker, legal, clerical and other services, as it may deem
     necessary or appropriate in carrying out the provisions of the Plan;

          (i) To establish, from time to time, rules for the performance of its
     powers and duties and for the administration of the Plan;

          (j) To adopt such procedures and subplans as are necessary or
     appropriate to permit participation in the Plan by employees who are
     foreign nationals or employed outside of the United States; and

          (k) To delegate to any one or more of its members or to any other
     person (including, but not limited to, employees of any Employer) severally
     or jointly, the authority to perform for and on behalf of the Committee one
     or more of the functions of the Committee under the Plan.

     10.4  Decisions of Committee.  All actions, interpretations, and decisions
of the Committee shall be conclusive and binding on all persons, and shall be
given the maximum deference permitted by law.

     10.5  Administrative Expenses.  All expenses incurred in the administration
of the Plan by the Committee, or otherwise, including legal fees and expenses,
shall be paid and borne by the Employers, except any stamp duties or transfer
taxes applicable to the purchase of Shares may be charged to the account of each
Participant. Any brokerage fees for the purchase of Shares by a Participant
shall be paid by the Company, but fees and taxes (including brokerage fees) for
the transfer, sale or resale of Shares by a Participant, or the issuance of
physical Share certificates, shall be borne solely by the Participant.

     10.6  Eligibility to Participate.  No member of the Committee who is also
an employee of an Employer shall be excluded from participating in the Plan if
otherwise eligible, but he or she shall not be entitled, as a member of the
Committee, to act or pass upon any matters pertaining specifically to his or her
own account under the Plan.

                                        6
<PAGE>

     10.7  Indemnification.  Each of the Employers shall, and hereby does,
indemnify and hold harmless the members of the Committee and the Board, from and
against any and all losses, claims, damages or liabilities (including attorneys'
fees and amounts paid, with the approval of the Board or the Committee, in
settlement of any claim) arising out of or resulting from the implementation of
a duty, act or decision with respect to the Plan, so long as such duty, act or
decision does not involve gross negligence or willful misconduct on the part of
any such individual.

                                   SECTION 11

                      AMENDMENT, TERMINATION, AND DURATION

     11.1  Amendment, Suspension, or Termination.  The Board or the Committee,
in its sole discretion, may amend or terminate the Plan, or any part thereof, at
any time and for any reason. If the Plan is terminated, the Board or the
Committee, in its discretion, may elect to terminate all outstanding options
either immediately or upon completion of the purchase of Shares on the next
Purchase Date (which, notwithstanding Section 2.15, may be sooner than
originally scheduled, if determined by the Board or the Committee in its
discretion), or may elect to permit options to expire in accordance with their
terms (and participation to continue through such expiration dates). If the
options are terminated prior to expiration, all amounts then credited to
Participants' accounts which have not been used to purchase Shares shall be
returned to the Participants (without interest thereon) as soon as
administratively practicable.

     11.2  Modifications to Prevent Adverse Accounting.  In the event the
Committee determines that the ongoing operation of the Plan may result in
unfavorable financial accounting consequences, the Committee may, in its
discretion, modify or amend the Plan to reduce or eliminate such unfavorable
accounting consequences including:

          (a) increasing the price per Share of the Shares to be purchased under
     any option on any future Purchase Date;

          (b) shortening the duration of any option so that the option
     terminates on a new Purchase Date; and

          (c) reducing the number of Shares that will be purchased on any future
     Purchase Date.

Such modifications or amendments shall not require stockholder approval or the
consent of any Plan participants.

     11.3  Duration of the Plan.  The Plan shall commence on the date specified
herein, and subject to Section 11.1 (regarding the Board's and the Committee's
right to amend or terminate the Plan), shall remain in effect thereafter.

                                   SECTION 12

                               GENERAL PROVISIONS

     12.1  Participation by Subsidiaries.  One or more Subsidiaries of the
Company may become participating Employers by adopting the Plan and obtaining
approval for such adoption from the Board or the Committee. By adopting the
Plan, a Subsidiary shall be deemed to agree to all of its terms, including (but
not limited to) the provisions granting exclusive authority (a) to the Board and
the Committee to amend the Plan, and (b) to the Committee to administer and
interpret the Plan. An Employer may terminate its participation in the Plan at
any time. The liabilities incurred under the Plan to the Participants employed
by each Employer shall be solely the liabilities of that Employer, and no other
Employer shall be liable for benefits accrued by a Participant during any period
when he or she was not employed by such Employer.

     12.2  Inalienability.  In no event may either a Participant, a former
Participant or his or her Beneficiary, spouse or estate sell, transfer,
anticipate, assign, hypothecate, or otherwise dispose of any right or interest
under the Plan; and such rights and interests shall not at any time be subject
to the claims of creditors

                                        7
<PAGE>

nor be liable to attachment, execution or other legal process. Accordingly, for
example, a Participant's interest in the Plan is not transferable pursuant to a
domestic relations order.

     12.3  Severability.  In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.

     12.4  Requirements of Law.  The granting of options and the issuance of
Shares shall be subject to all applicable laws, rules, and regulations, and to
such approvals by any governmental agencies or securities exchanges as the
Committee may determine are necessary or appropriate.

     12.5  Compliance with Rule 16b-3.  Any transactions under this Plan with
respect to officers (as defined in Rule 16a-1 promulgated under the 1934 Act)
are intended to comply with all applicable conditions of Rule 16b-3. To the
extent any provision of the Plan or action by the Committee fails to so comply,
it shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee. Notwithstanding any contrary provision of the Plan,
if the Committee specifically determines that compliance with Rule 16b-3 no
longer is required, all references in the Plan to Rule 16b-3 shall be null and
void.

     12.6  No Enlargement of Employment Rights.  Neither the establishment or
maintenance of the Plan, the granting of options, the purchase of Shares, nor
any action of any Employer or the Committee, shall be held or construed to
confer upon any individual any right to be continued as an employee of the
Employer nor, upon dismissal, any right or interest in any specific assets of
the Employers other than as provided in the Plan. Each Employer expressly
reserves the right to discharge any employee at any time, with or without cause.

     12.7  Apportionment of Costs and Duties.  All acts required of the
Employers under the Plan may be performed by the Company for itself and its
Subsidiaries, and the costs of the Plan may be equitably apportioned by the
Committee among the Company and the other Employers. Whenever an Employer is
permitted or required under the terms of the Plan to do or perform any act,
matter or thing, it shall be done and performed by any officer or employee of
the Employers who is thereunto duly authorized by the Employers.

     12.8  Construction and Applicable Law.  The Plan is intended to qualify as
an "employee stock purchase plan" within the meaning of Section 423(b) of the
Code. Any provision of the Plan which is inconsistent with Section 423(b) of the
Code shall, without further act or amendment by the Company or the Committee, be
reformed to comply with the requirements of Section 423(b). The provisions of
the Plan shall be construed, administered and enforced in accordance with such
Section and with the laws of the State of California (excluding California's
conflict of laws provisions).

     12.9  Captions.  The captions contained in and the table of contents
prefixed to the Plan are inserted only as a matter of convenience, and in no way
define, limit, enlarge or describe the scope or intent of the Plan nor in any
way shall affect the construction of any provision of the Plan.

                                        8
<PAGE>

                                   EXECUTION

     IN WITNESS WHEREOF, LSI Logic Storage Systems, Inc., by its duly authorized
officer, has executed this Plan on the date indicated below.

                                          LSI LOGIC STORAGE SYSTEMS, INC.

                                          By
                                            ------------------------------------
                                            Title

Dated:           , 2004

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