10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended April 1, 2007

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 1-10317

LSI CORPORATION

(Exact name of registrant as specified in its charter

Delaware
(State of Incorporation) 94-2712976
(I.R.S. Employer Identification Number)

1621 Barber Lane
Milpitas, California 95035
(Address of principal executive offices)
(Zip code)

(408) 433-8000
(Registrant’s telephone number, including area code)

LSI Logic Corporation (Former Name)

     Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

                         Large Accelerated Filer þ                    Accelerated Filer o                  Non-Accelerated Filer o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

     As of May 4, 2007, there were 767,901,169 shares of the registrant’s Common Stock, $.01 par value, outstanding.

LSI CORPORATION
Form 10-Q
For the Quarter Ended April 1, 2007
INDEX

		Page
		No.
	PART I. FINANCIAL INFORMATION
Item 1	Financial Statements
	Condensed Consolidated Balance Sheets as of April 1, 2007 (unaudited) and December 31, 2006	3
	Condensed Consolidated Statements of Operations for the three months ended April 1, 2007 and April 2, 2006 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the three months ended April 1, 2007 and April 2, 2006 (unaudited)	5
	Notes to unaudited Condensed Consolidated Financial Statements	6
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4	Controls and Procedures	23
	PART II. OTHER INFORMATION
Item 1	Legal Proceedings	23
Item 1A	Risk Factors	23
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 4	Submission of Matters to a Vote of Security Holders	27
Item 6	Exhibits	27
	Signatures	29
	Index to Exhibits
EXHIBIT 4.1
EXHIBIT 10.18
EXHIBIT 10.19
EXHIBIT 10.20
EXHIBIT 10.21
EXHIBIT 10.22
EXHIBIT 10.23
EXHIBIT 10.24
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

LSI CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

	April 1,			December 31,
	2007			2006
	(In thousands, except
	per share amounts)
ASSETS
Cash and cash equivalents	$	445,521		$	327,800
Short-term investments		571,121			681,137
Accounts receivable, less allowances of $9,027 and $13,871		303,369			348,638
Inventories		229,067			209,470
Prepaid expenses and other current assets		62,315			68,692
Total current assets		1,611,393			1,635,737
Property and equipment, net		89,246			86,045
Other intangible assets, net		64,799			59,484
Goodwill		932,978			932,323
Other assets		103,413			138,555
Total assets	$	2,801,829		$	2,852,144
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	162,904		$	200,189
Accrued salaries, wages and benefits		72,347			82,292
Other accrued liabilities		136,614			155,986
Income taxes payable		11,820			88,304
Total current liabilities		383,685			526,771
Long-term debt		350,000			350,000
Tax-related liabilities and other		131,540			79,400
Total long-term obligations and other liabilities		481,540			429,400
Commitments and contingencies (Note 10)
Minority interest in subsidiary		235			235
Stockholders’ equity:
Preferred shares; $.01 par value; 2,000 shares authorized; none outstanding		—			—
Common stock; $.01 par value; 1,300,000 shares authorized; 404,763 and 403,680 shares outstanding		4,048			4,037
Additional paid-in capital		3,116,902			3,102,178
Accumulated deficit		(1,198,079	)		(1,220,306	)
Accumulated other comprehensive income		13,498			9,829
Total stockholders’ equity		1,936,369			1,895,738
Total liabilities and stockholders’ equity	$	2,801,829		$	2,852,144

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

3

LSI CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

	Three Months Ended
	April 1, 2007			April 2, 2006
	(In thousands, except per share amounts)
Revenues	$	465,415		$	475,884
Cost of revenues		265,614			271,395
Gross profit		199,801			204,489
Research and development		103,847			102,274
Selling, general and administrative		61,610			68,878
Restructuring of operations and other items, net		(8,080	)		5,650
Acquired in-process research and development		6,500			—
Amortization of intangibles		5,285			11,216
Income from operations		30,639			16,471
Interest expense		(3,890	)		(6,330	)
Interest income and other, net		10,531			9,527
Income before income taxes		37,280			19,668
Provision for income taxes		7,456			6,500
Net income	$	29,824		$	13,168
Net income per share:
Basic	$	0.07		$	0.03
Diluted	$	0.07		$	0.03
Shares used in computing per share amounts:
Basic		404,230			394,851
Diluted		409,808			402,189

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

4

LSI CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

	Three Months Ended
	April 1, 2007			April 2, 2006
	(In thousands)
Operating activities:
Net income	$	29,824		$	13,168
Adjustments:
Depreciation and amortization		18,576			25,335
Stock-based compensation expense		11,184			11,831
Non-cash restructuring and other items		228			(2,958	)
Acquired in-process research and development		6,500			—
Non-cash foreign exchange loss/(gain)		389			(588	)
Gain on sale of equity securities		—			(1,429	)
Gain on sale of property and equipment		(9,662	)		—
Changes in deferred tax assets and liabilities		31			(3	)
Changes in assets and liabilities, net of assets acquired and liabilities assumed in business combinations:
Accounts receivable, net		45,450			56,889
Inventories		(19,654	)		8,693
Prepaid expenses and other assets		24,565			9,404
Accounts payable		(36,469	)		(23,008	)
Accrued and other liabilities		(14,980	)		2,226
Net cash provided by operating activities		55,982			99,560
Investing activities:
Purchase of debt securities available-for-sale		(60,630	)		(166,193	)
Proceeds from maturities and sales of debt securities available-for-sale		174,392			108,166
Purchases of equity securities		—			(150	)
Proceeds from sale of equity securities		—			1,555
Purchases of property, equipment and software		(20,503	)		(15,978	)
Proceeds from sale of property and equipment		12,511			—
Adjustment to goodwill acquired in a prior year for resolution of a pre-acquisition income tax contingency		2,442			—
Acquisitions of companies, net of cash acquired		(52,079	)		—
Net cash provided by/(used in) investing activities		56,133			(72,600	)
Financing activities:
Issuance of common stock		5,671			11,988
Net cash provided by financing activities		5,671			11,988
Effect of exchange rate changes on cash and cash equivalents		(65	)		233
Increase in cash and cash equivalents		117,721			39,181
Cash and cash equivalents at beginning of year		327,800			264,649
Cash and cash equivalents at end of period	$	445,521		$	303,830

          The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

5

LSI CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — BASIS OF PRESENTATION

     For financial reporting purposes, LSI Corporation (the “Company” or “LSI”) reports on a 13 or 14-week quarter with a year ending December 31. The current quarter ended April 1, 2007. The results of operations for the quarter ended April 1, 2007, are not necessarily indicative of the results to be expected for the full year. The first quarter in each of 2007 and 2006 consisted of 13 weeks.

     The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ significantly from these estimates.

     In management’s opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments and restructuring and other items, net as discussed in Note 3), necessary to state fairly the financial information included herein. While the Company believes that the disclosures are adequate to make the information not misleading, it is suggested that these financial statements be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006.

Recent Accounting Pronouncements

     In June 2006, the Financial Accounting Standards Board (“FASB”) issued interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109 (“FAS 109”).” FIN 48 prescribes a recognition threshold and measurement attribute for tax positions taken or expected to be taken in a tax return. This interpretation also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The evaluation of a tax position in accordance with this interpretation is a two-step process. In the first step, recognition, the Company determines whether it is more-likely-than-not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The second step addresses measurement of a tax position that meets the more-likely-than-not criteria. The tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Differences between tax positions taken in a tax return and amounts recognized in the financial statements will generally result in (a) an increase in a liability for income taxes payable or a reduction of an income tax refund receivable, (b) a reduction in a deferred tax asset or an increase in a deferred tax liability or (c) both (a) and (b). Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be de-recognized in the first subsequent financial reporting period in which that threshold is no longer met. Use of a valuation allowance as described in FAS 109 is not an appropriate substitute for the de-recognition of a tax position. The requirement to assess the need for a valuation allowance for deferred tax assets based on sufficiency of future taxable income is unchanged by this interpretation.

     As of January 1, 2007, the Company adopted the provisions of FIN 48. The Company recognized the cumulative effect of $3.4 million increase to the opening balance of accumulated deficit as of January 1, 2007. The amount of unrecognized tax benefit as of January 1, 2007 after the FIN 48 adjustment was $132.6 million. The entire unrecognized tax benefit as of January 1, 2007 of $102.6 million relates to unrecognized tax positions that, if recognized, would affect the annual effective tax rate of the Company. As of the date of adoption, the Company did not expect any uncertain tax benefits to significantly increase or decrease within the next 12 months.

     The Company files income tax returns at the U.S. federal level and in various states and foreign jurisdictions. The Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2002. The Company’s subsidiary in Hong Kong is currently under audit for the years 1997 to 2001.

     The Company recognizes interest and penalties accrued in relation to unrecognized tax benefits in tax expense. At January 1, 2007, the Company had accrued approximately $32.3 million for the payment of interest and penalties.

     In June 2006, the FASB Emerging Issues Task Force issued EITF Issue No. 06-2 (“EITF 06-02”), “Accounting for Sabbatical Leave and Other Similar Benefits Pursuant to FASB Statement No. 43 (“FAS 43”), Accounting for Compensated Absences.” EITF

6

06-02 addresses the accounting for an employee’s right to a compensated absence under a sabbatical or other similar benefit arrangement that is unrestricted (that is, the employee is not required to perform any services for or on behalf of the entity during the absence) and that requires the completion of a minimum service period and in which the benefit does not increase with additional years of service. For sabbatical arrangements meeting these criteria, EITF 06-02 concludes that the accumulated criteria have been met in paragraph 6(b) of FAS 43 and that if the remaining sections of paragraph 6 are met, the sabbatical arrangement should be accrued over the requisite service period, which for the Company would be 10 years. The Company offers a sabbatical of 20 days to full-time employees upon completion of 10 years of service. EITF 06-02 is effective for the Company on January 1, 2007, and the provisions of EITF 06-02 allow for either retrospective application or a cumulative effect adjustment upon adoption. The Company adopted EITF 06-02 in the first quarter of 2007, with a cumulative effect adjustment to retained earnings of $4.2 million.

     The impact of the adoption of FIN. 48 and EITF 06-02 on the opening balance of accumulated deficit as of January 1, 2007 is as follows (in thousands):

Accumulated deficit as of December 31, 2006	$	(1,220,306	)
Impact of adoption of FIN 48 on accumulated deficit as of January 1, 2007		(3,393	)
Impact of adoption of EITF 06-02 on accumulated deficit as of January 1, 2007		(4,204	)
Accumulated deficit as of January 1, 2007	$	(1,227,903	)

     In September 2006, the FASB issued Statement No. 157, Fair Value Measurements (“FAS 157”). FAS 157 establishes a single authoritative definition of fair value, sets out a framework for measuring fair value, and expands on required disclosures about fair value measurement. FAS 157 is effective for fiscal years beginning after November 15, 2007, and will be applied prospectively. The Company is currently evaluating the impact that the provisions of FAS 157 will have on the Company’s consolidated balance sheet and statement of operations.

     In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 permits companies to choose to measure certain financial instruments and certain other items at fair value. The standard requires that unrealized gains and losses on items for which the fair value option has been elected be reported in earnings. SFAS 159 is effective for the Company beginning in the first quarter of 2008, although earlier adoption is permitted. The Company is currently evaluating the impact that SFAS 159 will have on its consolidated financial statements.

NOTE 2 — STOCK-BASED COMPENSATION

     Stock-based compensation expense under Statement of Financial Accounting Standards No. 123(R), “Share-Based Payments” (“SFAS 123R”) for the three months ended April 1, 2007 and for the three months ended April 2, 2006 was $11.2 million and $11.8 million, respectively. Stock-based compensation costs capitalized to inventory and software for the three months ended April 1, 2007 are not significant.

     The estimated fair value of the Company’s stock-based awards, less expected forfeitures, is amortized over the awards’ vesting period (the requisite service period), on a straight-line basis. The table below summarizes stock-based compensation expense, related to employee stock options, Employee Stock Purchase Plan (“ESPP”) and restricted stock unit awards under SFAS 123R for the three months ended April 1, 2007 and April 2, 2006, respectively.

	Three months ended
Stock-based compensation expense:	April 1, 2007		April 2, 2006
	(In thousands)
Cost of revenues	$	1,944	$	1,525
Research and development		4,717		4,522
Selling, general and administrative		4,523		5,784
Total stock-based compensation expense	$	11,184	$	11,831

7

Stock Options

     The fair value of each option grant is estimated on the date of grant using a reduced form calibrated binominal lattice model (the “lattice model”). This model requires the use of historical data for employee exercise behavior and the use of assumptions outlined in the following table:

	Three months ended			Three months ended
Employee Stock Options Granted	April 1, 2007			April 2, 2006
Weighted average estimated grant date fair value	$	3.35		$	3.37
Weighted average assumptions in calculation:
Expected life (years)		4.35			4.25
Risk-free interest rate		4.73	%		4.59	%
Volatility		46.27	%		47.84	%

     The expected life of employee stock options represents the weighted-average period the stock options are expected to remain outstanding and is a derived output of the lattice model. The expected life of employee stock options is affected by all of the underlying assumptions and calibration of the Company’s model.

     The Company used an equally weighted combination of historical and implied volatilities as of the grant date. The historical volatility is the standard deviation of the daily stock returns for LSI from the date of the Company’s initial public offering in 1983. The Company used implied volatilities of near-the-money LSI traded call options as stock options are call options that are granted at- the-money. The historical and implied volatilities were annualized and equally weighted to determine the volatilities as of the grant date. Management believes that the equally weighted combination of historical and implied volatilities is more representative of future stock price trends than sole use of historical implied volatilities.

     The risk-free interest rate assumption is based upon observed interest rates of constant maturity U.S. Treasury securities appropriate for the term of the Company’s employee stock options.

     The lattice model assumes that employees’ exercise behavior is a function of the option’s remaining life and the extent to which the option is in-the-money. The lattice model estimates the probability of exercise as a function of these two variables based on the entire history of exercises and cancellations on all past option grants made by the Company since the initial public offering in 1983.

     Because stock-based compensation expense recognized is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. SFAS 123R requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on historical experience.

     A summary of the changes in stock options outstanding under the Company’s equity-based compensation plans during the three months ended April 1, 2007 is presented below:

				Weighted			Weighted		Aggregate
				Average			Average		Intrinsic
	Number of			Exercise			Remaining		Value
	Shares			Price Per			Contractual		(In
	(In thousands)			Share			Term (In years)		thousands)
Options outstanding at December 31, 2006		56,750		$	11.92			—		—
Options granted		9,107			9.33			—		—
Options exercised		(853	)		(6.65	)		—		—
Options canceled		(1,194	)		(15.04	)		—		—
Options outstanding at April 1, 2007		63,810		$	11.56			4.82	$	110,664
Options exercisable at April 1, 2007		36,675		$	13.85			3.93	$	56,553

     As of April 1, 2007, total unrecognized compensation expense related to nonvested stock options, net of estimated forfeitures, was approximately $87.9 million and is expected to be recognized over the next 3.0 years calculated on a weighted average basis. The total intrinsic value of options exercised in the first quarter of 2007 was $2.8 million. Cash received from stock option exercises was $5.7 million for the three months ended April 1, 2007.

     The Company’s determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as a number of highly complex and subjective assumptions. The Company uses third-party consultants to assist in developing the assumptions used in, as well as calibrating, the lattice model. The Company is responsible for determining the assumptions used in estimating the fair value of its share-based payment awards.

     Employee Stock Purchase Plans

8

     The Company also has two employee stock purchase plans (“ESPPs”), one for U.S. employees and one for employees outside the U.S., under which rights are granted to employees to purchase shares of common stock at 85% of the lesser of the fair market value of such shares at the beginning of a 12-month offering period or the end of each six-month purchase period within such an offering period. Compensation expense is calculated using the fair value of the employees’ purchase rights under the Black-Scholes model. No shares were issued under the ESPPs during the quarter ended April 1, 2007.

Restricted Stock Awards

     Under the 2003 Equity Incentive Plan (“2003 Plan”), the Company may grant restricted stock or restricted stock units. No participant may be granted more than a total of 0.5 million shares of restricted stock or restricted stock units in any year. The vesting requirements for the these awards are determined by the Compensation Committee of the Board of Directors. The Company typically grants restricted stock units, vesting of which is subject to the employee’s continuing service to the Company. The cost of these awards is determined using the fair value of the Company’s common stock on the date of grant and compensation expense is recognized over the vesting period on a straight-line basis.

     A summary of the changes in restricted stock unit awards outstanding during the three months ended April 1, 2007 is presented below:

	Number of
	Shares
	(In thousands)
Non-vested shares at December 31, 2006		1,910
Granted		1,600
Vested		(450	)
Forfeited		(48	)
Non-vested shares at April 1, 2007		3,012

     As of April 1, 2007, the Company had approximately $23.7 million of total unrecognized compensation expense, net of estimated forfeitures, related to restricted stock unit awards, which will be recognized over the weighted average period of 3.18 years. The fair value of shares vested in the first quarter of 2007 was $4.6 million.

NOTE 3 — RESTRUCTURING AND OTHER ITEMS

     The Company recorded a net credit of $8.1 million in restructuring of operations and other items for the three months ended April 1, 2007. A credit of $8.2 million was recorded in the Semiconductor segment and a charge of $0.1 million was recorded in the Storage Systems segment. The Company recorded charges of $5.7 million in restructuring of operations and other items during the three months ended April 2, 2006. Of these charges, $4.7 million was recorded in the Semiconductor segment and $1.0 million was recorded in the Storage Systems segment. For a complete discussion of the 2006 restructuring actions, please refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2006.

Restructuring and impairment of long-lived assets:

First quarter of 2007:

     The credit of $8.1 million resulted from the following items:

• $10.4 million net gain was recorded for the sale of land in Colorado, which had a net book value of $2.0 million. Total proceeds from the sale were $12.4 million. The gain was offset in part by a charge of $0.2 million associated with certain other asset write-offs;

• A credit of $0.5 million was recorded for changes in sublease assumptions for certain previously accrued facility lease termination costs;

9

• An expense of $0.7 million was recorded to reflect the change in time value of accruals for facility lease termination costs; and

• An expense of $1.9 million was recorded for severance and termination benefits for employees.

     Assets held for sale of $18.0 million and $20.1 million were included as a component of prepaid expenses and other current assets as of April, 1, 2007, and December 31, 2006, respectively. Assets classified as held for sale are recorded at the lower of their carrying amount or fair value less cost to sell and not depreciated. The fair values of impaired equipment and facilities were researched and estimated by management using the assistance of third party appraisers. Given that current market conditions for the sale of older fabrication facilities and related equipment may fluctuate, there can be no assurance that the Company will realize the current net carrying value of the assets held for sale. The Company reassesses the realizability of the carrying value of these assets at the end of each quarter until the assets are sold or otherwise disposed of and additional adjustments may be necessary.

     The following table sets forth the Company’s restructuring reserves as of December 31, 2006 and April 1, 2007, which are included in other accrued liabilities on the balance sheet, and the activity affecting the reserves during the three months ended April 1, 2007:

	Balance at		Restructuring			Utilized			Balance at
	December 31,		Expense			during Q1			April 1,
	2006		Q1 2007			2007			2007
	(In thousands)
Write-down of excess assets (a)	$	—	$	(10,143	)	$	10,143		$	—
Lease terminations (b)		23,169		189			(2,952	)		20,406
Payments to employees for severance (c)		342		1,874			(449	)		1,767
Total	$	23,511	$	(8,080	)	$	6,742		$	22,173

(a)	The credit includes the gain from the sale of the land in Colorado, offset in part by a charge of $0.2 million associated with certain asset write-offs.
(b)	Amounts utilized represent cash payments. The balance remaining for real estate lease terminations is expected to be paid during the remaining terms of these contracts, which extend through 2011.
(c)	Amounts utilized represent cash severance payments to 6 employees during the three months ended April 1, 2007. The balance remaining for severance is expected to be paid by the end of 2007.

NOTE 4 — BUSINESS COMBINATIONS

     The Company actively evaluates strategic acquisitions that build upon the Company’s existing library of intellectual property, human capital and engineering talent, and seeks to increase the Company’s leadership position in the markets in which the Company operates.

     On March 13, 2007, the Company completed the acquisition of SiliconStor, Inc., which was accounted for under the purchase method of accounting. There were no material acquisitions for the three months ended April 2, 2006. Pro forma statements of earnings information has not been presented because the effect of this acquisition was not material. The table below provides information about this acquisition.

Fair Value of

Tangible Net

Entity Name;

Total

Assets/

In-Process

Segment Included in;

Purchase

Type of

(Liabilities)

Amortizable

Research and

Description of Acquired Business

Acquisition Date

Price

Consideration

Acquired

Goodwill

Intangible Assets

Development

(dollars in millions)

SiliconStor, Inc.; Semiconductor segment; silicon solutions for enterprise storage based on SAS and FC-SATA

March 13, 2007

$

56.4

$56.4 cash

$

1.5

$

37.8

$

10.6

$

6.5

10

     Merger with Agere.On December 3, 2006, the Company entered into an Agreement and Plan of Merger with Agere. Agere is a provider of integrated circuit solutions for a variety of computing and communications applications. Some of Agere’s solutions include related software and reference designs. Agere’s solutions are used in products such as hard disk drives, mobile phones, high-speed communications systems and personal computers. Agere also licenses its intellectual property to others.

     On March 29, 2007, the stockholders of LSI and Agere approved proposals relating to the merger with Agere Systems at special meetings held on the same day. The merger closed on April 2, 2006. See Note 11.

NOTE 5 — BALANCE SHEET DETAIL

	April 1,		December 31,
	2007		2006
	(In thousands)
Cash and cash equivalents:
Cash in financial institutions	$	37,235	$	50,478
Cash equivalents		408,286		277,322
	$	445,521	$	327,800
Available-for-sale debt securities:
Asset and mortgage-backed securities	$	291,906	$	363,723
U.S. government and agency securities		240,310		272,287
Corporate and municipal debt securities		38,905		45,127
Total short-term investments	$	571,121	$	681,137
Long-term investments in equity securities:
Marketable equity securities available-for-sale	$	2,815	$	2,827
Non-marketable equity securities		9,976		12,973
Total long-term investments in equity securities	$	12,791	$	15,800
Inventories:
Raw materials	$	48,301	$	44,151
Work-in-process		54,670		52,497
Finished goods		126,096		112,822
	$	229,067	$	209,470

NOTE 6— RECONCILIATION OF BASIC AND DILUTED INCOME PER SHARE

     A reconciliation of the numerators and denominators used in the basic and diluted net income per share computations are as follows:

	Three Months Ended
	April 1, 2007						April 2, 2006
					Per-Share						Per-Share
	Income*		Shares+		Amount		Income*		Shares+		Amount
			(In thousands except per share amounts)
Basic EPS:
Net income available to common stockholders	$	29,824		404,230	$	0.07	$	13,168		394,851	$	0.03
Stock options, employee stock purchase rights and restricted stock unit awards		—		5,578		—		—		7,338		—
Diluted EPS:
Net income available to common stockholders	$	29,824		409,808	$	0.07	$	13,168		402,189	$	0.03

*	Numerator
+	Denominator

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     Options to purchase 42,304,732 and 45,195,499 shares during the three months ended April 1, 2007 and April 2, 2006, respectively, were excluded from the computation of diluted shares because of their antidilutive effect on net income per share.

     For the three months ended April 1, 2007, a weighted average of 26,080,460 potentially dilutive shares associated with the 2003 Convertible Notes were excluded from the calculation of diluted shares because of their antidilutive effect on net income per share. For the three months ended April 2, 2006, a weighted average of 36,401,581 potentially dilutive shares associated with the 2003 and 2001 Convertible Notes were excluded from the calculation of diluted shares because of their antidilutive effect on net income per share.

NOTE 7 — SEGMENT REPORTING

     The Company operates in two reportable segments — the Semiconductor segment and the Storage Systems segment — in which the Company offers products and services for a variety of electronic systems applications. LSI’s products are marketed primarily to original equipment manufacturers (“OEMs”) that sell products to the Company’s target markets.

     The following is a summary of operations by segment for the three months ended April 1, 2007 and April 2, 2006:

	Three months ended
	April 1, 2007		April 2, 2006
	(In thousands)
Revenues:
Semiconductor	$	272,374	$	298,374
Storage Systems		193,041		177,510
Total	$	465,415	$	475,884
Income from operations:
Semiconductor	$	27,159	$	3,529
Storage Systems		3,480		12,942
Total	$	30,639	$	16,471

     Intersegment revenues for the periods presented above were not significant. For the three months ended April 1, 2007, restructuring of operations and other items for the Semiconductor and Storage Systems segments were a net credit of $8.2 million and a charge of $0.1 million, respectively. For the three months ended April 2, 2006, restructuring of operations and other items for the Semiconductor and Storage Systems segments were $4.7 million and $1.0 million, respectively.

     Significant Customers. The following table summarizes the number of our significant customers, each of whom accounted for 10% or more of the Company’s revenues, along with the percentage of revenues they individually represent on a consolidated basis and by segment:

	Three months ended
	April 1, 2007			April 2, 2006
Semiconductor segment:
Number of significant customers		2			1
Percentage of segment revenues		20%,	14%			19%
Storage Systems segment:
Number of significant customers		2			2
Percentage of segment revenues		45%,	20%		43%,	15%
Consolidated:
Number of significant customers		2			2
Percentage of consolidated revenues		19%,	12%		17%,	12%

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     The following is a summary of total assets by segment as of April 1, 2007 and December 31, 2006:

	April 1,		December 31,
	2007		2006
	(In thousands)
Total Assets:
Semiconductor	$	2,147,557	$	2,212,711
Storage Systems		654,272		639,433
Total	$	2,801,829	$	2,852,144

     Revenues from domestic operations were $210.7 million, representing 45.3% of consolidated revenues for the three months ended April 1, 2007 compared to $236.9 million, representing 49.8% of consolidated revenues for the three months ended April 2, 2006.

NOTE 8 — COMPREHENSIVE INCOME

     Comprehensive income is defined as a change in equity of a company during a period from transactions and other events and circumstances, excluding transactions resulting from investments by owners and distributions to owners. Comprehensive income, net of taxes for the current reporting period and comparable period in the prior year is as follows:

	Three Months Ended
	April 1,		April 2,
	2007		2006
	(In thousands)
Net income	$	29,824	$	13,168
Change in unrealized gain/loss on available-for-sale securities		3,264		(3,011	)
Change in foreign currency translation adjustments		405		(366	)
Comprehensive income	$	33,493	$	9,791

NOTE 9— RELATED PARTY TRANSACTIONS

     A member of our board of directors is also a member of the board of directors of Seagate Technology. The Company sells semiconductors used in storage product applications to Seagate Technology for prices an unrelated third party would pay for such products. Revenues from sales to Seagate Technology were $55.6 million and $56.4 million for the three months ended April 1, 2007 and April 2, 2006, respectively. The Company had accounts receivable from Seagate Technology of $44.7 million and $45.8 million as of April 1, 2007 and December 31, 2006, respectively.

NOTE 10 — COMMITMENTS, CONTINGENCIES AND LEGAL MATTERS

     The Company is a party to a variety of agreements pursuant to which it may be obligated to indemnify the other party. Typically, these obligations arise in connection with contracts and license agreements or the sale of assets, under which the Company customarily agrees to hold the other party harmless against losses arising from a breach of warranties, representations and covenants related to such matters as title to assets sold, validity of certain intellectual property rights, non-infringement of third-party rights, and certain income tax-related matters. In each of these circumstances, payment by the Company is typically subject to the other party making a claim to and cooperating with the Company pursuant to the procedures specified in the particular contract. This usually allows the Company to challenge the other party’s claims or, in case of breach of intellectual property representations or covenants, to control the defense or settlement of any third-party claims brought against the other party. Further, the Company’s obligations under these agreements may be limited in terms of activity (typically to replace or correct the products or terminate agreement with a refund to the other party), duration and/or amounts. In some instances, the Company may have recourse against third parties and/or insurance covering payments made by the Company.

     In February 1999, a lawsuit alleging patent infringement was filed in the United States District Court for the District of Arizona by the Lemelson Medical, Education & Research Foundation, Limited Partnership (“Lemelson”) against 88 electronics industry companies, including LSI. The case number is CIV990377PHXRGS. The patents involved in this lawsuit are alleged to relate to

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semiconductor manufacturing and computer imaging, including the use of bar coding for automatic identification of articles. The plaintiff sought a judgment of infringement, an injunction, treble damages, attorneys’ fees and further relief as the court may provide. On January 17, 2007, the Company entered into an agreement with Lemelson that provided for a dismissal, with prejudice, of the entire lawsuit. Although the terms of the agreement are confidential, the agreement did not have a material adverse effect on the consolidated results of operations or the Company’s financial condition.

     On December 6, 2006, Sony Ericsson Mobile Communications USA Inc. filed a lawsuit against Agere in Wake County Superior Court in North Carolina, alleging unfair and deceptive trade practices, fraud and negligent misrepresentation in connection with Agere’s engagement with Sony Ericsson to develop a wireless data card for personal computers. The complaint claims an unspecified amount of damages and seeks damages, treble damages and attorneys’ fees. Based on the information currently available, LSI intends to contest this matter vigorously. No liability has been recorded since any possible loss or range of possible loss cannot be estimated at this time.

     Agere has a take or pay agreement with SMP under which it has agreed to purchase 51% of the managed wafer capacity from SMP’s integrated circuit manufacturing facility and Chartered Semiconductor agreed to purchase the remaining 49% of the managed wafer capacity. SMP determines its managed wafer capacity each year based on forecasts provided by Agere and Chartered Semiconductor. If Agere fails to purchase its required commitments, it will be required to pay SMP for the fixed costs associated with the unpurchased wafers. Chartered Semiconductor is similarly obligated with respect to the wafers allotted to it. The agreement may be terminated by either party upon two years written notice. The agreement may also be terminated for material breach, bankruptcy or insolvency.

     The Company and its subsidiaries are parties to other litigation matters and claims in the normal course of its operations. The Company typically defends legal matters aggressively and does not believe, based on currently available facts and circumstances, that the final outcome of these other matters, taken individually or as a whole, will have a material adverse effect on the Company’s consolidated results of operations and financial condition. However, the pending unsettled lawsuits may involve complex questions of fact and law and will likely require the expenditure of significant funds and the diversion of other resources to defend. From time to time the Company may enter into confidential discussions regarding the potential settlement of such lawsuits; however, there can be no assurance that any such discussions will occur or will result in a settlement. Moreover, the settlement of any pending litigation could require the Company to incur substantial costs and, in the case of the settlement of any intellectual property proceeding against the Company, may require the Company to obtain a license under a third party’s intellectual property rights that could require royalty payments in the future and the Company to grant a license to certain of its intellectual property rights to a third party under a cross-license agreement. The results of litigation are inherently uncertain, and material adverse outcomes are possible.

NOTE 11 — SUBSEQUENT EVENTS

     On December 3, 2006, the Company entered into an Agreement and Plan of Merger with Agere. Agere is a provider of integrated circuit solutions for a variety of computing and communications applications. Some of Agere’s solutions include related software and reference designs. Agere’s solutions are used in products such as hard disk drives, mobile phones, high-speed communications systems and personal computers. Agere also licenses its intellectual property to others. The purpose of the acquisition is to offer a comprehensive set of building block solutions including semiconductors, systems and related software for storage, networking and consumer electronics products that enable businesses and consumers to store, protect and stay connected to their information and digital content by expanding intellectual property portfolio and integrated workforce.

     On April 2, 2007, the Company completed the merger of a wholly owned subsidiary and Agere, resulting in Agere becoming a wholly owned subsidiary of the Company.

     Upon completion of the merger, each share of Agere common stock outstanding at the effective time of the merger was converted into the right to receive 2.16 shares of LSI common stock. As a result, approximately 368 million shares of LSI common stock were issued to former Agere stockholders. LSI assumed stock options and restricted stock units covering a total of approximately 58 million shares of LSI common stock. LSI also guaranteed Agere’s 6.5% Convertible Subordinated Notes due December 15, 2009, the fair value of which was $370 million as of April 2, 2007. The total estimated purchase price of the acquisition was as follows (in thousands):

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	Amounts
Estimated fair value of LSI common shares issued	$	3,647,021
Estimated fair value of options and restricted stock units assumed		206,916
Estimated direct transaction costs		22,400
Total estimated purchase price	$	3,876,337

Preliminary Estimated Purchase Price Allocation

     The preliminary allocation of the purchase price to Agere’s tangible and identifiable intangible assets acquired and liabilities assumed was based on their estimated fair values. The fair value of options assumed was estimated using a reduced form calibrated binomial lattice model and a share price of $9.905 per share, which represents the average closing price of LSI common shares for two trading days before and ending two trading days after December 4, 2006, the date by which the merger was agreed to and announced. The fair value of unearned stock compensation was based on the price of LSI common share on April 2, 2007. The valuation of these tangible and identifiable intangible assets and liabilities is subject to further management review and may change materially from the preliminary valuation. Further adjustments to these estimates may be included in the final allocation of the purchase price of Agere, if the adjustments are determined within the purchase price allocation period (up to twelve months from the closing date). The excess of the purchase price over the tangible and identifiable intangible assets acquired and liabilities assumed has been allocated to goodwill. None of the goodwill recorded is expected to be deductible for tax purposes because there is no tax basis in goodwill acquired in a stock transaction. The total purchase price of approximately $3.9 billion does not include the effect of restructuring activities because it cannot be estimated at this time. The estimated purchase price has been allocated as follows (in thousands):

	As of
	April 2,
	2007
Tangible net assets acquired	$	484,886
Identifiable intangible assets		1,797,500
In-process research and development		193,300
Unearned stock compensation		168,005
Goodwill		1,232,646
Total estimated purchase price	$	3,876,337

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     This Form 10-Q contains forward-looking statements. In many cases you can identify forward-looking statements by terminology such as “may”, “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “intend” or “continue,” or the negative of such terms and other comparable terminology. We assume no obligation to update any such forward-looking statements, and these statements involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. For a summary of such risks and uncertainties, please see Item 1A-“Risk Factors” in Part II.

OVERVIEW

     We are a leading provider of silicon-to-system solutions that are used at the core of products that create, store and consume digital information. We offer a broad portfolio of capabilities including custom and standard product integrated circuits, host bus and RAID adapters, storage area network solutions and software applications. Our products enable leading technology companies in the Storage and Consumer markets to deliver some of the most advanced and well-known electronic systems in the market today.

     We operate in two segments — the Semiconductor segment and the Storage Systems segment — in which we offer products and services for a variety of electronic systems applications. Our products are marketed primarily to original equipment manufacturers (“OEMs”) that sell products to our target markets.

     Revenues for the three months ended April 1, 2007 were $465.4 million representing a 2% decrease from $475.9 million for the three months ended April 2, 2006. The decrease is attributable to lower revenues in our Semiconductor segment, offset in part by an increase in revenues in our Storage Systems segment.

     We reported net income of $29.8 million or $0.07 per diluted share for the three months ended April 1, 2007, compared to net income of $13.2 million or $0.03 per diluted share for the three months ended April 2, 2006.

     Cash, cash equivalents and short-term investments were $1.02 billion as of April 1, 2007 as compared to $1.01 billion as of December 31, 2006. For the three months ended April 1, 2007, we generated $56.0 million in cash provided by operations as compared to $99.6 million in the same period of 2006.

     Acquisitions. We continue to evaluate strategic acquisitions that build upon our existing library of intellectual property, provide additional human capital, including engineering talent, and increase our leadership position in the spaces in which we operate. We acquired SiliconStor during the first quarter of 2007 for $56.4 million in cash. The acquisition was accounted for as a purchase of a business. Accordingly, the estimated fair value of assets acquired and liabilities assumed and the results of operations were included in our financial statements from the date of the acquisition. See Note 4 to our financial statements in Item 1.

     Merger with Agere. On April 2, 2007, pursuant to the Agreement and Plan of Merger, dated as of December 3, 2006, by and among LSI, Agere Systems and Atlas Acquisition Corp., a wholly owned subsidiary of LSI, Atlas Acquisition merged with and into Agere with Agere surviving the merger. As a result of the merger, each share of Agere common stock issued and outstanding immediately prior to the effective time of the merger (other than shares owned by LSI, Atlas Acquisition or Agere, or any wholly owned subsidiary of any of them) was converted into the right to receive 2.16 shares of LSI common stock. Approximately 368 million shares of LSI common stock were issued to former Agere stockholders in connection with the merger.

     As a result of the merger, LSI has acquired the business and assets of Agere. Agere was a leading provider of integrated circuit solutions for a variety of communications and computing applications. Some of its solutions included related software and reference designs. Agere’s customers included manufacturers of hard disk drives, mobile phones, advanced communications and networking equipment and personal computers. Agere also generated revenue from the licensing of intellectual property.

     Where more than one significant factor contributed to changes in results from year to year, we have quantified such factors throughout Management’s Discussion and Analysis, where practicable.

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RESULTS OF OPERATIONS

Revenues:

	Three Months Ended
	April 1,		April 2,
	2007		2006
Semiconductor segment	$	272.4	$	298.4
Storage Systems segment		193.0		177.5
Consolidated	$	465.4	$	475.9

There were no significant intersegment revenues during the periods presented.

     Total consolidated revenues for the three months ended April 1, 2007 decreased $10.5 million or 2.2% as compared to the three months ended April 2, 2006.

     Semiconductor segment:

     Revenues for the Semiconductor segment decreased $26.0 million or 8.7% for the three months ended April 1, 2007 compared to the three months ended April 2, 2006. The decrease in semiconductor revenues is attributable to the net effect of the following factors:

•	Decreases in demand for semiconductors used in consumer product applications such as digital audio players, where our customer’s solution has not been included in the new generation of a customer’s products, DVD products and cable set-top box solutions;
•	Decreases in demand for semiconductors used in communication product applications such as telecommunications and printing.
	These decreases were offset in part by increased demand for semiconductors used in storage products associated with the ramping of our SAS (Serial Attached SCSI) products and also from increased demand for Host Bus Adapters.

     Storage Systems segment:

     Revenues for the Storage Systems segment increased $15.5 million or 8.7% for the three months ended April 1, 2007 from the three months ended April 2, 2006. The increase in revenues is primarily attributable to increased demand for our mid-range integrated storage modules, premium feature software, and the ramp of our entry level SAS storage product introduced in the fourth quarter of 2006.

See Note 7 to the financial statements in Item 1 for information about our significant customers.

     Revenues by geography. The following table summarizes our revenues by geography:

	Three Months Ended
	April 1, 2007		April 2, 2006
Revenues:
North America	$	210.7	$	236.9
Asia, including Japan		188.9		186.4
Europe and Middle East (EMEA)		65.8		52.6
Total	$	465.4	$	475.9

     In the first quarter of 2007, revenues decreased in North America compared to the first quarter of 2006. The decrease in North America is attributable to decrease in demand for semiconductors used in consumer product applications such as digital audio players, custom storage products used in server applications and telecommunication products used in routers and switches. The decrease was offset in part by increased demand for semiconductors used in SAS storage product applications. Revenues in Asia, including Japan, increased in the first quarter of 2007 as compared to the first quarter of 2006. The increase in revenues in Asia, including Japan, is attributable to increased demand for storage semiconductors used in SAS applications, increased demand for Host Bus Adapters, offset in part by decreased demand for DVD products. The increase in EMEA is primarily attributable to increases in revenues for

17

custom semiconductors used in tape drive applications and storage semiconductors used in SAS applications. These increases were offset in part by decreased demand for semiconductors used in consumer product applications such as set-top boxes and DVD’s.

     Operating costs and expenses. Key elements of the consolidated statements of operations for the respective segments are as follows:

Gross profit margin:

	Three Months Ended
	April 1, 2007			April 2, 2006
Semiconductor segment	$	134.3		$	139.4
Percentage of revenues		49.3	%		46.7	%
Storage Systems segment	$	65.5		$	65.1
Percentage of revenues		33.9	%		36.7	%
Consolidated	$	199.8		$	204.5
Percentage of revenues		42.9	%		43.0	%

     The consolidated gross profit margin as a percentage of revenues remained relatively flat for the three months ended April 1, 2007 as compared to the three months ended April 2, 2006.

     Semiconductor segment:

     The gross profit margin as a percentage of revenues for the Semiconductor segment increased to 49.3% for the three months ended April 1, 2007 from 46.7% for the three months ended April 2, 2006. The improvement in gross margin percentage reflects:

• Improved wafer pricing for our .11 micron process products,

• Lower scrap costs; and

• A favorable shift in product mix in the first quarter of 2007.

     Storage Systems segment:

     The gross profit margin as a percentage of revenues for the Storage Systems segment decreased to 33.9% for the three months ended April 1, 2007 from 36.7% for the three months ended April 2, 2006. The decrease in gross profit margins is attributable to changes in product mix, a ramp in subsequent generation mid-range product offerings, and the introduction of our entry level SAS storage products that were introduced in the last quarter of 2006.

     We own our Storage Systems segment manufacturing facility in Wichita, Kansas. In addition, we acquire wafers, assembly and test services from vendors in Taiwan, Japan, Malaysia, Korea and China and outsource a portion of our Storage Systems segment manufacturing to facilities in Ireland. Utilizing diverse manufacturing locations allows us to better manage potential disruption in the manufacturing process due to economic and geographic risks associated with each location.

Research and development:

	Three Months Ended
	April 1, 2007			April 2, 2006
Semiconductor segment	$	73.7		$	81.6
Percentage of revenues		27.1	%		27.3	%
Storage Systems segment	$	30.1		$	20.7
Percentage of revenues		15.6	%		11.7	%
Consolidated	$	103.8		$	102.3
Percentage of revenues		22.3	%		21.5	%

     Research and development, or R&D expenses, increased $1.5 million or 1.5% during the three months ended April 1, 2007 as compared to the three months ended April 2, 2006.

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     Semiconductor segment:

     R&D expenses in the Semiconductor segment decreased by $7.9 million or 9.7% for the three months ended April 1, 2007 as compared to the three months ended April 2, 2006. The decrease in R&D expenses for the Semiconductor segment is primarily the result of our historical restructuring activities associated with our more focused strategy which lowered our labor, facility and information technology costs.

     Storage Systems segment:

     R&D expenses in the Storage Systems segment increased by $9.4 million or 45.4% for the three months ended April 1, 2007 as compared to the three months ended April 2, 2006. The increase in R&D expenses for the Storage Systems segment is due to increased compensation expenditures due to an increase in headcount, increased spending for R&D projects associated with new product lines and expenses related to a contract with a significant customer.

Selling, general and administrative:

	Three Months Ended
	April 1, 2007			April 2, 2006
Semiconductor segment	$	32.3		$	40.3
Percentage of revenues		11.9	%		13.5	%
Storage Systems segment	$	29.3		$	28.6
Percentage of revenues		15.2	%		16.1	%
Consolidated	$	61.6		$	68.9
Percentage of revenues		13.2	%		14.5	%

     Consolidated SG&A expenses decreased $7.3 million or 10.6% during the three months ended April 1, 2007 as compared to the three months ended April 2, 2006. A customer of ours, Silicon Graphics, filed for protection under chapter 11 of the United States Bankruptcy Code on May 8, 2006. As a result of this action, we recorded a $5.6 million charge in the first quarter of 2006 because we did not believe the receivable balance as of April 2, 2006 was collectible. Of this charge, $5.4 million related to the Storage Systems segment and $0.2 million related to the Semiconductor segment.

     Semiconductor segment:

     SG&A expenses for the Semiconductor segment decreased $8.0 million or 19.9% for the three months ended April 1, 2007 as compared to the three months ended April 2, 2006. The decrease in the Semiconductor segment was primarily due to a decrease in labor related expenses as a result of reduced headcount from restructuring activities and lower stock-based compensation expense.

     Storage Systems segment:

     SG&A expenses for the Storage Systems segment increased $0.7 million or 2.4% for the three months ended April 1, 2007 as compared to the three months ended April 2, 2006. The increase in SG&A expenses for the three months ended April 1, 2007 as compared to the three months ended April 2, 2006 is mainly due to the net impact of the following:

• An increase in sales commissions due to increased revenues;

• Increased compensation related expenses based on increased headcount;

• A $5.4 million charge recorded in the first quarter of 2006 to reduce a receivable balance following the Silicon Graphics bankruptcy filing.

     Acquired in-process research and development: We recorded a charge of $6.5 million for the three months ended April 1, 2007 associated with acquired in-process research and development in connection with the SiliconStor acquisition. See Note 4 for more detail information.

     We expect to incur significant charges for acquired in-process research and development, stock-based compensation and amortization of intangibles associated with the merger with Agere starting in the second quarter of 2007.

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     Restructuring of operations and other items: We recorded a net credit of $8.1 million in restructuring of operations and other items for the three months ended April 1, 2007. A credit of $8.2 million was recorded in the Semiconductor segment and a charge of $0.1 million was recorded in the Storage Systems segment. We recorded charges of $5.7 million in restructuring of operations and other items during the three months ended April 2, 2006. Of these charges, $4.7 million was recorded in the Semiconductor segment and $1.0 million was recorded in the Storage Systems segment. See Note 3 to the financial statements in Item 1. For a complete discussion of the 2006 restructuring actions, please refer to our Annual Report on Form 10-K for the year ended December 31, 2006.

     Stock-based compensation: Stock-based compensation expense in the condensed consolidated statements of operations for the three months ended April 1, 2007 was $11.2 million as compared to $11.8 million for the three months ended April 2, 2006. See Note 2 to the financial statements in Item 1 for a further discussion on stock-based compensation.

     Amortization of intangibles: Amortization of intangible assets was $5.3 million for the three months ended April 1, 2007 as compared to $11.2 million for the three months ended April 2, 2006. The decrease is primarily a result of certain intangible assets becoming fully amortized during 2006, offset in part by the intangible assets acquired in connection with the SiliconStor acquisition during the three months ended April 1, 2007 and the StoreAge and Metta acquisitions during the three months ended December 31, 2006. As of April 1, 2007, we had approximately $64.8 million of intangible assets, net of accumulated amortization that will continue to amortize.

     Interest expense: Interest expense decreased by $2.4 million to $3.9 million for the three months ended April 1, 2007 from $6.3 million for the three months ended April 2, 2006. The decrease is mainly due to a lower average debt balance from the repayment at maturity of $271.8 million of the 2001 Convertible Notes in the fourth quarter of 2006.

     Interest income and other, net: Interest income and other, net, was $10.5 million for the three months ended April 1, 2007 as compared to $9.5 million for the three months ended April 2, 2006. Interest income increased to $12.3 million for the three months ended April 1, 2007 from $9.2 million for the three months ended April 2, 2006. The increase in interest income is mainly due to higher returns during the three months ended April 1, 2007 as compared to the three months ended April 2, 2006. Other expenses, net of $1.8 million in the first quarter of 2007, included $1.2 million in expense for points on foreign currency forward contracts and a pre-tax loss of $0.7 million on the sale of property and equipment, offset in part by other miscellaneous items. Other income, net of $0.3 million in the first quarter of 2006, included a pre-tax gain of $1.4 million on the sale of certain marketable available-for-sale equity securities during the three months ended April 2, 2006, offset in part by $1.1 million in expense for points on foreign currency forward contracts and other miscellaneous items.

     Provision for income taxes: During the three months ended April 1, 2007 and April 2, 2006, we recorded an income tax provision of $7.5 million and $6.5 million, respectively.

     The provision for income taxes for the three months ended April 1, 2007 includes tax benefits of $1.2 million relating to a tax refund in a foreign jurisdiction which was recognized during three months ended April 1, 2007.

     Excluding certain foreign jurisdictions, our management believes that the future benefit of deferred tax assets, including stock based compensation awards, is not more likely than not to be realized.

FINANCIAL CONDITION, CAPITAL RESOURCES AND LIQUIDITY

     Cash, cash equivalents and short-term investments increased to $1.02 billion at April 1, 2007, from $1.01 billion at December 31, 2006. The increase is mainly due to cash and cash equivalents provided by operating, investing and financing activities as described below.

     Working capital. Working capital increased by $118.7 million to $1.2 billion at April 1, 2007, from $1.1 billion as of December 31, 2006. The increase in working capital is attributable to the following:

• Income taxes payable decreased by $76.5 million due to the adoption of FIN 48 in the first quarter of 2007, offset in part by an increase in the tax provision. They did not have a cash impact.

• Accounts payable decreased by $37.3 million due to the timing of invoice receipt and payments.

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•	Inventories increased by $19.6 million to $229.1 million as of April 1, 2007, from $209.5 million as of December 31, 2006. The increase in inventory levels reflects the need to build inventory to support the ending of a supply agreement and support the initiation of new product lines.
•	Other accrued liabilities decreased by $19.4 million due to the payment of liabilities and a decrease in our restructuring reserves, offset in part by an increase in interest payable.
•	Accrued salaries, wages and benefits decreased by $9.9 million primarily due to timing differences in payment of salaries, benefits and performance-based compensation.
•	Cash, cash equivalents and short-term investments increased by $7.7 million.
	These increases in working capital were offset, in part, by the following:
•	Prepaid expenses and other current assets decreased by $6.4 million primarily due to decreases in VAT and consumption tax and other miscellaneous receivables, a decrease in assets held following the sale from the sale of land in Colorado, offset by an increase in deferred tax assets.
•	Accounts receivable decreased by $45.3 million to $303.3 million as of April 1, 2007 from $348.6 million at December 31, 2006. The decrease is mainly attributed to lower revenues and improved collections in the first quarter of 2007 as compared to the fourth quarter of 2006.

     Cash and cash equivalents generated from operating activities. During the three months ended April 1, 2007, we generated $56.0 million of cash and cash equivalents from operating activities compared to $99.6 million generated in the same period of 2006. Cash and cash equivalents generated by operating activities for the three months ended April 1, 2007, were the result of the following:

• Net income adjusted for non-cash transactions. The non-cash items and other non-operating adjustments are quantified in our Condensed Consolidated Statements of Cash Flows included in this Form 10-Q; and

• A net decrease in assets and liabilities, including changes in working capital components from December 31, 2006 to April 1, 2007, as discussed above.

     Cash and cash equivalents provided by/(used in) investing activities. Cash and cash equivalents provided by investing activities were $56.1 million for the three months ended April 1, 2007, compared to $72.6 million used in investing activities for the same period of 2006. The primary investing activities for the three months ended April 1, 2007 were as follows:

• Proceeds from maturities and sales of debt securities available for sale, net of purchases;

• The receipt of an income tax refund for pre-acquisition tax matters associated with an acquisition in 2001;

• Purchases of property, equipment and software;

• The acquisition of SiliconStor, Inc. and

• Proceeds from the sale of land in Colorado.

     We expect capital expenditures to be approximately $95 million in 2007. In recent years, we have reduced our level of capital expenditures as a result of our focus on establishing strategic supplier alliances with foundry semiconductor manufacturers, which enables us to have access to advanced manufacturing capacity, and reduces our capital spending requirements.

     Cash and cash equivalents provided by financing activities. Cash and cash equivalents provided by financing activities for the three months ended April 1, 2007, was $5.7 million as compared to $12.0 million for the same period of 2006. The primary financing activities for the three months ended April 1, 2007 were the issuance of common stock under our employee stock option plans.

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     We may seek additional equity or debt financing from time to time. We believe that our existing liquid resources and funds generated from operations, combined with funds from such financing, will be adequate to meet our operating and capital requirements and obligations for the foreseeable future.

     Contractual Obligations

     The following table summarizes our contractual obligations as of April 1, 2007, and the effect these obligations are expected to have on our liquidity and cash flow in future periods. This table does not include contractual obligations assumed as part of the merger with Agere Systems, which closed on April 2, 2007.

	Payments due by period
	Less than		1 — 3		4 — 5		After 5
Contractual Obligations	1 year		years		years		years		Total
	(in millions)
Convertible Subordinated Notes	$	—	$	—	$	350.0	$	—	$	350.0
Operating lease obligations		45.5		72.8		29.0		8.0		155.3
Purchase commitments		345.4		13.8		—		—		359.2
Total	$	390.9	$	86.6	$	379.0	$	8.0	$	864.5

     Convertible Subordinated Notes

     As of April 1, 2007, we had outstanding $350.0 million of the 4% Convertible Subordinated Notes due in May 2010 (“2003 Convertible Notes”). The 2003 Convertible Notes are subordinated to all existing and future senior debt and are convertible at the holder’s option, at any time prior to maturity into shares of our common stock. The 2003 Convertible Notes have a conversion price of approximately $13.42 per share. We cannot elect to redeem the 2003 Convertible Notes prior to maturity. Each holder of the 2003 Convertible Notes has the right to cause us to repurchase all of such holder’s convertible notes at 100% of their principal amount plus accrued interest upon the occurrence of any fundamental change, which includes a transaction or event such as an exchange offer, liquidation, tender offer, consolidation, certain mergers or combination. The merger with Agere did not trigger the 2003 Convertible Note holders’ right to cause us to repurchase the Notes. Interest is payable semiannually.

     Fluctuations in our stock price impact the prices of our outstanding convertible securities and the likelihood of the convertible securities being converted into cash or equity. If we are required to redeem any of the Convertible Notes for cash, it may affect our liquidity position. In the event they are not converted to equity, we believe that our current cash position and expected future operating cash flows will be adequate to meet these obligations as they mature.

     As part of the merger with Agere, LSI guaranteed Agere’s 6.5% Convertible Subordinated Notes due December 15, 2009 with a fair value of approximately $370 million as of April 2, 2007. Interest on the Notes accrues at the rate of 6.5% per annum and is payable semi-annually on June 15 and December 15 of each year. From time to time, we redeem or repurchase Convertible Notes.

     Operating Lease Obligations

     We lease real estate, certain non-manufacturing equipment and software under non-cancelable operating leases.

     Purchase Commitments

     We maintain certain purchase commitments, primarily for raw materials with suppliers and for some non-production items. Purchase commitments for inventory materials are generally restricted to a forecasted time-horizon as mutually agreed upon between the parties. This forecasted time-horizon varies among different suppliers.

     In the second quarter of 2006, we completed the sale of our Gresham, Oregon semiconductor manufacturing facility to ON Semiconductor for approximately $105.0 million in cash. Under the terms of the agreement, ON Semiconductor entered into a multi-year wafer supply agreement (WSA) with LSI, whereby LSI agreed to purchase $198.8 million in wafers from ON Semiconductor during the period from the date of sale of the Gresham facility in May 2006 to the end of LSI’s second quarter of 2008. As of April 1, 2007, LSI had yet to purchase $93.2 million in wafers under this arrangement.

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Critical Accounting Policies

     For a detailed discussion of our critical accounting policies, please see the Critical Accounting Policies contained in the Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2006.

Recent Accounting Pronouncements

     The information contained in Item 1 in Note 1 of the Notes under the heading “Recent Accounting Pronouncements” is hereby incorporated by reference into this Item 2.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

     There have been no significant changes in the market risk disclosures during the three months ended April 1, 2007, as compared to the discussion in Part II, Item 7a of our Annual Report on Form 10-K for the year ended December 31, 2006.

Item 4. Controls and Procedures

     Evaluation of Disclosure Controls and Procedures: The Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean a company’s controls and other procedures that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 (“Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required or necessary disclosures. Our chief executive officer and chief financial officer have concluded, based on the evaluation of the effectiveness of the disclosure controls and procedures by our management, with the participation of our chief executive officer and chief financial officer, as of the end of the period covered by this report, that our disclosure controls and procedures were effective for this purpose.

     Changes in Internal Controls: During the fiscal quarter covered by this report, we did not make any change in our internal control over financial reporting that materially affected or is reasonably likely to materially affect our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

     This information is included in Note 10 to the financial statements in Item 1 of Part I.

Item 1A. Risk Factors

     This report contains forward-looking statements that are based on current expectations, estimates, forecasts and projections about the industry in which we operate, management’s beliefs and assumptions made by management. Words such as “expects,” “anticipates,” “intends,” “plans,” “estimates,” “believes,” “seeks,” variations of such words and similar expressions are intended to identify such forward looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Except as required under the federal securities laws and the rules and regulations of the Securities and Exchange Commission, we do not have any intention or obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise.

     The following factors, many of which are discussed in greater detail in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006, could affect our future performance and the price of our stock.

• We may fail to realize the benefits expected from our recent merger with Agere Systems, which could adversely affect the value of our common stock.

23

     The merger involves the integration of LSI and Agere, two companies that previously operated independently. We agreed to the merger with the expectation that, among other things, the merger would enable us to consolidate support functions, leverage our research and development, patents and services across a larger base, and integrate our workforces to create opportunities to achieve cost savings and to become a stronger and more competitive company. Although we expect significant benefits to result from the merger, there can be no assurance that we will actually realize these or any other anticipated benefits of the merger.

     The value of our common stock may be affected by our ability to achieve the benefits we expected to achieve in the merger. At the time of the merger agreement, LSI and Agere had a combined workforce of over 9,000 employees. Achieving the benefits of the merger will depend in part on meeting the challenges inherent in the successful combination and integration of global business enterprises, including the following:

• Demonstrating to our customers that the merger will not result in adverse changes to our ability to address their needs or loss of attention or business focus;

• Coordinating and integrating independent research and development teams across technologies and product platforms to enhance product development while reducing costs;

• Combining product offerings;

• Consolidating and integrating corporate, information technology, finance and administrative infrastructures;

• Coordinating sales and marketing efforts to effectively position our capabilities and the direction of product development; and

• Minimizing the diversion of management attention from important business objectives.

     If we do not successfully manage these issues and other challenges inherent in integrating complex businesses, then we may not achieve the anticipated benefits of the proposed merger and our revenues, expenses, operating results and financial condition could be materially adversely affected. For example, goodwill and other intangible assets could be determined to be impaired, which could result in a charge to earnings. The successful integration of the two businesses is likely to require significant management attention, and may divert the attention of our management team from business and operational issues.

• We must attract and retain key employees in a highly competitive environment; uncertainties associated with the Agere merger may cause a loss of employees and may otherwise materially adversely affect our business.

• The industries in which we operate are highly cyclical, and our operating results may fluctuate.

• General economic weakness and geopolitical factors may harm our operating results and financial condition.

• We are dependent on a limited number of customers.

• We depend to a large extent on independent foundry subcontractors to manufacture our semiconductor products; accordingly, any failure to secure and maintain sufficient foundry capacity could materially and adversely affect our business.

     Except for a semiconductor manufacturing facility in Singapore that we jointly own with Chartered Semiconductor Manufacturing, we rely entirely on independent foundries to manufacture our semiconductor products. To the extent we rely on third party manufacturing relationships, we face risks, including:

• a manufacturer may be unwilling to devote adequate capacity to production of our products or may be unable to produce our products;

• a manufacturer may not be able to develop manufacturing methods appropriate for our products;

• manufacturing costs may be higher than planned;

• product reliability may decline;

• a manufacturer may not be able to maintain continuing relationships with our suppliers; and

• we may have reduced control over delivery schedules, quality, manufacturing yields and costs of products.

     If any of these risks were to be realized, we could experience an interruption in supply or an increase in costs, which could adversely affect our results of operations.

     The ability of an independent foundry subcontractor to provide us with semiconductor devices is limited by its available capacity and existing obligations. Availability of foundry capacity has in the recent past been reduced from time to time due to strong

24

demand. Foundry capacity may not be available when needed at reasonable prices. We place orders on the basis of our customers’ purchase orders or our forecast of customer demand, and the foundries can allocate capacity to the production of other companies’ products and reduce deliveries to us on short notice. It is possible that other foundry customers that are larger and better financed than we, or that have long-term agreements with the foundry suppliers, may induce foundries to reallocate capacity to them. This reallocation could impair our ability to secure the supply of components that we need. Also, our foundry suppliers migrate capacity to newer, state-of-the-art manufacturing processes on a regular basis, which may create capacity shortages for products designed to be manufactured on older processes. In addition, the occurrence of a public health emergency or natural disaster could further affect the production capabilities of our manufacturers by resulting in quarantines or closures. If any of our foundry suppliers experiences a shortage in capacity, suffers any damage to its facilities due to earthquakes or other natural disasters, experiences power outages, encounters financial difficulties or experiences any other disruption of foundry capacity, we may need to qualify an alternative foundry supplier, which may require several months. In addition, we can not provide any assurances that any foundries will be able to produce integrated circuits with acceptable manufacturing yields, or that foundries will be able to deliver enough semiconductor devices to us on a timely basis, or at reasonable prices.

• We operate in intensely competitive markets.

• Our target markets are characterized by rapid technological change.

• Order or shipment cancellations or deferrals could cause our revenue to decline.

• We design and develop highly complex products that require significant investments.

• Our products may contain defects.

• Our manufacturing facilities have high fixed costs and involve highly complex and precise processes.

     We have a storage systems manufacturing facility in Wichita, Kansas; assembly and test facilities in Singapore and Thailand and a 51% equity interest in a joint venture with Chartered Semiconductor Manufacturing Ltd., which owns a semiconductor manufacturing facility in Singapore. Operations at any of these facilities may be disrupted for reasons beyond our control, including work stoppages, supply shortages, fire, earthquake, tornado, floods or other natural disasters, any of which could have a material adverse effect on our results of operations or financial position. In addition, if we do not experience adequate utilization of, or adequate yields at, these facilities, our results of operations may be adversely affected. We confront challenges in the manufacturing and assembly and test processes that require us to: maintain a competitive cost structure; exercise stringent quality control measures to obtain high yields; effectively manage subcontractors engaged in the wafer fabrication, test and assembly of products; and update equipment and facilities as required for leading edge production capabilities.

     The manufacture of our products involves highly complex and precise processes, requiring production in a clean and tightly controlled environment. In addition, the manufacture of integrated circuits is a highly complex and technologically demanding process. Although we work diligently to minimize the likelihood of reduced manufacturing yields, from time to time, we have experienced lower than anticipated manufacturing yields. This often occurs during the production of new products or the installation and start-up of new process technologies. Poor yields could result in product shortages or delays in product shipments, which could seriously harm relationships with our customers and materially and adversely affect our business and results of operations.

• Failure to qualify our products or our suppliers’ manufacturing lines may adversely affect our results of operations.

• We depend in part upon third-party subcontractors to assemble, obtain packaging materials for, and test certain products.

     We own two semiconductor assembly and test facilities. We also rely on third-party subcontractors located in Asia to assemble, obtain packaging materials for, and test for us. To the extent that we rely on third-party subcontractors to assemble and test semiconductor products for us or conduct other services, we will not be able to control directly product delivery schedules and quality assurance. This lack of control may result in product shortages or quality assurance problems that could delay shipments of products or increase manufacturing, assembly, testing or other costs. In addition, if we or these third-party subcontractors are unable to obtain sufficient packaging materials for products in a timely manner, we may experience product shortages or delays in product shipments, which could materially and adversely affect customer relationships and results of operations. If we or any of these subcontractors experiences capacity constraints or financial difficulties, suffers any damage to its facilities, experiences power outages or any other disruption of assembly or testing capacity, we may not be able to obtain alternative assembly and testing services in a timely manner.

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Due to the amount of time that it usually takes to qualify assemblers and testers, we could experience significant delays in product shipments if we are required to find alternative assemblers or testers for such components.

• A widespread outbreak of an illness or other health issue could negatively affect our manufacturing, assembly and test, design or other operations.

• We procure parts and raw materials from a limited number of domestic and foreign sources.

• If our new product development and expansion efforts are not successful, our results of operations may be adversely affected.

• We may engage in acquisitions and alliances giving rise to financial and technological risks.

• The semiconductor industry is prone to intellectual property litigation.

• We may not be able to adequately protect or enforce our intellectual property rights, which could harm our competitive position.

• A decline in the revenue that we derive from the licensing of intellectual property could have a significant impact on net income.

     We currently generate revenue from the licensing of intellectual property. This revenue has a high gross margin compared to the revenue generated from the sale of other products we sell, and a decline in this licensing revenue could have a significant impact on our profitability. Our licensing revenue typically comes from a limited number of transactions and the failure to complete one or more transactions in a quarter could have a material adverse impact on our revenue and profitability. In addition, changes in patent laws and changes in interpretations of patent laws may affect our ability to obtain new patents and to enforce existing patents, which may have an adverse impact on our intellectual property licensing revenue.

• We conduct a significant amount of activity outside of the United States, and are exposed to legal, business, political and economic risks associated with our international operations.

• We may rely on the capital markets and/or bank markets to provide financing.

• We utilize indirect channels of distribution over which we will have limited control.

• The price of our securities may be subject to wide fluctuations.

• Future changes in financial accounting standards or practices or existing taxation rules or practices may cause adverse unexpected fluctuations and affect reported results of operations.

• Internal control deficiencies or weaknesses that are not yet identified could emerge.

     As part of our integration of Agere, we must combine two previously separate internal control environments. Each control environment contains a significant number of individual controls that must operate separately until we are able to combine the two environments. We anticipate that the combination of the two control environments will be a complex and time-consuming process. We may make errors or fail to properly or timely integrate all internal control elements, which could have an adverse impact on our ability to accurately produce financial statements. The disclosure of such errors or failures could have an adverse impact on our stock price.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

     On December 4, 2006, we announced that our board of directors had authorized the repurchase of up to $500 million worth of our common stock. Our board of directors terminated the stock repurchase program previously authorized by the Board on July 28, 2000. The repurchases are expected to be funded from available cash and short-term investments. We did not repurchase any shares during the three months ended April 1, 2007.

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Item 4. Submission of Matters to a Vote of Security Holders

     LSI held a Special Meeting of Stockholders on March 29, 2007. At that meeting, stockholders approved the issuance of shares of LSI common stock in connection with the merger of Atlas Acquisition Corp. with and into Agere Systems Inc. contemplated by the Agreement and Plan of Merger, dated as of December 3, 2006, among LSI, Atlas Acquisition Corp. and Agere.

The results of the voting were as follows.

	Votes For		Votes Against		Abstain
Issuance of shares of common stock in connection with the Agere merger		204,451,968		32,422,738		2,533,235

There were no broker non-votes.

Item 6. Exhibits

4.1	Specimen Common Stock certificate
4.2	Indenture for Agere’s 6.5% Convertible Subordinated Notes due 2009 (incorporated by reference to Exhibit 10.1 to Agere’s Quarterly Report on Form 10-Q, filed August 9, 2002)
4.3	Supplemental Indenture No. 1 to the Indenture for Agere’s 6.5% Convertible Subordinated Notes due 2009 (incorporated by reference to Exhibit 4.5 to Agere’s Current Report on Form 8-K, filed June 1, 2005)
4.4	Supplemental Indenture No. 2 to the Indenture for Agere’s 6.5% Convertible Subordinated Notes due 2009 (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed April 6, 2007)
10.1	Patent and Technology License Agreement (incorporated by reference to Exhibit 10.13 to Agere’s Registration Statement on Form S-1, File No. 333-51594)
10.2	Joint Venture Agreement with Chartered Semiconductor Manufacturing Ltd. (incorporated by reference to Exhibit 10.19 to Agere’s Registration Statement on Form S-1, File No. 333-51594)
10.3	Amendment to Joint Venture Agreement with Chartered Semiconductor Manufacturing Ltd. (incorporated by reference to Exhibit 10.1 to Agere’s Current Report on Form 8-K, filed September 23, 2004)
10.4	Agreement of Sale with AG Semi-Conductor Limited, Maxim/Dallas Direct, Inc. and Texas Instruments Incorporated (incorporated by reference to Exhibit 10 to Agere’s Current Report on Form 8-K, filed September 19, 2005)
10.5	Agere Systems Inc. Short Term Incentive Plan (incorporated by reference to Exhibit 10.9 to Agere’s Annual Report on Form 10-Q, filed December 1, 2006)
10.6	Agere Systems Inc. 2001 Long Term Incentive Plan (incorporated by reference to Exhibit 10.1 to Agere’s Quarterly Report on Form 10-Q, filed May 5, 2006)
10.7	Form of Agere Systems Inc. 2001 Long Term Incentive Plan Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.7 to Agere’s Registration Statement on Form S-1, File No. 333- 51594)
10.8	Form of Agere Performance-vested RSU Award Agreement — Total Stockholder Return (incorporated by reference to Exhibit 10.2 to Agere’s Current Report on Form 8-K/A, filed November 3, 2005)
10.9	Form of Agere Performance-vested RSU Award Agreement — Earnings per share (incorporated by reference to Exhibit 10.13 to Agere’s Annual Report on Form 10-K, filed December 1, 2006)
10.10	Form of Agere Systems Inc. 2001 Long Term Incentive Plan Nonstatutory Stock Option Agreement (incorporated by reference to Exhibit 10.8 to Agere’s Registration Statement on Form S-1, File No. 333- 51594)
10.11	Agere Systems Inc. Non-Employee Director Stock Plan (incorporated by reference to Exhibit 10.2 to Agere’s Quarterly Report on Form 10-Q, filed May 5, 2006)
10.12	Agere Systems Inc. Supplemental Pension Plan (incorporated by reference to Exhibit 10.10 to Agere’s Registration Statement on Form S-1, File No. 333-51594)
10.13	Agere Systems Inc. Officer Severance Policy (incorporated by reference to Exhibit 10.26 to Agere’s Annual Report on Form 10-K, filed December 12, 2002)
10.14	1996 Lucent Long Term Incentive Program For Agere Employees (incorporated by reference to Exhibit 10.28 to Agere’s Annual Report on Form 10-K, filed December 12, 2002)
10.15	1997 Lucent Long Term Incentive Plan For Agere Employees (incorporated by reference to Exhibit 10.29 to Agere’s Annual Report on Form 10-K, filed December 12, 2002)
10.16	1998 Global Stock Option Plan For Agere Employees (incorporated by reference to Exhibit 10.30 to Agere’s Annual Report on Form 10-K, filed December 12, 2002)†
10.17	Employment Agreement with Ruediger Stroh (incorporated by reference to Exhibit 10.27 to our Annual Report on Form 10-K, filed December 12, 2005)

27

10.18	Retention Agreement with Andrew Micallef
10.19	Retention Agreement with Jean Rankin
10.20	Retention Agreement with Denis Regimbal
10.21	Retention Agreement with Ruediger Stroh
10.22	Employment Agreement with Jeffrey Hoogenboom
10.23	Employment Agreement with Claudine Simson
10.24	Separation Agreement with Donald Esses
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350

Note: The Securities and Exchange Commission file number for Agere Systems is: 001-16397

28

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 thereunto duly authorized.

	LSI CORPORATION (Registrant)
Date: May 11, 2007	By	/s/ Bryon Look
		Bryon Look
		Executive Vice President & Chief Financial Officer

29

INDEX TO EXHIBITS

4.1	Specimen Common Stock certificate
4.2	Indenture for Agere’s 6.5% Convertible Subordinated Notes due 2009 (incorporated by reference to Exhibit 10.1 to Agere’s Quarterly Report on Form 10-Q, filed August 9, 2002)
4.3	Supplemental Indenture No. 1 to the Indenture for Agere’s 6.5% Convertible Subordinated Notes due 2009 (incorporated by reference to Exhibit 4.5 to Agere’s Current Report on Form 8-K, filed June 1, 2005)
4.4	Supplemental Indenture No. 2 to the Indenture for Agere’s 6.5% Convertible Subordinated Notes due 2009 (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed April 6, 2007)
10.1	Patent and Technology License Agreement (incorporated by reference to Exhibit 10.13 to Agere’s Registration Statement on Form S-1, File No. 333-51594)
10.2	Joint Venture Agreement with Chartered Semiconductor Manufacturing Ltd. (incorporated by reference to Exhibit 10.19 to Agere’s Registration Statement on Form S-1, File No. 333-51594)
10.3	Amendment to Joint Venture Agreement with Chartered Semiconductor Manufacturing Ltd. (incorporated by reference to Exhibit 10.1 to Agere’s Current Report on Form 8-K, filed September 23, 2004)
10.4	Agreement of Sale with AG Semi-Conductor Limited, Maxim/Dallas Direct, Inc. and Texas Instruments Incorporated (incorporated by reference to Exhibit 10 to Agere’s Current Report on Form 8-K, filed September 19, 2005)
10.5	Agere Systems Inc. Short Term Incentive Plan (incorporated by reference to Exhibit 10.9 to Agere’s Annual Report on Form 10-Q, filed December 1, 2006)
10.6	Agere Systems Inc. 2001 Long Term Incentive Plan (incorporated by reference to Exhibit 10.1 to Agere’s Quarterly Report on Form 10-Q, filed May 5, 2006)
10.7	Form of Agere Systems Inc. 2001 Long Term Incentive Plan Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.7 to Agere’s Registration Statement on Form S-1, File No. 333- 51594)
10.8	Form of Agere Performance-vested RSU Award Agreement — Total Stockholder Return (incorporated by reference to Exhibit 10.2 to Agere’s Current Report on Form 8-K/A, filed November 3, 2005)
10.9	Form of Agere Performance-vested RSU Award Agreement — Earnings per share (incorporated by reference to Exhibit 10.13 to Agere’s Annual Report on Form 10-K, filed December 1, 2006)
10.10	Form of Agere Systems Inc. 2001 Long Term Incentive Plan Nonstatutory Stock Option Agreement (incorporated by reference to Exhibit 10.8 to Agere’s Registration Statement on Form S-1, File No. 333- 51594)
10.11	Agere Systems Inc. Non-Employee Director Stock Plan (incorporated by reference to Exhibit 10.2 to Agere’s Quarterly Report on Form 10-Q, filed May 5, 2006)
10.12	Agere Systems Inc. Supplemental Pension Plan (incorporated by reference to Exhibit 10.10 to Agere’s Registration Statement on Form S-1, File No. 333-51594)
10.13	Agere Systems Inc. Officer Severance Policy (incorporated by reference to Exhibit 10.26 to Agere’s Annual Report on Form 10-K, filed December 12, 2002)
10.14	1996 Lucent Long Term Incentive Program For Agere Employees (incorporated by reference to Exhibit 10.28 to Agere’s Annual Report on Form 10-K, filed December 12, 2002)
10.15	1997 Lucent Long Term Incentive Plan For Agere Employees (incorporated by reference to Exhibit 10.29 to Agere’s Annual Report on Form 10-K, filed December 12, 2002)
10.16	1998 Global Stock Option Plan For Agere Employees (incorporated by reference to Exhibit 10.30 to Agere’s Annual Report on Form 10-K, filed December 12, 2002)†
10.17	Employment Agreement with Ruediger Stroh (incorporated by reference to Exhibit 10.27 to our Annual Report on Form 10-K, filed December 12, 2005)
10.18	Retention Agreement with Andrew Micallef
10.19	Retention Agreement with Jean Rankin
10.20	Retention Agreement with Denis Regimbal
10.21	Retention Agreement with Ruediger Stroh
10.22	Employment Agreement with Jeffrey Hoogenboom
10.23	Employment Agreement with Claudine Simson
10.24	Separation Agreement with Donald Esses
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350

Note: The Securities and Exchange Commission file number for Agere Systems is: 001-16397

EX-4.1

     

Exhibit 4.1

SPECIMEN

COMMON STOCK	COMMON STOCK
PAR VALUE $.01	THIS CERTIFICATE IS TRANSFERABLE IN CANTON, MA AND JERSEY CITY, NJ

Certificate
Number
ZQ 000300

LSI CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE Shares
**600620******
***600620*****
****600620****
*****600620***

THIS CERTIFIES THAT		CUSIP 502161 10 2
		SEE REVERSE FOR CERTAIN DEFINITIONS

IS THE OWNER OF

FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK, $.01 PAR VALUE, OF

LSI CORPORATION, transferable on the books of the Company by the holder hereof in person or by duly authorized attorney upon surrender of this certificate properly endorsed. This certificate is not valid until countersigned and registered by the Transfer Agent and Registrar.

Witness the facsimile signatures of its duly authorized officers.

President & Chief Executive Officer

Executive Vice President & Chief Financial Officer

DATED <<MONTH DAY YEAR>>

COUNTERSIGNED AND REGISTERED:
COMPUTERSHARE TRUST COMPANY, N.A.
TRANSFER AGENT AND REGISTRAR,

By
	AUTHORIZED SIGNATURE

LSI CORPORATION

THE COMPANY IS AUTHORIZED TO ISSUE TWO CLASSES OF SHARES, COMMON STOCK AND PREFERRED STOCK. THE SHARES OF PREFERRED STOCK MAY BE ISSUED FROM TIME TO TIME IN ONE OR MORE SERIES. THE BOARD OF DIRECTORS OF THE COMPANY HAS AUTHORITY TO FIX THE NUMBER OF SHARES AND DESIGNATION OF SHARES OF PREFERRED STOCK AND TO DETERMINE OR ALTER THE RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS GRANTED OR IMPOSED UPON ANY UNISSUED SHARES OF PREFERRED STOCK.

A STATEMENT OF THE RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS GRANTED TO OR IMPOSED UPON THE RESPECTIVE CLASSES OF SHARES OR SERIES OF SHARES AND UPON THE HOLDERS THEREOF SUBJECT TO LIMITATIONS PRESCRIBED BY LAW AND AS ESTABLISHED, FROM TIME TO TIME, BY THE CERTIFICATE OF INCORPORATION OF THE COMPANY, THE NUMBER OF SHARES CONSTITUTING EACH CLASS AND SERIES, AND THE DESIGNATIONS THEREOF, MAY BE OBTAINED BY THE HOLDER HEREOF UPON REQUEST AND WITHOUT CHARGE FROM THE TRANSFER AGENT OF THE COMPANY AT ITS OFFICES IN CANTON, MA OR JERSEY CITY, NJ.

THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN RIGHTS AS SET FORTH IN THE AMENDED AND RESTATED PREFERRED SHARES RIGHTS AGREEMENT BETWEEN LSI CORPORATION (FORMERLY KNOWN AS LSI LOGIC CORPORATION) AND COMPUTERSHARE TRUST COMPANY, N.A. (SUCCESSOR TO BANKBOSTON, N.A.), AS THE RIGHTS AGENT, DATED AS OF NOVEMBER 20, 1998 AND AS SUBSEQUENTLY AMENDED, (THE “RIGHTS AGREEMENT”), THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF LSI CORPORATION. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS WILL BE EVIDENCED BY SEPARATE CERTIFICATES AND WILL NO LONGER BE EVIDENCED BY THIS CERTIFICATE. LSI CORPORATION WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID.

The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:

TEN COM	–	as tenants in common	UNIF GIFT MIN ACT-               Custodian
TEN ENT	–	as tenants by the entireties	(CUST)               (Minor)
JT TEN	–	as joint tenants with right of survivorship	under Uniform Gifts to Minors Act
		and not as tenants in common	(STATE)
			UNIF TRF MIN ACT                Custodian (until age ____ ).
			(CUST)                                  (MINOR)
			under Uniform Transfers to Minors Act _____________.
			(STATE)
Additional abbreviations may also be used though not in the above list.

For Value Received,                      hereby sell, assign and transfer unto

PLEASE INSERT
SOCIAL SECURITY
OR OTHER IDENTIFYING
NUMBER OF ASSIGNEE

(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE, OF ASSIGNEE)

	shares
of the common stock represented by the within Certificate, and do hereby irrevocably constitute and appoint
	Attorney
to transfer the said stock on the books of the within-named Company with full power of substitution in the premises.

Dated:                                         20
	Signature:
	Signature:
	NOTE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.
SIGNATURE(S) GUARANTEED:
THE SIGNATURE(S) SHOULD BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION
(Banks, Stockbrokers, Savings and Loan Associations and Credit Unions) WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15.

EX-10.18

Exhibit 10.18

[LSI LOGIC LETTERHEAD]

March 2, 2007

Mr. Andy Micallef
Agere Systems Inc.
1110 American Parkway NE
Allentown, PA 18109

Dear Andy,

As you know, we have worked diligently over the past weeks to combine the rich heritage of our two companies and to create a new corporate structure and leadership team that will be put in place at the time of our official close. I am pleased to confirm that you will be part of the combined company’s top-level corporate structure and leadership team, and that, effective upon the closing of the Merger and LSI Board of Director’s approval, the terms and conditions set forth below will be applicable to your employment.

Assignment

Your position will be Executive Vice President, Worldwide Manufacturing Operations, and you will be an elected officer of LSI Logic Corporation reporting to the President and Chief Executive Officer. Your work location will remain in Allentown, Pennsylvania.

Compensation and Benefits

Your compensation, target bonus opportunity and benefits, except as set forth below under change in control policy, will remain the same. In addition, I am pleased to offer you the following additional compensation:

Retention Payment. You will be eligible to receive a retention bonus of $275,000 (less any applicable withholding) to be paid in three installments as follows:

• Merger Closing Date – $75,000

• Twelve Months following the Merger Closing Date – $100,000

• Twenty-Four Months following the Merger Closing Date – $100,000

Each retention payment will be made as soon as administratively practical following the applicable payment date and is subject to you remaining an employee in good standing at each payment date. If for any reason you are not an employee at the scheduled time of payment, then your right to receive the applicable retention payment shall lapse.

Additional LSI Equity. You will be eligible to participate in the company’s 1991 Equity Incentive Plan and 2003 Equity Incentive Plan and on or about the Merger Closing Date, you will receive a stock option grant of 100,000 shares vesting over four years, and you will be awarded 50,000 time-based restricted stock units vesting over two years, in each case in accordance with the terms of the applicable plan and the approval of the Compensation Committee of the LSI Board of Directors.

Mr. Andy Micallef
March 2, 2007	- 2 -

Change in Control Policy

In consideration of the additional compensation set forth above, we ask that you agree that the Change in Control portion of the Agere Systems Inc. Officer Severance Policy (“Agere Severance Policy”) no longer applies to your employment and that instead you will be covered by the LSI Logic Corporation Change In Control Severance Agreement in the form attached to this letter.

In addition, because you have been offered the same or comparable position with the new company following the closing of the Merger, you acknowledge that the severance provisions of the Agere Severance Policy are not triggered upon the closing of the Merger. Of course, the other provisions, including the termination provisions, of the Agere Severance Policy will continue in effect during the two year period following the Merger.

Employment At Will

Please be aware that this letter is not an employment contract and should not be construed or interpreted as creating an implied or expressed guarantee of continued employment. The employment relationship is by mutual consent. This means that you have the right to terminate your employment at any time and for any reason. Likewise, the company reserves the right to terminate your employment on the same basis.

Contingency of Offer

This terms and conditions set forth in this letter are contingent upon the closing of the Merger between our two companies and the approval of our Board of Directors.

Acceptance

Please acknowledge your written acceptance of this offer by signing and returning a copy to Jon Gibson, Vice President — Human Resources.

*      *      *

We look forward to the completion of the Merger between our two companies and are very excited about the contributions we believe you will make to the combined company.

Sincerely,

/s/ Abhi Talwalkar

Abhi Talwalkar
President and Chief Executive Officer

Acknowledged and Agreed:

A. Micallef/3-8-07

Andy Micallef

LSI LOGIC CORPORATION
CHANGE IN CONTROL SEVERANCE AGREEMENT

     This Change in Control Severance Agreement (the “Agreement”) is made and entered into effective as of                                                              (the “Effective Date”), by and between                                          (“Employee”) and LSI Logic Corporation, a Delaware corporation (the “Company”). Certain capitalized terms used in this Agreement are defined in Section 1 below.

R E C I T A L S

     A. It is expected that the Company from time to time will consider the possibility of a Change in Control. The Board of Directors of the Company (the “Board”) recognizes that such consideration can be a distraction to the Employee and can cause the Employee to consider alternative employment opportunities.

     B. The Board believes that it is in the best interests of the Company and its shareholders to provide the Employee with an incentive to continue his or her employment and to maximize the value of the Company upon a Change in Control for the benefit of its shareholders.

     C. In order to provide the Employee with enhanced financial security and sufficient encouragement to remain with the Company notwithstanding the possibility of a Change in Control, the Board believes that it is imperative to provide the Employee with certain severance benefits upon the Employee’s termination of employment following a Change in Control.

AGREEMENT

     In consideration of the mutual covenants herein contained and the continued employment of Employee by the Company, the parties agree as follows:

     1. Definition of Terms. The following terms referred to in this Agreement shall have the following meanings:

          (a) Cause. “Cause” shall mean (I) any act of personal dishonesty taken by the Employee in connection with his or her responsibilities as an employee with the intention or reasonable expectation that such may result in substantial personal enrichment of the Employee, (ii) Employee’s conviction of a felony which the Board reasonably believes has had or will have a material detrimental effect on the Company’s reputation or business, (iii) a willful act by the Employee which constitutes misconduct and is injurious to the Company, or (iv) continued willful violations by the Employee of the Employee’s obligations to the Company after there has been delivered to the Employee a written demand for performance from the Company which describes the basis for the Company’s belief that the Employee has not substantially performed his or her duties.

          (b) Change in Control. “Change in Control” shall mean the occurrence of any of the following events:

               (i) the consummation by the Company of a merger or consolidation of the Company with any other corporation, other than a merger or

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consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation;

               (ii) the approval by the shareholders of the Company, or if shareholder approval is not required, by the Board, of a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; or

               (iii) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becoming the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities.

               (iv) a change in the composition of the Board, as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who either (A) are directors of the Company as of the date hereof, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of those directors whose election or nomination was not in connection with any transactions described in subsections (i), (ii), or (iii) or in connection with an actual or threatened proxy contest relating to the election of directors of the Company.

          (c) Involuntary Termination. “Involuntary Termination” shall mean any of the following: (i) without the Employee’s express written consent, a significant reduction of the Employee’s duties, position or responsibilities relative to the Employee’s duties, position or responsibilities in effect immediately prior to such reduction, or the removal of the Employee from such position, duties and responsibilities, unless the Employee is provided with comparable duties, position and responsibilities; (ii) without the Employee’s express written consent, a substantial reduction, without good business reasons, of the facilities and perquisites (including office space and location) available to the Employee immediately prior to such reduction; (iii) without the Employee’s express written consent, a reduction by the Company of the Employee’s base salary as in effect immediately prior to such reduction; (iv) without the Employee’s express written consent, a material reduction by the Company in the kind or level of employee benefits to which the Employee is entitled immediately prior to such reduction with the result that the Employee’s overall benefits package is significantly reduced; (v) without the Employee’s express written consent, the relocation of the Employee to a facility or a location more than thirty-five (35) miles from his or her current location; (vi) any purported termination of the Employee by the Company which is not effected for Cause or for which the grounds relied upon are not valid; or (vii) the failure of the Company to obtain the assumption of this Agreement by any successors contemplated in Section 5 below.

          (d) Termination Date. “Termination Date” shall mean the effective date of any notice of termination delivered by one party to the other hereunder.

     2. Term of Agreement. This Agreement shall terminate on                     , unless within such term a Change in Control has occurred, in which case this Agreement

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shall terminate upon the date that all obligations of the parties hereto under this Agreement have been satisfied.

     3. At-Will Employment. The Company and the Employee acknowledge that the Employee’s employment is and shall continue to be at-will, as defined under applicable law. If the Employee’s employment terminates for any reason, the Employee shall not be entitled to any payments, benefits, damages, awards or compensation other than as provided by this Agreement, or as otherwise also may be established under the Company’s then existing employee benefit plans or policies at the time of termination.

     4. Severance Benefits.

          (a) Termination Following A Change in Control.

               (i) Involuntary Termination.

                    (A) Equity Acceleration. If the Employee’s employment with the Company terminates as a result of an Involuntary Termination at any time within twelve (12) months after a Change in Control, then each unexpired option to purchase shares of the Company’s equity securities, each share of Company restricted stock and each other unexpired equity-based compensation award that was granted to the Employee by the Company at least six (6) months prior to the Change in Control (collectively, the “Awards”), shall be automatically accelerated and shall be fully vested and exercisable as at the date of Involuntary Termination.

                    (B) Severance Benefits. If the Employee’s employment with the Company terminates as a result of an Involuntary Termination at any time within twelve (12) months after a Change in Control, the Employee, within seven (7) days of such Involuntary Termination, shall be paid a lump sum that shall be equal to the sum of: (i) twenty-four (24) months of the Employee’s base salary (as in effect immediately prior to the Change in Control), plus (ii) 200% of the Employee’s target bonus for the year in which the Change in Control occurs. In addition, the Company shall provide the Employee with health, dental and vision coverage benefits during the period of twenty-four (24) months following the date of Involuntary Termination, provided, however, that the Employee elects continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), within the time period prescribed pursuant to COBRA and life insurance benefits during the period of eighteen (18) months following the date of Involuntary Termination, at the same level as each of such benefits were in effect for the Employee on the day immediately preceding the day of the Employee’s termination of employment.

               (ii) Other Termination. If the Employee’s employment with the Company terminates other than as a result of an Involuntary Termination at any time within twelve (12) months after a Change in Control, then the Employee shall not be entitled to receive severance or other benefits hereunder, but may be eligible for those benefits (if any) as may then be established under the Company’s then existing severance and benefits plans and policies at the Termination Date.

          (b) Accrued Wages and Vacation; Expenses. Without regard to the reason for, or the timing of, Employee’s termination of employment: (i) the Company shall pay the Employee any unpaid base salary due for periods prior to the Termination Date;

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(ii) the Company shall pay the Employee all of the Employee’s accrued and unused vacation through the Termination Date; and (iii) following submission of proper expense reports by the Employee, the Company shall reimburse the Employee for all expenses reasonably and necessarily incurred by the Employee in connection with the business of the Company prior to the Termination Date. These payments shall be made promptly upon termination and within the period of time mandated by law.

     5. Successors.

          (a) Company’s Successors. Any successor to the Company (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets shall assume the Company’s obligations under this Agreement and agree expressly to perform the Company’s obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business and/or assets which executes and delivers the assumption agreement described in this subsection (a) or which becomes bound by the terms of this Agreement by operation of law.

          (b) Employee’s Successors. Without the written consent of the Company, Employee shall not assign or transfer this Agreement or any right or obligation under this Agreement to any other person or entity. Notwithstanding the foregoing, the terms of this Agreement and all rights of Employee hereunder shall inure to the benefit of, and be enforceable by, Employee’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

     6. Limitation on Payments.

          (a) In the event that the severance and other benefits provided for in this Agreement or otherwise payable to the Employee (i) constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) and (ii) but for this Section 6 would be subject to the excise tax imposed by Section 4999 of the Code, then at the Employee’s election, the Employee’s severance benefits under Section 4 shall be payable either (i) in full, or (ii) as to such lesser amount selected by Employee that, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results in the receipt by the Employee on an after-tax basis, of the greatest amount of severance benefits under this Agreement, notwithstanding that all or some portion of such severance benefits may be taxable under Section 4999 of the Code.

          (b) If the Employee elects (pursuant to Section 6(a)) a reduction in the payments and benefits that would otherwise be paid or provided to the Employee under the terms of this Agreement, the Employee shall be entitled to select the particular payments or benefits that will be reduced and the manner and method of any such reduction of such payments or benefits (including but not limited to which equity-based awards that would vest under Sections 4(a)(i)(A)), subject to reasonable limitations (including, for example, express provisions under the Company’s benefit plans). Within thirty (30) days after the amount of any elected reduction in payments and benefits is finally determined in accordance with the provisions of this Section 6(b), the Employee shall notify the Company in writing regarding the payments or benefits that are to be reduced. If no notification is

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given by the Employee, no amounts shall be reduced and the Employee’s election under Section 6(a) shall be of no effect. If, as a result of any reduction elected under Section 6(a), amounts previously paid to the Employee exceed the amount to which the Employee is entitled, the Employee will promptly return the excess amount to the Company.

          (c) Limited Tax Gross-Up. In the event that the Employee’s “parachute payments” (as described in Section 6(a) and after applying any reduction elected under such Section) are subject to the excise tax imposed by Section 4999 of the Code, then the Company shall make a supplemental payment to the Employee in an amount that equals the excise tax on the parachute payments, plus any additional excise tax and federal, state and local and employment income taxes, on such supplemental payment. However, under no circumstances shall the total supplemental payment described in this Section 6(c) exceed the “Maximum Payment” described in the following sentence. For purposes of this Agreement, the Maximum Payment shall equal the sum of the Employee’s (i) annual base salary immediately prior to the Change in Control, and (ii) target bonus for the year in which the Change in Control occurs.

          (d) Unless the Company and the Employee otherwise agree in writing, the Company’s independent public accountants (the “Accountants”), shall make any calculations necessary or appropriate to implement this Section 6. For purposes of making such calculations, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Accountants shall assume that the Employee pays federal, state, and local income taxes at the highest marginal rates in effect on the date of termination (unless the Employee clearly does not do so) and the calculation of federal income tax shall take into account the deduction of any state and local income taxes. The Company and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6. The Company shall bear all costs the Accountants may reasonably incur in connection with any such calculations.

     7. Notices.

          (a) General. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of the Employee, mailed notices shall be addressed to him or her at the home address which he or she most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary.

          (b) Notice of Termination. Any termination by the Company for Cause or by the Employee as a result of a voluntary resignation or an Involuntary Termination shall be communicated by a notice of termination to the other party hereto given in accordance with this Section. Such notice shall indicate the specific termination provision in this Agreement relied upon, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated, and shall specify the Termination Date (which shall be not more than 30 days after the giving of such notice). The failure by the Employee to include in the notice any fact or circumstance which contributes to a showing of Involuntary Termination shall not waive any right of the

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Employee hereunder or preclude the Employee from asserting such fact or circumstance in enforcing his rights hereunder.

     8. Execution of Release Agreement upon Termination. As a condition of entering into this Agreement and receiving the benefits under Section 4, the Employee agrees to execute and not revoke a release of claims agreement substantially in the form attached hereto as Exhibit A upon the termination of his or her employment with the Company.

     9. Arbitration.

          (a) Any dispute or controversy arising out of, relating to, or in connection with this Agreement, or the interpretation, validity, construction, performance, breach, or termination thereof, shall be settled by binding arbitration to be held in Santa Clara County, California, in accordance with the National Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association (the “Rules”). The arbitrator may grant injunctions or other relief in such dispute or controversy. The decision of the arbitrator shall be final, conclusive and binding on the parties to the arbitration. Judgment may be entered on the arbitrator’s decision in any court having jurisdiction.

          (b) The arbitrator(s) shall apply California law to the merits of any dispute or claim, without reference to conflicts of law rules. The arbitration proceedings shall be governed by federal arbitration law and by the Rules, without reference to state arbitration law. Employee hereby consents to the personal jurisdiction of the state and federal courts located in California for any action or proceeding arising from or relating to this Agreement or relating to any arbitration in which the parties are participants.

          (c) The Company and Employee shall each pay one-half of the costs and expenses of such arbitration and each shall separately pay its counsel fees and expenses.

          (d) Employee understands that nothing in this Section modifies Employee’s at-will employment status. Either Employee or the Company can terminate the employment relationship at any time, with or without Cause.

          (e) EMPLOYEE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES ARBITRATION. EMPLOYEE UNDERSTANDS THAT SUBMITTING ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION, CONSTITUTES A WAIVER OF EMPLOYEE’S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, THE FOLLOWING CLAIMS:

               (i) ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH OF CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL MISREPRESENTATION; NEGLIGENT OR

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INTENTIONAL INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION.

               (ii) ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS ACT, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, AND LABOR CODE SECTION 201, et seq.;

               (iii) ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND REGULATIONS RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.

     10. Miscellaneous Provisions.

          (a) No Duty to Mitigate. The Employee shall not be required to mitigate the amount of any payment contemplated by this Agreement, nor shall any such payment be reduced by any earnings that the Employee may receive from any other source.

          (b) Waiver. No provision of this Agreement may be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Employee and by an authorized officer of the Company (other than the Employee). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

          (c) Integration. This Agreement and the stock option agreements representing the Options represent the entire agreement and understanding between the parties as to the subject matter herein and supersede all prior or contemporaneous agreements, whether written or oral.

          (d) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the internal substantive laws, but not the conflicts of law rules, of the State of California.

          (e) Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

          (f) Employment Taxes. All payments made pursuant to this Agreement shall be subject to withholding of applicable income and employment taxes.

          (g) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

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     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written.

EMPLOYEE	LSI LOGIC CORPORATION
	By:
	Title:

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EXHIBIT A

FORM RELEASE OF CLAIMS AGREEMENT

This Release of Claims Agreement (this “Agreement”) is made and entered into by and between LSI Logic Corporation (the “Company”) and                                          (the “Employee”).

WHEREAS, the Employee was employed by the Company; and

WHEREAS, the Company (or the Company’s predecessor) and the Employee have entered into a Change in Control Severance Agreement effective as of DATE (the “Severance Agreement”).

NOW THEREFORE, in consideration of the mutual promises made herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Employee (collectively referred to as the “Parties”) desiring to be legally bound do hereby agree as follows:

     1. Termination. The Employee’s employment with the Company terminated on                     , 20___.

     2. Consideration. Subject to and in consideration of the Employee’s release of claims as provided herein, the Company has agreed to pay the Employee certain benefits and the Employee has agreed to provide certain benefits to the Company, both as set forth in the Severance Agreement.

     3. Payment of Salary. The Employee acknowledges and represents that the Company has paid all salary, wages, bonuses, accrued vacation, commissions and any and all other benefits due to the Employee.

     4. Release of Claims. The Employee agrees that the foregoing consideration represents settlement in full of all outstanding obligations owed to the Employee by the Company. The Employee, on his own behalf and his respective heirs, family members, executors and assigns, hereby fully and forever releases the Company and its past, present and future officers, agents, directors, employees, investors, shareholders, administrators, affiliates, divisions, subsidiaries, parents, predecessor and successor corporations, and assigns, from, and agrees not to sue or otherwise institute or cause to be instituted any legal or administrative proceedings concerning any claim, duty, obligation or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that he may possess arising from any omissions, acts or facts that have occurred up until and including the Effective Date (as defined below) of this Agreement including, without limitation:

          (a) any and all claims relating to or arising from the Employee’s employment relationship with the Company and the termination of that relationship;

          (b) any and all claims relating to, or arising from, the Employee’s right to purchase, or actual purchase of shares of stock of the Company, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law and securities fraud under any state or federal law;

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          (c) any and all claims for wrongful discharge of employment, termination in violation of public policy, discrimination, breach of contract (both express and implied), breach of a covenant of good faith and fair dealing (both express and implied), promissory estoppel, negligent or intentional infliction of emotional distress, negligent or intentional misrepresentation, negligent or intentional interference with contract or prospective economic advantage, unfair business practices, defamation, libel, slander, negligence, personal injury, assault, battery, invasion of privacy, false imprisonment and conversion;

          (d) any and all claims for violation of any federal, state or municipal statute, including, but not limited to, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, the Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974, The Worker Adjustment and Retraining Notification Act, the California Fair Employment and Housing Act, and Labor Code Section 201, et seq. and Section 970, et seq. and all amendments to each such Act as well as the regulations issued thereunder;

          (e) any and all claims for violation of the federal or any state constitution;

          (f) any and all claims arising out of any other laws and regulations relating to employment or employment discrimination; and

          (g) any and all claims for attorneys’ fees and costs.

          The Employee agrees that the release set forth in this Section 4 shall be and remain in effect in all respects as a complete general release as to the matters released. This release does not extend to any obligations incurred under this Agreement.

     1. Acknowledgment of Waiver of Claims under ADEA. The Employee acknowledges that he is waiving and releasing any rights he may have under the Age Discrimination in Employment Act of 1967 (“ADEA”) and that this waiver and release is knowing and voluntary. The Employee and the Company agree that this waiver and release does not apply to any rights or claims that may arise under the ADEA after the Effective Date of this Agreement. The Employee acknowledges that the consideration given for this waiver and release agreement is in addition to anything of value to which the Employee was already entitled. The Employee further acknowledges that he has been advised by this writing that (a) he should consult with an attorney prior to executing this Agreement; (b) he has at least twenty-one (21) days within which to consider this Agreement; (c) he has seven (7) days following the execution of this Agreement by the Parties to revoke the Agreement; and (d) this Agreement shall not be effective until the revocation period has expired. Any revocation should be in writing and delivered to the Company by the close of business on the seventh (7^th) day from the date that the Employee signs this Agreement.

     2. Civil Code Section 1542. The Employee represents that he is not aware of any claims against the Company other than the claims that are released by this Agreement. The Employee acknowledges that he has been advised by legal counsel and is familiar with the provisions of California Civil Code Section 1542, which provides as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT

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THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

          The Employee, being aware of said code section, agrees to expressly waive any rights he may have thereunder, as well as under any other statute or common law principles of similar effect.

     3. No Pending or Future Lawsuits. The Employee represents that he has no lawsuits, claims or actions pending in his name, or on behalf of any other person or entity, against the Company or any other person or entity referred to herein. The Employee also represents that he does not intend to bring any claims on his own behalf or on behalf of any other person or entity against the Company or any other person or entity referred to herein.

     4. Confidentiality. The Employee agrees to use his best efforts to maintain in confidence the existence of this Agreement, the contents and terms of this Agreement, and the consideration for this Agreement (hereinafter collectively referred to as “Release Information”). The Employee agrees to take every reasonable precaution to prevent disclosure of any Release Information to third parties and agrees that there will be no publicity, directly or indirectly, concerning any Release Information. The Employee agrees to take every precaution to disclose Release Information only to those attorneys, accountants, governmental entities and family members who have a reasonable need to know of such Release Information.

     5. No Cooperation. The Employee agrees he will not act in any manner that might damage the business of the Company. The Employee agrees that he will not counsel or assist any attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges or complaints by any third party against the Company and/or any officer, director, employee, agent, representative, shareholder or attorney of the Company, unless under a subpoena or other court order to do so.

     6. Costs. The Parties shall each bear their own costs, expert fees, attorneys’ fees and other fees incurred in connection with this Agreement.

     7. Authority. The Company represents and warrants that the undersigned has the authority to act on behalf of the Company and to bind the Company and all who may claim through it to the terms and conditions of this Agreement. The Employee represents and warrants that he has the capacity to act on his own behalf and on behalf of all who might claim through him to bind them to the terms and conditions of this Agreement.

     8. No Representations. The Employee represents that he has had the opportunity to consult with an attorney, and has carefully read and understands the scope and effect of the provisions of this Agreement. Neither party has relied upon any representations or statements made by the other party hereto which are not specifically set forth in this Agreement.

     9. Severability. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision.

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     10. Entire Agreement. This Agreement and the Severance Agreement and the agreements and plans referenced therein represent the entire agreement and understanding between the Company and the Employee concerning the Employee’s separation from the Company, and supersede and replace any and all prior agreements and understandings concerning the Employee’s relationship with the Company and his compensation by the Company. This Agreement may only be amended in writing signed by the Employee and an executive officer of the Company.

     11. Governing Law. This Agreement shall be governed by the internal substantive laws, but not the choice of law rules, of the State of California.

     12. Effective Date. This Agreement is effective eight (8) days after it has been signed by the Parties (the “Effective Date”).

     13. Counterparts. This Agreement may be executed in counterparts, and each counterpart shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned.

     14. Voluntary Execution of Agreement. This Agreement is executed voluntarily and without any duress or undue influence on the part or behalf of the Parties hereto, with the full intent of releasing all claims. The Parties acknowledge that:

          (a) They have read this Agreement;

          (b) They have been represented in the preparation, negotiation and execution of this Agreement by legal counsel of their own choice or that they have voluntarily declined to seek such counsel;

          (c) They understand the terms and consequences of this Agreement and of the releases it contains; and

          (d) They are fully aware of the legal and binding effect of this Agreement.

[REMAINDER OF PAGE INTENTIONALLY BLANK]

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IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below.

LSI LOGIC CORPORATION

By:

Title:

Date:

EMPLOYEE

NAME

Date:

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EX-10.19

Exhibit 10.19

[LSI LOGIC LETTERHEAD]

March 2, 2007

Ms. Jean Rankin
Agere Systems Inc.
1110 American Parkway NE
Allentown, PA 18109

Dear Jean,

As you know, we have worked diligently over the past weeks to combine the rich heritage of our two companies and to create a new corporate structure and leadership team that will be put in place at the time of our official close. I am pleased to confirm that you will be part of the combined company’s top-level corporate structure and leadership team, and that, effective upon the closing of the Merger and LSI Board of Director’s approval, the terms and conditions set forth below will be applicable to your employment.

Assignment

Your position will be Executive Vice President, General Counsel and Secretary, and you will be an elected officer of LSI Logic Corporation reporting to the President and Chief Executive Officer. Your work location will remain in Allentown, Pennsylvania.

Compensation and Benefits

Your compensation, target bonus opportunity and benefits, except as set forth below under change in control policy, will remain the same. In addition, I am pleased to offer you the following additional compensation:

Retention Payment. You will be eligible to receive a retention bonus of $275,000 (less any applicable withholding) to be paid in three installments as follows:

• Merger Closing Date – $75,000

• Twelve Months following the Merger Closing Date – $100,000

• Twenty-Four Months following the Merger Closing Date – $100,000

Each retention payment will be made as soon as administratively practical following the applicable payment date and is subject to you remaining an employee in good standing at each payment date. If for any reason you are not an employee at the scheduled time of payment, then your right to receive the applicable retention payment shall lapse.

Additional LSI Equity. You will be eligible to participate in the company’s 1991 Equity Incentive Plan and 2003 Equity Incentive Plan, and on or about the Merger Closing Date, you will receive a stock option grant of 100,000 shares vesting over four years, and you will be awarded 50,000 time-based restricted stock units vesting over two years, in each case in accordance with the terms of the applicable plan and the approval of the Compensation Committee of the LSI Board of Directors.

Ms. Jean Rankin
March 2, 2007	- 2 -

Change in Control Policy

In consideration of the additional compensation set forth above, we ask that you agree that the Change in Control portion of the Agere Systems Inc. Officer Severance Policy (“Agere Severance Policy”) no longer applies to your employment and that instead you will be covered by the LSI Logic Corporation Change In Control Severance Agreement in the form attached to this letter.

Of course, the other provisions, including the termination provisions, of the Agere Severance Policy will continue in effect during the two year period following the Merger. In addition, as we discussed, you will have the right to opt to receive all of the benefits set forth in the Agere Severance Policy at any time during the one year period following the Merger should you elect to terminate your employment during that time period. If you elect to terminate your employment, then you will forfeit the second and third installments of the Retention Payment specified above.

Employment At Will

Please be aware that this letter is not an employment contract and should not be construed or interpreted as creating an implied or expressed guarantee of continued employment. The employment relationship is by mutual consent. This means that you have the right to terminate your employment at any time and for any reason. Likewise, the company reserves the right to terminate your employment on the same basis.

Contingency of Offer

This terms and conditions set forth in this letter are contingent upon the closing of the Merger between our two companies and the approval of our Board of Directors.

Acceptance

Please acknowledge your written acceptance of this offer by signing and returning a copy to Jon Gibson, Vice President — Human Resources.

*      *      *

We look forward to the completion of the Merger between our two companies and are very excited about the contributions we believe you will make to the combined company.

Sincerely,

/s/ Abhi Talwalkar

Abhi Talwalkar
President and Chief Executive Officer

Acknowledged and Agreed:

/s/ Jean F. Rankin

Jean Rankin

LSI LOGIC CORPORATION
CHANGE IN CONTROL SEVERANCE AGREEMENT

     This Change in Control Severance Agreement (the “Agreement”) is made and entered into effective as of                                                              (the “Effective Date”), by and between                                          (“Employee”) and LSI Logic Corporation, a Delaware corporation (the “Company”). Certain capitalized terms used in this Agreement are defined in Section 1 below.

R E C I T A L S

     A. It is expected that the Company from time to time will consider the possibility of a Change in Control. The Board of Directors of the Company (the “Board”) recognizes that such consideration can be a distraction to the Employee and can cause the Employee to consider alternative employment opportunities.

     B. The Board believes that it is in the best interests of the Company and its shareholders to provide the Employee with an incentive to continue his or her employment and to maximize the value of the Company upon a Change in Control for the benefit of its shareholders.

     C. In order to provide the Employee with enhanced financial security and sufficient encouragement to remain with the Company notwithstanding the possibility of a Change in Control, the Board believes that it is imperative to provide the Employee with certain severance benefits upon the Employee’s termination of employment following a Change in Control.

AGREEMENT

     In consideration of the mutual covenants herein contained and the continued employment of Employee by the Company, the parties agree as follows:

     1. Definition of Terms. The following terms referred to in this Agreement shall have the following meanings:

          (a) Cause. “Cause” shall mean (I) any act of personal dishonesty taken by the Employee in connection with his or her responsibilities as an employee with the intention or reasonable expectation that such may result in substantial personal enrichment of the Employee, (ii) Employee’s conviction of a felony which the Board reasonably believes has had or will have a material detrimental effect on the Company’s reputation or business, (iii) a willful act by the Employee which constitutes misconduct and is injurious to the Company, or (iv) continued willful violations by the Employee of the Employee’s obligations to the Company after there has been delivered to the Employee a written demand for performance from the Company which describes the basis for the Company’s belief that the Employee has not substantially performed his or her duties.

          (b) Change in Control. “Change in Control” shall mean the occurrence of any of the following events:

               (i) the consummation by the Company of a merger or consolidation of the Company with any other corporation, other than a merger or

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consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation;

               (ii) the approval by the shareholders of the Company, or if shareholder approval is not required, by the Board, of a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; or

               (iii) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becoming the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities.

               (iv) a change in the composition of the Board, as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who either (A) are directors of the Company as of the date hereof, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of those directors whose election or nomination was not in connection with any transactions described in subsections (i), (ii), or (iii) or in connection with an actual or threatened proxy contest relating to the election of directors of the Company.

          (c) Involuntary Termination. “Involuntary Termination” shall mean any of the following: (i) without the Employee’s express written consent, a significant reduction of the Employee’s duties, position or responsibilities relative to the Employee’s duties, position or responsibilities in effect immediately prior to such reduction, or the removal of the Employee from such position, duties and responsibilities, unless the Employee is provided with comparable duties, position and responsibilities; (ii) without the Employee’s express written consent, a substantial reduction, without good business reasons, of the facilities and perquisites (including office space and location) available to the Employee immediately prior to such reduction; (iii) without the Employee’s express written consent, a reduction by the Company of the Employee’s base salary as in effect immediately prior to such reduction; (iv) without the Employee’s express written consent, a material reduction by the Company in the kind or level of employee benefits to which the Employee is entitled immediately prior to such reduction with the result that the Employee’s overall benefits package is significantly reduced; (v) without the Employee’s express written consent, the relocation of the Employee to a facility or a location more than thirty-five (35) miles from his or her current location; (vi) any purported termination of the Employee by the Company which is not effected for Cause or for which the grounds relied upon are not valid; or (vii) the failure of the Company to obtain the assumption of this Agreement by any successors contemplated in Section 5 below.

          (d) Termination Date. “Termination Date” shall mean the effective date of any notice of termination delivered by one party to the other hereunder.

     2. Term of Agreement. This Agreement shall terminate on                                         , unless within such term a Change in Control has occurred, in which case this Agreement

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shall terminate upon the date that all obligations of the parties hereto under this Agreement have been satisfied.

     3. At-Will Employment. The Company and the Employee acknowledge that the Employee’s employment is and shall continue to be at-will, as defined under applicable law. If the Employee’s employment terminates for any reason, the Employee shall not be entitled to any payments, benefits, damages, awards or compensation other than as provided by this Agreement, or as otherwise also may be established under the Company’s then existing employee benefit plans or policies at the time of termination.

     4. Severance Benefits.

          (a) Termination Following A Change in Control.

               (i) Involuntary Termination.

                    (A) Equity Acceleration. If the Employee’s employment with the Company terminates as a result of an Involuntary Termination at any time within twelve (12) months after a Change in Control, then each unexpired option to purchase shares of the Company’s equity securities, each share of Company restricted stock and each other unexpired equity-based compensation award that was granted to the Employee by the Company at least six (6) months prior to the Change in Control (collectively, the “Awards”), shall be automatically accelerated and shall be fully vested and exercisable as at the date of Involuntary Termination.

                    (B) Severance Benefits. If the Employee’s employment with the Company terminates as a result of an Involuntary Termination at any time within twelve (12) months after a Change in Control, the Employee, within seven (7) days of such Involuntary Termination, shall be paid a lump sum that shall be equal to the sum of: (i) twenty-four (24) months of the Employee’s base salary (as in effect immediately prior to the Change in Control), plus (ii) 200% of the Employee’s target bonus for the year in which the Change in Control occurs. In addition, the Company shall provide the Employee with health, dental and vision coverage benefits during the period of twenty-four (24) months following the date of Involuntary Termination, provided, however, that the Employee elects continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), within the time period prescribed pursuant to COBRA and life insurance benefits during the period of eighteen (18) months following the date of Involuntary Termination, at the same level as each of such benefits were in effect for the Employee on the day immediately preceding the day of the Employee’s termination of employment.

               (ii) Other Termination. If the Employee’s employment with the Company terminates other than as a result of an Involuntary Termination at any time within twelve (12) months after a Change in Control, then the Employee shall not be entitled to receive severance or other benefits hereunder, but may be eligible for those benefits (if any) as may then be established under the Company’s then existing severance and benefits plans and policies at the Termination Date.

          (b) Accrued Wages and Vacation; Expenses. Without regard to the reason for, or the timing of, Employee’s termination of employment: (i) the Company shall pay the Employee any unpaid base salary due for periods prior to the Termination Date;

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(ii) the Company shall pay the Employee all of the Employee’s accrued and unused vacation through the Termination Date; and (iii) following submission of proper expense reports by the Employee, the Company shall reimburse the Employee for all expenses reasonably and necessarily incurred by the Employee in connection with the business of the Company prior to the Termination Date. These payments shall be made promptly upon termination and within the period of time mandated by law.

     5. Successors.

          (a) Company’s Successors. Any successor to the Company (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets shall assume the Company’s obligations under this Agreement and agree expressly to perform the Company’s obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business and/or assets which executes and delivers the assumption agreement described in this subsection (a) or which becomes bound by the terms of this Agreement by operation of law.

          (b) Employee’s Successors. Without the written consent of the Company, Employee shall not assign or transfer this Agreement or any right or obligation under this Agreement to any other person or entity. Notwithstanding the foregoing, the terms of this Agreement and all rights of Employee hereunder shall inure to the benefit of, and be enforceable by, Employee’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

     6. Limitation on Payments.

          (a) In the event that the severance and other benefits provided for in this Agreement or otherwise payable to the Employee (i) constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) and (ii) but for this Section 6 would be subject to the excise tax imposed by Section 4999 of the Code, then at the Employee’s election, the Employee’s severance benefits under Section 4 shall be payable either (i) in full, or (ii) as to such lesser amount selected by Employee that, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results in the receipt by the Employee on an after-tax basis, of the greatest amount of severance benefits under this Agreement, notwithstanding that all or some portion of such severance benefits may be taxable under Section 4999 of the Code.

          (b) If the Employee elects (pursuant to Section 6(a)) a reduction in the payments and benefits that would otherwise be paid or provided to the Employee under the terms of this Agreement, the Employee shall be entitled to select the particular payments or benefits that will be reduced and the manner and method of any such reduction of such payments or benefits (including but not limited to which equity-based awards that would vest under Sections 4(a)(i)(A)), subject to reasonable limitations (including, for example, express provisions under the Company’s benefit plans). Within thirty (30) days after the amount of any elected reduction in payments and benefits is finally determined in accordance with the provisions of this Section 6(b), the Employee shall notify the Company in writing regarding the payments or benefits that are to be reduced. If no notification is

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given by the Employee, no amounts shall be reduced and the Employee’s election under Section 6(a) shall be of no effect. If, as a result of any reduction elected under Section 6(a), amounts previously paid to the Employee exceed the amount to which the Employee is entitled, the Employee will promptly return the excess amount to the Company.

          (c) Limited Tax Gross-Up. In the event that the Employee’s “parachute payments” (as described in Section 6(a) and after applying any reduction elected under such Section) are subject to the excise tax imposed by Section 4999 of the Code, then the Company shall make a supplemental payment to the Employee in an amount that equals the excise tax on the parachute payments, plus any additional excise tax and federal, state and local and employment income taxes, on such supplemental payment. However, under no circumstances shall the total supplemental payment described in this Section 6(c) exceed the “Maximum Payment” described in the following sentence. For purposes of this Agreement, the Maximum Payment shall equal the sum of the Employee’s (i) annual base salary immediately prior to the Change in Control, and (ii) target bonus for the year in which the Change in Control occurs.

          (d) Unless the Company and the Employee otherwise agree in writing, the Company’s independent public accountants (the “Accountants”), shall make any calculations necessary or appropriate to implement this Section 6. For purposes of making such calculations, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Accountants shall assume that the Employee pays federal, state, and local income taxes at the highest marginal rates in effect on the date of termination (unless the Employee clearly does not do so) and the calculation of federal income tax shall take into account the deduction of any state and local income taxes. The Company and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6. The Company shall bear all costs the Accountants may reasonably incur in connection with any such calculations.

     7. Notices.

          (a) General. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of the Employee, mailed notices shall be addressed to him or her at the home address which he or she most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary.

          (b) Notice of Termination. Any termination by the Company for Cause or by the Employee as a result of a voluntary resignation or an Involuntary Termination shall be communicated by a notice of termination to the other party hereto given in accordance with this Section. Such notice shall indicate the specific termination provision in this Agreement relied upon, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated, and shall specify the Termination Date (which shall be not more than 30 days after the giving of such notice). The failure by the Employee to include in the notice any fact or circumstance which contributes to a showing of Involuntary Termination shall not waive any right of the

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Employee hereunder or preclude the Employee from asserting such fact or circumstance in enforcing his rights hereunder.

     8. Execution of Release Agreement upon Termination. As a condition of entering into this Agreement and receiving the benefits under Section 4, the Employee agrees to execute and not revoke a release of claims agreement substantially in the form attached hereto as Exhibit A upon the termination of his or her employment with the Company.

     9. Arbitration.

          (a) Any dispute or controversy arising out of, relating to, or in connection with this Agreement, or the interpretation, validity, construction, performance, breach, or termination thereof, shall be settled by binding arbitration to be held in Santa Clara County, California, in accordance with the National Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association (the “Rules”). The arbitrator may grant injunctions or other relief in such dispute or controversy. The decision of the arbitrator shall be final, conclusive and binding on the parties to the arbitration. Judgment may be entered on the arbitrator’s decision in any court having jurisdiction.

          (b) The arbitrator(s) shall apply California law to the merits of any dispute or claim, without reference to conflicts of law rules. The arbitration proceedings shall be governed by federal arbitration law and by the Rules, without reference to state arbitration law. Employee hereby consents to the personal jurisdiction of the state and federal courts located in California for any action or proceeding arising from or relating to this Agreement or relating to any arbitration in which the parties are participants.

          (c) The Company and Employee shall each pay one-half of the costs and expenses of such arbitration and each shall separately pay its counsel fees and expenses.

          (d) Employee understands that nothing in this Section modifies Employee’s at-will employment status. Either Employee or the Company can terminate the employment relationship at any time, with or without Cause.

          (e) EMPLOYEE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES ARBITRATION. EMPLOYEE UNDERSTANDS THAT SUBMITTING ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION, CONSTITUTES A WAIVER OF EMPLOYEE’S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, THE FOLLOWING CLAIMS:

               (i) ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH OF CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL MISREPRESENTATION; NEGLIGENT OR

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INTENTIONAL INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION.

               (ii) ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS ACT, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, AND LABOR CODE SECTION 201, et seq.;

               (iii) ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND REGULATIONS RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.

     10. Miscellaneous Provisions.

          (a) No Duty to Mitigate. The Employee shall not be required to mitigate the amount of any payment contemplated by this Agreement, nor shall any such payment be reduced by any earnings that the Employee may receive from any other source.

          (b) Waiver. No provision of this Agreement may be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Employee and by an authorized officer of the Company (other than the Employee). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

          (c) Integration. This Agreement and the stock option agreements representing the Options represent the entire agreement and understanding between the parties as to the subject matter herein and supersede all prior or contemporaneous agreements, whether written or oral.

          (d) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the internal substantive laws, but not the conflicts of law rules, of the State of California.

          (e) Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

          (f) Employment Taxes. All payments made pursuant to this Agreement shall be subject to withholding of applicable income and employment taxes.

          (g) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

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     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written.

EMPLOYEE	LSI LOGIC CORPORATION
	By:
	Title:

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EXHIBIT A

FORM RELEASE OF CLAIMS AGREEMENT

This Release of Claims Agreement (this “Agreement”) is made and entered into by and between LSI Logic Corporation (the “Company”) and                                          (the “Employee”).

WHEREAS, the Employee was employed by the Company; and

WHEREAS, the Company (or the Company’s predecessor) and the Employee have entered into a Change in Control Severance Agreement effective as of DATE (the “Severance Agreement”).

NOW THEREFORE, in consideration of the mutual promises made herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Employee (collectively referred to as the “Parties”) desiring to be legally bound do hereby agree as follows:

     1. Termination. The Employee’s employment with the Company terminated on                     , 20___.

     2. Consideration. Subject to and in consideration of the Employee’s release of claims as provided herein, the Company has agreed to pay the Employee certain benefits and the Employee has agreed to provide certain benefits to the Company, both as set forth in the Severance Agreement.

     3. Payment of Salary. The Employee acknowledges and represents that the Company has paid all salary, wages, bonuses, accrued vacation, commissions and any and all other benefits due to the Employee.

     4. Release of Claims. The Employee agrees that the foregoing consideration represents settlement in full of all outstanding obligations owed to the Employee by the Company. The Employee, on his own behalf and his respective heirs, family members, executors and assigns, hereby fully and forever releases the Company and its past, present and future officers, agents, directors, employees, investors, shareholders, administrators, affiliates, divisions, subsidiaries, parents, predecessor and successor corporations, and assigns, from, and agrees not to sue or otherwise institute or cause to be instituted any legal or administrative proceedings concerning any claim, duty, obligation or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that he may possess arising from any omissions, acts or facts that have occurred up until and including the Effective Date (as defined below) of this Agreement including, without limitation:

          (a) any and all claims relating to or arising from the Employee’s employment relationship with the Company and the termination of that relationship;

          (b) any and all claims relating to, or arising from, the Employee’s right to purchase, or actual purchase of shares of stock of the Company, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law and securities fraud under any state or federal law;

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          (c) any and all claims for wrongful discharge of employment, termination in violation of public policy, discrimination, breach of contract (both express and implied), breach of a covenant of good faith and fair dealing (both express and implied), promissory estoppel, negligent or intentional infliction of emotional distress, negligent or intentional misrepresentation, negligent or intentional interference with contract or prospective economic advantage, unfair business practices, defamation, libel, slander, negligence, personal injury, assault, battery, invasion of privacy, false imprisonment and conversion;

          (d) any and all claims for violation of any federal, state or municipal statute, including, but not limited to, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, the Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974, The Worker Adjustment and Retraining Notification Act, the California Fair Employment and Housing Act, and Labor Code Section 201, et seq. and Section 970, et seq. and all amendments to each such Act as well as the regulations issued thereunder;

          (e) any and all claims for violation of the federal or any state constitution;

          (f) any and all claims arising out of any other laws and regulations relating to employment or employment discrimination; and

          (g) any and all claims for attorneys’ fees and costs.

          The Employee agrees that the release set forth in this Section 4 shall be and remain in effect in all respects as a complete general release as to the matters released. This release does not extend to any obligations incurred under this Agreement.

     1. Acknowledgment of Waiver of Claims under ADEA. The Employee acknowledges that he is waiving and releasing any rights he may have under the Age Discrimination in Employment Act of 1967 (“ADEA”) and that this waiver and release is knowing and voluntary. The Employee and the Company agree that this waiver and release does not apply to any rights or claims that may arise under the ADEA after the Effective Date of this Agreement. The Employee acknowledges that the consideration given for this waiver and release agreement is in addition to anything of value to which the Employee was already entitled. The Employee further acknowledges that he has been advised by this writing that (a) he should consult with an attorney prior to executing this Agreement; (b) he has at least twenty-one (21) days within which to consider this Agreement; (c) he has seven (7) days following the execution of this Agreement by the Parties to revoke the Agreement; and (d) this Agreement shall not be effective until the revocation period has expired. Any revocation should be in writing and delivered to the Company by the close of business on the seventh (7^th) day from the date that the Employee signs this Agreement.

     2. Civil Code Section 1542. The Employee represents that he is not aware of any claims against the Company other than the claims that are released by this Agreement. The Employee acknowledges that he has been advised by legal counsel and is familiar with the provisions of California Civil Code Section 1542, which provides as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT

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THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

         The Employee, being aware of said code section, agrees to expressly waive any rights he may have thereunder, as well as under any other statute or common law principles of similar effect.

     3. No Pending or Future Lawsuits. The Employee represents that he has no lawsuits, claims or actions pending in his name, or on behalf of any other person or entity, against the Company or any other person or entity referred to herein. The Employee also represents that he does not intend to bring any claims on his own behalf or on behalf of any other person or entity against the Company or any other person or entity referred to herein.

     4. Confidentiality. The Employee agrees to use his best efforts to maintain in confidence the existence of this Agreement, the contents and terms of this Agreement, and the consideration for this Agreement (hereinafter collectively referred to as “Release Information”). The Employee agrees to take every reasonable precaution to prevent disclosure of any Release Information to third parties and agrees that there will be no publicity, directly or indirectly, concerning any Release Information. The Employee agrees to take every precaution to disclose Release Information only to those attorneys, accountants, governmental entities and family members who have a reasonable need to know of such Release Information.

     5. No Cooperation. The Employee agrees he will not act in any manner that might damage the business of the Company. The Employee agrees that he will not counsel or assist any attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges or complaints by any third party against the Company and/or any officer, director, employee, agent, representative, shareholder or attorney of the Company, unless under a subpoena or other court order to do so.

     6. Costs. The Parties shall each bear their own costs, expert fees, attorneys’ fees and other fees incurred in connection with this Agreement.

     7. Authority. The Company represents and warrants that the undersigned has the authority to act on behalf of the Company and to bind the Company and all who may claim through it to the terms and conditions of this Agreement. The Employee represents and warrants that he has the capacity to act on his own behalf and on behalf of all who might claim through him to bind them to the terms and conditions of this Agreement.

     8. No Representations. The Employee represents that he has had the opportunity to consult with an attorney, and has carefully read and understands the scope and effect of the provisions of this Agreement. Neither party has relied upon any representations or statements made by the other party hereto which are not specifically set forth in this Agreement.

     9. Severability. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision.

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     10. Entire Agreement. This Agreement and the Severance Agreement and the agreements and plans referenced therein represent the entire agreement and understanding between the Company and the Employee concerning the Employee’s separation from the Company, and supersede and replace any and all prior agreements and understandings concerning the Employee’s relationship with the Company and his compensation by the Company. This Agreement may only be amended in writing signed by the Employee and an executive officer of the Company.

     11. Governing Law. This Agreement shall be governed by the internal substantive laws, but not the choice of law rules, of the State of California.

     12. Effective Date. This Agreement is effective eight (8) days after it has been signed by the Parties (the “Effective Date”).

     13. Counterparts. This Agreement may be executed in counterparts, and each counterpart shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned.

     14. Voluntary Execution of Agreement. This Agreement is executed voluntarily and without any duress or undue influence on the part or behalf of the Parties hereto, with the full intent of releasing all claims. The Parties acknowledge that:

          (a) They have read this Agreement;

          (b) They have been represented in the preparation, negotiation and execution of this Agreement by legal counsel of their own choice or that they have voluntarily declined to seek such counsel;

          (c) They understand the terms and consequences of this Agreement and of the releases it contains; and

          (d) They are fully aware of the legal and binding effect of this Agreement.

[REMAINDER OF PAGE INTENTIONALLY BLANK]

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IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below.

LSI LOGIC CORPORATION

By:

Title:

Date:

EMPLOYEE

NAME

Date:

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EX-10.20

Exhibit 10.20

[LSI LOGIC LETTERHEAD]

March 2, 2007

Mr. Denis Regimbal
Agere Systems Inc.
1110 American Parkway NE
Allentown, PA 18109

Dear Denis,

As you know, we have worked diligently over the past weeks to combine the rich heritage of our two companies and to create a new corporate structure and leadership team that will be put in place at the time of our official close. I am pleased to confirm that you will be part of the combined company’s top-level corporate structure and leadership team, and that, effective upon the closing of the Merger and LSI Board of Director’s approval, the terms and conditions set forth below will be applicable to your employment.

Assignment

Your position will be Executive Vice President, Mobility Group, and you will be an elected officer of LSI Logic Corporation reporting to the President and Chief Executive Officer. Your work location will remain in Allentown, Pennsylvania.

Compensation and Benefits

Your compensation, target bonus opportunity and benefits, except as set forth below under change in control policy, will remain the same. In addition, I am pleased to offer you the following additional compensation:

Retention Payment. You will be eligible to receive a retention bonus of $275,000 (less any applicable withholding) to be paid in three installments as follows:

• Merger Closing Date – $75,000

• Twelve Months following the Merger Closing Date – $100,000

• Twenty-Four Months following the Merger Closing Date – $100,000

Each retention payment will be made as soon as administratively practical following the applicable payment date and is subject to you remaining an employee in good standing at each payment date. If for any reason you are not an employee at the scheduled time of payment, then your right to receive the applicable retention payment shall lapse.

Additional LSI Equity. You will be eligible to participate in the company’s 1991 Equity Incentive Plan and 2003 Equity Incentive Plan, and on or about the Merger Closing Date, you will receive a stock option grant of 100,000 shares vesting over four years, and you will be awarded 50,000 time-based restricted stock units vesting over two years, in each case in accordance with the terms of the applicable plan and the approval of the Compensation Committee of the LSI Board of Directors.

[Mr. Denis Regimbal
March 2, 2007	- 2 -

Change in Control Policy

In consideration of the additional compensation set forth above, we ask that you agree that the Change in Control portion of the Agere Systems Inc. Officer Severance Policy (“Agere Severance Policy”) no longer applies to your employment and that instead you will be covered by the LSI Logic Corporation Change In Control Severance Agreement in the form attached to this letter.

In addition, because you have been offered the same or comparable position with the new company following the closing of the Merger, you acknowledge that the severance provisions of the Agere Severance Policy are not triggered upon the closing of the Merger. Of course, the other provisions, including the termination provisions, of the Agere Severance Policy will continue in effect during the two year period following the Merger.

Employment At Will

Please be aware that this letter is not an employment contract and should not be construed or interpreted as creating an implied or expressed guarantee of continued employment. The employment relationship is by mutual consent. This means that you have the right to terminate your employment at any time and for any reason. Likewise, the company reserves the right to terminate your employment on the same basis.

Contingency of Offer

This terms and conditions set forth in this letter are contingent upon the closing of the Merger between our two companies and the approval of our Board of Directors.

Acceptance

Please acknowledge your written acceptance of this offer by signing and returning a copy to Jon Gibson, Vice President — Human Resources.

*   *   *

We look forward to the completion of the Merger between our two companies and are very excited about the contributions we believe you will make to the combined company.

Sincerely,

/s/ Abhi Talwalkar

Abhi Talwalkar
President and Chief Executive Officer

Acknowledged and Agreed:

/s/ Denis Regimbal

Denis Regimbal

LSI LOGIC CORPORATION
CHANGE IN CONTROL SEVERANCE AGREEMENT

     This Change in Control Severance Agreement (the “Agreement”) is made and entered into effective as of                                          (the “Effective Date”), by and between                                          (“Employee”) and LSI Logic Corporation, a Delaware corporation (the “Company”). Certain capitalized terms used in this Agreement are defined in Section 1 below.

R E C I T A L S

     A. It is expected that the Company from time to time will consider the possibility of a Change in Control. The Board of Directors of the Company (the “Board”) recognizes that such consideration can be a distraction to the Employee and can cause the Employee to consider alternative employment opportunities.

     B. The Board believes that it is in the best interests of the Company and its shareholders to provide the Employee with an incentive to continue his or her employment and to maximize the value of the Company upon a Change in Control for the benefit of its shareholders.

     C. In order to provide the Employee with enhanced financial security and sufficient encouragement to remain with the Company notwithstanding the possibility of a Change in Control, the Board believes that it is imperative to provide the Employee with certain severance benefits upon the Employee’s termination of employment following a Change in Control.

AGREEMENT

     In consideration of the mutual covenants herein contained and the continued employment of Employee by the Company, the parties agree as follows:

     1. Definition of Terms. The following terms referred to in this Agreement shall have the following meanings:

          (a) Cause. “Cause” shall mean (I) any act of personal dishonesty taken by the Employee in connection with his or her responsibilities as an employee with the intention or reasonable expectation that such may result in substantial personal enrichment of the Employee, (ii) Employee’s conviction of a felony which the Board reasonably believes has had or will have a material detrimental effect on the Company’s reputation or business, (iii) a willful act by the Employee which constitutes misconduct and is injurious to the Company, or (iv) continued willful violations by the Employee of the Employee’s obligations to the Company after there has been delivered to the Employee a written demand for performance from the Company which describes the basis for the Company’s belief that the Employee has not substantially performed his or her duties.

          (b) Change in Control. “Change in Control” shall mean the occurrence of any of the following events:

               (i) the consummation by the Company of a merger or consolidation of the Company with any other corporation, other than a merger or

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consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation;

               (ii) the approval by the shareholders of the Company, or if shareholder approval is not required, by the Board, of a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; or

               (iii) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becoming the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities.

               (iv) a change in the composition of the Board, as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who either (A) are directors of the Company as of the date hereof, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of those directors whose election or nomination was not in connection with any transactions described in subsections (i), (ii), or (iii) or in connection with an actual or threatened proxy contest relating to the election of directors of the Company.

          (c) Involuntary Termination. “Involuntary Termination” shall mean any of the following: (i) without the Employee’s express written consent, a significant reduction of the Employee’s duties, position or responsibilities relative to the Employee’s duties, position or responsibilities in effect immediately prior to such reduction, or the removal of the Employee from such position, duties and responsibilities, unless the Employee is provided with comparable duties, position and responsibilities; (ii) without the Employee’s express written consent, a substantial reduction, without good business reasons, of the facilities and perquisites (including office space and location) available to the Employee immediately prior to such reduction; (iii) without the Employee’s express written consent, a reduction by the Company of the Employee’s base salary as in effect immediately prior to such reduction; (iv) without the Employee’s express written consent, a material reduction by the Company in the kind or level of employee benefits to which the Employee is entitled immediately prior to such reduction with the result that the Employee’s overall benefits package is significantly reduced; (v) without the Employee’s express written consent, the relocation of the Employee to a facility or a location more than thirty-five (35) miles from his or her current location; (vi) any purported termination of the Employee by the Company which is not effected for Cause or for which the grounds relied upon are not valid; or (vii) the failure of the Company to obtain the assumption of this Agreement by any successors contemplated in Section 5 below.

          (d) Termination Date. “Termination Date” shall mean the effective date of any notice of termination delivered by one party to the other hereunder.

     2. Term of Agreement. This Agreement shall terminate on                     , unless within such term a Change in Control has occurred, in which case this Agreement

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shall terminate upon the date that all obligations of the parties hereto under this Agreement have been satisfied.

     3. At-Will Employment. The Company and the Employee acknowledge that the Employee’s employment is and shall continue to be at-will, as defined under applicable law. If the Employee’s employment terminates for any reason, the Employee shall not be entitled to any payments, benefits, damages, awards or compensation other than as provided by this Agreement, or as otherwise also may be established under the Company’s then existing employee benefit plans or policies at the time of termination.

     4.  Severance Benefits.

          (a) Termination Following A Change in Control.

               (i)  Involuntary Termination.

                    (A) Equity Acceleration. If the Employee’s employment with the Company terminates as a result of an Involuntary Termination at any time within twelve (12) months after a Change in Control, then each unexpired option to purchase shares of the Company’s equity securities, each share of Company restricted stock and each other unexpired equity-based compensation award that was granted to the Employee by the Company at least six (6) months prior to the Change in Control (collectively, the “Awards”), shall be automatically accelerated and shall be fully vested and exercisable as at the date of Involuntary Termination.

                    (B) Severance Benefits. If the Employee’s employment with the Company terminates as a result of an Involuntary Termination at any time within twelve (12) months after a Change in Control, the Employee, within seven (7) days of such Involuntary Termination, shall be paid a lump sum that shall be equal to the sum of: (i) twenty-four (24) months of the Employee’s base salary (as in effect immediately prior to the Change in Control), plus (ii) 200% of the Employee’s target bonus for the year in which the Change in Control occurs. In addition, the Company shall provide the Employee with health, dental and vision coverage benefits during the period of twenty-four (24) months following the date of Involuntary Termination, provided, however, that the Employee elects continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), within the time period prescribed pursuant to COBRA and life insurance benefits during the period of eighteen (18) months following the date of Involuntary Termination, at the same level as each of such benefits were in effect for the Employee on the day immediately preceding the day of the Employee’s termination of employment.

               (ii) Other Termination. If the Employee’s employment with the Company terminates other than as a result of an Involuntary Termination at any time within twelve (12) months after a Change in Control, then the Employee shall not be entitled to receive severance or other benefits hereunder, but may be eligible for those benefits (if any) as may then be established under the Company’s then existing severance and benefits plans and policies at the Termination Date.

          (b) Accrued Wages and Vacation; Expenses. Without regard to the reason for, or the timing of, Employee’s termination of employment: (i) the Company shall pay the Employee any unpaid base salary due for periods prior to the Termination Date;

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(ii) the Company shall pay the Employee all of the Employee’s accrued and unused vacation through the Termination Date; and (iii) following submission of proper expense reports by the Employee, the Company shall reimburse the Employee for all expenses reasonably and necessarily incurred by the Employee in connection with the business of the Company prior to the Termination Date. These payments shall be made promptly upon termination and within the period of time mandated by law.

     5. Successors.

          (a) Company’s Successors. Any successor to the Company (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets shall assume the Company’s obligations under this Agreement and agree expressly to perform the Company’s obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business and/or assets which executes and delivers the assumption agreement described in this subsection (a) or which becomes bound by the terms of this Agreement by operation of law.

          (b) Employee’s Successors. Without the written consent of the Company, Employee shall not assign or transfer this Agreement or any right or obligation under this Agreement to any other person or entity. Notwithstanding the foregoing, the terms of this Agreement and all rights of Employee hereunder shall inure to the benefit of, and be enforceable by, Employee’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

     6. Limitation on Payments.

          (a) In the event that the severance and other benefits provided for in this Agreement or otherwise payable to the Employee (i) constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) and (ii) but for this Section 6 would be subject to the excise tax imposed by Section 4999 of the Code, then at the Employee’s election, the Employee’s severance benefits under Section 4 shall be payable either (i) in full, or (ii) as to such lesser amount selected by Employee that, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results in the receipt by the Employee on an after-tax basis, of the greatest amount of severance benefits under this Agreement, notwithstanding that all or some portion of such severance benefits may be taxable under Section 4999 of the Code.

          (b) If the Employee elects (pursuant to Section 6(a)) a reduction in the payments and benefits that would otherwise be paid or provided to the Employee under the terms of this Agreement, the Employee shall be entitled to select the particular payments or benefits that will be reduced and the manner and method of any such reduction of such payments or benefits (including but not limited to which equity-based awards that would vest under Sections 4(a)(i)(A)), subject to reasonable limitations (including, for example, express provisions under the Company’s benefit plans). Within thirty (30) days after the amount of any elected reduction in payments and benefits is finally determined in accordance with the provisions of this Section 6(b), the Employee shall notify the Company in writing regarding the payments or benefits that are to be reduced. If no notification is

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given by the Employee, no amounts shall be reduced and the Employee’s election under Section 6(a) shall be of no effect. If, as a result of any reduction elected under Section 6(a), amounts previously paid to the Employee exceed the amount to which the Employee is entitled, the Employee will promptly return the excess amount to the Company.

          (c) Limited Tax Gross-Up. In the event that the Employee’s “parachute payments” (as described in Section 6(a) and after applying any reduction elected under such Section) are subject to the excise tax imposed by Section 4999 of the Code, then the Company shall make a supplemental payment to the Employee in an amount that equals the excise tax on the parachute payments, plus any additional excise tax and federal, state and local and employment income taxes, on such supplemental payment. However, under no circumstances shall the total supplemental payment described in this Section 6(c) exceed the “Maximum Payment” described in the following sentence. For purposes of this Agreement, the Maximum Payment shall equal the sum of the Employee’s (i) annual base salary immediately prior to the Change in Control, and (ii) target bonus for the year in which the Change in Control occurs.

          (d) Unless the Company and the Employee otherwise agree in writing, the Company’s independent public accountants (the “Accountants”), shall make any calculations necessary or appropriate to implement this Section 6. For purposes of making such calculations, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Accountants shall assume that the Employee pays federal, state, and local income taxes at the highest marginal rates in effect on the date of termination (unless the Employee clearly does not do so) and the calculation of federal income tax shall take into account the deduction of any state and local income taxes. The Company and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6. The Company shall bear all costs the Accountants may reasonably incur in connection with any such calculations.

     7. Notices.

          (a) General. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of the Employee, mailed notices shall be addressed to him or her at the home address which he or she most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary.

          (b) Notice of Termination. Any termination by the Company for Cause or by the Employee as a result of a voluntary resignation or an Involuntary Termination shall be communicated by a notice of termination to the other party hereto given in accordance with this Section. Such notice shall indicate the specific termination provision in this Agreement relied upon, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated, and shall specify the Termination Date (which shall be not more than 30 days after the giving of such notice). The failure by the Employee to include in the notice any fact or circumstance which contributes to a showing of Involuntary Termination shall not waive any right of the

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Employee hereunder or preclude the Employee from asserting such fact or circumstance in enforcing his rights hereunder.

     8. Execution of Release Agreement upon Termination. As a condition of entering into this Agreement and receiving the benefits under Section 4, the Employee agrees to execute and not revoke a release of claims agreement substantially in the form attached hereto as Exhibit A upon the termination of his or her employment with the Company.

     9. Arbitration.

          (a) Any dispute or controversy arising out of, relating to, or in connection with this Agreement, or the interpretation, validity, construction, performance, breach, or termination thereof, shall be settled by binding arbitration to be held in Santa Clara County, California, in accordance with the National Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association (the “Rules”). The arbitrator may grant injunctions or other relief in such dispute or controversy. The decision of the arbitrator shall be final, conclusive and binding on the parties to the arbitration. Judgment may be entered on the arbitrator’s decision in any court having jurisdiction.

          (b) The arbitrator(s) shall apply California law to the merits of any dispute or claim, without reference to conflicts of law rules. The arbitration proceedings shall be governed by federal arbitration law and by the Rules, without reference to state arbitration law. Employee hereby consents to the personal jurisdiction of the state and federal courts located in California for any action or proceeding arising from or relating to this Agreement or relating to any arbitration in which the parties are participants.

          (c) The Company and Employee shall each pay one-half of the costs and expenses of such arbitration and each shall separately pay its counsel fees and expenses.

          (d) Employee understands that nothing in this Section modifies Employee’s at-will employment status. Either Employee or the Company can terminate the employment relationship at any time, with or without Cause.

          (e) EMPLOYEE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES ARBITRATION. EMPLOYEE UNDERSTANDS THAT SUBMITTING ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION, CONSTITUTES A WAIVER OF EMPLOYEE’S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, THE FOLLOWING CLAIMS:

               (i) ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH OF CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL MISREPRESENTATION; NEGLIGENT OR

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INTENTIONAL INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION.

               (ii) ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS ACT, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, AND LABOR CODE SECTION 201, et seq.;

               (iii) ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND REGULATIONS RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.

     10. Miscellaneous Provisions.

          (a) No Duty to Mitigate. The Employee shall not be required to mitigate the amount of any payment contemplated by this Agreement, nor shall any such payment be reduced by any earnings that the Employee may receive from any other source.

          (b) Waiver. No provision of this Agreement may be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Employee and by an authorized officer of the Company (other than the Employee). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

          (c) Integration. This Agreement and the stock option agreements representing the Options represent the entire agreement and understanding between the parties as to the subject matter herein and supersede all prior or contemporaneous agreements, whether written or oral.

          (d) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the internal substantive laws, but not the conflicts of law rules, of the State of California.

          (e) Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

          (f) Employment Taxes. All payments made pursuant to this Agreement shall be subject to withholding of applicable income and employment taxes.

          (g) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

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     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written.

EMPLOYEE	LSI LOGIC CORPORATION
	By:
	Title:

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EXHIBIT A

FORM RELEASE OF CLAIMS AGREEMENT

This Release of Claims Agreement (this “Agreement”) is made and entered into by and between LSI Logic Corporation (the “Company”) and                                          (the “Employee”).

WHEREAS, the Employee was employed by the Company; and

WHEREAS, the Company (or the Company’s predecessor) and the Employee have entered into a Change in Control Severance Agreement effective as of DATE (the “Severance Agreement”).

NOW THEREFORE, in consideration of the mutual promises made herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Employee (collectively referred to as the “Parties”) desiring to be legally bound do hereby agree as follows:

     1. Termination. The Employee’s employment with the Company terminated on                     , 20                    .

     2. Consideration. Subject to and in consideration of the Employee’s release of claims as provided herein, the Company has agreed to pay the Employee certain benefits and the Employee has agreed to provide certain benefits to the Company, both as set forth in the Severance Agreement.

     3. Payment of Salary. The Employee acknowledges and represents that the Company has paid all salary, wages, bonuses, accrued vacation, commissions and any and all other benefits due to the Employee.

     4. Release of Claims. The Employee agrees that the foregoing consideration represents settlement in full of all outstanding obligations owed to the Employee by the Company. The Employee, on his own behalf and his respective heirs, family members, executors and assigns, hereby fully and forever releases the Company and its past, present and future officers, agents, directors, employees, investors, shareholders, administrators, affiliates, divisions, subsidiaries, parents, predecessor and successor corporations, and assigns, from, and agrees not to sue or otherwise institute or cause to be instituted any legal or administrative proceedings concerning any claim, duty, obligation or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that he may possess arising from any omissions, acts or facts that have occurred up until and including the Effective Date (as defined below) of this Agreement including, without limitation:

          (a) any and all claims relating to or arising from the Employee’s employment relationship with the Company and the termination of that relationship;

          (b) any and all claims relating to, or arising from, the Employee’s right to purchase, or actual purchase of shares of stock of the Company, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law and securities fraud under any state or federal law;

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          (c) any and all claims for wrongful discharge of employment, termination in violation of public policy, discrimination, breach of contract (both express and implied), breach of a covenant of good faith and fair dealing (both express and implied), promissory estoppel, negligent or intentional infliction of emotional distress, negligent or intentional misrepresentation, negligent or intentional interference with contract or prospective economic advantage, unfair business practices, defamation, libel, slander, negligence, personal injury, assault, battery, invasion of privacy, false imprisonment and conversion;

          (d) any and all claims for violation of any federal, state or municipal statute, including, but not limited to, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, the Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974, The Worker Adjustment and Retraining Notification Act, the California Fair Employment and Housing Act, and Labor Code Section 201, et seq. and Section 970, et seq. and all amendments to each such Act as well as the regulations issued thereunder;

          (e) any and all claims for violation of the federal or any state constitution;

          (f) any and all claims arising out of any other laws and regulations relating to employment or employment discrimination; and

          (g) any and all claims for attorneys’ fees and costs.

          The Employee agrees that the release set forth in this Section 4 shall be and remain in effect in all respects as a complete general release as to the matters released. This release does not extend to any obligations incurred under this Agreement.

     1. Acknowledgment of Waiver of Claims under ADEA. The Employee acknowledges that he is waiving and releasing any rights he may have under the Age Discrimination in Employment Act of 1967 (“ADEA”) and that this waiver and release is knowing and voluntary. The Employee and the Company agree that this waiver and release does not apply to any rights or claims that may arise under the ADEA after the Effective Date of this Agreement. The Employee acknowledges that the consideration given for this waiver and release agreement is in addition to anything of value to which the Employee was already entitled. The Employee further acknowledges that he has been advised by this writing that (a) he should consult with an attorney prior to executing this Agreement; (b) he has at least twenty-one (21) days within which to consider this Agreement; (c) he has seven (7) days following the execution of this Agreement by the Parties to revoke the Agreement; and (d) this Agreement shall not be effective until the revocation period has expired. Any revocation should be in writing and delivered to the Company by the close of business on the seventh (7^th) day from the date that the Employee signs this Agreement.

     2. Civil Code Section 1542. The Employee represents that he is not aware of any claims against the Company other than the claims that are released by this Agreement. The Employee acknowledges that he has been advised by legal counsel and is familiar with the provisions of California Civil Code Section 1542, which provides as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT

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THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

          The Employee, being aware of said code section, agrees to expressly waive any rights he may have thereunder, as well as under any other statute or common law principles of similar effect.

     3. No Pending or Future Lawsuits. The Employee represents that he has no lawsuits, claims or actions pending in his name, or on behalf of any other person or entity, against the Company or any other person or entity referred to herein. The Employee also represents that he does not intend to bring any claims on his own behalf or on behalf of any other person or entity against the Company or any other person or entity referred to herein.

     4. Confidentiality. The Employee agrees to use his best efforts to maintain in confidence the existence of this Agreement, the contents and terms of this Agreement, and the consideration for this Agreement (hereinafter collectively referred to as “Release Information”). The Employee agrees to take every reasonable precaution to prevent disclosure of any Release Information to third parties and agrees that there will be no publicity, directly or indirectly, concerning any Release Information. The Employee agrees to take every precaution to disclose Release Information only to those attorneys, accountants, governmental entities and family members who have a reasonable need to know of such Release Information.

     5. No Cooperation. The Employee agrees he will not act in any manner that might damage the business of the Company. The Employee agrees that he will not counsel or assist any attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges or complaints by any third party against the Company and/or any officer, director, employee, agent, representative, shareholder or attorney of the Company, unless under a subpoena or other court order to do so.

     6. Costs. The Parties shall each bear their own costs, expert fees, attorneys’ fees and other fees incurred in connection with this Agreement.

     7. Authority. The Company represents and warrants that the undersigned has the authority to act on behalf of the Company and to bind the Company and all who may claim through it to the terms and conditions of this Agreement. The Employee represents and warrants that he has the capacity to act on his own behalf and on behalf of all who might claim through him to bind them to the terms and conditions of this Agreement.

     8. No Representations. The Employee represents that he has had the opportunity to consult with an attorney, and has carefully read and understands the scope and effect of the provisions of this Agreement. Neither party has relied upon any representations or statements made by the other party hereto which are not specifically set forth in this Agreement.

     9. Severability. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision.

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     10. Entire Agreement. This Agreement and the Severance Agreement and the agreements and plans referenced therein represent the entire agreement and understanding between the Company and the Employee concerning the Employee’s separation from the Company, and supersede and replace any and all prior agreements and understandings concerning the Employee’s relationship with the Company and his compensation by the Company. This Agreement may only be amended in writing signed by the Employee and an executive officer of the Company.

     11. Governing Law. This Agreement shall be governed by the internal substantive laws, but not the choice of law rules, of the State of California.

     12. Effective Date. This Agreement is effective eight (8) days after it has been signed by the Parties (the “Effective Date”).

     13. Counterparts. This Agreement may be executed in counterparts, and each counterpart shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned.

     14. Voluntary Execution of Agreement. This Agreement is executed voluntarily and without any duress or undue influence on the part or behalf of the Parties hereto, with the full intent of releasing all claims. The Parties acknowledge that:

          (a) They have read this Agreement;

          (b) They have been represented in the preparation, negotiation and execution of this Agreement by legal counsel of their own choice or that they have voluntarily declined to seek such counsel;

          (c) They understand the terms and consequences of this Agreement and of the releases it contains; and

          (d) They are fully aware of the legal and binding effect of this Agreement.

[REMAINDER OF PAGE INTENTIONALLY BLANK]

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IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below.

LSI LOGIC CORPORATION

By:

Title:

Date:

EMPLOYEE

NAME

Date:

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EX-10.21

Exhibit 10.21

[LSI LOGIC LETTERHEAD]

March 2, 2007

Mr. Rudy Stroh
Agere Systems Inc.
1110 American Parkway NE
Allentown, PA 18109

Dear Rudy:

As you know, we have worked diligently over the past weeks to combine the rich heritage of our two companies and to create a new corporate structure and leadership team that will be put in place at the time of our official close. I am pleased to confirm that you will be part of the combined company’s top-level corporate structure and leadership team, and that, effective upon the closing of the Merger and LSI Board of Director’s approval, the terms and conditions set forth below will be applicable to your employment.

Assignment

Your position will be Executive Vice President, Storage Peripherals Group, and you will be an elected officer of LSI Logic Corporation reporting to the President and Chief Executive Officer. Your work location will remain in San Jose, CA.

Compensation and Benefits

Your compensation, target bonus opportunity and benefits, except as set forth below under change in control policy, will remain the same. In addition, I am pleased to offer you the following additional compensation:

Retention Payment. You will be eligible to receive a retention bonus of $275,000 (less any applicable withholding) to be paid in three installments as follows:

• Merger Closing Date – $75,000

• Twelve Months following the Merger Closing Date – $100,000

• Twenty-Four Months following the Merger Closing Date – $100,000

Each retention payment will be made as soon as administratively practical following the applicable payment date and is subject to you remaining an employee in good standing at each payment date. If for any reason you are not an employee at the scheduled time of payment, then your right to receive the applicable retention payment shall lapse.

Additional LSI Equity. You will be eligible to participate in the company’s 1991 Equity Incentive Plan and 2003 Equity Incentive Plan, and on or about the Merger Closing Date, you will receive a stock option grant of 200,000 shares vesting over four years, and you will be awarded 100,000 time-based restricted stock units vesting over two years, in each case in accordance with the terms of the applicable plan and the approval of the Compensation Committee of the LSI Board of Directors.

Mr. Rudy Stroh
March 2, 2007	- 2 -

Change in Control Policy

In consideration of the additional compensation set forth above, we ask that you agree that the Change in Control portion of the Agere Systems Inc. Officer Severance Policy (“Agere Severance Policy”) no longer applies to your employment and that instead you will be covered by the LSI Logic Corporation Change In Control Severance Agreement in the form attached to this letter.

In addition, because you have been offered the same or comparable position with the new company following the closing of the Merger, you acknowledge that the severance provisions of the Agere Severance Policy are not triggered upon the closing of the Merger. Of course, the other provisions, including the termination provisions, of the Agere Severance Policy will continue in effect during the two year period following the Merger.

Employment At Will

Please be aware that this letter is not an employment contract and should not be construed or interpreted as creating an implied or expressed guarantee of continued employment. The employment relationship is by mutual consent. This means that you have the right to terminate your employment at any time and for any reason. Likewise, the company reserves the right to terminate your employment on the same basis.

Contingency of Offer

This terms and conditions set forth in this letter are contingent upon the closing of the Merger between our two companies and the approval of our Board of Directors.

Acceptance

Please acknowledge your written acceptance of this offer by signing and returning a copy to Jon Gibson, Vice President — Human Resources.

*       *       *

We look forward to the completion of the Merger between our two companies and are very excited about the contributions we believe you will make to the combined company.

Sincerely,

Abhi Talwalkar
President and Chief Executive Officer

/s/ Abhi Talwalkar

Acknowledged and Agreed:

/s/ Rudy Stroh

Rudy Stroh

LSI LOGIC CORPORATION
CHANGE IN CONTROL SEVERANCE AGREEMENT

     This Change in Control Severance Agreement (the “Agreement”) is made and entered into effective as of                                          (the “Effective Date”), by and between                                          (“Employee”) and LSI Logic Corporation, a Delaware corporation (the “Company”). Certain capitalized terms used in this Agreement are defined in Section 1 below.

R E C I T A L S

     A. It is expected that the Company from time to time will consider the possibility of a Change in Control. The Board of Directors of the Company (the “Board”) recognizes that such consideration can be a distraction to the Employee and can cause the Employee to consider alternative employment opportunities.

     B. The Board believes that it is in the best interests of the Company and its shareholders to provide the Employee with an incentive to continue his or her employment and to maximize the value of the Company upon a Change in Control for the benefit of its shareholders.

     C. In order to provide the Employee with enhanced financial security and sufficient encouragement to remain with the Company notwithstanding the possibility of a Change in Control, the Board believes that it is imperative to provide the Employee with certain severance benefits upon the Employee’s termination of employment following a Change in Control.

AGREEMENT

     In consideration of the mutual covenants herein contained and the continued employment of Employee by the Company, the parties agree as follows:

     1. Definition of Terms. The following terms referred to in this Agreement shall have the following meanings:

          (a) Cause. “Cause” shall mean (I) any act of personal dishonesty taken by the Employee in connection with his or her responsibilities as an employee with the intention or reasonable expectation that such may result in substantial personal enrichment of the Employee, (ii) Employee’s conviction of a felony which the Board reasonably believes has had or will have a material detrimental effect on the Company’s reputation or business, (iii) a willful act by the Employee which constitutes misconduct and is injurious to the Company, or (iv) continued willful violations by the Employee of the Employee’s obligations to the Company after there has been delivered to the Employee a written demand for performance from the Company which describes the basis for the Company’s belief that the Employee has not substantially performed his or her duties.

          (b) Change in Control. “Change in Control” shall mean the occurrence of any of the following events:

               (i) the consummation by the Company of a merger or consolidation of the Company with any other corporation, other than a merger or

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consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation;

               (ii) the approval by the shareholders of the Company, or if shareholder approval is not required, by the Board, of a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; or

               (iii) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becoming the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities.

               (iv) a change in the composition of the Board, as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who either (A) are directors of the Company as of the date hereof, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of those directors whose election or nomination was not in connection with any transactions described in subsections (i), (ii), or (iii) or in connection with an actual or threatened proxy contest relating to the election of directors of the Company.

          (c) Involuntary Termination. “Involuntary Termination” shall mean any of the following: (i) without the Employee’s express written consent, a significant reduction of the Employee’s duties, position or responsibilities relative to the Employee’s duties, position or responsibilities in effect immediately prior to such reduction, or the removal of the Employee from such position, duties and responsibilities, unless the Employee is provided with comparable duties, position and responsibilities; (ii) without the Employee’s express written consent, a substantial reduction, without good business reasons, of the facilities and perquisites (including office space and location) available to the Employee immediately prior to such reduction; (iii) without the Employee’s express written consent, a reduction by the Company of the Employee’s base salary as in effect immediately prior to such reduction; (iv) without the Employee’s express written consent, a material reduction by the Company in the kind or level of employee benefits to which the Employee is entitled immediately prior to such reduction with the result that the Employee’s overall benefits package is significantly reduced; (v) without the Employee’s express written consent, the relocation of the Employee to a facility or a location more than thirty-five (35) miles from his or her current location; (vi) any purported termination of the Employee by the Company which is not effected for Cause or for which the grounds relied upon are not valid; or (vii) the failure of the Company to obtain the assumption of this Agreement by any successors contemplated in Section 5 below.

          (d) Termination Date. “Termination Date” shall mean the effective date of any notice of termination delivered by one party to the other hereunder.

     2. Term of Agreement. This Agreement shall terminate on                     , unless within such term a Change in Control has occurred, in which case this Agreement

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shall terminate upon the date that all obligations of the parties hereto under this Agreement have been satisfied.

     3. At-Will Employment. The Company and the Employee acknowledge that the Employee’s employment is and shall continue to be at-will, as defined under applicable law. If the Employee’s employment terminates for any reason, the Employee shall not be entitled to any payments, benefits, damages, awards or compensation other than as provided by this Agreement, or as otherwise also may be established under the Company’s then existing employee benefit plans or policies at the time of termination.

     4. Severance Benefits.

          (a) Termination Following A Change in Control.

               (i) Involuntary Termination.

                    (A) Equity Acceleration. If the Employee’s employment with the Company terminates as a result of an Involuntary Termination at any time within twelve (12) months after a Change in Control, then each unexpired option to purchase shares of the Company’s equity securities, each share of Company restricted stock and each other unexpired equity-based compensation award that was granted to the Employee by the Company at least six (6) months prior to the Change in Control (collectively, the “Awards”), shall be automatically accelerated and shall be fully vested and exercisable as at the date of Involuntary Termination.

                    (B) Severance Benefits. If the Employee’s employment with the Company terminates as a result of an Involuntary Termination at any time within twelve (12) months after a Change in Control, the Employee, within seven (7) days of such Involuntary Termination, shall be paid a lump sum that shall be equal to the sum of: (i) twenty-four (24) months of the Employee’s base salary (as in effect immediately prior to the Change in Control), plus (ii) 200% of the Employee’s target bonus for the year in which the Change in Control occurs. In addition, the Company shall provide the Employee with health, dental and vision coverage benefits during the period of twenty-four (24) months following the date of Involuntary Termination, provided, however, that the Employee elects continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), within the time period prescribed pursuant to COBRA and life insurance benefits during the period of eighteen (18) months following the date of Involuntary Termination, at the same level as each of such benefits were in effect for the Employee on the day immediately preceding the day of the Employee’s termination of employment.

               (ii) Other Termination. If the Employee’s employment with the Company terminates other than as a result of an Involuntary Termination at any time within twelve (12) months after a Change in Control, then the Employee shall not be entitled to receive severance or other benefits hereunder, but may be eligible for those benefits (if any) as may then be established under the Company’s then existing severance and benefits plans and policies at the Termination Date.

          (b) Accrued Wages and Vacation; Expenses. Without regard to the reason for, or the timing of, Employee’s termination of employment: (i) the Company shall pay the Employee any unpaid base salary due for periods prior to the Termination Date;

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(ii) the Company shall pay the Employee all of the Employee’s accrued and unused vacation through the Termination Date; and (iii) following submission of proper expense reports by the Employee, the Company shall reimburse the Employee for all expenses reasonably and necessarily incurred by the Employee in connection with the business of the Company prior to the Termination Date. These payments shall be made promptly upon termination and within the period of time mandated by law.

     5. Successors.

          (a) Company’s Successors. Any successor to the Company (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets shall assume the Company’s obligations under this Agreement and agree expressly to perform the Company’s obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business and/or assets which executes and delivers the assumption agreement described in this subsection (a) or which becomes bound by the terms of this Agreement by operation of law.

          (b) Employee’s Successors. Without the written consent of the Company, Employee shall not assign or transfer this Agreement or any right or obligation under this Agreement to any other person or entity. Notwithstanding the foregoing, the terms of this Agreement and all rights of Employee hereunder shall inure to the benefit of, and be enforceable by, Employee’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

     6. Limitation on Payments.

          (a) In the event that the severance and other benefits provided for in this Agreement or otherwise payable to the Employee (i) constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) and (ii) but for this Section 6 would be subject to the excise tax imposed by Section 4999 of the Code, then at the Employee’s election, the Employee’s severance benefits under Section 4 shall be payable either (i) in full, or (ii) as to such lesser amount selected by Employee that, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results in the receipt by the Employee on an after-tax basis, of the greatest amount of severance benefits under this Agreement, notwithstanding that all or some portion of such severance benefits may be taxable under Section 4999 of the Code.

          (b) If the Employee elects (pursuant to Section 6(a)) a reduction in the payments and benefits that would otherwise be paid or provided to the Employee under the terms of this Agreement, the Employee shall be entitled to select the particular payments or benefits that will be reduced and the manner and method of any such reduction of such payments or benefits (including but not limited to which equity-based awards that would vest under Sections 4(a)(i)(A)), subject to reasonable limitations (including, for example, express provisions under the Company’s benefit plans). Within thirty (30) days after the amount of any elected reduction in payments and benefits is finally determined in accordance with the provisions of this Section 6(b), the Employee shall notify the Company in writing regarding the payments or benefits that are to be reduced. If no notification is

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given by the Employee, no amounts shall be reduced and the Employee’s election under Section 6(a) shall be of no effect. If, as a result of any reduction elected under Section 6(a), amounts previously paid to the Employee exceed the amount to which the Employee is entitled, the Employee will promptly return the excess amount to the Company.

          (c) Limited Tax Gross-Up. In the event that the Employee’s “parachute payments” (as described in Section 6(a) and after applying any reduction elected under such Section) are subject to the excise tax imposed by Section 4999 of the Code, then the Company shall make a supplemental payment to the Employee in an amount that equals the excise tax on the parachute payments, plus any additional excise tax and federal, state and local and employment income taxes, on such supplemental payment. However, under no circumstances shall the total supplemental payment described in this Section 6(c) exceed the “Maximum Payment” described in the following sentence. For purposes of this Agreement, the Maximum Payment shall equal the sum of the Employee’s (i) annual base salary immediately prior to the Change in Control, and (ii) target bonus for the year in which the Change in Control occurs.

          (d) Unless the Company and the Employee otherwise agree in writing, the Company’s independent public accountants (the “Accountants”), shall make any calculations necessary or appropriate to implement this Section 6. For purposes of making such calculations, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Accountants shall assume that the Employee pays federal, state, and local income taxes at the highest marginal rates in effect on the date of termination (unless the Employee clearly does not do so) and the calculation of federal income tax shall take into account the deduction of any state and local income taxes. The Company and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6. The Company shall bear all costs the Accountants may reasonably incur in connection with any such calculations.

     7. Notices.

          (a) General. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of the Employee, mailed notices shall be addressed to him or her at the home address which he or she most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary.

          (b) Notice of Termination. Any termination by the Company for Cause or by the Employee as a result of a voluntary resignation or an Involuntary Termination shall be communicated by a notice of termination to the other party hereto given in accordance with this Section. Such notice shall indicate the specific termination provision in this Agreement relied upon, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated, and shall specify the Termination Date (which shall be not more than 30 days after the giving of such notice). The failure by the Employee to include in the notice any fact or circumstance which contributes to a showing of Involuntary Termination shall not waive any right of the

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Employee hereunder or preclude the Employee from asserting such fact or circumstance in enforcing his rights hereunder.

     8. Execution of Release Agreement upon Termination. As a condition of entering into this Agreement and receiving the benefits under Section 4, the Employee agrees to execute and not revoke a release of claims agreement substantially in the form attached hereto as Exhibit A upon the termination of his or her employment with the Company.

     9. Arbitration.

          (a) Any dispute or controversy arising out of, relating to, or in connection with this Agreement, or the interpretation, validity, construction, performance, breach, or termination thereof, shall be settled by binding arbitration to be held in Santa Clara County, California, in accordance with the National Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association (the “Rules”). The arbitrator may grant injunctions or other relief in such dispute or controversy. The decision of the arbitrator shall be final, conclusive and binding on the parties to the arbitration. Judgment may be entered on the arbitrator’s decision in any court having jurisdiction.

          (b) The arbitrator(s) shall apply California law to the merits of any dispute or claim, without reference to conflicts of law rules. The arbitration proceedings shall be governed by federal arbitration law and by the Rules, without reference to state arbitration law. Employee hereby consents to the personal jurisdiction of the state and federal courts located in California for any action or proceeding arising from or relating to this Agreement or relating to any arbitration in which the parties are participants.

          (c) The Company and Employee shall each pay one-half of the costs and expenses of such arbitration and each shall separately pay its counsel fees and expenses.

          (d) Employee understands that nothing in this Section modifies Employee’s at-will employment status. Either Employee or the Company can terminate the employment relationship at any time, with or without Cause.

          (e) EMPLOYEE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES ARBITRATION. EMPLOYEE UNDERSTANDS THAT SUBMITTING ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION, CONSTITUTES A WAIVER OF EMPLOYEE’S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, THE FOLLOWING CLAIMS:

               (i) ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH OF CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL MISREPRESENTATION; NEGLIGENT OR

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INTENTIONAL INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION.

               (ii) ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS ACT, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, AND LABOR CODE SECTION 201, et seq.;

               (iii) ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND REGULATIONS RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.

     10. Miscellaneous Provisions.

          (a) No Duty to Mitigate. The Employee shall not be required to mitigate the amount of any payment contemplated by this Agreement, nor shall any such payment be reduced by any earnings that the Employee may receive from any other source.

          (b) Waiver. No provision of this Agreement may be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Employee and by an authorized officer of the Company (other than the Employee). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

          (c) Integration. This Agreement and the stock option agreements representing the Options represent the entire agreement and understanding between the parties as to the subject matter herein and supersede all prior or contemporaneous agreements, whether written or oral.

          (d) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the internal substantive laws, but not the conflicts of law rules, of the State of California.

          (e) Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

          (f) Employment Taxes. All payments made pursuant to this Agreement shall be subject to withholding of applicable income and employment taxes.

          (g) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

Page 7 of 13

     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written.

EMPLOYEE	LSI LOGIC CORPORATION
	By:
	Title:

Page 8 of 13

EXHIBIT A

FORM RELEASE OF CLAIMS AGREEMENT

This Release of Claims Agreement (this “Agreement”) is made and entered into by and between LSI Logic Corporation (the “Company”) and                                          (the “Employee”).

WHEREAS, the Employee was employed by the Company; and

WHEREAS, the Company (or the Company’s predecessor) and the Employee have entered into a Change in Control Severance Agreement effective as of DATE (the “Severance Agreement”).

NOW THEREFORE, in consideration of the mutual promises made herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Employee (collectively referred to as the “Parties”) desiring to be legally bound do hereby agree as follows:

     1. Termination. The Employee’s employment with the Company terminated on                     , 20     .

     2. Consideration. Subject to and in consideration of the Employee’s release of claims as provided herein, the Company has agreed to pay the Employee certain benefits and the Employee has agreed to provide certain benefits to the Company, both as set forth in the Severance Agreement.

     3. Payment of Salary. The Employee acknowledges and represents that the Company has paid all salary, wages, bonuses, accrued vacation, commissions and any and all other benefits due to the Employee.

     4. Release of Claims. The Employee agrees that the foregoing consideration represents settlement in full of all outstanding obligations owed to the Employee by the Company. The Employee, on his own behalf and his respective heirs, family members, executors and assigns, hereby fully and forever releases the Company and its past, present and future officers, agents, directors, employees, investors, shareholders, administrators, affiliates, divisions, subsidiaries, parents, predecessor and successor corporations, and assigns, from, and agrees not to sue or otherwise institute or cause to be instituted any legal or administrative proceedings concerning any claim, duty, obligation or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that he may possess arising from any omissions, acts or facts that have occurred up until and including the Effective Date (as defined below) of this Agreement including, without limitation:

          (a) any and all claims relating to or arising from the Employee’s employment relationship with the Company and the termination of that relationship;

          (b) any and all claims relating to, or arising from, the Employee’s right to purchase, or actual purchase of shares of stock of the Company, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law and securities fraud under any state or federal law;

Page 9 of 13

          (c) any and all claims for wrongful discharge of employment, termination in violation of public policy, discrimination, breach of contract (both express and implied), breach of a covenant of good faith and fair dealing (both express and implied), promissory estoppel, negligent or intentional infliction of emotional distress, negligent or intentional misrepresentation, negligent or intentional interference with contract or prospective economic advantage, unfair business practices, defamation, libel, slander, negligence, personal injury, assault, battery, invasion of privacy, false imprisonment and conversion;

          (d) any and all claims for violation of any federal, state or municipal statute, including, but not limited to, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, the Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974, The Worker Adjustment and Retraining Notification Act, the California Fair Employment and Housing Act, and Labor Code Section 201, et seq. and Section 970, et seq. and all amendments to each such Act as well as the regulations issued thereunder;

          (e) any and all claims for violation of the federal or any state constitution;

          (f) any and all claims arising out of any other laws and regulations relating to employment or employment discrimination; and

          (g) any and all claims for attorneys’ fees and costs.

          The Employee agrees that the release set forth in this Section 4 shall be and remain in effect in all respects as a complete general release as to the matters released. This release does not extend to any obligations incurred under this Agreement.

     1. Acknowledgment of Waiver of Claims under ADEA. The Employee acknowledges that he is waiving and releasing any rights he may have under the Age Discrimination in Employment Act of 1967 (“ADEA”) and that this waiver and release is knowing and voluntary. The Employee and the Company agree that this waiver and release does not apply to any rights or claims that may arise under the ADEA after the Effective Date of this Agreement. The Employee acknowledges that the consideration given for this waiver and release agreement is in addition to anything of value to which the Employee was already entitled. The Employee further acknowledges that he has been advised by this writing that (a) he should consult with an attorney prior to executing this Agreement; (b) he has at least twenty-one (21) days within which to consider this Agreement; (c) he has seven (7) days following the execution of this Agreement by the Parties to revoke the Agreement; and (d) this Agreement shall not be effective until the revocation period has expired. Any revocation should be in writing and delivered to the Company by the close of business on the seventh (7^th) day from the date that the Employee signs this Agreement.

     2. Civil Code Section 1542. The Employee represents that he is not aware of any claims against the Company other than the claims that are released by this Agreement. The Employee acknowledges that he has been advised by legal counsel and is familiar with the provisions of California Civil Code Section 1542, which provides as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT

Page 10 of 13

THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

          The Employee, being aware of said code section, agrees to expressly waive any rights he may have thereunder, as well as under any other statute or common law principles of similar effect.

     3. No Pending or Future Lawsuits. The Employee represents that he has no lawsuits, claims or actions pending in his name, or on behalf of any other person or entity, against the Company or any other person or entity referred to herein. The Employee also represents that he does not intend to bring any claims on his own behalf or on behalf of any other person or entity against the Company or any other person or entity referred to herein.

     4. Confidentiality. The Employee agrees to use his best efforts to maintain in confidence the existence of this Agreement, the contents and terms of this Agreement, and the consideration for this Agreement (hereinafter collectively referred to as “Release Information”). The Employee agrees to take every reasonable precaution to prevent disclosure of any Release Information to third parties and agrees that there will be no publicity, directly or indirectly, concerning any Release Information. The Employee agrees to take every precaution to disclose Release Information only to those attorneys, accountants, governmental entities and family members who have a reasonable need to know of such Release Information.

     5. No Cooperation. The Employee agrees he will not act in any manner that might damage the business of the Company. The Employee agrees that he will not counsel or assist any attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges or complaints by any third party against the Company and/or any officer, director, employee, agent, representative, shareholder or attorney of the Company, unless under a subpoena or other court order to do so.

     6. Costs. The Parties shall each bear their own costs, expert fees, attorneys’ fees and other fees incurred in connection with this Agreement.

     7. Authority. The Company represents and warrants that the undersigned has the authority to act on behalf of the Company and to bind the Company and all who may claim through it to the terms and conditions of this Agreement. The Employee represents and warrants that he has the capacity to act on his own behalf and on behalf of all who might claim through him to bind them to the terms and conditions of this Agreement.

     8. No Representations. The Employee represents that he has had the opportunity to consult with an attorney, and has carefully read and understands the scope and effect of the provisions of this Agreement. Neither party has relied upon any representations or statements made by the other party hereto which are not specifically set forth in this Agreement.

     9. Severability. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision.

Page 11 of 13

     10. Entire Agreement. This Agreement and the Severance Agreement and the agreements and plans referenced therein represent the entire agreement and understanding between the Company and the Employee concerning the Employee’s separation from the Company, and supersede and replace any and all prior agreements and understandings concerning the Employee’s relationship with the Company and his compensation by the Company. This Agreement may only be amended in writing signed by the Employee and an executive officer of the Company.

     11. Governing Law. This Agreement shall be governed by the internal substantive laws, but not the choice of law rules, of the State of California.

     12. Effective Date. This Agreement is effective eight (8) days after it has been signed by the Parties (the “Effective Date”).

     13. Counterparts. This Agreement may be executed in counterparts, and each counterpart shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned.

     14. Voluntary Execution of Agreement. This Agreement is executed voluntarily and without any duress or undue influence on the part or behalf of the Parties hereto, with the full intent of releasing all claims. The Parties acknowledge that:

          (a) They have read this Agreement;

          (b) They have been represented in the preparation, negotiation and execution of this Agreement by legal counsel of their own choice or that they have voluntarily declined to seek such counsel;

          (c) They understand the terms and consequences of this Agreement and of the releases it contains; and

          (d) They are fully aware of the legal and binding effect of this Agreement.

[REMAINDER OF PAGE INTENTIONALLY BLANK]

Page 12 of 13

IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below.

LSI LOGIC CORPORATION

By:

Title:

Date:

EMPLOYEE

NAME

Date:

Page 13 of 13

EX-10.22

Exhibit 10.22

[LSI Logic Letterhead]

January 29, 2007

Jeff Hoogenboom
116 Trellingwood Drive
Morrisville, NC 27560

Dear Jeff:

I am pleased to confirm our offer of employment with LSI LOGIC CORPORATION. To be sure that you understand the terms and conditions of this offer of employment, I would like to detail them below.

Your position will be Executive Vice President, Sales and an elected officer of the Company pending Board of Director approval. You will be reporting to Abhi Talwalkar and you will receive $325,000.00 annualized.

You will be eligible for all executive company benefits, including group health insurance coverage, annual tax and financial counseling, and one-time estate planning, as of your date of hire. The details of these plans will be discussed with you when you join the company.

You will receive a monthly car allowance of $800.00.

When you join LSI LOGIC CORPORATION, you will receive a one time “sign-on” bonus of $150,000.00, less statutory withholding. This payment will be made 30 days after you join the company.

In this position you are eligible to participate in LSI Logic’s 2007 Incentive Plan. You have been included in this Incentive Plan because of your ability to directly influence the results of your organization and the Company. Your participation for incentive payout is based on your contribution to LSI Logic’s achievement of its 2007 goals for Operating Income and Incremental Revenue Growth and the achievement of your and your organization’s own specific objectives. Your target short-term incentive amount is 55% of your base salary and is guaranteed at 100% of target for the first year.

You will also be eligible to receive a performance-based bonus of $75,000.00 based on the achievement of stretch goals set forth by Abhi Talwalker. This supplemental bonus opportunity will be offered for your first year of employment only.

As is our normal practice, this offer is contingent upon verification of job applicable information submitted on your application, verification of work authorization as required by the Immigration Reform and Control Act of 1986, as well as your signing the ‘Employee Invention and Confidential Information Agreement’.

If you find the terms of this offer acceptable, please sign below conveying your acceptance and indicate a start date prior to returning this letter to me. Retain the enclosed copy of this letter for your records. Jeff, we are excited about the opportunity to have you join our organization. We have enjoyed meeting with you and are confident you will make a significant contribution to the success and future of LSI Logic Corporation.

Regards,

/s/ Jon Gibson
Jon Gibson
Vice President, Human Resources
/s/ Jeff Hoogenboom	2-20-2007
Signature of Jeff Hoogenboom	Date
2-20-2007
Start Date
JG:vm
Enclosures

[LSI Logic Letterhead]

January 29, 2007

Jeff Hoogenboom
116 Trellingwood Drive
Morrisville, NC 27560

Dear Jeff:

This is to advise you that upon becoming an employee of LSI Logic you will be eligible to be granted an option to purchase shares of Common Stock of LSI Logic Corporation pursuant to the Company’s stock option program. You will also be granted Restricted Stock Units.

Management intends to recommend that a non-statutory stock option to purchase 250,000 shares be granted to you. However, this is not an offer to grant you an option or to sell you shares of LSI Logic Corporation Common Stock. The LSI Logic Corporation Board of Directors has ultimate discretionary authority with respect to stock option grants made by the Company and there can be no assurances that management’s recommendation will be approved.

Stock option grants are made subject to the terms and conditions of the stock option plan, the stock option grant award and such other terms as the Board of Directors may determine appropriate. The exercise price for a stock option is normally equal to the closing price of the Company’s Common Stock on the date the option grant is effective. In addition, stock options are subject to a vesting schedule. Generally 25% of the option becomes exerciseable each year beginning one year after the grant date, so long as the grantee remains an employee of the Company.

The foregoing is only a partial description of the terms generally provided for stock option grants. The stock option plan under which a specific option is granted and the terms of a specific grant award will be controlling in all respects. You will be notified when action has been taken on the recommendation described above and will receive a copy of the stock option plan with the grant award.

Management also intends to recommend that a grant of 100,000 Restricted Stock Units (RSUs) be granted to you. The RSU grant will be granted under and subject to the terms, definitions, and provisions of the Company’s 2003 Plan. They will be scheduled to vest at a rate of 1/4 on each anniversary of the grant over four years assuming your continued employment with the Company on each scheduled vesting date. Any portion of the RSU grant that becomes vested will be settled in shares of the Company’s Common Stock promptly after vesting. The RSU grant will be subject to the Company’s standard terms and conditions for RSUs granted under the 2003 Plan.

Regards,

/s/ Jon Gibson

Jon Gibson

Vice President, Human Resources

JG:vm

EX-10.23

Exhibit 10.23

March 19, 2007

Dr. Claudine Simson
4222 Hidden Canyon Cove
Austin, TX 78746

Dear Claudine:

I am pleased to confirm our offer of employment with LSI Logic Corporation. To be sure that you understand the terms and conditions of this offer of employment, I would like to detail them below.

Your position will be Executive Vice President/Chief Technology Officer and an elected officer of the Company pending Board of Director approval. You will be reporting to Abhi Talwalkar and you will receive a $350,000.00 annualized base salary.

As of your date of hire, you will be eligible for all executive company benefits, including group health insurance coverage, life insurance, an annual physical, annual tax and financial counseling, and one-time estate planning. You will also be eligible to immediately participate in LSI Logic’s 401(k) Plan and to participate in the Company’s Employee Stock Purchase Plan as of the next open enrollment period. Your participation in these Plans will require you to take the necessary steps to enroll. The details of these Plans will be discussed with you when you join the company.

You will receive a monthly car allowance of $800.00.

When you join LSI Logic, you will receive a one time “sign-on” bonus of $125,000.00, less statutory withholdings. This payment will be made within approximately 30 days after you join the Company.

Your office will be located in Austin, Texas.

In this position, you are eligible to participate in LSI Logic’s 2007 Short Term Incentive Plan. You have been included in the Short Term Incentive Plan because of your ability to directly influence the results of your organization and the Company. Your participation for incentive payout is based on your contribution to LSI Logic’s achievement of its 2007 goals for Operating Income and the achievement of your and your organization’s own specific objectives. Your target short term incentive amount is 55% of your base salary, but the actual award could be above or below this target level based on the Company’s performance to plan, and your individual performance.

Shortly after becoming an employee of LSI Logic, a non-statutory stock option to purchase 300,000 shares will be granted to you by the Board of Directors. Stock option grants are made subject to the terms and conditions of the stock option plan, the stock option grant award, and such other terms as the Board of Directors may determine appropriate. The exercise price for a stock option is normally equal to the closing price of the Company’s Common Stock on the date the option grant is effective. In addition, stock options are subject to a vesting schedule. Generally 25% of the option grant becomes exercisable each year beginning one year after the grant date, so long as you remain an employee of the Company. The foregoing is only a brief and partial description of the terms generally provided for stock option grants. The stock option plan under which a specific option is granted and the terms of a specific grant award will be controlling in all respects. You will receive a copy of the stock option plan with the grant award.

In addition, 100,000 Restricted Stock Units (RSUs) will be granted to you effective no later than the 20th day of the month following your date of hire. The RSU grant will be granted under and subject to the terms, definitions, and provisions of the Company’s 2003 Plan. The RSU grant will be scheduled to vest at a rate of 25% on each anniversary of the grant over four years assuming your continued employment with the Company on each scheduled vesting date. Any portion of the RSU grant that becomes vested will be settled in shares of the Company’s Common Stock promptly after vesting. The RSU grant will be subject to the Company’s standard terms and conditions for RSUs granted under the 2003 Plan.

Shortly after you commence your employment, you will be offered LSI Logic’s standard Change in Control Severance Agreement. The Change in Control Severance Agreement expires on November 20, 2008, for all executive officers. The Board of Directors, at that time, and in their sole discretion, will determine whether to offer some, all, or different terms as compared with the current Change in Control Severance Agreement to some, all, or none of the Company’s executive officers, including you.

In the event of a Company-initiated involuntary termination for other than cause, in which the above-referenced Change in Control Severance Agreement is not triggered, the Company commits to negotiate in good faith and offer a severance agreement to you in exchange for a release of all claims you may have against the Company.

As is our normal practice, this offer is contingent upon verification of job applicable information submitted on your application, verification of work authorization as required by the Immigration Reform and Control Act of 1986, as well as your signing the “Employee Invention and Confidential Information Agreement.”

If you find the terms of this offer acceptable, please sign below conveying your acceptance and indicate a start date prior to returning this letter to me. Retain the enclosed copy of this letter for your records.

Claudine, we are excited about the opportunity to have you join our organization! We have enjoyed meeting with you and are confident you will make a significant contribution to the success and future of LSI Logic.

Regards,

/s/ Jon Gibson
Jon Gibson
Vice President, Human Resources
/s/ Claudine Simson Signature of Claudine Simson	3/20/07 Date
26 March 2007
Start Date
JG:vm
Enclosures

EX-10.24

Exhibit 10.24

SEPARATION AGREEMENT

     THIS SEPARATION AGREEMENT (the “Agreement”) is made and entered into effective this 28th day of March, 2007 (the “Agreement Date”), between Donald J. Esses (“Employee”) and LSI Logic Corporation (the “Company”), with respect to the following recitals of fact:

     A. Employee is currently employed as an executive officer of the Company.

     B. The Company and Employee desire to set forth the terms on which Employee is leaving his employment with the Company.

     NOW THEREFORE, in consideration of the promises and covenants contained in this Agreement, the parties agree as follows:

     1. Resignation. Employee acknowledges and agrees that, as of April 30, 2007, Employee will have resigned all of his positions with the Company (including, but not limited to, his status as an executive officer of Company), and any other positions with other entities that are affiliated with the Company, other than his position as a Technical Consultant, as described in Section 2, below. Employee shall execute a letter of resignation in the form attached hereto as Exhibit “A” concurrent with his execution of this Agreement. In addition, Employee shall execute any additional documents that may be necessary or appropriate to effect or to memorialize any resignations from the Company contemplated by this Agreement.

     2. Change In Status. From and after April 30, 2007, all compensation and benefits shall cease, except for those specifically listed in this Section 2. Employee’s position with the Company, including all compensation and eligibility for benefits (other than post-termination benefits specifically described herein), shall terminate on the earlier of: (i) March 31, 2008, or (ii) Employee’s commencement of any other employment, occupation, or consulting activity such that this activity would include being an employee of a company and working greater than nineteen (19) hours per week at a single employer (the “Termination Date”).

     2.1 Position. Employee will remain an employee of the Company until such time as his employment terminates on the Termination Date. Employee’s job title, as of the Agreement Date, will be “Technical Consultant.” In this position, Employee will be required to provide technical consulting to the Company on an as-needed basis. Employee’s position as Technical Consultant, and any other position with the Company, will terminate as of the Termination Date. During Employee’s tenure as a Technical Consultant, Employee shall be paid an annualized salary of $319,300.00, paid every two weeks, less any and all statutory withholding and deductions as required by law or as authorized by Employee.

     2.2 Stock Rights. Employee will not be eligible to receive any further stock option or restricted stock unit grants after April 30, 2007. However, existing stock option

1.

     and restricted stock unit grants will continue to vest, until the Termination Date, as described in Section 3, below.

     2.3 Benefit Plans. Employee and Employee’s dependents shall continue to be covered by the Company’s group benefit plans (e.g., medical, dental, vision care, and life insurance), at the Company’s expense, except for the employee-paid portion of such premiums, from April 30, 2007 to and including the last day of the month in which the Termination Date falls, to the same extent Employee and Employee’s dependents were covered by said plans as of April 30, 2007. If Employee desires to continue coverage, pursuant to COBRA, after the Termination Date, Employee may do so at Employee’s own expense. Employee understands and agrees that he must complete a COBRA application in order to receive the extension of health benefits beyond the Termination Date.

     2.4 Incentive Bonus Plans and Other Benefits. Employee will no longer be eligible to participate in any bonus program. Employee will not be entitled to any other compensation or benefits after April 30, 2007, other than what is specifically set forth in this Section 2. Employee’s car allowance and vacation accrual will be terminated effective as of April 30, 2007.

     3. Outstanding Stock Rights. Employee acknowledges that he holds the stock options and restricted stock units (the “Stock Rights”) set forth on Exhibit “B” attached hereto and incorporated herein by this reference. Employee acknowledges and agrees that he has no other options, stock units, or other rights received from the Company to purchase any stock or securities of the Company or any affiliate thereof (collectively, the “Issuers”). Employee’s outstanding Stock Rights will continue to vest through the Termination Date. Any vested stock options must be exercised within 90 days of the Termination Date. Employee understands and agrees that all Stock Rights which have not vested on or before the Termination Date will expire on the Termination Date, and vested stock options not exercised within 90 days of the Termination Date will expire on the 91st day following the Termination Date. Employee acknowledges and agrees that he does not enter into this Agreement on the basis of or in reliance in any way on any representation or assurance of any Issuer or any officer, director, employee or agent of any Issuer regarding the current or future value of his Stock Rights or of any stock or securities of any Issuer.

     4. Outplacement Services. The Company will pay up to $10,000 in outplacement fees directly to a firm of the Employee’s choosing, provided such firm meets with the reasonable approval of the Company. Employee must initiate the use of any Company-paid outplacement services no later than August 1, 2007.

     5. Release.

     (a) Employee, for himself, and his heirs, executors, administrators, assigns, successors, agents, and representatives, hereby irrevocably and unconditionally releases and forever discharges the Company, and each and all of its heirs, executors, administrators, successors, assigns, predecessors, owners, shareholders, agents, representatives, employees,

2.

consultants, insurers, officers, directors, attorneys, affiliates, partners, and corporate parents, subsidiaries, and divisions (referred to herein collectively as the “Related Entities”) from any and all liabilities, claims, demands, contracts, debts, obligations and causes of action of every nature, character and description, past, present, and future, known or unknown, vested or contingent, ascertained or unascertained, suspected or unsuspected, existing or claimed to exist, in law, admiralty, or equity, under any theory of the law, whether common, constitutional, statutory, or otherwise, in any jurisdiction, foreign or domestic, which Employee now owns or holds, or has at any time heretofore owned or held, by reason of any matter, cause or thing occurred, done, omitted or suffered to be done from the beginning of the world to the day of the Agreement Date, including, without limitation, (i) Employee’s employment relationship with the Company (or any Related Entity), including employment through the Termination Date; and (ii) the termination of Employee’s employment with the Company (or any Related Entity), including Employee’s resignation as an executive officer of Company.

     (b) Employee acknowledges that the release contained in this Agreement includes, but is not limited to, a release of all claims Employee may have under all state, federal and local laws pertaining to discrimination, harassment, the California Labor Code, family and medical leave laws, wage and hour laws, disability laws, civil rights laws, as well as laws pertaining to claims of or for emotional distress, defamation, breach of contract, breach of the covenant of good faith and fair dealing, as well as equal pay laws and laws pertaining to wrongful discharge, including, without limitation, the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, the Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974, the Worker Adjustment and Retraining Notification Act, the Older Workers Benefit Protection Act, the Family and Medical Leave Act, the California Family Rights Act, and the California Fair Employment and Housing Act. It is expressly understood by Employee that among the various rights and claims being waived in this release are those arising under the Age Discrimination in Employment Act of 1967. Employee understands that rights or claims under this law that may arise after the date this Agreement is executed by him are not waived. Employee also understands that nothing in this Agreement is to be construed to interfere with Employee’s ability to file a charge with the Equal Employment Opportunity Commission concerning this Agreement or any conduct released herein, but Employee acknowledges that by this Agreement he waives any ability to further collect, directly or indirectly, any monetary or non-monetary award based on any conduct or omissions against the Company or any of the Related Entities.

     (c) Employee acknowledges that the releases provided in this Agreement extend to any rights or obligations of Employee or Company under the LSI Logic Corporation Change of Control Severance Agreement effective December 9, 2003. By Employee’s execution of this Agreement, Employee hereby agrees that the Change of Control Severance Agreement is terminated as of April 30, 2007.

     (d) Employee understands and agrees that if, hereafter, Employee discovers facts different from or in addition to those which Employee now knows or believes to be true, that the waivers and releases of this Agreement shall be and remain effective in all respects notwithstanding such different or additional facts or the discovery of such fact. Employee further agrees that Employee fully and forever waives any and all rights and benefits conferred

3.

upon Employee by the provisions of Section 1542 of the Civil Code of the State of California, or any other similar federal, state, or local law, which states as follows (parentheticals added):

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR (i.e., EMPLOYEE) DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR (i.e., THE COMPANY).”

     (e) The provisions of this Section 5 shall survive the termination or expiration of this Agreement for any reason.

     6. Confidentiality and Return of Company Property.

     (a) Employee acknowledges, agrees, and warrants that he will continue to maintain the confidentiality of all confidential and proprietary information of the Company and third parties, and shall abide by the terms and conditions of the Employee Invention and Confidential Information Agreement entered into between Employee and the Company, which is attached hereto as Exhibit “C” and incorporated herein by this reference.

     (b) Employee represents and warrants that to the best of his knowledge and belief he has returned to the Company all tangible and intangible property of the Company in his possession, custody, or control. In addition, notwithstanding the foregoing representation and warranty, if Employee discovers he has retained any property of the Company, he shall promptly notify the Company thereof and take reasonable steps in accordance with the Company’s instructions to return such property to the Company. The provisions of this Section 6 shall survive the expiration or termination, for any reason, of this Agreement.

     7. Governing Law. This Agreement is entered into in the State of California and shall be construed and interpreted in accordance with the laws of the State of California, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of any other jurisdiction.

     8. Confidentiality of this Agreement. Employee warrants and agrees, absolutely and unconditionally, that, absent the compulsion of legal process, he will keep the existence of this Agreement and the terms hereof, including, without limitation, the amount of money and consideration he is receiving, completely confidential, and that he has done so. Provided, however, Employee may disclose the existence of this Agreement and its terms, in confidence, to his spouse and his attorneys, accountants, or other professional advisors who have a legitimate need to know the information contained herein.

     9. Further Actions. Employee, for himself, and his heirs, executors, administrators, assigns and successors, covenants not to sue or otherwise institute or cause to be instituted or in any way actively participate in or voluntarily assist in (except at the Company’s request or as provided by law) the prosecution of any legal or administrative proceedings against Company

4.

and/or any of the Related Entities with respect to any matter arising out of or relating to any liabilities, claims, demands, contracts, debts, obligations and causes of action released hereunder.

     10. No Admission of Liability. Employee and Company both acknowledge and agree that this is a compromise settlement of the hereinabove mentioned dealings and disputes, which is not in any respect to be deemed, construed, or treated as an admission or a concession of any liability or wrongdoing whatsoever by either party for any purpose whatsoever.

     11. Non-Disparagement. Employee and Company agree that, in the future, neither will make any disparaging or defamatory remarks about the other or any of the Related Entities.

     12. Severability. If any term, clause or provision of this Agreement is construed to be or adjudged invalid, void or unenforceable, such term, clause or provision will be construed as severed from this Agreement, and the remaining terms, clauses and provisions will remain in full force and effect.

     13. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered will be deemed to be an original and all of which taken together will constitute one and the same instrument.

     14. Entire Agreement. This Agreement constitutes the entire understanding of the parties with respect to the subject matter hereof and supersedes any and all prior, contemporaneous or subsequent statements, representations, agreements or understandings, whether oral or written, between the parties with respect hereto. This Agreement shall inure to the benefit of the executors, administrators, heirs, successors and assigns of the parties hereto. The terms of this Agreement may only be modified by a written instrument signed by Employee and an authorized officer of the Company.

     15. Execution. For this Agreement to be effective, Employee must sign and date it on the last page hereof, and return the executed original to the undersigned representative of the Company, no later than the close of business on the date twenty-one (21) days after the Agreement Date, or this Agreement will be deemed rescinded by the Company, and thereafter void for all purposes.

     16. Rescission Period. Employee understands that he has a full seven (7) days following his execution and delivery of this Agreement to the Company to revoke his consent to this Agreement by notifying the undersigned representative of the Company, of such revocation, in writing, within that seven-day period. This Agreement shall not be effective or enforceable until the seven-day revocation period has expired (the “Effective Date”). In the event that Employee revokes this Agreement prior to the Effective Date, the Agreement shall be deemed void and neither party shall have any obligation hereunder, including Company’s obligation to pay the amounts described herein.

     17. Notices. All notices, requests, demands, and other communications called for hereunder will be in writing and will be deemed given (a) on the date of delivery if delivered personally, (b) one day after being sent overnight by a well established commercial overnight

5.

service, or (c) four days after being mailed by registered or certified mail, return receipt requested, prepaid and addressed to the parties or their successors at the following addresses, or at such other addresses as the parties may later designate in writing:

To Company:	LSI Logic Corporation 1621 Barber Lane, M/S D-106 Milpitas, California 95035-7458 Attn: General Counsel
To Employee:	Donald J. Esses 18691 Carriage Hill Drive San Jose, California 95120

     18. Opportunity to Consult Counsel. Employee hereby acknowledges that he has read and understands the foregoing Agreement and is being given the opportunity to consider this Agreement for up to a full twenty-one (21) days from his receipt of this Agreement. Employee is advised to consult with an attorney of his own choosing before signing this Agreement. Employee may execute this Agreement at any time prior to the expiration of the 21-day period and that if he does so, he does so voluntarily, without any threat or coercion from anyone, knowing that he is waiving his statutory right to consider this Agreement for a full twenty-one (21) days.

	LSI LOGIC CORPORATION, a Delaware corporation
/s/ Donald J. Esses	By:	/s/ Jon R. Gibson
DONALD J. ESSES		JON R. GIBSON Vice President, Human Resources

Date:      3/30     , 2007

6.

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO
SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002

I, Abhijit Y. Talwalkar, certify that:

1. I have reviewed this quarterly report on Form 10-Q of LSI Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 11, 2007

By:	/s/ Abhijit Y. Talwalkar
	Name:	Abhijit Y. Talwalkar
	Title:	President & Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO
SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002

I, Bryon Look, certify that:

1. I have reviewed this quarterly report on Form 10-Q of LSI Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 11, 2007

By:	/s/ Bryon Look
	Name:	Bryon Look
	Title:	Executive Vice President & Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Abhijit Y. Talwalkar, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of LSI Corporation on Form 10-Q for the quarterly period ended April 1, 2007, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of LSI Corporation.

By:	/s/ Abhijit Y. Talwalkar
	Name:	Abhijit Y. Talwalkar
	Title:	President & Chief Executive Officer
	Date:	May 11, 2007

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Bryon Look, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of LSI Corporation on Form 10-Q for the quarterly period ended April 1, 2007, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of LSI Corporation.

By:	/s/ Bryon Look
	Name:	Bryon Look
	Title:	Executive Vice President & Chief Financial Officer
	Date:	May 11, 2007