Exhibit 10.7

 

INTEL CORPORATION

 

1997 STOCK OPTION PLAN

 

(Amended and Restated Effective July 16, 1997)

 

1.                                      PURPOSE

The purpose of this Intel Corporation 1997 Stock Option Plan (the “Plan”) is to
advance the interests of Intel Corporation, a Delaware corporation (hereinafter
“Intel”), by stimulating the efforts of non-officer employees who are selected
to be participants by heightening the desire of such persons to continue in
working toward and contributing to the success of Intel.  Stock options granted
pursuant to this Plan are not incentive stock options, as defined in Section 422
of the Internal Revenue Code of 1986, as amended (the “Code”).

2.                                      DEFINITIONS

(A)                                  “BOARD OF DIRECTORS” MEANS THE BOARD OF
DIRECTORS OF INTEL.

(B)                                 “COMMITTEE” MEANS THE BOARD OF DIRECTORS
AND/OR A COMMITTEE OF THE BOARD OF DIRECTORS ACTING PURSUANT TO ITS
AUTHORIZATION TO ADMINISTER THIS PLAN UNDER SECTION 4.

(C)                                  “COMMON STOCK” MEANS INTEL CORPORATION’S
COMMON STOCK, PAR VALUE $.001, AS PRESENTLY CONSTITUTED, SUBJECT TO ADJUSTMENT,
AND INCLUDING OTHER SECURITIES, AS PROVIDED IN SECTION 8.

(D)                                 “CORPORATION” MEANS INTEL AND ITS
SUBSIDIARIES AND AFFILIATES, UNLESS THE CONTEXT OTHERWISE REQUIRES.

(E)                                  “PLAN” MEANS THE INTEL CORPORATION 1997
STOCK OPTION PLAN.

(F)                                    “SUBSIDIARY” MEANS ANY CORPORATION (OTHER
THAN INTEL) IN AN UNBROKEN CHAIN OF CORPORATIONS BEGINNING WITH INTEL WHERE EACH
OF THE CORPORATIONS IN THE UNBROKEN CHAIN OTHER THAN THE LAST CORPORATION OWNS
STOCK POSSESSING 50 PERCENT OR MORE OF THE TOTAL COMBINED VOTING POWER OF ALL
CLASSES OF STOCK IN ONE OF THE OTHER CORPORATIONS IN SUCH CHAIN.

(G)                                 “IMMEDIATE FAMILY” MEANS THE SPOUSE,
CHILDREN AND GRANDCHILDREN OF THE PARTICIPANT (AS DEFINED IN SECTION 5 HEREOF).

3.                                      COMMON STOCK SUBJECT TO THE PLAN AND TO
OPTIONS

Subject to adjustment as provided in Section 8, the maximum number of shares of
Common Stock which may be issued pursuant to this Plan shall not exceed
130,000,000 shares (as adjusted automatically by the Plan’s terms effective July
13, 1997, to reflect a stock split effected in the form of a stock
distribution). 

 

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Shares issued under this Plan may be authorized and unissued shares of Common
Stock or shares of Common Stock reacquired by Intel.  All or any shares of
Common Stock subject to an option which for any reason are not issued under an
option may again be made subject to an option under the Plan.

4.                                      ADMINISTRATION OF THE PLAN

The Plan shall be administered by the Board of Directors and/or by a Committee
of the Board of Directors of Intel, as appointed from time to time by the Board
of Directors.  The Board of Directors shall fill vacancies on and from time to
time may remove or add members to the Committee.  Notwithstanding the foregoing,
unless otherwise restricted by the Board of Directors, the Committee may appoint
one or more separate committees (any such committee, a “Subcommittee”) composed
of one or more directors of Intel (who may but need not be members of the
Committee) and may delegate to any such Subcommittee(s) the authority to grant
options under the Plan to Participants (as defined in Section 5 hereof), to
determine all terms of such options, and/or to administer the Plan or any aspect
of it.  Any action by any such Subcommittee within the scope of such delegation
shall be deemed for all purposes to have been taken by the Committee.  The
Committee shall act pursuant to a majority vote or majority written consent.

Subject to the express provisions of this Plan, the Committee shall be
authorized and empowered to do all things necessary or desirable in connection
with the administration of this Plan, including, without limitation: (a) to
prescribe, amend and rescind rules and regulations relating to this Plan and to
define terms not otherwise defined herein; (b) to determine which persons are
Participants, to which of such Participants, if any, an option shall be granted
hereunder and the timing of any such option grants; (c) to determine the number
of shares of Common Stock subject to an option and the exercise or purchase
price of such shares; (d) to establish and verify the extent of satisfaction of
any conditions to exercisability applicable to an option, (e) to waive
conditions to and/or accelerate exercisability of an option, either
automatically upon the occurrence of specified events (including in connection
with a change of control of the Corporation) or otherwise in its discretion; (f)
to prescribe and amend the terms of option grants made under this Plan (which
need not be identical); (g) to determine whether, and the extent to which,
adjustments are required pursuant to Section 8 hereof; and (h) to interpret and
construe this Plan, any rules and regulations under the Plan and the terms and
conditions of any option granted hereunder, and to make exceptions to any such
provisions in good faith and for the benefit of the Corporation.

All decisions, determinations and interpretations by the Committee regarding the
Plan, any rules and regulations under the Plan and the terms and conditions of
any option granted hereunder, shall be final and binding on all Participants and
optionholders.  The Committee shall consider such factors as it deems relevant,
in its sole and absolute discretion, to making such decisions, determinations
and

 

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interpretations including, without limitation, the recommendations or advice of
any officer or other employee of the Corporation and such attorneys, consultants
and accountants as it may select.

5.                                      PARTICIPANTS

Any person who is an employee of the Corporation (a “Participant”) shall be
eligible to be considered for the grant of an option hereunder unless such
person is an “officer or director” as contemplated by Rule 4460 of the Nasdaq
Stock Market’s National Market rules. No option shall be granted to any
Participant if immediately after the grant of such option such Participant would
own stock, including stock subject to outstanding options previously granted to
him or her, amounting to more than five percent (5%) of the total combined
voting power or value of all classes of stock of Intel. Any person designated by
the Corporation as an independent contractor shall not be treated as an employee
under the Plan.

6.                                      GRANT, TERMS AND CONDITIONS OF OPTIONS

Options may be granted at any time and from time to time prior to the
termination of the Plan to Participants selected by the Committee.  However,
subject to adjustment pursuant to Section 8, the aggregate number of shares of
Common Stock subject to options granted under this Plan during any calendar year
to any one Participant shall not exceed one percent (1%) of the number of shares
of Common Stock outstanding on December 28, 1996.  No optionholder shall have
any rights as a stockholder with respect to any shares of Common Stock subject
to an option hereunder until said shares have been issued.  Options granted
pursuant to the Plan need not be identical but each option shall be subject to
the following terms and conditions:

(A)                                  PRICE:  THE EXERCISE PRICE FOR EACH OPTION
SHALL BE ESTABLISHED BY THE COMMITTEE.  THE EXERCISE PRICE SHALL NOT BE LESS
THAN THE FAIR MARKET VALUE OF THE STOCK ON THE DATE OF GRANT.  THE EXERCISE
PRICE SHALL BE PAID IN FULL AT THE TIME OF EXERCISE.  THE EXERCISE PRICE SHALL
BE PAID IN SUCH FORM OF CONSIDERATION AS THE COMMITTEE IN ITS DISCRETION SHALL
SPECIFY, WHICH MAY BUT NEED NOT INCLUDE, E.G., IN CASH, BY LOAN (AS DESCRIBED IN
SECTION 7), BY PAYMENT UNDER AN ARRANGEMENT WITH A BROKER WHERE PAYMENT IS MADE
PURSUANT TO AN IRREVOCABLE DIRECTION TO THE BROKER TO DELIVER ALL OR PART OF THE
PROCEEDS FROM THE SALE OF THE OPTION SHARES TO THE CORPORATION, BY THE SURRENDER
OF SHARES OF COMMON STOCK OWNED BY THE OPTIONHOLDER EXERCISING THE OPTION OR
ISSUABLE UNDER AN OPTION HELD BY THE OPTIONHOLDER AND HAVING A FAIR MARKET VALUE
ON THE DATE OF EXERCISE EQUAL TO THE OPTION PRICE, OR BY ANY COMBINATION OF THE
FOREGOING.

(B)                                 DURATION AND EXERCISE OR TERMINATION OF
OPTION:  EACH OPTION SHALL BE EXERCISABLE IN SUCH MANNER AND AT SUCH TIMES AS
THE COMMITTEE SHALL DETERMINE.  HOWEVER, EACH OPTION GRANTED MUST EXPIRE WITHIN
A PERIOD OF

 

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NOT MORE THAN TEN (10) YEARS FROM THE GRANT DATE.  THE EFFECTIVE DATE OF EACH
OPTION GRANTED HEREUNDER SHALL BE THE DATE ON WHICH THE GRANT WAS MADE.

(C)                                  SUSPENSION OR TERMINATION OF OPTION:  THE
CHIEF EXECUTIVE OFFICER, PRESIDENT, CHIEF OPERATING OFFICER, VICE PRESIDENT FOR
HUMAN RESOURCES AND GENERAL COUNSEL OF THE CORPORATION (ANY SUCH PERSON, AN
“AUTHORIZED OFFICER”) EACH MAY PROVIDE AT ANY TIME (INCLUDING AFTER A NOTICE OF
EXERCISE HAS BEEN DELIVERED) AND FROM TIME TO TIME THAT THE RIGHT TO EXERCISE AN
OPTION MAY BE SUSPENDED PENDING A DETERMINATION BY AN AUTHORIZED OFFICER OR THE
COMMITTEE ON WHETHER A PARTICIPANT TO WHOM THE OPTION WAS GRANTED OR AN
OPTIONHOLDER HAS COMMITTED AN ACT OF EMBEZZLEMENT, FRAUD, DISHONESTY, NONPAYMENT
OF ANY OBLIGATION OWED TO THE CORPORATION, BREACH OF FIDUCIARY DUTY OR
DELIBERATE DISREGARD OF CORPORATION RULES; HAS MADE AN UNAUTHORIZED DISCLOSURE
OF ANY CORPORATION TRADE SECRET OR CONFIDENTIAL INFORMATION; HAS ENGAGED IN ANY
CONDUCT CONSTITUTING UNFAIR COMPETITION; HAS INDUCED ANY CUSTOMER OF THE
CORPORATION TO BREACH A CONTRACT WITH THE CORPORATION OR ANY PRINCIPAL FOR WHOM
THE CORPORATION ACTS AS AGENT TO TERMINATE SUCH AGENCY RELATIONSHIP; OR HAS
ENGAGED IN ANY OTHER ACT OR CONDUCT PROSCRIBED BY THE COMMITTEE FROM TIME TO
TIME (ANY SUCH ACT OR CONDUCT, INDIVIDUALLY OR COLLECTIVELY, SOMETIME
HEREINAFTER REFERRED TO AS “MISCONDUCT”). NO PERSON SHALL BE ENTITLED TO
EXERCISE ANY OPTION GRANTED TO A PARTICIPANT OR HELD BY AN OPTIONHOLDER IF THE
AUTHORIZED OFFICER OR THE COMMITTEE, AS THE CASE MAY BE, HAS DETERMINED SUCH
PARTICIPANT OR OPTIONHOLDER TO HAVE ENGAGED IN ANY MISCONDUCT.

(D)                                 CONDITIONS AND RESTRICTIONS UPON SECURITIES
SUBJECT TO OPTIONS:  THE COMMITTEE MAY PROVIDE THAT THE SHARES OF COMMON STOCK
ISSUED UPON EXERCISE OF AN OPTION SHALL BE SUBJECT TO SUCH FURTHER CONDITIONS OR
AGREEMENTS AS THE COMMITTEE IN ITS DISCRETION MAY SPECIFY PRIOR TO THE EXERCISE
OF SUCH OPTION, INCLUDING WITHOUT LIMITATION, CONDITIONS ON VESTING OR
TRANSFERABILITY, FORFEITURE OR REPURCHASE PROVISIONS AND METHOD OF PAYMENT FOR
THE SHARES ISSUED UPON EXERCISE (INCLUDING THE ACTUAL OR CONSTRUCTIVE SURRENDER
OF COMMON STOCK ALREADY OWNED BY THE PARTICIPANT). THE COMMITTEE MAY ESTABLISH
RULES FOR THE DEFERRED DELIVERY OF COMMON STOCK UPON EXERCISE OF AN OPTION WITH
THE DEFERRAL EVIDENCED BY USE OF “STOCK UNITS” EQUAL IN NUMBER TO THE NUMBER OF
SHARES OF COMMON STOCK WHOSE DELIVERY IS SO DEFERRED. A “STOCK UNIT” IS A
BOOKKEEPING ENTRY REPRESENTING AN AMOUNT EQUIVALENT TO THE FAIR MARKET VALUE OF
ONE SHARE OF COMMON STOCK.  STOCK UNITS REPRESENT AN UNFUNDED AND UNSECURED
OBLIGATION OF THE CORPORATION EXCEPT AS OTHERWISE PROVIDED BY THE COMMITTEE. 
SETTLEMENT OF STOCK UNITS UPON EXPIRATION OF THE DEFERRAL PERIOD SHALL BE MADE
IN COMMON STOCK OR OTHERWISE AS DETERMINED BY THE COMMITTEE.  THE AMOUNT OF
COMMON STOCK, OR OTHER SETTLEMENT MEDIUM, TO BE SO DISTRIBUTED MAY BE INCREASED
BY AN INTEREST FACTOR OR BY DIVIDEND EQUIVALENTS.  UNTIL A STOCK UNIT IS SO
SETTLED, THE NUMBER OF SHARES OF COMMON STOCK REPRESENTED BY A STOCK UNIT SHALL
BE

 

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SUBJECT TO ADJUSTMENT PURSUANT TO SECTION 8.  ANY STOCK UNITS THAT ARE SETTLED
AFTER THE HOLDER’S DEATH SHALL BE DISTRIBUTED TO THE HOLDER’S DESIGNATED
BENEFICIARY(S) OR, IF NONE WAS DESIGNATED, THE HOLDER’S ESTATE.

(E)                                  TRANSFERABILITY OF OPTION:  UNLESS
OTHERWISE PROVIDED BY THE COMMITTEE AND SUBJECT TO THE ESTABLISHMENT OF
PROCEDURES BY THE COMMITTEE, EACH OPTION SHALL BE TRANSFERABLE ONLY:

(1)                                  BY WILL OR THE LAWS OF DESCENT AND
DISTRIBUTION, OR

(2)                                  BY GIFT TO THE IMMEDIATE FAMILY,
PARTNERSHIPS WHOSE ONLY PARTNERS ARE THE PARTICIPANT OR MEMBERS OF THE IMMEDIATE
FAMILY, LIMITED LIABILITY COMPANIES WHOSE ONLY SHAREHOLDERS ARE THE PARTICIPANT
OR MEMBERS OF THE IMMEDIATE FAMILY, AND TRUSTS ESTABLISHED SOLELY FOR THE
BENEFIT OF THE PARTICIPANT OR MEMBERS OF THE IMMEDIATE FAMILY.

The transferees described in this subsection ((e)) of Section 6 shall be
referred to as “Permitted Transferees”.

Options are transferable only to the extent the options are exercisable at the
time of transfer.  Any purported assignment, transfer or encumbrance that does
not qualify under subsections (1) and (2) above shall be void and unenforceable
against the Corporation.

The terms of stock options granted pursuant to this Plan shall apply to the
beneficiaries, executors and administrators of the Participant and to Permitted
Transferees (including the beneficiaries, executors and administrators of
Permitted Transferees), including the right to agree to any amendment of the
applicable option agreement, except that options transferred to Permitted
Transferees shall not be transferable except by will or the laws of descent and
distribution.

(F)                                    CANCELLATION:  THE COMMITTEE MAY, AT ANY
TIME PRIOR TO EXERCISE AND SUBJECT TO CONSENT OF THE PARTICIPANT, CANCEL ANY
OPTION PREVIOUSLY GRANTED AND MAY OR MAY NOT SUBSTITUTE IN ITS PLACE AN OPTION
AT A DIFFERENT PRICE AND DIFFERENT TYPE UNDER DIFFERENT TERMS OR IN DIFFERENT
AMOUNTS.

(G)                                 OTHER TERMS AND CONDITIONS:  OPTIONS MAY
ALSO CONTAIN SUCH OTHER PROVISIONS, WHICH SHALL NOT BE INCONSISTENT WITH ANY OF
THE FOREGOING TERMS, AS THE COMMITTEE SHALL DEEM APPROPRIATE.  NO OPTION,
HOWEVER, NOR ANYTHING CONTAINED IN THE PLAN SHALL CONFER UPON ANY PARTICIPANT
ANY RIGHT TO CONTINUE IN THE CORPORATION’S EMPLOY OR SERVICE NOR LIMIT IN ANY
WAY THE CORPORATION’S RIGHT TO TERMINATE HIS OR HER EMPLOYMENT OR SERVICE AT ANY
TIME.  OPTION GRANTS MAY BE EVIDENCED BY A WRITTEN AGREEMENT AND/OR SUCH OTHER
WRITTEN ARRANGEMENTS AS MAY BE APPROVED FROM TIME TO TIME BY THE COMMITTEE.

 

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7.                                      LOANS

The Corporation may, in the sole discretion of the Committee, make loans for the
purpose of enabling the Participant to exercise an option granted under the Plan
and to pay the tax liability resulting from an option exercise under the Plan. 
The Committee shall have full authority to determine the terms and conditions of
such loans.  Such loans may be secured by the shares of Common Stock received
upon exercise of such option.

8.                                      ADJUSTMENT OF AND CHANGES IN SECURITIES

(A)                                  IF THE OUTSTANDING SECURITIES OF THE
CLASS(ES) THEN SUBJECT TO THIS PLAN ARE INCREASED, DECREASED OR EXCHANGED FOR OR
CONVERTED INTO CASH, PROPERTY OR A DIFFERENT NUMBER OR KIND OF SHARES OR OTHER
SECURITIES, OR IF CASH, PROPERTY OR SHARES OR OTHER SECURITIES ARE DISTRIBUTED
IN RESPECT OF SUCH OUTSTANDING SECURITIES, IN EITHER CASE AS A RESULT OF A
REORGANIZATION, RECLASSIFICATION, DIVIDEND (OTHER THAN A REGULAR, QUARTERLY CASH
DIVIDEND) OR OTHER DISTRIBUTION, STOCK SPLIT, REVERSE STOCK SPLIT, SPIN-OFF OR
THE LIKE, OR IF SUBSTANTIALLY ALL OF THE PROPERTY AND ASSETS OF THE CORPORATION
ARE SOLD, THEN, UNLESS THE TERMS OF SUCH TRANSACTION SHALL PROVIDE OTHERWISE,
THE MAXIMUM NUMBER AND TYPE OF SHARES OR OTHER SECURITIES THAT MAY BE SUBJECT TO
OPTIONS AND ISSUED IN ACCORD WITH THIS PLAN SHALL BE APPROPRIATELY ADJUSTED. 
THE COMMITTEE SHALL DETERMINE IN ITS SOLE DISCRETION THE APPROPRIATE ADJUSTMENT
TO BE EFFECTED PURSUANT TO THE IMMEDIATELY PRECEDING SENTENCE.  IN ADDITION, IN
CONNECTION WITH ANY SUCH CHANGE IN THE CLASS(ES) OF SECURITIES THEN SUBJECT TO
THIS PLAN, THE COMMITTEE MAY MAKE APPROPRIATE AND PROPORTIONATE ADJUSTMENTS IN
THE NUMBER AND TYPE OF SHARES OR OTHER SECURITIES OR CASH OR OTHER PROPERTY THAT
MAY BE ACQUIRED PURSUANT TO OPTIONS THERETOFORE GRANTED UNDER THIS PLAN AND THE
EXERCISE PRICE OF SUCH OPTIONS, AND INCLUDING COORDINATE ADJUSTMENTS IN THE
NUMBER OF SHARES OF COMMON STOCK REPRESENTED BY STOCK UNITS (AS REFERRED TO IN
SECTION 6(D) HEREOF).

(B)                                 IN THE EVENT THAT, OTHERWISE THAN AS
PROVIDED IN SUBSECTION (A) ABOVE, THERE SHALL BE A CHANGE IN THE NUMBER OR KIND
OF THE OUTSTANDING SHARES OF COMMON STOCK, OR ANY OTHER SECURITIES INTO WHICH
THE COMMON STOCK SHALL HAVE BEEN CHANGED, OR FOR WHICH IT SHALL HAVE BEEN
EXCHANGED, WHETHER BY REASON OF MERGER, CONSOLIDATION OR OTHERWISE, THEN IF THE
COMMITTEE, IN ITS SOLE DISCRETION, SHALL DETERMINE THAT SUCH CHANGE EQUITABLY
REQUIRES AN ADJUSTMENT TO SHARES OR OTHER SECURITIES CURRENTLY SUBJECT TO
OPTIONS OR STOCK UNITS (AS REFERRED TO IN SECTION 6(D) HEREOF) OR WHICH MAY
BECOME SUBJECT TO OPTIONS UNDER THE PLAN, OR TO PRICES OR TERMS OF OUTSTANDING
OPTIONS, SUCH ADJUSTMENT SHALL BE MADE IN ACCORDANCE WITH SUCH DETERMINATION. 
IN ADDITION, IN THE EVENT OF SUCH CHANGE DESCRIBED IN THIS PARAGRAPH, THE
COMMITTEE MAY ACCELERATE THE TIME OR TIMES AT WHICH ANY OPTION MAY BE EXERCISED
OR ANY STOCK UNIT MAY BE SETTLED AND MAY

 

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PROVIDE FOR CANCELLATION OF ANY SUCH ACCELERATED OPTION WHICH IS NOT EXERCISED
WITHIN A TIME PRESCRIBED BY THE COMMITTEE IN ITS SOLE DISCRETION.

(C)                                  NO RIGHT TO PURCHASE FRACTIONAL SHARES OR
FRACTIONS OF OTHER SECURITIES SHALL RESULT FROM ANY ADJUSTMENT IN OPTIONS
PURSUANT TO THIS SECTION.  IN CASE OF ANY SUCH ADJUSTMENT, THE SHARES OR OTHER
SECURITIES SUBJECT TO THE OPTION SHALL BE ROUNDED DOWN TO THE NEAREST WHOLE
SHARE OF COMMON STOCK OR EQUIVALENT OTHER SECURITY, AS THE CASE MAY BE.

9.                                      REGISTRATION, LISTING OR QUALIFICATION
OF SECURITIES

In the event that the Committee determines in its discretion that the
registration, listing or qualification of the shares of Common Stock issuable
under the Plan on any securities exchange or under any applicable law or
governmental regulation is necessary as a condition to the issuance of such
shares under the option, the option may not be exercisable or exercised in whole
or in part unless such registration, listing, qualification, consent or approval
has been unconditionally obtained.

10.                               TAX WITHHOLDING

To the extent required by applicable federal, state, local or foreign law, a
Participant or optionholder shall make arrangements satisfactory to the
Committee for the satisfaction of any withholding tax obligations that arise by
reason of an option exercise or disposition of shares of Common Stock issued
upon exercise of an option.  The Corporation shall not be required to issue
shares of Common Stock or to recognize the disposition of such shares until such
obligations are satisfied.  The Committee may permit these obligations to be
satisfied by any means permitted under Section 6(a) for the payment of the
exercise price of an option.

11.                               OPTION GRANTS BY SUBSIDIARIES

In the case of a grant of an option to any Participant employed by a Subsidiary,
such grant may, if the Committee so directs, be implemented by Intel issuing any
subject shares to the Subsidiary, for such lawful consideration as the Committee
may determine, upon the condition or understanding that the Subsidiary will
transfer the shares to the optionholder in accordance with the terms of the
option specified by the Committee pursuant to the provisions of the Plan. 
Notwithstanding any other provision hereof, such option may be issued by and in
the name of the Subsidiary and shall be deemed granted on such date as the
Committee shall determine.

12.                               EFFECTIVE DATE, AMENDMENT AND TERMINATION OF
PLAN

The Plan was adopted by Intel’s Board of Directors and became effective on
January 15, 1997.  The Plan was amended and restated by the Board of Directors
on July 16, 1997, to provide for limited transferability of options.

 

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Unless earlier suspended or terminated by the Board of Directors, or extended as
provided below, no options may be granted after the tenth anniversary of the
date the Plan is approved by the Board of Directors.  The Board of Directors or
the Committee may from time to time extend the effective term of the Plan and
otherwise amend the Plan as determined appropriate, without action by Intel’s
stockholders except to the extent required by applicable law.  References in the
Plan and in writings evidencing and setting the terms of option grants which
refer to the Code or other applicable law shall also be deemed to refer to any
applicable successor provisions thereof unless otherwise determined by the
Committee. The Plan may be earlier terminated at such earlier time as the Board
of Directors may determine. Termination and expiration of the Plan will not
affect the rights and obligations arising under options theretofore granted and
then in effect.

 

 

 

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INTEL CORPORATION 1997 STOCK OPTION PLAN

ADDITIONAL INFORMATION FOR AUSTRALIAN PARTICIPANTS

 

This discussion has been prepared by Intel Corporation’s (“Intel”) solicitors to
enable employees who have not previously owned stock (sometimes also referred to
as shares) in an offshore company to be provided with basic information in
relation to the ownership and trading of Intel stock.

This discussion is relevant for employees participating in the 1997 Plan, who
are Australian residents for tax purposes, or, though not resident in Australia
for tax purposes, are eligible to participate in the Plan in relation to their
employment in Australia.

THE OPTIONS

•                  The options are to acquire Intel Corporation common stock
(“Stock”) in the future.  Stock are commonly termed shares in Australia.  The
options are exercisable pursuant to the conditions set out in the Grant
Agreement, which is offered under the Plan Rules.

•                  The exercise price of each option, which is for one unit of
stock, is US$76.00.  You will need to pay this sum, in US dollars, on exercise. 
On [date], the exercise price was equivalent to A$[________].  Exchange rates
are likely to fluctuate between now and your exercise of the option.

•                  You may contact David Bolt at Intel Australia Pty. Ltd. on
(02) 9935-5800 to obtain details of the applicable Australian Dollar equivalent
of the exercise price.  Conversion rates are also shown daily in most
newspapers.

•                  The Stock issued on exercise of the options will be quoted on
NASDAQ.  A brief description of the NASDAQ National Market is given below.  The
Stock will not be quoted on the Australian Stock Exchange.  To deal in the
Stock, you will probably need to contact US stockbrokers.

•                  You will receive a copy of Intel’s annual report each year
which describes Intel’s business.

•                  There are risks associated with purchasing stock in a company
which you should consider before exercising your option.  Owning stock does
involve risk.  There is no guarantee that a company’s share price will rise, or
that it will pay dividends or issue new stock.  Share prices can fall.

•                  There are company specific risk factors which are described
in the 10-K Statement.

 

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NASDAQ

The stock issued to participants in the Plan on exercise of the options will be
quoted on the NASDAQ National market.  NASDAQ stands for National Association of
Securities Dealers Automated Quotations.  It is an over-the-counter trading
system for securities, which has a similar purpose to a stock exchange such as
the Australian Stock Exchange.  It operates through a computer and telephone
communications network.  NASDAQ is an inter-dealer system sponsored by the
National Association of Securities Dealers and is the principal over-the-counter
trading system in the US.  It is a computerized quotation and trading system
consisting of thousands of computer terminals.

A listing with NASDAQ is voluntary.  NASDAQ requires that listed companies meet
certain financial standards in terms of assets and shareholder’s equity. 
Generally these requirements are somewhat lower than those of the New York Stock
Exchange and the American Stock Exchange, the two national securities exchanges
operating in the US.

TAXATION IMPLICATIONS OF THE AUSTRALIAN OFFER

This discussion is relevant for Participants who are residents of Australia for
tax purposes, and those who though not Australian residents, are entitled to
participate in the Plan as a result of services performed in Australia.  It
assumes that no Australian Participant will hold more than five percent (5%) of
Intel Common Stock, including Options, nor will control more than five percent
(5%) of the votes which may be cast at a general meeting of Intel Corporation.

The following are the taxable events associated with the grant of Options and
subsequent Stock dealings:

Grant of Options

The Options granted to you will be “qualifying rights” for Australian tax
purposes and will not trigger a tax liability unless you elect to be taxed at
grant.

If you elect to be taxed at grant then, you will be taxed on the deemed value of
the Options in the year of grant.  The “value” of the Options is determined by
reference to rules in the legislation.  It is a function of the market value of
the Common Stock, the Option exercise price and the exercise period.  By way of
example, an Option to acquire stock at a price equal to the “market value” of
that stock on the day of grant of the Option, and which may be exercised within
ten (10) years from the date of grant, will have a deemed market value on the
date of grant of 18.4% of the exercise price.

If you make this election, then you will have no further tax liability until the
Stock obtained on exercise of the Option is sold, or until dividends or bonus
stock are received.

 

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It is recommended that you obtain professional tax advice before you elect to be
taxed on the value of the Options at the date of grant.  Ordinarily it would not
be in your interest to elect to be taxed on the grant.

Exercise of Options

If you do not make the election to be taxed at the time of grant of the Options,
you will be taxed on the Options in the year in which they are exercised,
subject to the rules below regarding leaving employment.

If you exercise the Options and continue to hold the Stock for thirty (30) days
after exercise, then the amount brought to tax will be the deemed “market value”
of the Stock acquired as at the date of exercise, less the exercise price.  The
tax legislation sets out the formula for calculating this value.

The calculation of the amount brought to tax if the shares are sold on, or
within thirty (30) days of the Options being exercised, is dealt with below.

In any event, you will need to include an amount in your tax return in the year
in which the Option is exercised.

Subsequent Sale

If you sell the Stock received from the exercise of the Options on, or within
thirty (30) days of, the date of the exercise of the Options, you will be
subject to tax in the year in which the Options were exercised, on the
consideration received for the sale of the Stock less the Option exercise price.

If the Stock received from the exercise of the Options is sold outside the
thirty (30) day period from exercise, you also need to pay capital gains tax in
the year of sale.  A taxable capital gain will arise in the year of sale if, and
to the extent that, the sale price of the Stock exceeds the deemed “market
value” of the Options at the date of exercise (the value on which tax was paid
on exercise of the relevant Options) plus the exercise price.  This will
ordinarily be the market value of the stock at the exercise date.  If the Stock
is sold twelve (12) months or more from the date of exercise of the Options, the
taxable capital gain will be adjusted to allow for inflation.

If you made the election to be taxed on the Options in the year of the grant,
the taxable capital gain which will need to be included in your taxable income
on the sale of the Stock will be calculated on the basis of the sale price of
the Stock less the value of the Options at the date of grant (i.e., the sum
which was taxed in the year of grant) and the Option exercise price.  The
taxable capital gain will be adjusted to allow for inflation if the sale occurs
twelve (12) months or more from the date of grant of the Options.

 

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Leaving Employment

You will have no tax liability in respect of those Options which are forfeited
on termination of employment.  Further, any tax which you elected to pay on the
grant of forfeited options may be refunded.

However, if you are still able to exercise the Options following termination and
you had not elected to be taxed on the grant of the Options, you will be subject
to tax in the year in which your employment terminates on the deemed “market
value” of the Options at the date of termination of employment.  You will then
suffer no more tax in relation to the Options or the Stock acquired on exercise
until the Stock is sold (as described above), or dividends or bonus Stock is
received.

If, however, the Options are exercised and the Stock is sold within thirty (30)
days of termination of your employment, you will simply be taxed on the sale
price less the Option (exercise) price, and will suffer no further tax in
relation to the sale of the Stock under the capital gains tax regime.

Dividends

Generally, you will be subject to tax on dividends received in Australia.  The
taxable sum will include the amount of US dividend withholding tax, deducted in
the US before remission to you.

An Australian tax credit will be available for the US dividend withholding tax. 
The credit will be limited to the lesser of the amount of US withholding tax and
the Australian tax applicable to the relevant amount.

The Australian and Foreign Investment Regime

The Australian foreign Investment Fund (FIF) regime operates to tax Australian
residents holding interests in certain foreign companies on the increase of
value of that interest each year, whether or not realized.

The Common Stock of Intel Corporation is presently listed on NASDAQ and the FIF
regime will not apply to your Intel Corporation holding.  Intel Corporation will
advise you if this position changes.

Withholding and Reporting

Intel Corporation has no obligation to report the grant or exercise of your
Options or stock to the Australian tax authorities or to withhold the proceeds
of any exercise.  Accordingly, you will be solely responsible for reporting your
gains to the Australian Taxation Office and paying any required taxes.

 

12.

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Summary

This summary only briefly discusses the Australian tax consequences of benefits
acquired under the Plan, based on law currently in effect.

Due to the complexities of, and possible changes to, the tax law you should seek
professional tax advice.

 

 

 

 

13.

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