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.


 


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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.


 


 


 


 


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