We are asking our stockholders to approve the Option Exchange with the following features:

Exclusion of Our Listed Officers and Directors.

The Option Exchange will be available to specified employees holding eligible stock options (as defined below) other than our listed officers and directors.

Eligible Stock Options.

The Option Exchange will be offered only with respect to stock options with a purchase (exercise) price above the highest daily adjusted closing price of our common stock over the 52 weeks (52-week high) prior to the end of the exchange offer period, and will exclude any stock options granted within the 12 months preceding the beginning of the exchange offer period. This approach seeks to remove stock options with intrinsic value in the recent past from being eligible for the Option Exchange, as they would be considered likely to have intrinsic value in the near future.

Offer an Approximate Value-for-Value Exchange.

The value of an employee's new stock option grant received as part of the Option Exchange is not expected to exceed the value of such employee's surrendered stock options. The exercise price of the new stock options will be set on the grant date of the Option Exchange using the average of the market high and low prices for the day. The exchange ratios of shares associated with surrendered eligible stock options into new stock options will be established shortly before the start of the Option Exchange. The exchange ratios will be established by grouping together eligible awards with similar grant dates and exercise prices, and assigning an appropriate exchange ratio to each grouping. (See the example in "Stock Option Exchange Ratios" below.)

Establishment of a New Vesting Period with a Term of Seven Years.

New stock option awards will receive a renewed vesting period that will vest in 25% annual increments over a four-year period from grant date with a seven-year term. This vesting period supports the long-term nature of stock as an incentive vehicle and also provides for additional years of retention over the tendered stock options.

Implementation of the Option Exchange within Nine Months of Stockholder Approval.

We expect that the Option Exchange will begin within nine months of the stockholder approval, if received. The actual implementation date within that nine-month period, and whether we actually implement this program, will be determined by our Board. If the Option Exchange does not commence within this time frame, Intel will not conduct the Option Exchange without first seeking stockholder approval. Our Board reserves the right to amend, postpone, or under certain circumstances cancel the Option Exchange once it has commenced.