Exhibit 10.7
INTEL CORPORATION
1997 STOCK OPTION PLAN
(Amended and Restated Effective July 16, 1997)
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”).
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.
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.
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.
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:
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.
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.
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.
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.
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.
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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