File No. SR-NASD-2002-141; comments to the SEC on proposed NASDAQ rulemaking
From: Klafter, Cary [cary.klafter@intel.com]
Sent: Friday, April 11, 2003 6:48 PM
To: rule-comments@sec.gov
Cc: Bloom, Sara
Subject: File No. SR-NASD-2002-141; comments to the SEC on proposed NASDAQ rulemaking

Margaret H. McFarland 
Deputy Secretary 
Securities and Exchange Commission 
450 Fifth Street, N.W. 
Washington D.C. 20549-0609 

Dear Ms. McFarland: 

We are submitting these comments on behalf of Intel Corporation. Intel is subject to the qualification requirements for NASDAQ-traded securities, including the NASD Rules 4200 
and 4350 which are subject of the proposed rule changes in File No. SR-NASD-2002-141. 

We are generally supportive of these rule changes, but we have some comments relating to 
various of the defined terms in the proposals. 

Rule 4200 (a)(14), definition of 'Family Member".  The definition of this term is 
unnecessarily broad and would create on-going concern and doubt as to the extent of actual
compliance. The proposal effectively covers every relative, no matter how attenuated or 
unknown the relationship.  A violation could occur if a director had an unknown, 3d cousin 
working at the issuer. The definition ought to be tightened substantially to focus on those 
supported by or who support the director from an economic point of view, and/or the 
traditional list of close relatives where it can be expected that the director knows or 
ought to know of an affiliation with the issuer (e.g., parents, siblings, children). We 
suggest that the current definition of "immediate family", or some modest variation, would 
be appropriate. We note that both the SEC and NYSE employ variations on an "immediate 
family" definition that are more appropriately drafted for the purposes of this rule. 

Rule 4200 (a)(15), subsection C. This provision should similarly utilize a more limited 
definition of "Family Member" as discussed above.  The three-year backwards look makes 
this particularly important if the rule is to be subject to realistic compliance efforts.  
As with the example above, consider the newly-recruited director whose unknown, 3d cousin 
was an executive officer who left the company two years earlier.

Rule 4200 (a)(15) first paragraph and subsection A. These paragraphs are duplicative in 
each stating that employment with the issuer prevents status as an independent director; 
one reference is sufficient. In addition, the first paragraph refers to "officer or employee" 
and that phrase suggests that an officer might somehow not also be an employee. The term 
"employee" in subsection A ought to suffice to establish the exclusion sought.

Rule 4200 (a)(15), subsection A and elsewhere. The rule or the accompanying interpretation 
should make clear that "employee" is a term defined by relevant labor law and does not 
include independent contractors or persons employed by other entities who have provided 
goods or services to the issuer. 

Rule 4200 (a)(15), subsection D. We have a charity match program under which the company 
will match an employee's contributions to  tax-qualified charitable organizations up to 
an aggregate of $10,000 per year. Subject to the eligibility of the recipient organization, 
the matching contribution from the company is non-discretionary.  It is possible that a 
director could be the unpaid president or CFO of a local charitable organization which 
receives more than 5% of its gross revenues in a year through this non-discretionary match 
feature.  We recommend that the contributions from charity matching programs of this type 
be excluded from the calculations in subsection D. Contributions made on a discretionary 
basis by the issuer would continue to be included. 

IM 4200, definition of "subsidiary".  The term "executive officer", when used in the rule 
with regards to a "subsidiary", should be specifically defined as in Exchange Act rule 
16a-1(f). As currently drafted, the term would cover employees who have no policy-making 
roles at the corporate level but happen to be the president or CFO of a minor, 3d-tier 
subsidiary.  The Exchange Act is already proposed for use in rule 4350 c)(3)(B) and ought 
be employed here too. 

Also with regards with "subsidiary"  “…IM4200 states that the reference to a “parent or 
subsidiary” is intended to cover entities that are consolidated with the issuer’s 
financial statements.”  It would be worthwhile to clarify that the rule is referring to 
the issuer’s financial statements as filed with the Commission (as opposed to filings 
with the IRS or for any other purpose).  Further, we read the plain language of the 
definition as intended to apply only to entities that the issuer controls and consolidates 
and that it would not apply to, say, an entity in which the issuer owns enough that it 
would be included in the issuer's financial statements as an investment, but not 
consolidated.  It would be worthwhile to clarify the definition in that regard.

We appreciate the opportunity to submit these comments. Please contact the undersigned if 
you have questions concerning the above.

 /s/ Cary Klafter 
Vice President, Legal and Government Affairs 
Corporate Secretary 
Intel Corporation 

_________________ 
Cary Klafter 
Intel Corporation 
408.765.1215 
408.653.8050 (fax) 
408.219.6959 (cell) 
cary.klafter@intel.com