Xilinx Inc. and Subsidiaries - Page 7

         readily ascertainable fair market value, income is recognized on             
         the grant date, and the issuer is entitled to a deduction.  Sec.             
         83(h); sec. 1.83-7(a), Income Tax Regs.                                      
              NSOs, when granted, may be “in-the-money”, “out-of-the-                 
         money”, or “at-the-money”.  ISOs, however, may only be “at-the-              
         money” or “out-of-the-money”.8  An option is deemed in-the-money             
         when the exercise price on the grant date is below the stock’s               
         market price.  Conversely, an option is out-of-the-money when the            
         exercise price on the grant date is above the stock’s market                 
         price.  An option that has an exercise price equal to the stock’s            
         market price on the grant date is considered at-the-money.                   
              An employee typically cannot exercise options, until the                
         employee has a vested right (i.e., a legal right that is not                 
         contingent on the performance of additional services) in the                 
         option pursuant to the stock option plan’s terms.  Some companies            
         permit immediate vesting upon issuance of an option, while others            
         delay vesting several years or allow incremental vesting over a              
         period of years.                                                             

          the option privilege is readily ascertainable.  Sec. 1.83-7(b)(1)           
          and (2), Income Tax Regs.  “Option privilege” is the value of the           
          right to benefit from any future increase in the value of the               
          property subject to the option, without risking any capital.                
          Sec. 1.83-7(b)(3), Income Tax Regs.                                         
               8  Pursuant to sec. 422, the exercise price relating to ISOs           
          may not be less than the stock’s market price on the grant date.            
          Sec. 422(b)(4).                                                             

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Last modified: May 25, 2011