Xilinx Inc. and Subsidiaries - Page 8

              Petitioner, pursuant to broad-based plans (i.e., plans that             
         offer ESOs to 20 percent or more of a company’s employees),                  
         offered three types of stock option compensation:  ISOs, NSOs,               
         and ESPP purchase rights.  All ISOs and NSOs issued by petitioner            
         were at-the-money.  All ESPP purchase rights were issued with an             
         exercise price equal to 85 percent of the stock’s market price.              
         Prior to and during the 1997 taxable year, the options were                  
         generally subject to a 5-year vesting period.  After 1997,                   
         petitioner decreased the vesting period from 5 to 4 years.                   

              Pursuant to the stock option plan, employees could exercise             
         options by delivering to petitioner’s broker a notice of exercise            
         with irrevocable instructions and consideration equal to the                 
         exercise price.  The broker would then deliver the instructions              
         and consideration to petitioner.  Employees could elect to                   
         exercise their options in either a “same-day-sale” or “buy-and-              
         hold” transaction.  In a same-day-sale, the employee does not                
         make a payment for the stock relating to the option.  Instead,               
         simultaneous execution of the option and sale of the stock                   
         results in the excess of the stock’s market price on the grant               
         date over the exercise price going to the employee and the amount            
         of the exercise price going to petitioner.  In a buy-and-hold                
         transaction, the employee pays the exercise price by presenting a            
         check or other form of consideration to petitioner’s broker and              
         in exchange receives the shares of stock.                                    

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Last modified: May 25, 2011