NOTE 10. EMPLOYEE STOCK PLANS

Stock Incentive Plans

We currently maintain the Amended and Restated 2004 Stock Incentive Plan (Plan). Under the Plan, there are a total of 7.8 million shares of common stock authorized for issuance, with full value awards being counted as 1.25 shares of common stock for purposes of the share limit. The Plan expires in October 2020.

In connection with our acquisition of Opnext, we assumed Opnext’s Amended and Restated 2001 Long-Term Stock Incentive Plan (Opnext Plan) and the shares reserved for issuance thereunder. After giving effect to the exchange ratio, the unused and converted share reserve thereunder consisted of 6,306,977 shares of common stock as of the acquisition date. Subject to compliance with applicable NASDAQ listing requirements, we may grant new stock awards under the assumed Opnext Plan using such share reserve (including any shares returned to such share reserve as a result of the forfeiture or expiration of the stock awards assumed and converted by us) to our employees who are former Opnext employees and to new employees hired after the date of the acquisition.

As of September 28, 2013, there were 7.5 million shares of our common stock available for grant under both plans.

We generally grant stock options that vest over a four year service period, and restricted stock awards and units that vest over a one to four year service period, and in certain cases each may vest earlier based upon the achievement of specific performance-based objectives as set by our board of directors.

In July 2011, our board of directors approved the grant of 0.2 million performance stock units (PSUs) to certain executive officers with an aggregate estimated grant date fair value of $0.9 million. These PSUs vest, up to 150 percent of the target PSUs, upon the achievement of certain revenue growth targets through June 30, 2013, relative to certain comparable companies. Vesting is also contingent upon service conditions being met through August 2015. In October 2013, it was determined that achievement of the performance conditions was reached at the 150 percent target level. As of September 28, 2013, there were 0.2 million PSUs outstanding, after adjustments for forfeitures due to terminations, related to this grant, with an aggregate estimated grant date fair value of $0.8 million.

In July 2012, our board of directors approved an additional grant of 0.6 million PSUs to certain executive officers, subject to shareholder approval of an amendment to our current Plan. These PSUs are not included in the awards outstanding or granted disclosures or in stock-based compensation expense as they are not deemed granted for accounting purposes until the foregoing shareholder approval is obtained. Approximately 0.2 million of the PSUs were forfeited as a result of certain executive officer departures. We will record a cumulative adjustment for stock-based compensation expense based on the fair value of these awards at the date of approval. These PSUs vest upon the achievement of certain adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) targets through June 30, 2014. Vesting is also contingent upon service conditions being met through August 2016. If the performance conditions are not achieved, then the corresponding PSUs will be forfeited in the first quarter of fiscal year 2015.

The following table summarizes the combined activity under all of our equity incentive plans for the three months ended September 28, 2013:


	Shares			Stock			Weighted-		Restricted Stock			Weighted-
	Available			Options /SARs			Average		Awards / Units			Average Grant
	For Grant			Outstanding			Exercise Price		Outstanding			Date Fair Value
	(Thousands)			(Thousands)					(Thousands)
Balances at June 29, 2013		7,578			6,475		$	9.36		2,850		$	3.17
Granted		(499	)		—			—		400			1.12
Exercised or released		—			(8	)		0.97		(468	)		2.73
Cancelled or forfeited		392			(281	)		12.36		(141	)		2.95

Balances at September 28, 2013		7,471			6,186			9.25		2,641			2.95

Supplemental disclosure information about our stock options outstanding as of September 28, 2013 is as follows:

Weighted-

Average

Aggregate

Average

Remaining

Intrinsic

Shares

Exercise Price

Contractual Life

Value

(Thousands)

(Years)

(Thousands)

Options and SARs exercisable at September 28, 2013

5,407

9.79

4.5

180

Options and SARs outstanding at September 28, 2013

6,186

9.25

5.0

184

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value, based on the closing price of our common stock of $1.80 on September 27, 2013, which would have been received by the option holders had all option holders exercised their options as of that date. There were approximately 0.2 million shares of common stock subject to in-the-money options which were exercisable as of September 28, 2013. We settle employee stock option exercises with newly issued shares of common stock.