. Stock

–Based Compensation

June 2010,

the Company's Board of Directors (the “Board”) approved the Company’s

2010

Stock Incentive Plan (the

“2010

Plan”), which became effective in

November 2010.

The

2010

Plan provides for the grants of restricted stock, stock appreciation rights and stock unit awards to employees, non-employee directors, advisors and consultants. The compensation committee of the Board administers the

2010

Plan, including the determination of the recipient of an award, the number of shares subject to each award, whether an option is to be classified as an incentive stock option or nonstatutory option, and the terms and conditions of each award, including the exercise and purchase prices and the vesting or duration of the award. Options granted under the

2010

Plan are exercisable only upon vesting. At

March 31, 2019,

6,232,297

shares of common stock have been reserved for future grants under the

2010

Plan.

Stock Option Awards

The Company did

not

grant any stock options during the

three

months ended

March 31, 2019

and

2018.

The following table summarizes information regarding options outstanding:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2018		1,159,121		$	12.94		2.62	$	22,267
Exercised		(78,205	)	$	8.26
Outstanding at March 31, 201 9		1,080,916		$	13.28		2.42	$	32,927
Vested and Exercisable at March 31, 2019		1,080,916		$	13.28		2.42	$	32,927

The intrinsic value of options outstanding, exercisable and vested and expected to vest is calculated based on the difference between the exercise price and the fair value of the Company’s common stock as of the respective balance sheet dates.

The total intrinsic value of options exercised during the

three

months ended

March

31,

2019

and

2018

was

$2,745

and

$3,208,

respectively. The intrinsic value of exercised options is calculated based on the difference between the exercise price and the fair value of the Company’s common stock as of the exercise date. Cash received from the exercise of stock options was

$646

and

$291

for the

three

months ended

March

31,

2019

and

2018,

respectively.

Restricted Stock Units

The Company granted restricted stock units (“RSUs”) to members of the Board and its employees. Most of the Company’s outstanding RSUs vest over

four

years with vesting contingent upon continuous service. The Company estimates the fair value of RSUs using the market price of the common stock on the date of the grant. The fair value of these awards is amortized on a straight-line basis over the vesting period.

The following table summarizes information regarding outstanding RSUs:

	Number of Shares			Weighted Average Grant Date Fair Value Per Share
Outstanding at December 31, 2018		4,051,685		$	34.68
Granted		322,941		$	36.94
Vested		(265,180	)	$	31.50
Canceled		(69,604	)	$	34.85
Outstanding at March 31 , 201 9		4,039,842		$	35.07
Expected to vest at March 31, 201 9		3,940,956

The RSUs include performance-based stock units subject to achievement of pre-established revenue goal and earnings per share on a non-GAAP basis. Once the goals are met, the performance-based stock units are subject to

four

years of vesting from the original grant date, contingent upon continuous service. The total performance-based units that vested for the

three

months ended

March 31, 2019

and

2018

was

4,375

and

35,644,

respectively. As of

March 31, 2019,

the total performance-based units outstanding was

85,234.

Employee Stock Purchase Plan

December 2011,

the Company adopted the Employee Stock Purchase Plan (the “ESPP”). Participants purchase the Company's stock using payroll deductions, which

may

not

exceed

15%

of their total cash compensation. Pursuant to the terms of the ESPP, the "look-back" period for the stock purchase price is

six

months. Offering and purchase periods will begin on

February 10

and

August 10

of each year. Participants will be granted the right to purchase common stock at a price per share that is

85%

of the lesser of the fair market value of the Company's common stock at the beginning or the end of each

six

-month period.

The ESPP imposes certain limitations upon an employee’s right to acquire common stock, including the following: (i)

employee shall be granted a right to participate if such employee would own stock possessing

or more of the total combined voting power or value of all classes of stock of the Company immediately after the election to purchase common stock, and (ii)

employee

may

be granted rights to purchase more than

$25

of fair value of common stock in each calendar year. The maximum aggregate number of shares of common stock available for purchase under the ESPP is

2,750,000

shares. Total common stock issued under the ESPP during the

three

months ended

March 31, 2019

and

2018

was

121,549

and

177,771,

respectively.

The fair value of the ESPP purchases is estimated at the start of the offering period using the Black-Scholes option pricing model with the following assumptions:

	Three Months Ended March 31,
	2019			2018

Risk-free interest rate		2.50	%		1.79	%
Expected life (in years)		0.49			0.49
Dividend yield		—			—
Expected volatility		45	%		48	%
Estimated fair value	$	11.11		$	7.42

Stock-Based Compensation Expense

Stock-based compensation expense is included in the Company’s condensed consolidated statements of income (loss) as follows:

	Three Months Ended March 31,
	2019		2018
Cost of goods sold	$	805	$	569
Research and development		10,732		8,498
Sales and marketing		4,148		3,242
General and administrative		3,073		2,244
	$	18,758	$	14,553

Total unrecognized compensation cost related to unvested restricted stock units at

March 31,

2019,

prior to the consideration of expected forfeitures, is approximately

$113,412

and is expected to be recognized over a weighted-average period of

2.19

years.