7. Employee Benefit Plans

Stock Options — On February 20, 2003, the Company adopted the 2003 Stock Incentive Plan (the "2003 Incentive Plan") which was subsequently amended and restated. The Company has reserved 4,515,239 shares of its common stock for issuance under the 2003 Incentive Plan, as amended and restated. The 2003 Incentive Plan provides for the issuance of options and other stock-based awards. Options are generally granted at fair value at the date of grant as determined by the Board of Directors, have terms up to ten years and generally vest over four years. At December 30, 2011, 1,184,018 shares were available for future grants under the 2003 Incentive Plan.

On June 10, 2010, the stockholders of the Company approved amendments to the Company's 2003 Amended and Restated Stock Incentive Plan, which included: an increase in share authorization by 1,500,000 common shares; the elimination of the Company's ability to increase further the number of shares under the plan without stockholder approval; and makes certain other changes to the 2003 Amended and Restated Stock Incentive Plan, all of which are more fully described in the Company's definitive proxy statement filed on April 23, 2010.

Option activity under the 2003 Incentive Plan is as follows:


	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
	(In thousands)
Outstanding, January 2, 2009		2,145,882		$	8.03		6.65	$	360

Granted		1,204,292			1.63
Exercised		(14,312	)		1.07
Cancelled		(441,400	)		7.96

Outstanding, January 1, 2010		2,894,462		$	5.38		6.99	$	8,543

Granted		66,000			3.01
Exercised		(646,671	)		2.59
Cancelled		(330,828	)		6.32

Outstanding, December 31, 2010		1,982,963		$	6.07		5.96	$	8,130

Granted		—			—
Exercised		(269,017	)		3.16
Cancelled		(59,255	)		6.07

Outstanding, December 30, 2011		1,654,691		$	6.54		5.02	$	2,776

Options exercisable and expected to vest, December 30, 2011		1,633,763		$	6.60		4.99	$	2,687
Options exercisable, December 30, 2011		1,414,874		$	7.36

The following table summarizes information with respect to options outstanding and exercisable at December 30, 2011:


Range of Exercise Price	Shares Outstanding		Weighted Average Remaining Average Life (Years)		Weighted Average Exercise Price		Shares Exercisable		Weighted Average Exercise Price
$1.00–1.11		349,436		5.97	$	1.09		229,413	$	1.08
$1.17–6.43		293,476		6.99		2.64		175,777		2.90
$6.55–6.55		388,323		3.36		6.55		388,323		6.55
$6.61–12.99		345,806		4.04		8.72		343,711		8.73
$13.51–14.90		277,650		5.27		14.80		277,650		14.80

Grand Total		1,654,691		5.02	$	6.54		1,414,874	$	7.36

For the fiscal years 2011,2010 and 2009, the intrinsic value of the Company's exercised stock options was $2.2 million, $4.6 million, and $23,000, respectively. For the 2011, 2010 and 2009, the Company's vested share recognized expense was $0.3 million, $2.2 million and $1.1 million, respectively. As of December 30, 2011, $0.2 million of unrecognized stock-based compensation cost, net of estimated forfeitures, related to options remains to be amortized and is expected to be recognized over an estimated period of 1.3 years.

Restricted Stock Units and Restricted Stock Awards — In fiscal years 2011, 2010, and 2009, the Company granted 37,500, 30,000 and 37,500, respectively, of common stock to its board members under the 2003 Incentive Plan. Restricted shares vest on the earlier of 1) the next Annual Shareholder Meeting, or 2) 365 days from date of grant. During the second quarter of fiscal year 2009 the Company granted 22,500 shares of common stock to a board member under the 2003 Incentive Plan. These shares vested over a three month period. The total unamortized expense of the Company's unvested restricted stock awards as of December 30, 2011, is approximately $0.1 million. During the first quarter of fiscal year 2008, the Company began granting Restricted Stock Units (RSU's) to employees as part of the Company's long term equity compensation plan. These RSU's are granted to employees with a per share or unit purchase price of zero dollars and either have time based or performance based vesting (PSU's). RSU's typically vest over three years, subject to the employee's continued service with the Company. The expected cost of the grant is recognized over the service period, and is reduced for estimated forfeitures. During the year ended December 30, 2011, the Company approved and granted 690,800 RSU's to employees with a weighted average fair value of $10.42 per share and 66,250 PSU's with a weighted average fair value of $10.65 per share. As of December 30, 2011, $6.3 million of unrecognized stock-based compensation cost, net of estimated forfeitures, related to RSU's remains to be amortized and is expected to be recognized over an estimated period of 2.0 years. The unvested amount is subject to forfeiture, until fully vested. At December 30, 2011, 1,167,867 shares were subject to forfeiture.

The following table summarizes the Company's restricted stock unit and restricted stock award activity thru the year ended December 30, 2011 (in thousands):


	Number of Shares			Aggregate Intrinsic Value
Unvested restricted stock units and restricted stock awards at January 1, 2010		359
Granted		747
Vested		(155	)
Forfeited		(154	)

Unvested restricted stock units and restricted stock awards at December 31, 2010		797
Granted		794
Vested		(318	)
Forfeited		(106	)

Unvested restricted stock units and restricted stock awards at December 30, 2011		1,167		$	7,136

Vested and expected to vest restricted stock units and restricted stock awards		989		$	6,043

Employee Stock Purchase Plan — In 2004 the Company adopted an Employee Stock Purchase Plan ("ESPP") and is authorized to issue 555,343 shares of common stock under the ESPP. The ESPP permits employees to purchase common stock at a discount through payroll withholdings at certain specified dates (purchase period) within a defined offering period. The purchase price is 95% of the fair market value of the common stock at the end of the purchase period and is intended to qualify as an "employee stock purchase plan" under Section 423 of the Internal Revenue Code. There were 23,887 shares issued under the ESPP during the year ended December 30, 2011.

Employee Savings and Retirement Plan — The Company sponsors a 401(k) savings and retirement plan (the "401(k) Plan") for all employees who meet certain eligibility requirements. Participants could elect to contribute to the 401(k) Plan, on a pre-tax basis, up to 25% of their salary to a maximum of $16,500. The Company may make matching contributions of up to 3% of employee contributions based upon eligibility. The Company made approximately $0.6 million, $0.6 million, and $0.1 million discretionary employer contributions to the 401(k) Plan in the years ended December 30, 2011, December 31, 2010 and January 1, 2010, respectively.