11. Equity Incentive Plans

2005 Equity Incentive Plan

In December 2005, our Board of Directors adopted the 2005 Equity Incentive Plan, or the 2005 Plan, and authorized for issuance thereunder 108,879 shares of common stock. The 2005 Plan became effective upon the closing of our initial public offering on March 8, 2006. The 2005 Plan is an amendment and restatement of our previous stock option plans.

Stock options granted under the 2005 Plan generally vest over 4 years, vesting is generally based on service time, and have a maximum contractual term of 10 years. Restricted stock units granted to non-employee directors, which are granted in lieu of paying director fees in cash, generally vest one year after the date of grant. Prior to vesting, restricted stock units do not have dividend equivalent rights, do not have voting rights and the shares underlying the restricted units are not considered issued and outstanding. Shares are issued on the date the restricted stock units vest.

The 2005 Plan provides for annual reserve increases on the first day of each fiscal year commencing on January 1, 2007 and ending on January 1, 2015. The annual reserve increases are equal to the lesser of (i) 2% of the total number of shares of our common stock outstanding on December 31^st of the preceding calendar year, or (ii) 100,000 shares of common stock. Our Board of Directors has the authority to designate a smaller number of shares by which the authorized number of shares of common stock will be increased prior to the last day of any calendar year.

2005 Non-Employee Directors’ Stock Option Plan

In December 2005, our Board of Directors adopted the 2005 Non-Employee Directors’ Stock Option Plan, or the Directors’ Plan, and authorized for issuance thereunder 25,000 shares of common stock. The Directors’ Plan provides for the automatic grant of non-statutory stock options to purchase shares of common stock to our non-employee directors, which vest over four years and have a term of 10 years. The Directors’ Plan provides for an annual reserve increase to be added on the first day of each fiscal year, commencing on January 1, 2007 and ending on January 1, 2015. The annual reserve increases are equal to the number of shares subject to options granted during the preceding fiscal year less the number of shares that revert back to the share reserve during the preceding fiscal year. Our Board of Directors has the authority to designate a smaller number of shares by which the authorized number of shares of common stock will be increased prior to the last day of any calendar year. In May 2013, our stockholders approved an amendment to the Directors’ Plan to increase the shares reserved by an additional 200,000 shares.

2015 Equity Incentive Plan

In April 2015, our Board of Directors approved the 2015 Equity Incentive Plan, or the 2015 Plan, and authorized for issuance thereunder (i) an additional 1,000,000 shares of common stock plus (ii) the number of shares available for issuance pursuant to the grant of future awards under our 2005 Equity Incentive Plan determined as of the effective date of the 2015 Plan; plus (iii) the number of shares underlying outstanding stock awards granted under our previous stock option plans prior to the effective date of the 2015 Plan that expire or terminate for any reason prior to exercise or settlement, are forfeited or repurchased because of the failure to meet a contingency or condition required to vest such shares, or are reacquired, withheld (or not issued) to satisfy a tax withholding obligation in connection with an award. The 2015 Plan became effective upon the approval of the plan by our stockholders on June 23, 2015. Due to the effectiveness of our 2015 Plan, no additional awards will be made under our previous stock option plans. All outstanding awards under our previous stock option plans will continue to be subject to the terms and conditions as set forth in the agreements evidencing such stock awards and the terms of the applicable plan. Stock options issued under the 2015 Plan generally vest over 4 years; vesting is generally based on service time, and have a maximum contractual term of 10 years.

2015 Non-Employee Directors’ Stock Option Plan

In April 2015, our Board of Directors adopted the 2015 Non-Employee Directors’ Stock Option Plan, or the 2015 Directors’ Plan, and authorized for issuance thereunder and (i) an additional 250,000 shares of common stock plus (ii) the number of shares available for issuance pursuant to the grant of future awards under our previous non-employee directors stock option plan determined as of the effective date of the 2015 Directors’ Plan; plus (iii) the number of shares underlying outstanding stock awards granted under our previous non-employee directors stock option plan prior to the effective date of the 2015 Directors’ Plan that expire or terminate for any reason prior to exercise or settlement, are forfeited or repurchased because of the failure to meet a contingency or condition required to vest such shares, or are reacquired, withheld (or not issued) to satisfy a tax withholding obligation in connection with an award. The 2015 Directors’ Plan became effective upon the approval of the plan by our stockholders on June 23, 2015. Due to the effectiveness of our 2015 Directors’ Plan, no additional awards will be made under our previous non-employee directors’ stock option plan. The 2015 Directors’ Plan provides for the automatic grant of non-statutory stock options to purchase shares of common stock to our non-employee directors, which vest over approximately one year and have a term of 10 years.

The following table sets forth the summary of option activity under our share-based compensation plans:

	Outstanding Options
	Number of			Weighted Average
	Shares			Exercise Price
Balance as of January 1, 2015		1,978,273		$	7.10
Options granted		1,544,300			1.19
Options exercised		—			—
Options forfeited		—			—
Options cancelled		(1,196,172	)		5.04
Balance as of December 31, 2015		2,326,401			4.23

At December 31, 2015, options to exercise 912,785 shares of our common stock, at a weighted average exercise price of $8.16 were exercisable.

The intrinsic value of options exercised is calculated based on the difference between the exercise price and the quoted market price of our stock on the exercise date. The total intrinsic value of options exercised during the fiscal years ended December 31, 2014 and 2013 was $26,000, and $13,000, respectively. There were no exercises during the fiscal year ended December 31, 2015. Options to exercise 5,610 shares of our common stock expired in 2015.

Information regarding the stock options outstanding at December 31, 2015 is summarized as follows:

	Outstanding						Exercisable
			Remaining						Remaining
			Contractual		Aggregate				Contractual		Aggregate
	Number		Life		Intrinsic		Number		Life		Intrinsic
Exercise Price	of Shares		(In Years)		Value		of Shares		(In Years)		Value
$0.88 - $0.88		18,000		9.97	$	—		—		—	$	—
$1.08 - $1.08		1,017,706		9.48		—		112,902		8.91		—
$1.20 - $1.95		238,100		9.52		—		450		8.92		—
$1.97 - $3.50		239,247		6.23		—		172,729		5.55		—
$4.14 - $4.42		239,751		6.12		—		233,227		6.08		—
$4.48 - $4.68		290,341		7.34		—		132,142		6.22		—
$4.77 - $21.00		237,349		4.73		—		215,428		4.43		—
$23.70 - $90.10		43,293		2.45		—		43,293		2.45		—
$98.50 - $98.50		2,500		1.39				2,500		1.39
$117.00 - $117.00		114		1.01		—		114		1.01		—
		2,326,401		7.92	$	—		912,785		5.78	$	—

The intrinsic value noted in the table above is calculated as the difference between the market value per share as of December 31, 2015 and the exercise price of the shares. The market value per share as of December 31, 2015, the last trading date of 2015, was $0.70 as reported by The NASDAQ Stock Market.

Information with respect to unvested share units (restricted stock units) as of December 31, 2015 is as follows:

				Weighted
	Number			Average
	of			Grant Date
	Shares			Fair Value
Outstanding at January 1, 2015		81,050		$	4.67
Granted		—			—
Released		(21,875	)		4.67
Forfeited		(22,225	)		4.67
Outstanding at December 31, 2015		36,950			4.67

The total value of restricted stock units released during the fiscal years ended December 31, 2015, 2014, and 2013 was $28,000, $136,000, and $75,000, respectively.

We authorized shares of common stock for issuance under the 2005 Plan and the Directors’ Plan as follows.

Year	Number of Shares
2013		2,319,812
2014		158,751
2015		175,000

The shares authorized for issuance in 2013 include the annual reserve increase of 119,812 shares and the stockholder approved increase of 2,200,000 shares. As of December 31, 2014, 1,667,850 and 136,110 shares remained available for issuance under the 2005 Plan and the Directors’ Plan, respectively. The shares authorized for issuance in 2015 include the annual reserve increase of 175,000 shares.

We authorized shares of common stock for issuance under the 2015 Plan and the 2015 Directors’ Plan as follows.

Year

Number of

2015

1,250,000

The shares authorized for issuance include the stockholder approved increase of 1,250,000 shares. As of December 31, 2015, 2,503,057 and 400,000 shares remained available for issuance under the 2015 Plan and the 2015 Directors’ Plan, respectively.

2005 Employee Stock Purchase Plan

In December 2005, our Board of Directors adopted the 2005 Employee Stock Purchase Plan, or the 2005 ESPP, and authorized for issuance thereunder 50,000 shares of common stock. The 2005 ESPP allows eligible employee participants to purchase shares of our common stock at a discount through payroll deductions. The 2005 ESPP consists of a fixed offering period, generally twenty-four months with four purchase periods within each offering period. Purchases are generally made on the last trading day of each October and April. Employees purchase shares at each purchase date at 85% of the market value of our common stock on their enrollment date or the end of the purchase period, whichever price is lower.

The 2005 ESPP provides for annual reserve increases on the first day of each fiscal year commencing on January 1, 2007 and ending on January 1, 2015. The annual reserve increases will be equal to the lesser of (i) 1% of the total number of shares of our common stock outstanding on December 31 of the preceding calendar year, or (ii) 75,000 shares of common stock. Our Board of Directors has the authority to designate a smaller number of shares by which the authorized number of shares of common stock will be increased prior to the last day of any calendar year. In May 2011, our Compensation Committee terminated the then current offering period under the 2005 ESPP and resolved to begin a new offering period in August 2011 and also amended the 2005 ESPP to reduce the time period of each offering period from twenty-four to six months.

In July 2011, following stockholder approval, the 2005 ESPP was amended to, among other changes, modify the annual automatic increase in shares reserved for the plan to an amount equal to the least of (i) one percent (1%) of the total number of shares of common stock outstanding on December 31st of the preceding calendar year, (ii) 75,000 shares of common stock and (iii) an amount determined by our Board of Directors.

2015 Employee Stock Purchase Plan

In April 2015, our Board of Directors adopted the 2015 Employee Stock Purchase Plan, or 2015 ESPP, and authorized for issuance thereunder (i) an additional 500,000 shares of our common stock plus (ii) the number of shares that remain available for issuance under the 2005 ESPP after all outstanding purchase rights under the 2005 ESPP are exercised. The 2015 ESPP allows eligible employee participants to purchase shares of our common stock at a discount through payroll deductions. The terms of any offering period under the 2015 ESPP will be determined by the Company’s board of directors, or the Board. Purchases are generally made on the last trading day of each November and May. Employees may purchase shares at each purchase date at 85% of the market value of our common stock at either the beginning of the offering period or the end of the purchase period, whichever price is lower. The 2005 ESPP remained in effect until the conclusion of our previous offering, which concluded in October 2015.

There were 128,249 shares that were not purchased by our employees in the recently concluded offering under the 2005 ESPP and were added to the available reserve of 500,000 shares for the 2015 ESPP.

Pursuant to the 2005 ESPP, on January 1, 2015, 2014 and 2013 an additional 75,000 shares for each year were reserved for issuance. We issued 26,157, 70,226, and 54,494 shares at weighted average prices of $1.46, $2.82, and $3.67 during the fiscal years ended December 31, 2015, 2014 and 2013, respectively. At December 31, 2015, 628,249 shares were available for issuance under the 2015 ESPP.