Stock-Based Awards and Stock-Based Compensation

Stock Option Plans

2011 Plan

Our 2011 Equity Incentive Plan (the “2011 Plan”) provides our board of directors with broad discretion in creating employee equity incentives. Unless otherwise provided in the 2011 Plan, the compensation committee of the board of directors, in its discretion, determines stock option exercise prices, which may not be less than the fair value of our common stock at the date of grant, vesting periods, and expiration periods, which are a maximum of ten years from the date of grant.

The 2011 Plan replaced two previous plans. Awards that were outstanding upon termination of the previous plans remained outstanding pursuant to their original terms and awards subsequently terminated return to the pool of shares available for grant under the 2011 Plan.

The 2011 Plan allows for grants of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock, restricted stock units ("RSUs"), performance shares and performance stock units ("PSUs"). Generally, all stock option grants are issued under an option agreement that provides, among other things, that the option grant vests over a four-year period while RSU and PSU agreements vest between one and four years.

The number of shares available for issuance under the 2011 Plan increases on the first business day of each year in an amount equal to the lesser of (i) 5,000,000 shares; (ii) 3.9% of the outstanding shares on the last day of the immediately preceding year; or (iii) such number of shares as determined by the board of directors.

2015 Employee Stock Purchase Plan

In May 2015, our stockholders approved the adoption of the 2015 Employee Stock Purchase Plan (the "ESPP"), pursuant to which 2,000,000 shares of common stock have been reserved for issuance to participating employees. Eligible employees may elect to contribute up to 15% of their base salary during each pay period, up to $25,000 in a calendar year, for the purchase of up to 3,000 shares during a purchase period. The ESPP provides for separate overlapping 12 month offering periods starting every six months. Each offering has two purchase dates occurring every six months on designated dates. The offerings under the ESPP commence on May 15 and November 15 of each calendar year, with purchase periods beginning in May 2016. Any eligible employee may participate in only one offering period at a time and may purchase shares only through payroll deductions permitted under the ESPP. At the end of each six-month period, the purchase price is determined and the accumulated funds are used to automatically purchase shares of common stock. The purchase price per share is equal to 85% of the lower of the fair market value of the common stock on the first day of the offering period or the date of purchase.

The first purchase period of the ESPP will be in May 2016 and, therefore, no shares were issued pursuant to the ESPP in the three-month period ended March 31, 2016.

Stock Option Activity

Certain information regarding stock option activity for the three-month period ended March 31, 2016 and stock options outstanding as of March 31, 2016 was as follows:



	Shares Available for Grant		Outstanding Stock Options		Weighted average exercise price		Weighted average remaining life (in years)	Aggregate intrinsic value (in thousands)
Balances, December 31, 2015	3,642,166		6,976,957		$	5.59
Additional shares reserved	2,979,417
Stock options granted	(726,949	)	726,949		3.24
Forfeited – stock options	444,489		(444,489	)	8.48
Exercised – stock options			(27,337	)	1.39
Granted – RSUs	(1,707,796	)
Forfeited – RSUs	333,802
Vested RSUs adjusted for taxes	44,188
Balances, March 31, 2016	5,009,317		7,232,080		$	5.19	5.80	$	6,396
Exercisable at March 31, 2016			4,443,999		$	5.27	3.66	$	6,014
Vested and expected to vest			6,718,503		$	5.22	5.45	$	6,312

Restricted Stock Activity

Restricted stock results from the grant of RSUs. The shares of restricted stock vest over the period specified in the related RSU agreements.

Restricted stock activity was as follows:



	Number of shares		Weighted average grant date fair value
Balances, December 31, 2015	4,498,292		$	6.98
Granted – RSUs	1,707,796		3.23
Vested – RSUs	(213,702	)	6.93
Forfeited – RSUs	(333,802	)	6.79
Balances, March 31, 2016	5,658,584		5.87

All shares to be issued upon the exercise of stock options and the vesting of RSUs will come from newly issued shares.

Stock-based compensation expense was included in our Consolidated Statements of Operations as follows (in thousands):



	Three Months Ended March 31,
	2016		2015
Cost of revenues	$	616	$	820
Research and development	916		2,518
Sales and marketing	815		784
General and administrative	1,289		1,522
	$	3,636	$	5,644

As of March 31, 2016, unrecognized stock-based compensation related to all stock-based awards was $33.3 million, which will be recognized over the weighted average remaining vesting period of 2.8 years.