EMPLOYEE STOCK PLANS

On May 10, 2012, our shareholders approved our 2012 Equity Incentive Plan (the "2012 Plan"), which amended and restated the 2005 Equity Incentive Plan to increase our common stock available for grant under the plan by 2.5 million shares.

Options to purchase common stock granted under the 2012 Plan generally have terms not exceeding seven years. Options to purchase stock under our equity incentive plans are generally granted at exercise prices that are at least 100 percent of the fair market value of our common stock on the date of grant. Generally, 25 percent of the options vest on the first anniversary of the vesting commencement date, and the remaining options vest 1/36 per month for the next 36 months thereafter.

Stock Options

The following table summarizes the stock option activity under all of our equity incentive plans for the six months ended July 1, 2012:



	Number of Shares		Weighted- Average Exercise Price		Weighted Average Remaining Term	Aggregated Intrinsic Value
	(thousands)				(years)	(thousands)
Outstanding at December 31, 2011	6,489		$	4.37
Granted	1,260		$	2.78
Exercised	(132	)	$	1.13
Canceled or forfeited	(596	)	$	4.68
Outstanding at July 1, 2012	7,021		$	4.12	3.9	$	827
Vested and expected to vest at July 1, 2012	6,513		$	4.24	3.8	$	798
Exercisable at July 1, 2012	4,336		$	5.10	2.7	$	633

The following table provides information pertaining to the our stock options for the six months ended July 1, 2012 and July 3, 2011 (in thousands, except weighted-average fair values):



	Six Months Ended
	July 1, 2012		July 3, 2011
Weighted-average fair value of options granted	$	1.78	$	2.39
Intrinsic value of options exercised	$	197	$	69
Cash received from options exercised	$	150	$	48

The aggregate intrinsic value represent the pre-tax differences between the exercise price of stock options and the quoted market price of our stock on July 1, 2012 and July 3, 2011, respectively, for all in-the-money options. There were approximately 1.0 million shares of common stock subject to in-the-money options that were exercisable as of July 1, 2012.

Restricted Stock Units

The 2012 Plan provides for grants of time-based and performance-based RSUs.

Time-Based Restricted Stock Units

Generally, 25 percent of the time-based RSUs vest on each anniversary of the vesting commencement date or date of grant. On occasion, we grant time-based RSUs for varying purposes with different vesting schedules. Time-based RSUs granted under the 2012 Plan are counted against the total number of shares of common stock available for grant under the plan at 1.75 shares of common stock for every one share of common stock subject thereto.

During the three and six months ended July 1, 2012 and July 3, 2011, we did not grant any time-based RSUs. The associated stock-based compensation expense on time-based RSUs is determined based on the fair value of our common stock on the date of grant of the RSU and recognized over the vesting period. As of July 1, 2012, we had approximately 5,000 time-based RSUs outstanding.

Performance-Based Restricted Stock Units

The vesting of performance-based RSUs is contingent on our achievement of certain predetermined financial goals and in some cases, the achievement of certain market performance measures. The amount of stock-based compensation expense recognized in any one period can vary based on the achievement or anticipated achievement of these specific performance goals. If a performance goal is not met or is not expected to be met, no compensation cost would be recognized on the underlying RSUs, and any previously recognized compensation expense on those RSUs would be reversed.

As of December 31, 2011, we had 0.2 million performance-based RSUs outstanding. During the first quarter of 2012, all of these performance-based RSUs expired. We did not record any compensation expense related to these performance-based RSUs during the three and six months ended July 1, 2012 and July 3, 2011 since the performance targets were not met.

The following table summarizes restricted stock units ("RSUs") activity under all of our equity incentive plans for the six months ended July 1, 2012:



	Number of Shares		Weighted Average Grant Date Fair Value
	(thousands)
Outstanding at December 31, 2011	246		$	3.50
Granted	—		N/A
Released	(13	)	$	5.80
Expired	(228	)	$	3.32
Outstanding at July 1, 2012	5		$	5.83