Under the Company’s employee stock purchase plans, eligible employees may purchase a limited number of shares of common stock at 85% of the fair market value at either the date of enrollment or the date of purchase, whichever is less. The 1995 Employee Stock Purchase Plan was closed effective December 31, 2004. On May 19, 2005, the Company’s shareholders approved the 2005 Employee Stock Purchase Plan (the “2005 ESPP”). Under the 2005 ESPP, the Company is authorized to issue 250,000 shares of common stock. Shares issued under the 2005 ESPP in 2011, 2010, and 2009 were 58,230, 30,249 and 10,172, respectively.

Stock Option and Award Plans

As of December 31, 2011, the Company has one stock option plan which is the 2008 Equity Incentive Plan (the “2008 Plan”). Also, the 1995 Stock Plan, as amended (the “1995 Plan”), expired on March 15, 2010 and the 2000 Stock Option Plan as amended (the “2000 Plan”), expired on July 14, 2010.

Under the 1995 Plan, 3,925,000 shares of the Company’s common stock were available to grant to employees in the form of incentive stock options. The 1995 Plan, as amended, expired on March 15, 2010 and as such shares are no longer available for grant. The terms of the options granted are subject to the provisions of the 1995 Plan, as determined by the Compensation Committee of the Board of Directors. The exercise price of options under the 1995 Plan is equal to the fair market value of the common stock on the date of grant. Options granted under the 1995 Plan are generally nontransferable. As of December 31, 2011, 255,902 options were outstanding.

The 2000 Plan provided for the granting of non-qualified options to employees and consultants to purchase up to an aggregate of 1,250,000 shares of common stock and was terminated on July 14, 2010. No member of the Board of Directors or executive officers appointed by the Board of Directors was eligible for grants of options under the 2000 Plan. The terms of the options granted are subject to the provisions of the 2000 Plan, as determined by the Compensation Committee of the Board of Directors. Each non-qualified stock option shall either be fully exercisable on the date of grant or shall become exercisable thereafter in such installments as the Board of Directors may specify. No option granted under the 2000 Plan may be exercised after the expiration of seven years from the date of grant. The exercise price of options under the 2000 Plan is equal to the fair market value of the common stock on the date of grant. Options granted under the 2000 Plan are generally nontransferable. In connection with the adoption of the 2008 Plan on May 22, 2008, shares are no longer available for grant under the 2000 Plan.

The 2008 Plan was approved by shareholders at the shareholder meeting held on May 22, 2008. The purpose of this plan is to provide stock options, stock issuances, and other equity interests in the Company to employees, officers, directors, consultants, and advisors to the Company and its subsidiaries or any future parent corporation. The 2008 Plan is administered by the Board of Directors of the Company who will have sole discretion and authority to interpret and correct the provisions of the Plan and any Award. The Board will also have sole authority to determine the terms and provisions of the respective Stock Option Agreements and Awards, which need not be identical. The aggregate number of shares of Common Stock of the Company that may be issued pursuant to the 2008 Plan is 5,196,250. As of December 31, 2011, there were 770,695 shares available for grant under the 2008 Plan.


	Number of options outstanding			Weighted average exercise price per share
Outstanding at December 31, 2008		2,868,118		$	15.33
Granted and assumed		461,650			2.97
Exercised		(29,064	)		2.93
Canceled, forfeited or expired		(815,570	)		24.97
Outstanding at December 31, 2009		2,485,134			10.02
Granted and assumed		113,167			2.18
Exercised		(13,264	)		2.32
Canceled, forfeited or expired		(425,204	)		10.93
Outstanding at December 31, 2010		2,159,833			9.47
Granted		10,000			2.77
Exercised		(88,188	)		2.42
Canceled, forfeited or expired		(311,091	)		12.85
Outstanding at December 31, 2011		1,770,554		$	9.19


	Number of restricted stock units outstanding
Outstanding at December 31, 2008		137,110
Granted		495,502
Released		(39,225	)
Canceled, forfeited or expired		(22,205	)
Outstanding at December 31, 2009		571,182
Granted		1,398,250
Released		(405,838	)
Canceled, forfeited or expired		(66,726	)
Outstanding at December 31, 2010		1,496,868
Granted		1,045,251
Released		(749,070	)
Canceled, forfeited or expired		(163,097	)
Outstanding at December 31, 2011		1,629,952

The Company has, in connection with the acquisitions of various companies, assumed the stock option plans of each acquired company. The related options are included in the preceding table.


	Options Outstanding						Options Exercisable
Range of Exercise prices	Number Outstanding		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$ 2.00 to 2.32		238,512		4.71	$	2.21		162,138	$	2.23
2.43 to 2.43		226,066		4.89		2.43		132,316		2.43
2.48 to 5.12		196,341		3.87		4.01		179,505		4.12
5.52 to 8.16		200,924		3.59		6.37		197,417		6.38
8.40 to 11.76		186,646		3.11		10.41		186,646		10.41
11.84 to 13.12		177,637		2.63		12.76		177,637		12.76
13.20 to 13.28		185,678		1.38		13.24		185,678		13.24
13.44 to 16.88		225,178		2.09		14.93		225,178		14.93
17.04 to 24.80		132,993		2.19		23.23		132,993		23.23
25.76		579		4.31		25.76		579		25.76
$ 2.00 to 25.76		1,770,554		3.26	$	9.19		1,580,087	$	10.01

Stock options generally expire five, seven or ten years from the date of grant and generally vest ratably over periods ranging from immediately to four years.

Stock compensation charged to operations was $2.5 million in 2011, $2.4 million in 2010, and $1.3 million in 2009. Further, no compensation cost was capitalized as part of inventory, and no income tax benefit was recognized in those years. Lastly, no equity awards were settled in cash.

Stock-Based Compensation Fair Value Disclosures

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:


	2011		2010			2009
Risk-free interest rate		N/A		1.61	%		2.43	%
Expected life in years		N/A		3.80			4.03
Expected volatility		N/A		94.84	%		89.26	%
Expected dividend yield		—		—			—

The weighted average fair value of stock options granted, calculated using the Black-Scholes option-pricing model is $0.00 for 2011, $1.41 for 2010, $1.89 for 2009. In 2011 the company granted stock options to a consultant. The fair value of these options was calculated using the stock price on the date of grant. The cost of this grant was $0.02 million. The weighted average fair value of restricted stock units granted is $3.09 for 2011, $2.37 for 2010 and $3.01 for 2009. The total intrinsic value of the options exercised was $0.08 million for 2011, $0.01 million for 2010, and $0.06 million for 2009. Restricted stock units released had an intrinsic value of $2.2 million in 2011, $0.9 million in 2010, and $0.1 million in 2009.

The Company recognized compensation expense related to stock options granted to non-employees of $.02 million in 2011, zero in 2010, and $0.01 million in 2009.

Employee 401(k) Plan

The TranSwitch Corporation 401(k) Retirement Plan (the “Plan”) provides tax-deferred salary deductions for eligible employees. Employees may contribute an annual maximum amount as set periodically by the Internal Revenue Service. The Company had provided matching contributions equal to 50% of the employees’ contributions, up to a maximum of 6% of the employee’s annual compensation. On July 1, 2009, the Company indefinitely suspended its matching contributions. Company contributions begin vesting after two years and are fully vested after three years. Contribution expense related to the Plan was zero in 2011 and 2010, and $0.1 million in 2009.

Note 12. Employee Benefit Plans

Employee Stock Purchase Plans

Stock Option and Award Plans

Stock-Based Compensation Fair Value Disclosures

Employee 401(k) Plan