6. STOCK BASED COMPENSATION

Equity Compensation Plans

The Company has the following active equity compensation plans under which equity securities have been authorized for issuance to employees and/or directors:

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The 2015 Long-Term Incentive and Share Award Plan (2015 Plan)

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The 2005 Employee Stock Purchase Plan (2005 ESP Plan)

The 2015 Plan provides for the granting of stock options, stock appreciation rights, restricted stock units and other share-based awards to eligible employees and directors, as defined in the respective plans. Option grants have terms of ten years and become exercisable in varying amounts over periods of up to three years. To date, no stock appreciation rights have been granted under the 2015 Plan. An aggregate of 10,000 shares of common stock were reserved for issuance under the 2015 Plan.

In 2015, the Company approved the 2016 ESP Plan under Section 423 of the Internal Revenue Code. The 2016 ESP Plan will become effective on January 1, 2016, immediately after our existing 2005 ESP Plan expires on December 31, 2015. All full-time employees of ANADIGICS, Inc. and part-time employees, as defined in the 2016 ESP Plan, are eligible to participate in the plan. An aggregate of 5,000 shares of common stock were reserved for offering under the 2016 ESP Plan. Offerings are made at the commencement of each calendar year and must be purchased by the end of that calendar year.

The following table summarizes information related to awards of restricted stock units and stock options as well as changes during the six months period ended July 4, 2015:

	Restricted Stock Units										Stock Options
	Time-based					Performance-based					Time-based
	Units			Weighted Average (WA) grant date fair value		Units			WA price/ unit		Issuable upon exercise			WA exercise price		WA remaining contractual life (years)
Outstanding at January 1, 201 5		2,790		$	1.58		314		$	1.87		1,219		$	4.82
Granted		2,462			1.04		264			1.05		11			1.18
Shares vested/options exercised		(1,440	)		1.37		(10	)		2.03		-			-
Forfeited/expired		(141	)		1.25		-			-		(131	)		4.68
Outstanding at July 4, 2015		3,671		$	1.31		568		$	1.56		1,099		$	4.80	3.2
Exercisable at July 4, 2015	N/A			N/A		N/A			N/A			1,084		$	4.85	3.2

In February 2015, the Company awarded 264 restricted stock units to its officers and other key employees which have market performance-based vesting conditions contingent upon the Company’s relative shareholder returns measured against defined peer group companies. The market performance-based awards will be evaluated annually in one-third increments measuring Company shareholder returns during the one, two and three year periods following the award. Company performance within the top 75th percentile tier in a measurement period would result in maximum performance attainment, while performance below the 25th-percentile results in no vesting for that period. These market performance-based restricted stock units, included in the table above, have an average fair value of $1.05 calculated using a Monte Carlo Simulation model on the date of grant.

The table below summarizes stock based compensation by financial statement line item for the three and six month periods ended July 4, 2015 and June 28, 2014:

	Three months ended				Six months ended
	July 4, 2015		June 28, 2014		July 4, 2015		June 28, 2014
Cost of sales	$	266	$	246	$	540	$	522
Research and development expenses		472		522		925		1,076
Selling and administrative expenses		388		588		857		1,601
Total stock based compensation	$	1,126	$	1,356	$	2,322	$	3,199

No tax benefits have been recorded due to the Company’s full valuation allowance position.

As of July 4, 2015, there was $2,775 of unrecognized stock based compensation cost related to unvested restricted awards and unvested stock options. The weighted average remaining recognition periods for our restricted stock units and stock options are 1.4 and 2.4 years, respectively.

Valuation Method for ESP Plan, Stock Option Awards and Performance Awards

For ESP Plan and stock option awards, the fair value is estimated at the date of grant using a Black-Scholes option pricing model. The fair value of Company-based performance awards are fixed upon the date of grant. Market-based performance equity award fair values are calculated with the assistance of a valuation consultant using a Monte Carlo simulation method. The weighted average assumptions and fair values for stock-based compensation grants used for the six month periods ended July 4, 2015 and June 28, 2014 are summarized below:

	Six months ended
	July 4, 2015			June 28, 2014
Stock option awards:
Risk-free interest rate		1.3	%		1.7	%
Expected volatility		63	%		58	%
Average expected term (in years)		5.0			5.0
Expected dividend yield		0.0	%		0.0	%
Weighted average fair value of options granted	$	0.63		$	0.97

ESP Plan:
Risk-free interest rate		0.3	%		0.1	%
Expected volatility		77	%		57	%
Average expected term (in years)		1.0			1.0
Expected dividend yield		0.0	%		0.0	%
Weighted average fair value of purchase option	$	0.31		$	0.28

Performance awards:
Average risk-free interest rate		0.6	%		0.3	%
Expected volatility		66.5	%		54.6	%
Average expected term (in years)		3.0			3.0
Expected dividend yield		0.0	%		0.0	%
Weighted average fair value of performance awards	$	1.05		$	1.84

For equity awards with an expected term of one year or less, the assumption for expected volatility is solely based on the Company’s historical volatility, whereas for equity awards with expected terms of greater than one year, the assumption is based on a combination of implied and historical volatility.

Equity-based compensation recognized is reduced for estimated forfeitures and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.