10.

Employee Equity Incentive Plans

Stock Purchase and Stock Option Plans

The

2009

Equity Incentive Plan, the

2011

Equity Incentive Plan, the

2013

Equity Incentive Plan and the

2016

Equity Incentive Plan

September 10, 2009,

our stockholders approved the

2009

Equity Incentive Plan, or the

2009

Plan, under which

900,000

shares of our common stock were reserved for the grant of stock options and other equity incentives. On

September 16, 2011,

our stockholders approved the

2011

Equity Incentive Plan, or the

2011

Plan, under which

600,000

shares of our common stock were reserved for the grant of stock options and other equity incentives. On

August 30, 2013,

our stockholders approved the

2013

Equity Incentive Plan, or the

2013

Plan, under which

2,000,000

shares of our common stock were reserved for the grant of stock options and other equity incentives. On

August 26, 2016,

our stockholders approved the

2016

Equity Incentive Plan, or the

2016

Plan, under which

2,000,000

shares of the common stock were reserved for the grant of stock options and other equity incentives. The

2009

Plan, the

2011

Plan, the

2013

Plan and the

2016

Plan are referred to as the Plans.

Stock Options

Under the Plans, nonqualified and incentive stock options

may

be granted to employees, consultants and non-employee directors. Generally, the per share exercise price shall

not

be less than

100%

of the fair market value of a share on the grant date. The Board of Directors has the full power to determine the provisions of each option issued under the Plans. While we

may

grant options that become exercisable at different times or within different periods, we have primarily granted options that vest over

four

years. The options, once granted, expire

ten

years from the date of grant.

Stock Awards

Stock awards, denominated restricted stock under the

2009

Plan and the

2011

Plan,

may

be granted to any employee, director or consultant under the Plans. Pursuant to a stock award, we will issue shares of common stock. Shares that are subject to the restriction will be released from restriction if certain requirements, including continued performance of services, are met.

Stock Appreciation Rights

Awards of stock appreciation rights, or SARs,

may

be granted to employees, consultants and non-employee directors pursuant to the Plans. A SAR is payable on the difference between the market price at the time of exercise and the exercise price at the date of grant. In any event, the exercise price of a SAR shall

not

be less than

100%

of the fair market value of a share on the grant date and shall expire

later than

ten

years from the grant date. Upon exercise, the holder of a SAR shall be entitled to receive payment either in cash or a number of shares by dividing such cash amount by the fair market value of a share on the exercise date.

Restricted Stock Units

Restricted stock units, denominated performance units in the

2009

Plan,

may

be granted to employees, consultants and non-employee directors under the Plan. Each restricted stock unit shall have a value equal to the fair market value of

one

share. After the applicable performance period has ended, the holder will be entitled to receive a payment, either in cash or in the form of shares, based on the number of restricted stock units earned over the performance period, to be determined as a function of the extent to which the corresponding performance goals or other vesting provisions have been achieved.

The

1999

Equity Incentive Plan

Prior to

May 2009,

stock options were granted under the

1999

Equity Incentive Plan, or the

1999

Plan, for

not

less than

85%

of fair market value at the time of grant. Once granted, the options expire

ten

years from the date of grant. Options granted to employees under the

1999

Equity Incentive Plan typically vested over

four

years. The

1999

Plan expired in

May 2009

and

additional grants

may

be made thereunder.

Zilog

2004

Omnibus Stock Incentive Plan

The Zilog

2004

Omnibus Stock Incentive Plan, or the Zilog

2004

Plan, was approved by the stockholders of Zilog in

2004,

and was amended and approved by the stockholders of Zilog in

2007.

In connection with the acquisition of Zilog, our Board of Directors approved assumption of the Zilog

2004

Plan. Employees of Zilog and persons

first

employed by our company after the closing of the acquisition of Zilog were eligible to receive grants under the Zilog

2004

Plan. Under the

2004

Plan, non-statutory stock options were granted. At the time of the assumption of the Zilog

2004

Plan by our company, up to

652,963

shares of our common stock were available for grant under the plan.

In general, the options and shares granted pursuant to the Zilog

2004

Plan are exercisable at such time or times, and subject to such terms and conditions (including the vesting schedule, period of exercisability and expiration date) as the plan administrator, generally the Compensation Committee of our Board of Directors, determined in the applicable option agreement. The exercise price per share, payable upon the exercise of an option, was established by such administrator at the time of the grant and is

not

less than the par value per share of common stock on the date of the grant and, in the case of an incentive stock option, generally is

not

less than

100%

of the fair market value per share on the date of grant. The Zilog

2004

Plan expired in

February 2014

and

additional grants

may

be made thereunder.

Zilog

2002

Omnibus Stock Incentive Plan

The Zilog

2002

Omnibus Stock Incentive Plan, or the Zilog

2002

Plan, was adopted in

2002.

In connection with the acquisition of Zilog, our Board of Directors approved the assumption of the Zilog

2002

Plan with respect to the shares available for grant as stock options. Employees of Zilog and persons

first

employed by our company after the closing of the acquisition of Zilog were eligible to receive grants under the Zilog

2002

Plan. At the time of the assumption of the Zilog

2002

Plan by our company, up to

366,589

shares of our common stock were available for grant under the plan.

Stock options granted under the Zilog

2002

Plan were permitted to be: (i) incentive stock options or nonqualified stock options or (ii) EBITDA-linked options and/or non-EBITDA linked options. We did

not

grant any EBITDA-linked options and

none

are outstanding. In general, non-EBITDA-linked options granted pursuant to the Zilog

2002

Plan was exercisable at such time or times and subject to such terms and conditions (including the vesting schedule, period of exercisability and expiration date) as determined by the plan administrator in the applicable award agreements or thereafter. The exercise price per share payable upon the exercise of an option was established by such administrator at the time of grant. The term of each non-EBITDA-linked option was determined at the time of grant and does

not

exceed

ten

years. The Zilog

2002

Plan expired in

May 2012

and

additional grants

may

be made thereunder.

Employee Stock Purchase Plan

The Board of Directors has approved the Amended and Restated

1999

Employee Stock Purchase Plan, or the Purchase Plan, and reserved a total of

1,550,000

shares of common stock for issuance under the Purchase Plan. Under the Purchase Plan, all eligible employees

may

purchase our common stock at a price equal to

85%

of the lower of the fair market value at the beginning of the offer period or the semi-annual purchase date. Stock purchases are limited to

15%

of an employee’s eligible compensation. During the year ended

March 31, 2017,

there were

112,171

shares purchased under the Purchase Plan, leaving approximately

128,070

shares available for purchase under the Purchase Plan in the future.

Fair Value of Stock Compensation

The authoritative guidance provided by FASB requires employee stock options and rights to purchase shares under stock participation plans to be accounted for under the fair value method and requires the use of an option pricing model for estimating fair value. Accordingly, share-based compensation is measured at grant date, based on the fair value of the award.

Compensation cost for equity incentive awards is based on the grant-date fair value estimated in accordance with the authoritative guidance provided by FASB. We use the straight-line attribution method to recognize share-based compensation costs over the service period of the award.

The fair value of issuances under our Purchase Plan is estimated on the issuance date and using the Black-Scholes options pricing model, consistent with the requirements of the authoritative guidance provided by FASB.

The following table summarizes the effects of share-based compensation expenses recognized on our consolidated statement of operations resulting from options granted under our equity incentive plans and rights to acquire stock granted under our Purchase Plan (in thousands):

	Year Ended March 31,
Statement of Operations Classifications	2017		2016		2015

Cost of goods sold	$	362	$	488	$	433
Research, development and engineering (1)		1,144		1,272		814
Selling, general and administrative		1,932		1,832		1,620
Stock-based compensation effect in income before income tax provision		3,438		3,592		2,867
Provision for income tax		694		660		1,009
Net stock-based compensation effects on net income	$	2,744	$	2,932	$	1,858

(

) Includes acquisition-related compensation expenses of

$249,000

during fiscal

2016.

As of

March 31, 2017,

there were approximately

$6.8

million of total unrecognized compensation costs related to stock options granted. The unrecognized compensation cost is expected to be recognized over a weighted average period of

2.6

years.

The Black-Scholes option pricing model is used to estimate the fair value of options granted under our equity incentive plans and rights to acquire stock granted under our stock purchase plan. The weighted average estimated fair values of employee stock option grants and rights granted under the Purchase Plan, as well as the weighted average assumptions that were used in calculating such values during the

during fiscal

2017,

2016

and

2015,

were based on estimates at the date of grant as follows:

	Stock Options									Purchase Plan
	Year Ended March 31,									Year Ended March 31,
	2017			2016			2015			2017			2016			2015
Weighted average estimated fair value of grant per share	$	4.48		$	4.83		$	5.54		$	3.28		$	3.33		$	2.90
Risk-free interest rate		1.6	%		1.8	%		1.8	%		0.4	%		0.1	%		0.1	%
Expected term in years		6.41			6.45			6.25			0.75			0.50			0.50
Volatility		40.6	%		44.9	%		52.2	%		37.5	%		39.8	%		36.9	%
Dividend yield		0.4	%		1.2	%		1.0	%		0.7	%		1.1	%		1.1	%

We estimate the expected term of options granted based on the historical average period over which the options are exercised by employees. We estimate the volatility of our common stock based on historical volatility measures. We base the risk-free interest rate that is used in the option valuation model on U.S. Treasury

zero

-coupon issues with remaining terms similar to the expected term of the options.

We estimate the dividend yield based on the historical trend and our expectation of future dividends. Dividend yield is calculated based on the annualized cash dividends per share declared during the quarter and the closing stock price on the date of grant. We are required to estimate forfeitures at the time of grants and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. We use historical data to estimate pre-vesting option forfeitures and record stock-based compensation expense only for those awards that are expected to vest. All stock-based payment awards are amortized on a straight-line basis over the requisite service periods of the awards, which are generally the vesting periods.

We recognize the estimated compensation cost of restricted stock over the vesting term. The estimated compensation cost is based on the fair value of our common stock on the date of grant.

We recognize the compensation cost relating to stock bonuses on the date of grant based on the fair value of our common stock on the date of grant, as such stock bonuses are vested immediately. We did

not

grant any bonus shares during fiscal

2017.

Stock compensation activities under our equity incentive plans for fiscal 2017, 2016 and 2015 were as follows:

				Options Outstanding
	Shares Available for Grant			Number of Shares (1)			Intrinsic Value (2)		Weighted Average Exercise Price per Share
								(000)

Balances, March 31, 2014		1,930,250			5,201,635		$	8,658	$	10.22
Options granted		(249,000	)		249,000				$	11.83
Options exercised		-			(339,374	)	$	1,310	$	8.62
Options cancelled		39,750			(94,250	)			$	11.46
Options expired		26,000			(74,500	)			$	11.17
Balances, March 31, 2015		1,747,000			4,942,511		$	10,831	$	10.37
Options granted		(1,124,000	)		1,124,000				$	11.72
Options exercised		-			(382,826	)	$	1,551	$	9.02
Options cancelled		14,500			(14,500	)			$	11.31
Options expired		-			(434,788	)			$	14.68
Balances, March 31, 2016		637,500			5,234,397		$	6,456	$	10.40
New shares authorized (3)		2,000,000
Options granted		(746,000	)		746,000				$	11.06
Options exercised		-			(859,852	)	$	3,112	$	9.10
Options cancelled		7,500			(7,500	)			$	13.37
Options expired		22,500			(27,500	)			$	11.81
Balances, March 31, 2017		1,921,500			5,085,545		$	19,570	$	10.70

(

)

The number of stock options exercised includes shares that were withheld on behalf of employees to satisfy the statutory tax withholding requirements.

(

)

Except for options exercised, these amounts represent the difference between the exercise price and

$14.55

per share, the closing price of our stock on

March 31, 2017

as reported on the NASDAQ Global Select Market, for all in-the-money, outstanding and exercisable options.

(

)

August 26, 2016,

our stockholders approved the

2016

Plan, under which

2,000,000

shares of our common stock are reserved for the grant of stock options and other equity incentives.

The following table summarizes information about stock options outstanding at

March 31, 2017:

Options Outstanding										Options Exercisable
Exercise Price per Share				Number of Shares Outstanding		Weighted Average Contractual Life		Weighted Average Exercise Price per Share		Number of Shares Exercisable		Weighted Average Exercise Price per Share
$	5.01	-	7.75		576,500		1.6	$	6.66		576,500	$	6.66
$	7.76	-	10.00		843,295		4.7	$	9.30		783,545	$	9.30
$	10.01	-	12.50		2,890,750		6.9	$	11.31		1,417,000	$	11.51
$	12.51	-	14.50		775,000		5.4	$	12.95		523,250	$	12.78
$	5.01	-	14.50		5,085,545		5.7	$	10.70		3,300,295	$	10.34

Of the

5,085,545

options outstanding,

3,300,295

were exercisable on

March 31, 2017

at a weighted average exercise price of

$10.34

per share, with an intrinsic value of

$13.9

million. The weighted average remaining contractual life of options outstanding and options exercisable at

March 31, 2017

was

5.7

years and

4.1

years, respectively. The fair value of options that vested during the year ended

March 31, 2017

was

$2.9

million.

The following table summarizes information about stock options outstanding at

March 31, 2016:

Options Outstanding										Options Exercisable
Exercise Price per Share				Number of Shares Outstanding		Weighted Average Contractual Life		Weighted Average Exercise Price per Share		Number of Shares Exercisable		Weighted Average Exercise Price per Share
$	5.01	-	7.75		819,897		2.6	$	6.63		819,897	$	6.63
$	7.76	-	10.00		1,223,500		4.8	$	9.33		1,017,750	$	9.29
$	10.01	-	12.50		2,448,000		6.6	$	11.42		1,331,916	$	11.52
$	12.51	-	13.37		743,000		6.1	$	12.96		450,000	$	12.69
$	5.01	-	13.37		5,234,397		5.5	$	10.40		3,619,563	$	9.93

Of the

5,234,397

options outstanding,

3,619,563

were exercisable on

March 31, 2016

at a weighted average exercise price of

$9.93

per share, with an intrinsic value of

$6.0

million. The weighted average remaining contractual life of options outstanding and options exercisable at

March 31, 2016

was

5.5

years and

years, respectively. The fair value of options that vested during the year ended

March 31, 2016

was

$2.8

million.