Stockholders' Equity

6 Months Ended

Jun. 30, 2011

Stockholders' Equity

Stockholders' Equity

Note E. Stockholders' Equity

On February 16, 2011, Empire filed an Amended and Restated Certificate of Incorporation (the "Amended Charter") with the Secretary of State of the State of Delaware. The Amended Charter amended Empire's prior Amended and Restated Certificate of Incorporation, as amended, by: (1) increasing Empire's authorized capital stock from 100 million shares, consisting of 95 million shares of common stock and 5 million shares of preferred stock, to a total of 155 million shares, consisting of 150 million shares of common stock and 5 million shares of preferred stock (the "Authorized Capital Amendment"); and (2) eliminating the classified board provisions and providing for the annual election of all directors (the "Declassification Amendment"). The Authorized Capital Amendment and the Declassification Amendment were each approved by the requisite vote of Empire's stockholders at a special meeting of stockholders held on February 16, 2011.

On March 28, 2011, Empire commenced its rights offering. All holders of Empire's common stock were granted the non-transferrable right to purchase 0.56750 shares of Empire's common stock at a price of $0.8837 per share for each share they hold. The expiration date of this rights offering originally set as April 29, 2011, was extended on April 15, 2011, until May 20, 2011.

On May 20, 2011 the rights offering was consummated and Empire's stockholders validly subscribed for 19,886,776 shares of its common stock, par value $0.01 per share, in the rights offering. The rights were exercised at $0.8837 per share, resulting in total gross proceeds of approximately $17.6 million, which were used to repay the Bridge Loan.

Stock-based compensation expense is approximately $319,000 and $912,000 for the three months ended June 30, 2011 and 2010, respectively, and approximately $679,000 and $2.0 million for the six months ended June 30, 2011 and 2010, respectively. As of June 30, 2011, there was approximately $1.1 million of total unrecognized compensation cost related to non-vested share-based compensation awards granted under Empire's plans. That cost is expected to be recognized over the remaining vesting period of two years. This expected cost does not include the impact of any future stock-based compensation awards.

On May 11, 2010, as part of a legal settlement with the Company's former CEO, the Company issued warrants to purchase an aggregate of 3.25 million shares of its common stock at $2.00 per share, as follows: (i) 250,000 shares with an expiration date of May 10, 2015; (ii) 1 million shares with an expiration date of May 10, 2015; and (iii) 2 million shares with an expiration date of May 10, 2020, which may be exercised on a cashless basis and cannot be exercised until the warrants to purchase 1.25 million shares described in clauses (i) and (ii) above have been exercised in full. The warrants were recorded as legal settlement expense and valued at approximately $5.6 million.

On March 14, 2011, Empire's Board of Directors (the "Board") authorized the issuance of 178,643 shares of Empire's common stock as payment of dividends due for the year ended December 31, 2010 on its Series B preferred stock. The approximate value of these shares when issued was $114,000.

On February 23, 2010, the Board authorized the issuance of 74,705 shares of Empire's common stock as payment of dividends due for the year ended December 31, 2009 on its Series B preferred stock. The approximate value of these shares when issued was $138,000.