Note 16 – Equity

The activity in shares of our common and preferred stock during 2014, 2013 and 2012 included the following:



	Year Ended December 31, 2014
	2014	2013	2012
Common Stock:
Outstanding at the beginning of the year	46,981	46,691	37,663
Issuance of common stock	2,917	—	8,625
Exercise of stock options	—	23	—
Conversion of preferred stock	2,537	—	—
Issuance of stock based compensation	465	267	403
Outstanding at the end of the year	52,900	46,981	46,691

Series B Preferred Stock:
Outstanding at the end of the year	20	20	20

Series C Convertible Preferred Stock:
Outstanding at the beginning of the year	37	37	37
Conversion to common stock	(22)	—	—

Outstanding at the end of the year	15	37	37

Treasury Stock:
Outstanding at the end of the year	(72)	(72)	(72)

Common Stock

The Common Stock is $0.001 par value common stock, and 125,000,000 shares are authorized.

In April 2014, we issued the warrants to purchase 2,130,680 shares of our common stock, with an exercise price of $5.29 per share, in connection with our litigation settlement. The warrants expire on April 16, 2019 and are subject to customary anti-dilution provisions.

In February 2014, we entered into the Securities Purchase Agreement whereby we issued 2.9 million shares of our common stock and warrants to purchase 0.7 million shares of our common stock for a total of $12.5 million in cash. The warrants have an exercise price of $5.292 per share and expire on February 28, 2019 and are subject to customary anti-dilution provisions. See Note 12 for additional information.

In March 2013, we entered into warrant agreements through which we issued 3,440,000 warrants to purchase shares of our common stock at an exercise price of $3.014 per share, expiring on April 30, 2018, and warrants to purchase a total of 560,000 shares of our common stock at an exercise price of $3.685 per share, expiring on May 21, 2018. The warrants were entered into in connection with our Monetary Production Payments, additional discussion of which can be found in Note 14. Both warrant agreements are subject to customary anti-dilution provisions and include a cashless exercise provision which entitles investors to surrender a portion of the underlying common stock that has a value equal to the aggregate exercise price in lieu of paying cash upon exercise of a warrant.

In January 2013, in connection with our entry into the Procurement Agreement, we issued warrants to purchase a total of 1,000,000 shares of our common stock at an exercise price of $7.31 per share to the investor. The warrants expire on January 9, 2018 and are subject to customary anti-dilution provisions. Additional information concerning the Procurement Agreement can be found in Note 24.

In June 2012, we completed an underwritten public offering of 8.6 million shares of common stock at a price of $7.50 per common share ($7.13 per common share, net of underwriting discounts) for net proceeds of $60.8 million.

In May 2012, we entered into warrant agreements through which we issued certain investors warrants to purchase a total of 2,000,000 shares of our common stock at an exercise price of $10.50 per share. The warrants were entered into in connection with the May 31, 2012 reimbursement agreement (see Note 24 for additional discussion of this reimbursement agreement). The terms of each of the warrants are substantially identical. The warrants expire on January 24, 2016 and are subject to customary anti-dilution provisions. We also agreed to provide the investors with customary resale registration rights as soon as reasonably practicable.

Series C Convertible Preferred Stock

As of December 31, 2014, we have 14,800 shares of Series C convertible preferred stock (the “Series C Preferred Stock”) outstanding, convertible into 1.7 million shares of common stock. The Series C Preferred Stock is convertible into common stock at any time at the option of the holders at a conversion price of $8.75, plus accrued but unpaid dividends. The Series C Preferred Stock ranks senior to any of our other existing or future shares of capital stock. Dividends on the Series C Preferred Stock are:

cumulative;

compounded quarterly based on the original issue price;

payable in cash or common stock, at 4.5% or 4.92%, respectively; and

payable to the preferred stock investors prior to payment of any other dividend on any other shares of our capital stock.

The Series C Preferred Stock also participates on an as-converted basis with respect to any dividends paid on the common stock.

The Series C Preferred Stock is redeemable for a cash payment of an amount equal to 102% of the sum of the liquidation preference of $1,000 per share plus accrued but unpaid dividends. If we call the Series C Preferred Stock for redemption, the holders have the right to convert their shares into a newly issued preferred stock identical in all respects to the Series C Preferred Stock except that such newly issued preferred stock will not bear a dividend.

Upon the tenth anniversary of the initial issuance of the Series C Preferred Stock, we must redeem all of the Series C Preferred Stock for an amount equal to the Liquidation Preference plus accrued and unpaid dividends payable by us in cash or common stock at our election. Issuance by us of common stock for such redemption is subject to the Equity Conditions and to the market value of the outstanding shares of common stock immediately prior to such redemption equaling at least $500 million.

In the event of a change of control of Endeavour, we will be required to offer to redeem all of the Series C Preferred Stock for the greater of: (i) the amount equal to which such holder would be entitled to receive had the holder converted such Series C Preferred Stock into common stock; (ii) 115% of the sum of the Liquidation Preference plus accrued and unpaid dividends; and (iii) the amount resulting in an internal rate of return to such holder of 15% from the date of issuance of such Series C Preferred Stock through the date that Endeavour pays the redemption price for such shares.

During 2014, holders of a portion of our Series C Preferred Stock converted 22,200 preferred shares, with a face value of $22.2 million, into 2.5 million shares of our common stock.

Series B Preferred Stock

In September 2002, we authorized and designated 500,000 shares of preferred stock, as Series B preferred stock par value $.001 per share (the “Series B Preferred Stock”).

The Series B Preferred Stock is entitled to dividends of 8% of the original issuing price per share per annum, which are cumulative prior to any dividends on the common stock and on parity with the payment of any dividend or other distribution on any other series of preferred stock that has similar characteristics. The holders of each share of Series B Preferred Stock are entitled to be paid out of available funds prior to any distributions to holders of common stock in the amount of $100.00 per outstanding share plus all accrued dividends. We may, upon approval of our Board, redeem all or a portion of the outstanding shares of Series B Preferred Stock at a cost of the liquidation preference and all accrued and unpaid dividends.

For discussion of the potential impact of our filings under Chapter 11 of the Bankruptcy Code on our equity, see Note 3 – Voluntary Reorganization under Chapter 11.