Common use of Mandatory Convertible Preferred Stock Offering Clause in Contracts

Mandatory Convertible Preferred Stock Offering. Title of securities: 11.125% Mandatory Convertible Preferred Stock, Series A, par value $0.01 per share, of the Company (the “Mandatory Convertible Preferred Stock”). Size of the Mandatory Convertible Preferred Stock Offering: 17,500,000 shares Underwriters’ overallotment option to purchase additional shares of Mandatory Convertible Preferred Stock: Up to an additional 1,750,000 shares that the underwriters for the Mandatory Convertible Preferred Stock Offering have the option to purchase to cover overallotments. Public offering price: $100.00 per share of Mandatory Convertible Preferred Stock Underwriting discount: $3.00 per share of Mandatory Convertible Preferred Stock Net proceeds: The Company estimates that the net proceeds from the Mandatory Convertible Preferred Stock Offering will be approximately $1,696.50 million (or approximately $1,866.25 million if the underwriters exercise their option to purchase additional shares of Mandatory Convertible Preferred Stock in full), after deducting the underwriters’ discounts and commissions and estimated offering expenses. Liquidation preference: $100.00 per share of Mandatory Convertible Preferred Stock Dividends: 11.125% of the liquidation preference of $100.00 for each share of the Mandatory Convertible Preferred Stock per annum (equivalent to $11.125 per annum per share of the Mandatory Convertible Preferred Stock), if declared by the Company’s board of directors or an authorized committee thereof, payable in cash or, at the Company’s election (subject to certain limitations), by delivery of shares of the Company’s common stock or by delivery of any combination of cash and shares of the Company’s common stock. The dividend payable on the first dividend payment date (September 30, 2015), if declared, is expected to be $3.4611 per share of Mandatory Convertible Preferred Stock, and on each subsequent dividend payment date, if declared, will be $2.78125 per share of Mandatory Convertible Preferred Stock. Accumulated and unpaid dividends for any past dividend period will not bear interest. If the Company elects to make any such payment of a declared dividend, or any portion thereof, in shares of its common stock, such shares shall be valued for such purpose at the average VWAP per share of its common stock (as defined in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement) over the five consecutive trading day period commencing on and including the seventh scheduled trading day immediately preceding the applicable dividend payment date (the “average price”), multiplied by 97%. In no event will the number of shares of its common stock delivered in connection with any declared dividend, including any declared dividend payable in connection with a conversion, exceed a number equal to the total dividend payment divided by the floor price (as defined below). To the extent that the amount of the declared dividend exceeds the product of the number of shares of its common stock delivered in connection with such declared dividend and 97% of the average price, the Company will, if it is legally able to do so, pay such excess amount in cash. Floor price: $1.75, subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement. Dividend record dates: The 15th calendar day of the month in which such dividend payment falls. Dividend payment dates: The last business day of each of March, June, September and December of each year, commencing on September 30, 2015 to, and including, the mandatory conversion date. Initial price: $5.00, which is the last reported sale price of the Company’s common stock on the NASDAQ Global Select Market (the “NASDAQ”) on June 4, 2015. Threshold appreciation price: $5.875, which represents an appreciation of 17.50% over the initial price. Acquisition termination redemption: If the Verizon Transaction has not closed on or before 5:00 p.m. (New York City time) on August 6, 2016, the Verizon Purchase Agreement is terminated or if the Company determines in its reasonable judgment that the Verizon Transaction will not occur, the Company may, at its option, in its sole discretion, give notice of acquisition termination redemption to the holders of the shares of Mandatory Convertible Preferred Stock. If the Company provides such notice, then, on the acquisition termination redemption date (as defined in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement), the Company will be required to redeem the shares of Mandatory Convertible Preferred Stock, in whole but not in part, at a redemption amount per share of Mandatory Convertible Preferred Stock equal to the acquisition termination make-whole amount described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement. If redeemed, the Company will pay the acquisition termination make-whole amount in cash unless the acquisition termination share price described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement is greater than the initial price. If the acquisition termination share price is greater than the initial price, the Company will pay the acquisition termination make-whole amount in shares of its common stock and cash, unless the Company elects, subject to certain limitations, to pay cash or shares of its common stock in lieu of such amounts. Other than pursuant to the provisions described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement, the shares of Mandatory Convertible Preferred Stock will not be redeemable by the Company. Mandatory conversion date: June 29, 2018 Mandatory conversion rate: The conversion rate for each share of the Mandatory Convertible Preferred Stock will be not more than 20.0000 shares of the Company’s common stock and not less than 17.0213 shares of its common stock (the “maximum conversion rate” and “minimum conversion rate,” respectively), depending on the applicable market value (as defined below) of its common stock, subject to certain anti-dilution adjustments described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement. The “applicable market value” of the Company’s common stock is the average VWAP per share of its common stock for the 20 consecutive trading day period commencing on and including the 22nd scheduled trading day immediately preceding June 29, 2018. The conversion rate will be calculated as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement and the following table illustrates the conversion rate per share of the Mandatory Convertible Preferred Stock, subject to certain anti-dilution adjustments described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement. Applicable Market Value of our Common Stock on the Mandatory Conversion Date Conversion Rate Per Share of the Mandatory Convertible Preferred Stock Less than or equal to $5.00 (the initial price). 20.0000 shares of common stock. Greater than $5.00 and less than $5.875 (the threshold appreciation price). Between 20.0000 and 17.0213 shares, determined by dividing $100.00 by the applicable market value of common stock. Equal to or greater than the threshold appreciation price. 17.0213 shares of common stock (the minimum conversion rate). Early conversion at the option of the holder: At any time prior to June 29, 2018, other than during a fundamental change conversion period (as defined below), a holder of shares of the Mandatory Convertible Preferred Stock may elect to convert such holder’s shares of Mandatory Convertible Preferred Stock, in whole or in part, into shares of the Company’s common stock, at the minimum conversion rate of 17.0213 shares of its common stock per share of the Mandatory Convertible Preferred Stock, subject to certain anti-dilution adjustments. If, as of the effective date of any early conversion (the “early conversion date”), the Company has not declared all or any portion of the accumulated dividends for all dividend periods ending on a dividend payment date prior to such early conversion date, the conversion rate for such early conversion will be adjusted so that holders converting their Mandatory Convertible Preferred Stock at such time receive an additional number of shares of its common stock equal to such amount of accumulated and unpaid dividends for such prior dividend periods, divided by the greater of the floor price and the average VWAP per share of its common stock over the 20 consecutive trading day period commencing on and including the 22nd scheduled trading day immediately preceding the early conversion date (the “early conversion average price”). To the extent that the cash amount of the accumulated and unpaid dividends for all dividend periods ending on a dividend payment date prior to the relevant conversion date exceeds the value of the product of the number of additional shares added to the conversion rate and the early conversion average price, the Company will not have any obligation to pay the shortfall in cash. Early conversion at the option of the holder upon a fundamental change: Upon the occurrence of a “fundamental change” (as defined in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement) prior to June 29, 2018, under certain circumstances the Company will deliver or pay to holders of Mandatory Convertible Preferred Stock who convert their shares of the Mandatory Convertible Preferred Stock during the period from, and including, the effective date of the fundamental change to, but excluding, the earlier of (A) the mandatory conversion date and (B) the date selected by the Company that is not less than 30 and not more than 60 days after the effective date of such fundamental change (the “fundamental change conversion period”), a number of shares of its common stock or, if the fundamental change also constitutes a reorganization event, units of exchange property (as defined in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement), determined using the applicable fundamental change conversion rate. The fundamental change conversion rate will be determined based on the effective date of the fundamental change and the price per share of its common stock paid or deemed paid in such fundamental change (the “stock price”). Holders who convert their Mandatory Convertible Preferred Stock within the fundamental change conversion period will also receive a “fundamental change dividend make-whole amount,” in cash or in shares of the Company’s common stock or a combination thereof, equal to the present value (computed using a discount rate of 6.00% per annum) of all remaining dividend payments on their shares of the Mandatory Convertible Preferred Stock (excluding any accumulated and unpaid dividends for all dividend periods ending on or prior to the dividend payment date immediately preceding the effective date of the fundamental change as well as dividends accumulated to the effective date of the fundamental change) from such effective date to, but excluding, the mandatory conversion date. If the Company elects to pay the fundamental change dividend make-whole amount in shares of its common stock in lieu of cash, the number of shares of its common stock that the Company will deliver will equal (x) the fundamental change dividend make-whole amount divided by (y) the greater of the floor price and 97% of the stock price. In addition, to the extent that, as of the effective date of the fundamental change, the Company has not declared any or all of the accumulated dividends on the Mandatory Convertible Preferred Stock as of such effective date (including accumulated and unpaid dividends for all dividend periods ending on or prior to the dividend payment date immediately preceding the effective date of the fundamental change as well as dividends accumulated to the effective date of the fundamental change, the “accumulated dividend amount”), upon conversion, the Company will pay or deliver, as the case may be, such accumulated dividend amount in cash (to the extent it is legally permitted to do so) or shares of its common stock, or any combination thereof at the Company’s election, to holders who convert Mandatory Convertible Preferred Stock within the fundamental change conversion period. If the Company elects to pay the accumulated dividend amount in shares of its common stock in lieu of cash, the number of shares of its common stock that the Company will deliver will equal (x) the accumulated dividend amount divided by (y) the greater of the floor price and 97% of the stock price. To the extent that the sum of the fundamental change dividend make-whole amount and accumulated dividend amount or any portion thereof paid in shares of its common stock exceeds the product of the number of additional shares the Company delivers in respect thereof and 97% of the stock price, the Company will, if it is legally able to do so, declare and pay such excess amount in cash. The following table sets forth the fundamental change conversion rate per share of Mandatory Convertible Preferred Stock based on the effective date of the fundamental change and the stock price paid (or deemed paid) per share of common stock in the fundamental change (each of the stock price and the fundamental change conversion rate subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement). Effective Date $1.50 $2.50 $3.75 $4.50 $4.75 $5.00 $5.25 $5.50 $5.88 $6.25 $6.50 $7.50 $8.75 $10.00 $12.50 $15.00 $20.00 June 10, 2015 8.5047 11.8132 13.4879 13.8893 13.9765 14.0495 14.1119 14.1666 14.2390 14.3041 14.3451 14.5008 14.6882 14.8663 15.1754 15.4157 15.7407 December 31, 2015 9.8076 12.8979 14.3438 14.6264 14.6776 14.7165 14.7470 14.7722 14.8043 14.8341 14.8540 14.9425 15.0734 15.2129 15.4701 15.6738 15.9485 June 30, 2016 11.3101 14.0865 15.2730 15.4203 15.4293 15.4283 15.4212 15.4114 15.3961 15.3845 15.3800 15.3926 15.4633 15.5637 15.7688 15.9352 16.1583 December 31, 2016 13.0426 15.3869 16.2843 16.2760 16.2345 16.1848 16.1317 16.0790 16.0060 15.9449 15.9118 15.8401 15.8509 15.9153 16.0712 16.2000 16.3701 June 30, 2017 15.0403 16.8056 17.4044 17.2219 17.1169 17.0038 16.8895 16.7793 16.6296 16.5047 16.4364 16.2716 16.2309 16.2679 16.3792 16.4689 16.5844 December 31, 2017 17.3438 18.3415 18.6799 18.3457 18.1552 17.9455 17.7307 17.5233 17.2455 17.0223 16.9059 16.6543 16.6025 16.6300 16.6960 16.7427 16.8014 June 29, 2018 20.0000 20.0000 20.0000 20.0000 20.0000 20.0000 19.0476 18.1818 17.0213 17.0213 17.0213 17.0213 17.0213 17.0213 17.0213 17.0213 17.0213 The exact stock price and fundamental change effective date may not be set forth in the table, in which case: • if the stock price is between two stock price amounts in the table or the effective date is between two dates in the table, the fundamental change conversion rate will be determined by straight-line interpolation between the fundamental change conversion rates set forth for the higher and lower stock price amounts and the two dates, as applicable, based on a 365-day year; • if the stock price is greater than $20.00 per share (subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement), then the fundamental change conversion rate will be the minimum conversion rate (subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement); and • if the stock price is less than $1.50 per share (subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement) (the “minimum stock price”), then the fundamental change conversion rate will be determined (x) as if the stock price equaled the minimum stock price and (y) if the effective date is between two dates on the table, using straight-line interpolation (subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement).

Mandatory Convertible Preferred Stock Offering. Title of securitiesSecurities: 11.1255.75% Series A Mandatory Convertible Preferred Stock, Series A, par value $0.01 0.001 per share, of the Company Issuer (the “Mandatory Convertible Preferred Stock”). Size Number of Shares of Mandatory Convertible Preferred Stock Offered: 10,000,000 shares of Mandatory Convertible Preferred Stock. Over-Allotment Option: 1,500,000 additional shares of Mandatory Convertible Preferred Stock. Public Offering Price: $100.00 per share. Underwriting Discount: $1.625 per share. Net Proceeds: The net proceeds from the Mandatory Convertible Preferred Stock Offering: 17,500,000 shares Underwriters’ overallotment , after deducting underwriting discounts and commissions and estimated offering expenses, will be approximately $983.09 million (or approximately $1.13 billion if the underwriters exercise their over-allotment option in full to purchase additional shares of Mandatory Convertible Preferred Stock). Liquidation Preference: Up to an additional 1,750,000 shares that $100.00 per share. Dividends: 5.75% of the underwriters for the Mandatory Convertible Preferred Stock Offering have the option to purchase to cover overallotments. Public offering price: liquidation preference of $100.00 per share of Mandatory Convertible Preferred Stock Underwriting discount: $3.00 per share of Mandatory Convertible Preferred Stock Net proceeds: The Company estimates that the net proceeds year. Dividends will accumulate from the Mandatory Convertible Preferred Stock Offering will be approximately $1,696.50 million (or approximately $1,866.25 million most recent date as to which dividends shall have been paid or, if no dividends have been paid, from the underwriters exercise their option to purchase additional shares of Mandatory Convertible Preferred Stock in full), after deducting the underwriters’ discounts and commissions and estimated offering expenses. Liquidation preference: $100.00 per share of Mandatory Convertible Preferred Stock Dividends: 11.125% of the liquidation preference of $100.00 for each share of the Mandatory Convertible Preferred Stock per annum (equivalent to $11.125 per annum per share first original issue date of the Mandatory Convertible Preferred Stock), if declared by and, to the Companyextent the Issuer’s board of directors directors, or an authorized committee thereof, declares a dividend payable with respect to the Mandatory Convertible Preferred Stock, the Issuer will pay such dividends in cash or, at the Company’s election (subject to certain limitations)cash, by delivery of shares of the Company’s common stock Class B Common Stock or by delivery of through any combination of cash and shares of Class B Common Stock, as determined by the Company’s common stockIssuer in its sole discretion (subject to certain limitations); provided that any unpaid dividends will continue to accumulate. The expected dividend payable on the first dividend payment date Dividend Payment Date (September 30, 2015), if declared, as defined below) is expected to be $3.4611 per share of Mandatory Convertible Preferred Stock, and on each subsequent dividend payment date, if declared, will be $2.78125 1.4535 per share of Mandatory Convertible Preferred Stock. Accumulated and unpaid dividends for any past Each subsequent dividend period will not bear interest. If the Company elects is expected to make any such payment of a declared dividend, or any portion thereof, in shares of its common stock, such shares shall be valued for such purpose at the average VWAP per share of its common stock (as defined in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement) over the five consecutive trading day period commencing on and including the seventh scheduled trading day immediately preceding the applicable dividend payment date (the “average price”), multiplied by 97%. In no event will the number of shares of its common stock delivered in connection with any declared dividend, including any declared dividend payable in connection with a conversion, exceed a number equal to the total dividend payment divided by the floor price (as defined below). To the extent that the amount of the declared dividend exceeds the product of the number of shares of its common stock delivered in connection with such declared dividend and 97% of the average price, the Company will, if it is legally able to do so, pay such excess amount in cash. Floor price: $1.75, subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement. Dividend record dates: The 15th calendar day of the month in which such dividend payment falls. Dividend payment dates: The last business day of each of March, June, September and December of each year, commencing on September 30, 2015 to, and including, the mandatory conversion date. Initial price: $5.00, which is the last reported sale price of the Company’s common stock on the NASDAQ Global Select Market (the “NASDAQ”) on June 4, 2015. Threshold appreciation price: $5.875, which represents an appreciation of 17.50% over the initial price. Acquisition termination redemption: If the Verizon Transaction has not closed on or before 5:00 p.m. (New York City time) on August 6, 2016, the Verizon Purchase Agreement is terminated or if the Company determines in its reasonable judgment that the Verizon Transaction will not occur, the Company may, at its option, in its sole discretion, give notice of acquisition termination redemption to the holders of the shares of Mandatory Convertible Preferred Stock. If the Company provides such notice, then, on the acquisition termination redemption date (as defined in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement), the Company will be required to redeem the shares of Mandatory Convertible Preferred Stock, in whole but not in part, at a redemption amount 1.4375 per share of Mandatory Convertible Preferred Stock equal to the acquisition termination make-whole amount described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement. If redeemed, the Company will pay the acquisition termination make-whole amount in cash unless the acquisition termination share price described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement is greater than the initial price. If the acquisition termination share price is greater than the initial price, the Company will pay the acquisition termination make-whole amount in shares of its common stock and cash, unless the Company elects, subject to certain limitations, to pay cash or shares of its common stock in lieu of such amounts. Other than pursuant to the provisions described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement, the shares of Mandatory Convertible Preferred Stock will not be redeemable by the Company. Mandatory conversion date: June 29, 2018 Mandatory conversion rate: The conversion rate for each share of the Mandatory Convertible Preferred Stock will be not more than 20.0000 shares of the Company’s common stock and not less than 17.0213 shares of its common stock (the “maximum conversion rate” and “minimum conversion rate,” respectively), depending on the applicable market value (as defined below) of its common stock, subject to certain anti-dilution adjustments described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement. The “applicable market value” of the Company’s common stock is the average VWAP per share of its common stock for the 20 consecutive trading day period commencing on and including the 22nd scheduled trading day immediately preceding June 29, 2018. The conversion rate will be calculated as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement and the following table illustrates the conversion rate per share of the Mandatory Convertible Preferred Stock, subject to certain anti-dilution adjustments described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement. Applicable Market Value of our Common Stock on the Mandatory Conversion Date Conversion Rate Per Share of the Mandatory Convertible Preferred Stock Less than or equal to $5.00 (the initial price). 20.0000 shares of common stock. Greater than $5.00 and less than $5.875 (the threshold appreciation price). Between 20.0000 and 17.0213 shares, determined by dividing $100.00 by the applicable market value of common stock. Equal to or greater than the threshold appreciation price. 17.0213 shares of common stock (the minimum conversion rate). Early conversion at the option of the holder: At any time prior to June 29, 2018, other than during a fundamental change conversion period (as defined below), a holder of shares of the Mandatory Convertible Preferred Stock may elect to convert such holder’s shares of Mandatory Convertible Preferred Stock, in whole or in part, into shares of the Company’s common stock, at the minimum conversion rate of 17.0213 shares of its common stock per share of the Mandatory Convertible Preferred Stock, subject to certain anti-dilution adjustments. If, as of the effective date of any early conversion (the “early conversion date”), the Company has not declared all or any portion of the accumulated dividends for all dividend periods ending on a dividend payment date prior to such early conversion date, the conversion rate for such early conversion will be adjusted so that holders converting their Mandatory Convertible Preferred Stock at such time receive an additional number of shares of its common stock equal to such amount of accumulated and unpaid dividends for such prior dividend periods, divided by the greater of the floor price and the average VWAP per share of its common stock over the 20 consecutive trading day period commencing on and including the 22nd scheduled trading day immediately preceding the early conversion date (the “early conversion average price”). To the extent that the cash amount of the accumulated and unpaid dividends for all dividend periods ending on a dividend payment date prior to the relevant conversion date exceeds the value of the product of the number of additional shares added to the conversion rate and the early conversion average price, the Company will not have any obligation to pay the shortfall in cash. Early conversion at the option of the holder upon a fundamental change: Upon the occurrence of a “fundamental change” (as defined in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement) prior to June 29, 2018, under certain circumstances the Company will deliver or pay to holders of Mandatory Convertible Preferred Stock who convert their shares of the Mandatory Convertible Preferred Stock during the period from, and including, the effective date of the fundamental change to, but excluding, the earlier of (A) the mandatory conversion date and (B) the date selected by the Company that is not less than 30 and not more than 60 days after the effective date of such fundamental change (the “fundamental change conversion period”), a number of shares of its common stock or, if the fundamental change also constitutes a reorganization event, units of exchange property (as defined in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement), determined using the applicable fundamental change conversion rate. The fundamental change conversion rate will be determined based on the effective date of the fundamental change and the price per share of its common stock paid or deemed paid in such fundamental change (the “stock price”). Holders who convert their Mandatory Convertible Preferred Stock within the fundamental change conversion period will also receive a “fundamental change dividend make-whole amount,” in cash or in shares of the Company’s common stock or a combination thereof, equal to the present value (computed using a discount rate of 6.00% per annum) of all remaining dividend payments on their shares of the Mandatory Convertible Preferred Stock (excluding any accumulated and unpaid dividends for all dividend periods ending on or prior to the dividend payment date immediately preceding the effective date of the fundamental change as well as dividends accumulated to the effective date of the fundamental change) from such effective date to, but excluding, the mandatory conversion date. If the Company elects to pay the fundamental change dividend make-whole amount in shares of its common stock in lieu of cash, the number of shares of its common stock that the Company will deliver will equal (x) the fundamental change dividend make-whole amount divided by (y) the greater of the floor price and 97% of the stock price. In addition, to the extent that, as of the effective date of the fundamental change, the Company has not declared any or all of the accumulated dividends on the Mandatory Convertible Preferred Stock as of such effective date (including accumulated and unpaid dividends for all dividend periods ending on or prior to the dividend payment date immediately preceding the effective date of the fundamental change as well as dividends accumulated to the effective date of the fundamental change, the “accumulated dividend amount”), upon conversion, the Company will pay or deliver, as the case may be, such accumulated dividend amount in cash (to the extent it is legally permitted to do so) or shares of its common stock, or any combination thereof at the Company’s election, to holders who convert Mandatory Convertible Preferred Stock within the fundamental change conversion period. If the Company elects to pay the accumulated dividend amount in shares of its common stock in lieu of cash, the number of shares of its common stock that the Company will deliver will equal (x) the accumulated dividend amount divided by (y) the greater of the floor price and 97% of the stock price. To the extent that the sum of the fundamental change dividend make-whole amount and accumulated dividend amount or any portion thereof paid in shares of its common stock exceeds the product of the number of additional shares the Company delivers in respect thereof and 97% of the stock price, the Company will, if it is legally able to do so, declare and pay such excess amount in cash. The following table sets forth the fundamental change conversion rate per share of Mandatory Convertible Preferred Stock based on the effective date of the fundamental change and the stock price paid (or deemed paid) per share of common stock in the fundamental change (each of the stock price and the fundamental change conversion rate subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement). Effective Date $1.50 $2.50 $3.75 $4.50 $4.75 $5.00 $5.25 $5.50 $5.88 $6.25 $6.50 $7.50 $8.75 $10.00 $12.50 $15.00 $20.00 June 10, 2015 8.5047 11.8132 13.4879 13.8893 13.9765 14.0495 14.1119 14.1666 14.2390 14.3041 14.3451 14.5008 14.6882 14.8663 15.1754 15.4157 15.7407 December 31, 2015 9.8076 12.8979 14.3438 14.6264 14.6776 14.7165 14.7470 14.7722 14.8043 14.8341 14.8540 14.9425 15.0734 15.2129 15.4701 15.6738 15.9485 June 30, 2016 11.3101 14.0865 15.2730 15.4203 15.4293 15.4283 15.4212 15.4114 15.3961 15.3845 15.3800 15.3926 15.4633 15.5637 15.7688 15.9352 16.1583 December 31, 2016 13.0426 15.3869 16.2843 16.2760 16.2345 16.1848 16.1317 16.0790 16.0060 15.9449 15.9118 15.8401 15.8509 15.9153 16.0712 16.2000 16.3701 June 30, 2017 15.0403 16.8056 17.4044 17.2219 17.1169 17.0038 16.8895 16.7793 16.6296 16.5047 16.4364 16.2716 16.2309 16.2679 16.3792 16.4689 16.5844 December 31, 2017 17.3438 18.3415 18.6799 18.3457 18.1552 17.9455 17.7307 17.5233 17.2455 17.0223 16.9059 16.6543 16.6025 16.6300 16.6960 16.7427 16.8014 June 29, 2018 20.0000 20.0000 20.0000 20.0000 20.0000 20.0000 19.0476 18.1818 17.0213 17.0213 17.0213 17.0213 17.0213 17.0213 17.0213 17.0213 17.0213 The exact stock price and fundamental change effective date may not be set forth in the table, in which case: • if the stock price is between two stock price amounts in the table or the effective date is between two dates in the table, the fundamental change conversion rate will be determined by straight-line interpolation between the fundamental change conversion rates set forth for the higher and lower stock price amounts and the two dates, as applicable, based on a 365-day year; • if the stock price is greater than $20.00 per share (subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement), then the fundamental change conversion rate will be the minimum conversion rate (subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement); and • if the stock price is less than $1.50 per share (subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement) (the “minimum stock price”), then the fundamental change conversion rate will be determined (x) as if the stock price equaled the minimum stock price and (y) if the effective date is between two dates on the table, using straight-line interpolation (subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement).

Mandatory Convertible Preferred Stock Offering. Title of securitiesSecurities: 11.1256% Mandatory Convertible Preferred Stock, Series A, par value $0.01 per share, of the Company Sempra Energy (the “Mandatory Convertible Preferred Stock”). Size ) Shares of the Mandatory Convertible Preferred Stock OfferingOffered by Sempra Energy: 17,500,000 15,000,000 shares Underwriters’ overallotment option to purchase additional shares Shares of Mandatory Convertible Preferred StockStock that the Underwriters Have the Option to Purchase from Sempra Energy: Up to an additional 1,750,000 2,250,000 shares that the underwriters for the Mandatory Convertible Preferred Stock Offering have the option to purchase purchase, solely to cover overallotmentsover-allotments, if any. Public offering priceOffering Price: $100.00 per share of Mandatory Convertible Preferred Stock Underwriting discountNet Proceeds: $3.00 per share of Mandatory Convertible Preferred Stock Net proceeds: The Company Sempra Energy estimates that the net proceeds to it from the Mandatory Convertible Preferred Stock Offering after deducting the underwriting discount but before deducting estimated offering expenses payable by it, will be approximately $1,696.50 million 1.473 billion (or approximately $1,866.25 million 1.694 billion if the underwriters for the Mandatory Convertible Preferred Stock Offering exercise their over-allotment option to purchase additional shares of Mandatory Convertible Preferred Stock in full), after deducting the underwriters’ discounts and commissions and estimated offering expenses. Liquidation preferencePreference: $100.00 per share of Mandatory Convertible Preferred Stock Dividends: 11.1256% of the liquidation preference of $100.00 for each per share of the Mandatory Convertible Preferred Stock per annum year (equivalent to $11.125 6.00 per annum per share of the Mandatory Convertible Preferred Stockshare), when, as and if declared by the CompanySempra Energy’s board of directors or an authorized committee thereof, payable in cash or, at the Company’s election (subject to certain limitations), by delivery of shares of the CompanySempra Energy’s common stock Common Stock or by delivery of any combination of cash and shares of the Company’s common stockCommon Stock, as determined by Sempra Energy in its sole discretion. The expected dividend payable on the first dividend payment date (September 30, 2015), if declared, is $1.60 per share of the Mandatory Convertible Preferred Stock. Each subsequent dividend for a full dividend period is expected to be $3.4611 1.50 per share of Mandatory Convertible Preferred Stock, and on each subsequent dividend payment date, if declared, will be $2.78125 per share of the Mandatory Convertible Preferred Stock. Accumulated and unpaid dividends for any past dividend period will not bear interest. If the Company Sempra Energy elects to make any such payment of a declared dividend, or any portion thereof, in shares of its common stockCommon Stock, such shares shall be valued for such purpose at the average VWAP per share of its common stock (as defined in the Mandatory Convertible Preferred Common Stock Preliminary Prospectus Supplement) over the five consecutive trading day period commencing beginning on and including the seventh sixth scheduled trading day immediately preceding prior to the applicable dividend payment date (the “average price”), multiplied by 97%. In no event will the number of shares of its common stock Common Stock delivered in connection with any declared dividend, including any declared dividend payable in connection with a conversion, exceed a number equal to the total dividend payment divided by the floor price (as defined below)price. To the extent that the amount of the any declared dividend exceeds the product of (x) the number of shares of its common stock Sempra Energy’s Common Stock delivered in connection with such declared dividend and (y) 97% of the average priceprice applicable to such dividend, the Company Sempra Energy will, if it is legally able to do so, pay such excess amount in cash. Floor pricePrice: $1.7537.45, subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement. Dividend record dates: The 15th calendar day of the month in which such dividend payment falls. Dividend payment dates: The last business day of each of March, June, September and December of each year, commencing on September 30, 2015 to, and including, the mandatory conversion date. Initial price: $5.00, which is the last reported sale price of the Company’s common stock on the NASDAQ Global Select Market (the “NASDAQ”) on June 4, 2015. Threshold appreciation price: $5.875, which represents an appreciation of 17.50% over the initial price. Acquisition termination redemption: If the Verizon Transaction has not closed on or before 5:00 p.m. (New York City time) on August 6, 2016, the Verizon Purchase Agreement is terminated or if the Company determines in its reasonable judgment that the Verizon Transaction will not occur, the Company may, at its option, in its sole discretion, give notice of acquisition termination redemption to the holders of the shares of Mandatory Convertible Preferred Stock. If the Company provides such notice, then, on the acquisition termination redemption date (as defined in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement), the Company will be required to redeem the shares of Mandatory Convertible Preferred Stock, in whole but not in part, at a redemption amount per share of Mandatory Convertible Preferred Stock equal to the acquisition termination make-whole amount described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement. If redeemed, the Company will pay the acquisition termination make-whole amount in cash unless the acquisition termination share price described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement is greater than the initial price. If the acquisition termination share price is greater than the initial price, the Company will pay the acquisition termination make-whole amount in shares of its common stock and cash, unless the Company elects, subject to certain limitations, to pay cash or shares of its common stock in lieu of such amounts. Other than pursuant to the provisions described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement, the shares of Mandatory Convertible Preferred Stock will not be redeemable by the Company. Mandatory conversion date: June 29, 2018 Mandatory conversion rate: The conversion rate for each share of the Mandatory Convertible Preferred Stock will be not more than 20.0000 shares of the Company’s common stock and not less than 17.0213 shares of its common stock (the “maximum conversion rate” and “minimum conversion rate,” respectively), depending on the applicable market value (as defined below) of its common stock, subject to certain anti-dilution adjustments described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement. The “applicable market value” of the Company’s common stock is the average VWAP per share of its common stock for the 20 consecutive trading day period commencing on and including the 22nd scheduled trading day immediately preceding June 29, 2018. The conversion rate will be calculated as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement and the following table illustrates the conversion rate per share of the Mandatory Convertible Preferred Stock, subject to certain anti-dilution adjustments described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement. Applicable Market Value of our Common Stock on the Mandatory Conversion Date Conversion Rate Per Share of the Mandatory Convertible Preferred Stock Less than or equal to $5.00 (the initial price). 20.0000 shares of common stock. Greater than $5.00 and less than $5.875 (the threshold appreciation price). Between 20.0000 and 17.0213 shares, determined by dividing $100.00 by the applicable market value of common stock. Equal to or greater than the threshold appreciation price. 17.0213 shares of common stock (the minimum conversion rate). Early conversion at the option of the holder: At any time prior to June 29, 2018, other than during a fundamental change conversion period (as defined below), a holder of shares of the Mandatory Convertible Preferred Stock may elect to convert such holder’s shares of Mandatory Convertible Preferred Stock, in whole or in part, into shares of the Company’s common stock, at the minimum conversion rate of 17.0213 shares of its common stock per share of the Mandatory Convertible Preferred Stock, subject to certain anti-dilution adjustments. If, as of the effective date of any early conversion (the “early conversion date”), the Company has not declared all or any portion of the accumulated dividends for all dividend periods ending on a dividend payment date prior to such early conversion date, the conversion rate for such early conversion will be adjusted so that holders converting their Mandatory Convertible Preferred Stock at such time receive an additional number of shares of its common stock equal to such amount of accumulated and unpaid dividends for such prior dividend periods, divided by the greater of the floor price and the average VWAP per share of its common stock over the 20 consecutive trading day period commencing on and including the 22nd scheduled trading day immediately preceding the early conversion date (the “early conversion average price”). To the extent that the cash amount of the accumulated and unpaid dividends for all dividend periods ending on a dividend payment date prior to the relevant conversion date exceeds the value of the product of the number of additional shares added to the conversion rate and the early conversion average price, the Company will not have any obligation to pay the shortfall in cash. Early conversion at the option of the holder upon a fundamental change: Upon the occurrence of a “fundamental change” (as defined in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement) prior to June 29, 2018, under certain circumstances the Company will deliver or pay to holders of Mandatory Convertible Preferred Stock who convert their shares of the Mandatory Convertible Preferred Stock during the period from, and including, the effective date of the fundamental change to, but excluding, the earlier of (A) the mandatory conversion date and (B) the date selected by the Company that is not less than 30 and not more than 60 days after the effective date of such fundamental change (the “fundamental change conversion period”), a number of shares of its common stock or, if the fundamental change also constitutes a reorganization event, units of exchange property (as defined in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement), determined using the applicable fundamental change conversion rate. The fundamental change conversion rate will be determined based on the effective date of the fundamental change and the price per share of its common stock paid or deemed paid in such fundamental change (the “stock price”). Holders who convert their Mandatory Convertible Preferred Stock within the fundamental change conversion period will also receive a “fundamental change dividend make-whole amount,” in cash or in shares of the Company’s common stock or a combination thereof, equal to the present value (computed using a discount rate of 6.00% per annum) of all remaining dividend payments on their shares of the Mandatory Convertible Preferred Stock (excluding any accumulated and unpaid dividends for all dividend periods ending on or prior to the dividend payment date immediately preceding the effective date of the fundamental change as well as dividends accumulated to the effective date of the fundamental change) from such effective date to, but excluding, the mandatory conversion date. If the Company elects to pay the fundamental change dividend make-whole amount in shares of its common stock in lieu of cash, the number of shares of its common stock that the Company will deliver will equal (x) the fundamental change dividend make-whole amount divided by (y) the greater of the floor price and 97% of the stock price. In addition, to the extent that, as of the effective date of the fundamental change, the Company has not declared any or all of the accumulated dividends on the Mandatory Convertible Preferred Stock as of such effective date (including accumulated and unpaid dividends for all dividend periods ending on or prior to the dividend payment date immediately preceding the effective date of the fundamental change as well as dividends accumulated to the effective date of the fundamental change, the “accumulated dividend amount”), upon conversion, the Company will pay or deliver, as the case may be, such accumulated dividend amount in cash (to the extent it is legally permitted to do so) or shares of its common stock, or any combination thereof at the Company’s election, to holders who convert Mandatory Convertible Preferred Stock within the fundamental change conversion period. If the Company elects to pay the accumulated dividend amount in shares of its common stock in lieu of cash, the number of shares of its common stock that the Company will deliver will equal (x) the accumulated dividend amount divided by (y) the greater of the floor price and 97% of the stock price. To the extent that the sum of the fundamental change dividend make-whole amount and accumulated dividend amount or any portion thereof paid in shares of its common stock exceeds the product of the number of additional shares the Company delivers in respect thereof and 97% of the stock price, the Company will, if it is legally able to do so, declare and pay such excess amount in cash. The following table sets forth the fundamental change conversion rate per share of Mandatory Convertible Preferred Stock based on the effective date of the fundamental change and the stock price paid (or deemed paid) per share of common stock in the fundamental change (each of the stock price and the fundamental change conversion rate subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement). Effective Date $1.50 $2.50 $3.75 $4.50 $4.75 $5.00 $5.25 $5.50 $5.88 $6.25 $6.50 $7.50 $8.75 $10.00 $12.50 $15.00 $20.00 June 10, 2015 8.5047 11.8132 13.4879 13.8893 13.9765 14.0495 14.1119 14.1666 14.2390 14.3041 14.3451 14.5008 14.6882 14.8663 15.1754 15.4157 15.7407 December 31, 2015 9.8076 12.8979 14.3438 14.6264 14.6776 14.7165 14.7470 14.7722 14.8043 14.8341 14.8540 14.9425 15.0734 15.2129 15.4701 15.6738 15.9485 June 30, 2016 11.3101 14.0865 15.2730 15.4203 15.4293 15.4283 15.4212 15.4114 15.3961 15.3845 15.3800 15.3926 15.4633 15.5637 15.7688 15.9352 16.1583 December 31, 2016 13.0426 15.3869 16.2843 16.2760 16.2345 16.1848 16.1317 16.0790 16.0060 15.9449 15.9118 15.8401 15.8509 15.9153 16.0712 16.2000 16.3701 June 30, 2017 15.0403 16.8056 17.4044 17.2219 17.1169 17.0038 16.8895 16.7793 16.6296 16.5047 16.4364 16.2716 16.2309 16.2679 16.3792 16.4689 16.5844 December 31, 2017 17.3438 18.3415 18.6799 18.3457 18.1552 17.9455 17.7307 17.5233 17.2455 17.0223 16.9059 16.6543 16.6025 16.6300 16.6960 16.7427 16.8014 June 29, 2018 20.0000 20.0000 20.0000 20.0000 20.0000 20.0000 19.0476 18.1818 17.0213 17.0213 17.0213 17.0213 17.0213 17.0213 17.0213 17.0213 17.0213 The exact stock price and fundamental change effective date may not be set forth in the table, in which case: • if the stock price is between two stock price amounts in the table or the effective date is between two dates in the table, the fundamental change conversion rate will be determined by straight-line interpolation between the fundamental change conversion rates set forth for the higher and lower stock price amounts and the two dates, as applicable, based on a 365-day year; • if the stock price is greater than $20.00 per share (subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement), then the fundamental change conversion rate will be the minimum conversion rate (subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement); and • if the stock price is less than $1.50 per share (subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement) (the “minimum stock price”), then the fundamental change conversion rate will be determined (x) as if the stock price equaled the minimum stock price and (y) if the effective date is between two dates on the table, using straight-line interpolation (subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement).

Mandatory Convertible Preferred Stock Offering. Title Mandatory Convertible Preferred Stock Offered: 2,000,000 shares of securities: 11.125our 6.00% Series A Mandatory Convertible Preferred Stock, Series A, no par value $0.01 per share, of the Company share (the “Mandatory Convertible Preferred Stock”). Size of the Mandatory Convertible Preferred Stock OfferingOver-Allotment Option: 17,500,000 shares Underwriters’ overallotment option to purchase 300,000 additional shares of Mandatory Convertible Preferred Stock: Up to an additional 1,750,000 shares that the underwriters for the Mandatory Convertible Preferred Stock Offering have the option to purchase to cover overallotments. Public offering priceOffering Price: $100.00 200.00 per share of Mandatory Convertible Preferred Stock share. Underwriting discountDiscount: $3.00 6.00 per share of Mandatory Convertible Preferred Stock share. Net proceeds: The Company estimates that the net proceeds from the Mandatory Convertible Preferred Stock Offering will be approximately Proceeds (before expenses): $1,696.50 388.0 million (or approximately $1,866.25 446.2 million if the underwriters exercise their over-allotment option to purchase additional shares of Mandatory Convertible Preferred Stock in full), after deducting the underwriters’ discounts and commissions and estimated offering expenses. Liquidation preferencePreference: $100.00 200.00 per share of Mandatory Convertible Preferred Stock share. Dividends: 11.1256.00% of the liquidation preference of $100.00 for each 200.00 per share of the Mandatory Convertible Preferred Stock per annum year. Dividends will accumulate from the most recent date as to which dividends shall have been paid or, if no dividends have been paid, from the first original issue date of the Mandatory Convertible Preferred Stock, and, to the extent the Issuer’s board of directors, or an authorized committee thereof, declares a dividend payable with respect to the Mandatory Convertible Preferred Stock, the Issuer will pay such dividends in cash, by delivery of shares of Common Stock or through any combination of cash and shares of Common Stock, as determined by the Issuer in its sole discretion (equivalent subject to certain limitations); provided that any unpaid dividends will continue to accumulate. The expected dividend payable on the first Dividend Payment Date (as defined below) is $11.125 per annum 2.80 per share of the Mandatory Convertible Preferred Stock), if declared by the Company’s board of directors or an authorized committee thereof, payable in cash or, at the Company’s election (subject to certain limitations), by delivery of shares of the Company’s common stock or by delivery of any combination of cash and shares of the Company’s common stock. The Each subsequent dividend payable on the first dividend payment date (September 30, 2015), if declared, is expected to be $3.4611 per share of Mandatory Convertible Preferred Stock, and on each subsequent dividend payment date, if declared, will be $2.78125 per share of Mandatory Convertible Preferred Stock. Accumulated and unpaid dividends for any past dividend period will not bear interest. If the Company elects to make any such payment of a declared dividend, or any portion thereof, in shares of its common stock, such shares shall be valued for such purpose at the average VWAP per share of its common stock (as defined in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement) over the five consecutive trading day period commencing on and including the seventh scheduled trading day immediately preceding the applicable dividend payment date (the “average price”), multiplied by 97%. In no event will the number of shares of its common stock delivered in connection with any declared dividend, including any declared dividend payable in connection with a conversion, exceed a number equal to the total dividend payment divided by the floor price (as defined below). To the extent that the amount of the declared dividend exceeds the product of the number of shares of its common stock delivered in connection with such declared dividend and 97% of the average price, the Company will, if it is legally able to do so, pay such excess amount in cash. Floor price: $1.75, subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement. Dividend record dates: The 15th calendar day of the month in which such dividend payment falls. Dividend payment dates: The last business day of each of March, June, September and December of each year, commencing on September 30, 2015 to, and including, the mandatory conversion date. Initial price: $5.00, which is the last reported sale price of the Company’s common stock on the NASDAQ Global Select Market (the “NASDAQ”) on June 4, 2015. Threshold appreciation price: $5.875, which represents an appreciation of 17.50% over the initial price. Acquisition termination redemption: If the Verizon Transaction has not closed on or before 5:00 p.m. (New York City time) on August 6, 2016, the Verizon Purchase Agreement is terminated or if the Company determines in its reasonable judgment that the Verizon Transaction will not occur, the Company may, at its option, in its sole discretion, give notice of acquisition termination redemption to the holders of the shares of Mandatory Convertible Preferred Stock. If the Company provides such notice, then, on the acquisition termination redemption date (as defined in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement), the Company will be required to redeem the shares of Mandatory Convertible Preferred Stock, in whole but not in part, at a redemption amount per share of Mandatory Convertible Preferred Stock equal to the acquisition termination make-whole amount described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement. If redeemed, the Company will pay the acquisition termination make-whole amount in cash unless the acquisition termination share price described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement is greater than the initial price. If the acquisition termination share price is greater than the initial price, the Company will pay the acquisition termination make-whole amount in shares of its common stock and cash, unless the Company elects, subject to certain limitations, to pay cash or shares of its common stock in lieu of such amounts. Other than pursuant to the provisions described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement, the shares of Mandatory Convertible Preferred Stock will not be redeemable by the Company. Mandatory conversion date: June 29, 2018 Mandatory conversion rate: The conversion rate for each share of the Mandatory Convertible Preferred Stock will be not more than 20.0000 shares of the Company’s common stock and not less than 17.0213 shares of its common stock (the “maximum conversion rate” and “minimum conversion rate,” respectively), depending on the applicable market value (as defined below) of its common stock, subject to certain anti-dilution adjustments described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement. The “applicable market value” of the Company’s common stock is the average VWAP per share of its common stock for the 20 consecutive trading day period commencing on and including the 22nd scheduled trading day immediately preceding June 29, 2018. The conversion rate will be calculated as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement and the following table illustrates the conversion rate 3.00 per share of the Mandatory Convertible Preferred Stock. Dividend Record Dates: The March 15, subject to certain anti-dilution adjustments described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement. Applicable Market Value of our Common Stock on the Mandatory Conversion Date Conversion Rate Per Share of the Mandatory Convertible Preferred Stock Less than June 15, September 15 or equal to $5.00 (the initial price). 20.0000 shares of common stock. Greater than $5.00 and less than $5.875 (the threshold appreciation price). Between 20.0000 and 17.0213 shares, determined by dividing $100.00 by the applicable market value of common stock. Equal to or greater than the threshold appreciation price. 17.0213 shares of common stock (the minimum conversion rate). Early conversion at the option of the holder: At any time prior to June 29, 2018, other than during a fundamental change conversion period (as defined below), a holder of shares of the Mandatory Convertible Preferred Stock may elect to convert such holder’s shares of Mandatory Convertible Preferred Stock, in whole or in part, into shares of the Company’s common stock, at the minimum conversion rate of 17.0213 shares of its common stock per share of the Mandatory Convertible Preferred Stock, subject to certain anti-dilution adjustments. If, as of the effective date of any early conversion (the “early conversion date”), the Company has not declared all or any portion of the accumulated dividends for all dividend periods ending on a dividend payment date prior to such early conversion date, the conversion rate for such early conversion will be adjusted so that holders converting their Mandatory Convertible Preferred Stock at such time receive an additional number of shares of its common stock equal to such amount of accumulated and unpaid dividends for such prior dividend periods, divided by the greater of the floor price and the average VWAP per share of its common stock over the 20 consecutive trading day period commencing on and including the 22nd scheduled trading day December 15 immediately preceding the early conversion date (the “early conversion average price”). To the extent that the cash amount of the accumulated and unpaid dividends for all dividend periods ending on a dividend payment date prior to the relevant conversion date exceeds the value of the product of the number of additional shares added to the conversion rate and the early conversion average price, the Company will not have any obligation to pay the shortfall in cash. Early conversion at the option of the holder upon a fundamental change: Upon the occurrence of a “fundamental change” (as defined in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement) prior to June 29, 2018, under certain circumstances the Company will deliver or pay to holders of Mandatory Convertible Preferred Stock who convert their shares of the Mandatory Convertible Preferred Stock during the period from, and including, the effective date of the fundamental change to, but excluding, the earlier of (A) the mandatory conversion date and (B) the date selected by the Company that is not less than 30 and not more than 60 days after the effective date of such fundamental change (the “fundamental change conversion period”), a number of shares of its common stock or, if the fundamental change also constitutes a reorganization event, units of exchange property (as defined in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement), determined using the applicable fundamental change conversion rate. The fundamental change conversion rate will be determined based on the effective date of the fundamental change and the price per share of its common stock paid or deemed paid in such fundamental change (the “stock price”). Holders who convert their Mandatory Convertible Preferred Stock within the fundamental change conversion period will also receive a “fundamental change dividend make-whole amount,” in cash or in shares of the Company’s common stock or a combination thereof, equal to the present value (computed using a discount rate of 6.00% per annum) of all remaining dividend payments on their shares of the Mandatory Convertible Preferred Stock (excluding any accumulated and unpaid dividends for all dividend periods ending on or prior to the dividend payment date immediately preceding the effective date of the fundamental change as well as dividends accumulated to the effective date of the fundamental change) from such effective date to, but excluding, the mandatory conversion date. If the Company elects to pay the fundamental change dividend make-whole amount in shares of its common stock in lieu of cash, the number of shares of its common stock that the Company will deliver will equal (x) the fundamental change dividend make-whole amount divided by (y) the greater of the floor price and 97% of the stock price. In addition, to the extent that, as of the effective date of the fundamental change, the Company has not declared any or all of the accumulated dividends on the Mandatory Convertible Preferred Stock as of such effective date (including accumulated and unpaid dividends for all dividend periods ending on or prior to the dividend payment date immediately preceding the effective date of the fundamental change as well as dividends accumulated to the effective date of the fundamental change, the “accumulated dividend amount”), upon conversion, the Company will pay or deliver, as the case may be, such accumulated dividend amount in cash (to the extent it is legally permitted to do so) or shares of its common stock, or any combination thereof at the Company’s election, to holders who convert Mandatory Convertible Preferred Stock within the fundamental change conversion period. If the Company elects to pay the accumulated dividend amount in shares of its common stock in lieu of cash, the number of shares of its common stock that the Company will deliver will equal (x) the accumulated dividend amount divided by (y) the greater of the floor price and 97% of the stock price. To the extent that the sum of the fundamental change dividend make-whole amount and accumulated dividend amount or any portion thereof paid in shares of its common stock exceeds the product of the number of additional shares the Company delivers in respect thereof and 97% of the stock price, the Company will, if it is legally able to do so, declare and pay such excess amount in cash. The following table sets forth the fundamental change conversion rate per share of Mandatory Convertible Preferred Stock based on the effective date of the fundamental change and the stock price paid (or deemed paid) per share of common stock in the fundamental change (each of the stock price and the fundamental change conversion rate subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement). Effective Date $1.50 $2.50 $3.75 $4.50 $4.75 $5.00 $5.25 $5.50 $5.88 $6.25 $6.50 $7.50 $8.75 $10.00 $12.50 $15.00 $20.00 June 10, 2015 8.5047 11.8132 13.4879 13.8893 13.9765 14.0495 14.1119 14.1666 14.2390 14.3041 14.3451 14.5008 14.6882 14.8663 15.1754 15.4157 15.7407 December 31, 2015 9.8076 12.8979 14.3438 14.6264 14.6776 14.7165 14.7470 14.7722 14.8043 14.8341 14.8540 14.9425 15.0734 15.2129 15.4701 15.6738 15.9485 June 30, 2016 11.3101 14.0865 15.2730 15.4203 15.4293 15.4283 15.4212 15.4114 15.3961 15.3845 15.3800 15.3926 15.4633 15.5637 15.7688 15.9352 16.1583 December 31, 2016 13.0426 15.3869 16.2843 16.2760 16.2345 16.1848 16.1317 16.0790 16.0060 15.9449 15.9118 15.8401 15.8509 15.9153 16.0712 16.2000 16.3701 June 30, 2017 15.0403 16.8056 17.4044 17.2219 17.1169 17.0038 16.8895 16.7793 16.6296 16.5047 16.4364 16.2716 16.2309 16.2679 16.3792 16.4689 16.5844 December 31, 2017 17.3438 18.3415 18.6799 18.3457 18.1552 17.9455 17.7307 17.5233 17.2455 17.0223 16.9059 16.6543 16.6025 16.6300 16.6960 16.7427 16.8014 June 29, 2018 20.0000 20.0000 20.0000 20.0000 20.0000 20.0000 19.0476 18.1818 17.0213 17.0213 17.0213 17.0213 17.0213 17.0213 17.0213 17.0213 17.0213 The exact stock price and fundamental change effective date may not be set forth in the table, in which case: • if the stock price is between two stock price amounts in the table or the effective date is between two dates in the table, the fundamental change conversion rate will be determined by straight-line interpolation between the fundamental change conversion rates set forth for the higher and lower stock price amounts and the two dates, as applicable, based on a 365-day year; • if the stock price is greater than $20.00 per share (subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement), then the fundamental change conversion rate will be the minimum conversion rate (subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement); and • if the stock price is less than $1.50 per share (subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement) (the “minimum stock price”), then the fundamental change conversion rate will be determined (x) as if the stock price equaled the minimum stock price and (y) if the effective date is between two dates on the table, using straight-line interpolation (subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement)Dividend Payment Date.

Mandatory Convertible Preferred Stock Offering. Title of securitiesSecurities: 11.1256.75% Mandatory Convertible Preferred Stock, Series A, par value $0.01 per shareB, of the Company Sempra Energy (the “Mandatory Convertible Preferred Stock”). Size ) Shares of the Mandatory Convertible 5,000,000 shares Preferred Stock Offered by Sempra Energy: Shares of Mandatory Convertible Preferred Stock Offering: 17,500,000 shares Underwriters’ overallotment option to purchase additional shares of Mandatory Convertible Preferred Stock: that the Up to an additional 1,750,000 750,000 shares that the underwriters for the Mandatory Convertible Preferred Stock Offering have the option to purchase purchase, solely to cover overallotmentsover-allotments, if any. Underwriters Have the Option to Purchase from Sempra Energy: Public offering priceOffering Price: $100.00 per share of Mandatory Convertible Preferred Stock Underwriting discountNet Proceeds: $3.00 per share of Mandatory Convertible Preferred Stock Net proceeds: The Company Sempra Energy estimates that the net proceeds to it from the Mandatory Convertible Preferred Stock Offering after deducting the underwriting discount but before deducting estimated offering expenses payable by Sempra Energy, will be approximately $1,696.50 491.8 million (or approximately $1,866.25 565.5 million if the underwriters for the Mandatory Convertible Preferred Stock Offering exercise their over-allotment option to purchase additional shares of Mandatory Convertible Preferred Stock in full), after deducting the underwriters’ discounts and commissions and estimated offering expenses. Liquidation preferencePreference: $100.00 per share of Mandatory Convertible Preferred Stock Dividends: 11.1256.75% of the liquidation preference of $100.00 for each per share of the Mandatory Convertible Preferred Stock per annum year (equivalent to $11.125 6.75 per annum per share of the Mandatory Convertible Preferred Stockshare), when, as and if declared by the CompanySempra Energy’s board of directors or an authorized committee thereof, payable in cash or, at the Company’s election (subject to certain limitations), by delivery of shares of the CompanySempra Energy’s common stock Common Stock or by delivery of any combination of cash and shares of the Company’s common stockCommon Stock, as determined by Sempra Energy in its sole discretion. The expected dividend payable on the first dividend payment date (September 30, 2015), if declared, is $1.725 per share of the Mandatory Convertible Preferred Stock. Each subsequent dividend for a full dividend period is expected to be $3.4611 1.6875 per share of Mandatory Convertible Preferred Stock, and on each subsequent dividend payment date, if declared, will be $2.78125 per share of the Mandatory Convertible Preferred Stock. Accumulated and unpaid dividends for any past dividend period will not bear interest. If the Company Sempra Energy elects to make any such payment of a declared dividend, or any portion thereof, in shares of its common stockCommon Stock, such shares shall be valued for such purpose at the average VWAP per share of its common stock (as defined in the Mandatory Convertible Preferred Common Stock Preliminary Prospectus Supplement) over the five consecutive trading day period commencing beginning on and including the seventh sixth scheduled trading day immediately preceding prior to the applicable dividend payment date (the “average price”), multiplied by 97%. In no event will the number of shares of its common stock Common Stock delivered in connection with any declared dividend, including any declared dividend payable in connection with a conversion, exceed a number equal to the total dividend payment divided by the floor price (as defined below)price. To the extent that the amount of the any declared dividend exceeds the product of (x) the number of shares of its common stock Sempra Energy’s Common Stock delivered in connection with such declared dividend and (y) 97% of the average priceprice applicable to such dividend, the Company Sempra Energy will, if it is legally able to do so, pay such excess amount in cash. Floor pricePrice: $1.7539.8125, subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement. Dividend record dates: The 15th calendar day of the month in which such dividend payment falls. Dividend payment dates: The last business day of each of March, June, September and December of each year, commencing on September 30, 2015 to, and including, the mandatory conversion date. Initial price: $5.00, which is the last reported sale price of the Company’s common stock on the NASDAQ Global Select Market (the “NASDAQ”) on June 4, 2015. Threshold appreciation price: $5.875, which represents an appreciation of 17.50% over the initial price. Acquisition termination redemption: If the Verizon Transaction has not closed on or before 5:00 p.m. (New York City time) on August 6, 2016, the Verizon Purchase Agreement is terminated or if the Company determines in its reasonable judgment that the Verizon Transaction will not occur, the Company may, at its option, in its sole discretion, give notice of acquisition termination redemption to the holders of the shares of Mandatory Convertible Preferred Stock. If the Company provides such notice, then, on the acquisition termination redemption date (as defined in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement), the Company will be required to redeem the shares of Mandatory Convertible Preferred Stock, in whole but not in part, at a redemption amount per share of Mandatory Convertible Preferred Stock equal to the acquisition termination make-whole amount described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement. If redeemed, the Company will pay the acquisition termination make-whole amount in cash unless the acquisition termination share price described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement is greater than the initial price. If the acquisition termination share price is greater than the initial price, the Company will pay the acquisition termination make-whole amount in shares of its common stock and cash, unless the Company elects, subject to certain limitations, to pay cash or shares of its common stock in lieu of such amounts. Other than pursuant to the provisions described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement, the shares of Mandatory Convertible Preferred Stock will not be redeemable by the Company. Mandatory conversion date: June 29, 2018 Mandatory conversion rate: The conversion rate for each share of the Mandatory Convertible Preferred Stock will be not more than 20.0000 shares of the Company’s common stock and not less than 17.0213 shares of its common stock (the “maximum conversion rate” and “minimum conversion rate,” respectively), depending on the applicable market value (as defined below) of its common stock, subject to certain anti-dilution adjustments described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement. The “applicable market value” of the Company’s common stock is the average VWAP per share of its common stock for the 20 consecutive trading day period commencing on and including the 22nd scheduled trading day immediately preceding June 29, 2018. The conversion rate will be calculated as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement and the following table illustrates the conversion rate per share of the Mandatory Convertible Preferred Stock, subject to certain anti-dilution adjustments described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement. Applicable Market Value of our Common Stock on the Mandatory Conversion Date Conversion Rate Per Share of the Mandatory Convertible Preferred Stock Less than or equal to $5.00 (the initial price). 20.0000 shares of common stock. Greater than $5.00 and less than $5.875 (the threshold appreciation price). Between 20.0000 and 17.0213 shares, determined by dividing $100.00 by the applicable market value of common stock. Equal to or greater than the threshold appreciation price. 17.0213 shares of common stock (the minimum conversion rate). Early conversion at the option of the holder: At any time prior to June 29, 2018, other than during a fundamental change conversion period (as defined below), a holder of shares of the Mandatory Convertible Preferred Stock may elect to convert such holder’s shares of Mandatory Convertible Preferred Stock, in whole or in part, into shares of the Company’s common stock, at the minimum conversion rate of 17.0213 shares of its common stock per share of the Mandatory Convertible Preferred Stock, subject to certain anti-dilution adjustments. If, as of the effective date of any early conversion (the “early conversion date”), the Company has not declared all or any portion of the accumulated dividends for all dividend periods ending on a dividend payment date prior to such early conversion date, the conversion rate for such early conversion will be adjusted so that holders converting their Mandatory Convertible Preferred Stock at such time receive an additional number of shares of its common stock equal to such amount of accumulated and unpaid dividends for such prior dividend periods, divided by the greater of the floor price and the average VWAP per share of its common stock over the 20 consecutive trading day period commencing on and including the 22nd scheduled trading day immediately preceding the early conversion date (the “early conversion average price”). To the extent that the cash amount of the accumulated and unpaid dividends for all dividend periods ending on a dividend payment date prior to the relevant conversion date exceeds the value of the product of the number of additional shares added to the conversion rate and the early conversion average price, the Company will not have any obligation to pay the shortfall in cash. Early conversion at the option of the holder upon a fundamental change: Upon the occurrence of a “fundamental change” (as defined in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement) prior to June 29, 2018, under certain circumstances the Company will deliver or pay to holders of Mandatory Convertible Preferred Stock who convert their shares of the Mandatory Convertible Preferred Stock during the period from, and including, the effective date of the fundamental change to, but excluding, the earlier of (A) the mandatory conversion date and (B) the date selected by the Company that is not less than 30 and not more than 60 days after the effective date of such fundamental change (the “fundamental change conversion period”), a number of shares of its common stock or, if the fundamental change also constitutes a reorganization event, units of exchange property (as defined in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement), determined using the applicable fundamental change conversion rate. The fundamental change conversion rate will be determined based on the effective date of the fundamental change and the price per share of its common stock paid or deemed paid in such fundamental change (the “stock price”). Holders who convert their Mandatory Convertible Preferred Stock within the fundamental change conversion period will also receive a “fundamental change dividend make-whole amount,” in cash or in shares of the Company’s common stock or a combination thereof, equal to the present value (computed using a discount rate of 6.00% per annum) of all remaining dividend payments on their shares of the Mandatory Convertible Preferred Stock (excluding any accumulated and unpaid dividends for all dividend periods ending on or prior to the dividend payment date immediately preceding the effective date of the fundamental change as well as dividends accumulated to the effective date of the fundamental change) from such effective date to, but excluding, the mandatory conversion date. If the Company elects to pay the fundamental change dividend make-whole amount in shares of its common stock in lieu of cash, the number of shares of its common stock that the Company will deliver will equal (x) the fundamental change dividend make-whole amount divided by (y) the greater of the floor price and 97% of the stock price. In addition, to the extent that, as of the effective date of the fundamental change, the Company has not declared any or all of the accumulated dividends on the Mandatory Convertible Preferred Stock as of such effective date (including accumulated and unpaid dividends for all dividend periods ending on or prior to the dividend payment date immediately preceding the effective date of the fundamental change as well as dividends accumulated to the effective date of the fundamental change, the “accumulated dividend amount”), upon conversion, the Company will pay or deliver, as the case may be, such accumulated dividend amount in cash (to the extent it is legally permitted to do so) or shares of its common stock, or any combination thereof at the Company’s election, to holders who convert Mandatory Convertible Preferred Stock within the fundamental change conversion period. If the Company elects to pay the accumulated dividend amount in shares of its common stock in lieu of cash, the number of shares of its common stock that the Company will deliver will equal (x) the accumulated dividend amount divided by (y) the greater of the floor price and 97% of the stock price. To the extent that the sum of the fundamental change dividend make-whole amount and accumulated dividend amount or any portion thereof paid in shares of its common stock exceeds the product of the number of additional shares the Company delivers in respect thereof and 97% of the stock price, the Company will, if it is legally able to do so, declare and pay such excess amount in cash. The following table sets forth the fundamental change conversion rate per share of Mandatory Convertible Preferred Stock based on the effective date of the fundamental change and the stock price paid (or deemed paid) per share of common stock in the fundamental change (each of the stock price and the fundamental change conversion rate subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement). Effective Date $1.50 $2.50 $3.75 $4.50 $4.75 $5.00 $5.25 $5.50 $5.88 $6.25 $6.50 $7.50 $8.75 $10.00 $12.50 $15.00 $20.00 June 10, 2015 8.5047 11.8132 13.4879 13.8893 13.9765 14.0495 14.1119 14.1666 14.2390 14.3041 14.3451 14.5008 14.6882 14.8663 15.1754 15.4157 15.7407 December 31, 2015 9.8076 12.8979 14.3438 14.6264 14.6776 14.7165 14.7470 14.7722 14.8043 14.8341 14.8540 14.9425 15.0734 15.2129 15.4701 15.6738 15.9485 June 30, 2016 11.3101 14.0865 15.2730 15.4203 15.4293 15.4283 15.4212 15.4114 15.3961 15.3845 15.3800 15.3926 15.4633 15.5637 15.7688 15.9352 16.1583 December 31, 2016 13.0426 15.3869 16.2843 16.2760 16.2345 16.1848 16.1317 16.0790 16.0060 15.9449 15.9118 15.8401 15.8509 15.9153 16.0712 16.2000 16.3701 June 30, 2017 15.0403 16.8056 17.4044 17.2219 17.1169 17.0038 16.8895 16.7793 16.6296 16.5047 16.4364 16.2716 16.2309 16.2679 16.3792 16.4689 16.5844 December 31, 2017 17.3438 18.3415 18.6799 18.3457 18.1552 17.9455 17.7307 17.5233 17.2455 17.0223 16.9059 16.6543 16.6025 16.6300 16.6960 16.7427 16.8014 June 29, 2018 20.0000 20.0000 20.0000 20.0000 20.0000 20.0000 19.0476 18.1818 17.0213 17.0213 17.0213 17.0213 17.0213 17.0213 17.0213 17.0213 17.0213 The exact stock price and fundamental change effective date may not be set forth in the table, in which case: • if the stock price is between two stock price amounts in the table or the effective date is between two dates in the table, the fundamental change conversion rate will be determined by straight-line interpolation between the fundamental change conversion rates set forth for the higher and lower stock price amounts and the two dates, as applicable, based on a 365-day year; • if the stock price is greater than $20.00 per share (subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement), then the fundamental change conversion rate will be the minimum conversion rate (subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement); and • if the stock price is less than $1.50 per share (subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement) (the “minimum stock price”), then the fundamental change conversion rate will be determined (x) as if the stock price equaled the minimum stock price and (y) if the effective date is between two dates on the table, using straight-line interpolation (subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement).

Mandatory Convertible Preferred Stock Offering. Title of securitiesSecurities: 11.1256.75% Mandatory Convertible Preferred Stock, Series A, par value $0.01 per shareB, of the Company Sempra Energy (the “Mandatory Convertible Preferred Stock”). Size ) Shares of the Mandatory Convertible Preferred Stock OfferingOffered by Sempra Energy: 17,500,000 5,000,000 shares Underwriters’ overallotment option to purchase additional shares Shares of Mandatory Convertible Preferred StockStock that the Underwriters Have the Option to Purchase from Sempra Energy: Up to an additional 1,750,000 750,000 shares that the underwriters for the Mandatory Convertible Preferred Stock Offering have the option to purchase purchase, solely to cover overallotmentsover-allotments, if any. Public offering priceOffering Price: $100.00 per share of Mandatory Convertible Preferred Stock Underwriting discountNet Proceeds: $3.00 per share of Mandatory Convertible Preferred Stock Net proceeds: The Company Sempra Energy estimates that the net proceeds to it from the Mandatory Convertible Preferred Stock Offering after deducting the underwriting discount but before deducting estimated offering expenses payable by Sempra Energy, will be approximately $1,696.50 491.8 million (or approximately $1,866.25 565.5 million if the underwriters for the Mandatory Convertible Preferred Stock Offering exercise their over-allotment option to purchase additional shares of Mandatory Convertible Preferred Stock in full), after deducting the underwriters’ discounts and commissions and estimated offering expenses. Liquidation preferencePreference: $100.00 per share of Mandatory Convertible Preferred Stock Dividends: 11.1256.75% of the liquidation preference of $100.00 for each per share of the Mandatory Convertible Preferred Stock per annum year (equivalent to $11.125 6.75 per annum per share of the Mandatory Convertible Preferred Stockshare), when, as and if declared by the CompanySempra Energy’s board of directors or an authorized committee thereof, payable in cash or, at the Company’s election (subject to certain limitations), by delivery of shares of the CompanySempra Energy’s common stock Common Stock or by delivery of any combination of cash and shares of the Company’s common stockCommon Stock, as determined by Sempra Energy in its sole discretion. The expected dividend payable on the first dividend payment date (September 30, 2015), if declared, is $1.725 per share of the Mandatory Convertible Preferred Stock. Each subsequent dividend for a full dividend period is expected to be $3.4611 1.6875 per share of Mandatory Convertible Preferred Stock, and on each subsequent dividend payment date, if declared, will be $2.78125 per share of the Mandatory Convertible Preferred Stock. Accumulated and unpaid dividends for any past dividend period will not bear interest. If the Company Sempra Energy elects to make any such payment of a declared dividend, or any portion thereof, in shares of its common stockCommon Stock, such shares shall be valued for such purpose at the average VWAP per share of its common stock (as defined in the Mandatory Convertible Preferred Common Stock Preliminary Prospectus Supplement) over the five consecutive trading day period commencing beginning on and including the seventh sixth scheduled trading day immediately preceding prior to the applicable dividend payment date (the “average price”), multiplied by 97%. In no event will the number of shares of its common stock Common Stock delivered in connection with any declared dividend, including any declared dividend payable in connection with a conversion, exceed a number equal to the total dividend payment divided by the floor price (as defined below)price. To the extent that the amount of the any declared dividend exceeds the product of (x) the number of shares of its common stock Sempra Energy’s Common Stock delivered in connection with such declared dividend and (y) 97% of the average priceprice applicable to such dividend, the Company Sempra Energy will, if it is legally able to do so, pay such excess amount in cash. Floor pricePrice: $1.7539.8125, subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement. Dividend record dates: The 15th calendar day of the month in which such dividend payment falls. Dividend payment dates: The last business day of each of March, June, September and December of each year, commencing on September 30, 2015 to, and including, the mandatory conversion date. Initial price: $5.00, which is the last reported sale price of the Company’s common stock on the NASDAQ Global Select Market (the “NASDAQ”) on June 4, 2015. Threshold appreciation price: $5.875, which represents an appreciation of 17.50% over the initial price. Acquisition termination redemption: If the Verizon Transaction has not closed on or before 5:00 p.m. (New York City time) on August 6, 2016, the Verizon Purchase Agreement is terminated or if the Company determines in its reasonable judgment that the Verizon Transaction will not occur, the Company may, at its option, in its sole discretion, give notice of acquisition termination redemption to the holders of the shares of Mandatory Convertible Preferred Stock. If the Company provides such notice, then, on the acquisition termination redemption date (as defined in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement), the Company will be required to redeem the shares of Mandatory Convertible Preferred Stock, in whole but not in part, at a redemption amount per share of Mandatory Convertible Preferred Stock equal to the acquisition termination make-whole amount described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement. If redeemed, the Company will pay the acquisition termination make-whole amount in cash unless the acquisition termination share price described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement is greater than the initial price. If the acquisition termination share price is greater than the initial price, the Company will pay the acquisition termination make-whole amount in shares of its common stock and cash, unless the Company elects, subject to certain limitations, to pay cash or shares of its common stock in lieu of such amounts. Other than pursuant to the provisions described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement, the shares of Mandatory Convertible Preferred Stock will not be redeemable by the Company. Mandatory conversion date: June 29, 2018 Mandatory conversion rate: The conversion rate for each share of the Mandatory Convertible Preferred Stock will be not more than 20.0000 shares of the Company’s common stock and not less than 17.0213 shares of its common stock (the “maximum conversion rate” and “minimum conversion rate,” respectively), depending on the applicable market value (as defined below) of its common stock, subject to certain anti-dilution adjustments described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement. The “applicable market value” of the Company’s common stock is the average VWAP per share of its common stock for the 20 consecutive trading day period commencing on and including the 22nd scheduled trading day immediately preceding June 29, 2018. The conversion rate will be calculated as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement and the following table illustrates the conversion rate per share of the Mandatory Convertible Preferred Stock, subject to certain anti-dilution adjustments described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement. Applicable Market Value of our Common Stock on the Mandatory Conversion Date Conversion Rate Per Share of the Mandatory Convertible Preferred Stock Less than or equal to $5.00 (the initial price). 20.0000 shares of common stock. Greater than $5.00 and less than $5.875 (the threshold appreciation price). Between 20.0000 and 17.0213 shares, determined by dividing $100.00 by the applicable market value of common stock. Equal to or greater than the threshold appreciation price. 17.0213 shares of common stock (the minimum conversion rate). Early conversion at the option of the holder: At any time prior to June 29, 2018, other than during a fundamental change conversion period (as defined below), a holder of shares of the Mandatory Convertible Preferred Stock may elect to convert such holder’s shares of Mandatory Convertible Preferred Stock, in whole or in part, into shares of the Company’s common stock, at the minimum conversion rate of 17.0213 shares of its common stock per share of the Mandatory Convertible Preferred Stock, subject to certain anti-dilution adjustments. If, as of the effective date of any early conversion (the “early conversion date”), the Company has not declared all or any portion of the accumulated dividends for all dividend periods ending on a dividend payment date prior to such early conversion date, the conversion rate for such early conversion will be adjusted so that holders converting their Mandatory Convertible Preferred Stock at such time receive an additional number of shares of its common stock equal to such amount of accumulated and unpaid dividends for such prior dividend periods, divided by the greater of the floor price and the average VWAP per share of its common stock over the 20 consecutive trading day period commencing on and including the 22nd scheduled trading day immediately preceding the early conversion date (the “early conversion average price”). To the extent that the cash amount of the accumulated and unpaid dividends for all dividend periods ending on a dividend payment date prior to the relevant conversion date exceeds the value of the product of the number of additional shares added to the conversion rate and the early conversion average price, the Company will not have any obligation to pay the shortfall in cash. Early conversion at the option of the holder upon a fundamental change: Upon the occurrence of a “fundamental change” (as defined in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement) prior to June 29, 2018, under certain circumstances the Company will deliver or pay to holders of Mandatory Convertible Preferred Stock who convert their shares of the Mandatory Convertible Preferred Stock during the period from, and including, the effective date of the fundamental change to, but excluding, the earlier of (A) the mandatory conversion date and (B) the date selected by the Company that is not less than 30 and not more than 60 days after the effective date of such fundamental change (the “fundamental change conversion period”), a number of shares of its common stock or, if the fundamental change also constitutes a reorganization event, units of exchange property (as defined in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement), determined using the applicable fundamental change conversion rate. The fundamental change conversion rate will be determined based on the effective date of the fundamental change and the price per share of its common stock paid or deemed paid in such fundamental change (the “stock price”). Holders who convert their Mandatory Convertible Preferred Stock within the fundamental change conversion period will also receive a “fundamental change dividend make-whole amount,” in cash or in shares of the Company’s common stock or a combination thereof, equal to the present value (computed using a discount rate of 6.00% per annum) of all remaining dividend payments on their shares of the Mandatory Convertible Preferred Stock (excluding any accumulated and unpaid dividends for all dividend periods ending on or prior to the dividend payment date immediately preceding the effective date of the fundamental change as well as dividends accumulated to the effective date of the fundamental change) from such effective date to, but excluding, the mandatory conversion date. If the Company elects to pay the fundamental change dividend make-whole amount in shares of its common stock in lieu of cash, the number of shares of its common stock that the Company will deliver will equal (x) the fundamental change dividend make-whole amount divided by (y) the greater of the floor price and 97% of the stock price. In addition, to the extent that, as of the effective date of the fundamental change, the Company has not declared any or all of the accumulated dividends on the Mandatory Convertible Preferred Stock as of such effective date (including accumulated and unpaid dividends for all dividend periods ending on or prior to the dividend payment date immediately preceding the effective date of the fundamental change as well as dividends accumulated to the effective date of the fundamental change, the “accumulated dividend amount”), upon conversion, the Company will pay or deliver, as the case may be, such accumulated dividend amount in cash (to the extent it is legally permitted to do so) or shares of its common stock, or any combination thereof at the Company’s election, to holders who convert Mandatory Convertible Preferred Stock within the fundamental change conversion period. If the Company elects to pay the accumulated dividend amount in shares of its common stock in lieu of cash, the number of shares of its common stock that the Company will deliver will equal (x) the accumulated dividend amount divided by (y) the greater of the floor price and 97% of the stock price. To the extent that the sum of the fundamental change dividend make-whole amount and accumulated dividend amount or any portion thereof paid in shares of its common stock exceeds the product of the number of additional shares the Company delivers in respect thereof and 97% of the stock price, the Company will, if it is legally able to do so, declare and pay such excess amount in cash. The following table sets forth the fundamental change conversion rate per share of Mandatory Convertible Preferred Stock based on the effective date of the fundamental change and the stock price paid (or deemed paid) per share of common stock in the fundamental change (each of the stock price and the fundamental change conversion rate subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement). Effective Date $1.50 $2.50 $3.75 $4.50 $4.75 $5.00 $5.25 $5.50 $5.88 $6.25 $6.50 $7.50 $8.75 $10.00 $12.50 $15.00 $20.00 June 10, 2015 8.5047 11.8132 13.4879 13.8893 13.9765 14.0495 14.1119 14.1666 14.2390 14.3041 14.3451 14.5008 14.6882 14.8663 15.1754 15.4157 15.7407 December 31, 2015 9.8076 12.8979 14.3438 14.6264 14.6776 14.7165 14.7470 14.7722 14.8043 14.8341 14.8540 14.9425 15.0734 15.2129 15.4701 15.6738 15.9485 June 30, 2016 11.3101 14.0865 15.2730 15.4203 15.4293 15.4283 15.4212 15.4114 15.3961 15.3845 15.3800 15.3926 15.4633 15.5637 15.7688 15.9352 16.1583 December 31, 2016 13.0426 15.3869 16.2843 16.2760 16.2345 16.1848 16.1317 16.0790 16.0060 15.9449 15.9118 15.8401 15.8509 15.9153 16.0712 16.2000 16.3701 June 30, 2017 15.0403 16.8056 17.4044 17.2219 17.1169 17.0038 16.8895 16.7793 16.6296 16.5047 16.4364 16.2716 16.2309 16.2679 16.3792 16.4689 16.5844 December 31, 2017 17.3438 18.3415 18.6799 18.3457 18.1552 17.9455 17.7307 17.5233 17.2455 17.0223 16.9059 16.6543 16.6025 16.6300 16.6960 16.7427 16.8014 June 29, 2018 20.0000 20.0000 20.0000 20.0000 20.0000 20.0000 19.0476 18.1818 17.0213 17.0213 17.0213 17.0213 17.0213 17.0213 17.0213 17.0213 17.0213 The exact stock price and fundamental change effective date may not be set forth in the table, in which case: • if the stock price is between two stock price amounts in the table or the effective date is between two dates in the table, the fundamental change conversion rate will be determined by straight-line interpolation between the fundamental change conversion rates set forth for the higher and lower stock price amounts and the two dates, as applicable, based on a 365-day year; • if the stock price is greater than $20.00 per share (subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement), then the fundamental change conversion rate will be the minimum conversion rate (subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement); and • if the stock price is less than $1.50 per share (subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement) (the “minimum stock price”), then the fundamental change conversion rate will be determined (x) as if the stock price equaled the minimum stock price and (y) if the effective date is between two dates on the table, using straight-line interpolation (subject to adjustment as described in the Mandatory Convertible Preferred Stock Preliminary Prospectus Supplement).