ADT, Inc. (Form: S-1, Received: 12/21/2017 16:59:45)

Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.

Inputs other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market data at the measurement date.

Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

As filed with the Securities and Exchange Commission on December 21, 2017.

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

ADT Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

7381

47-4116383

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(IRS Employer

Identification Number)

1501 Yamato Road

Boca Raton, Florida 33431

(561) 988-3600

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Timothy J. Whall

Chief Executive Officer

1501 Yamato Road

Boca Raton, Florida 33431

(561) 322-7235

(Name, address, including zip code, and telephone number, including area code, of agent for service)

With copies to:

Taurie M. Zeitzer, Esq.

Tracey A. Zaccone, Esq.

Paul, Weiss, Rifkind, Wharton &

Garrison LLP

1285 Avenue of the Americas

New York, NY 10019-6064

(212) 373-3000

P. Gray Finney, Esq.

Senior Vice President, Chief Legal Officer & Secretary

1501 Yamato Road

Boca Raton, Florida 33431

(561) 988-3600

Arthur D. Robinson, Esq.

David W. Azarkh, Esq.

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, NY 10017

(212) 455-2000

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒ (Do not check if a smaller reporting company)	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. ☐

CALCULATION OF REGISTRATION FEE



Title of each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price ⁽¹⁾⁽²⁾	Amount of Registration Fee
Common Stock, par value $0.01 per share	$100,000,000.00	$12,450.00

(1)	Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

(2)	Includes offering price of any additional shares that the underwriters have the option to purchase, if any. See “Underwriting (Conflict of Interest).”

The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion, dated December 21, 2017

PROSPECTUS

Shares

LOGO

ADT Inc.

Common Stock

This is the initial public offering of ADT Inc., a Delaware corporation. We are offering shares of common stock.

We expect the public offering price to be between $ and $ per share. Prior to this offering, no public market exists for the shares. We intend to apply to list our common stock on The New York Stock Exchange (“NYSE”) under the symbol “ADT.” Following the completion of this offering and related transactions, funds affiliated with or managed by Apollo Global Management, LLC will continue to own a majority of the voting power of our outstanding common stock. As a result, we expect to be a “controlled company” under the corporate governance rules for NYSE-listed companies and will be exempt from certain corporate governance requirements of such rules. See “Risk Factors—Risks Related to this Offering and Ownership of our Common Stock” and “Principal Stockholders.”

Investing in our common stock involves risks that are described in the “ Risk Factors ” section beginning on page 35 of this prospectus.


	Per Share	Total
Public offering price	$	$
Underwriting discounts and commissions ⁽¹⁾	$	$
Proceeds to us, before expenses	$	$

(1)	See “Underwriting (Conflict of Interest)” for additional information regarding the underwriters’ compensation.

The underwriters may also exercise their over-allotment option to purchase up to an additional shares from us at the public offering price, less underwriting discounts and commissions, for 30 days after the date of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares of common stock against payment on or about , 2018.

Joint Book-Running Managers



Morgan Stanley		Goldman Sachs & Co. LLC


Barclays	Deutsche Bank Securities	RBC Capital Markets

Citigroup	BofA Merrill Lynch	Credit Suisse

Co-Managers


Imperial Capital	Academy Securities	Allen & Company LLC
Apollo Global Securities	Citizens Capital Markets	LionTree


SunTrust Robinson Humphrey				The Williams Capital Group, L.P.

The date of this prospectus is , 2018.

LOGO

For investors outside the United States: neither we nor the underwriters have done anything that would permit this offering or possession or distribution of this prospectus or any free writing prospectus we may provide to you in connection with this offering in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus and any such free writing prospectus outside of the United States.

TABLE OF CONTENTS


PROSPECTUS SUMMARY			1
RISK FACTORS			35
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS			67
USE OF PROCEEDS			70
DIVIDEND POLICY			71
CAPITALIZATION			72
DILUTION			74
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA			77
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION			80
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			90
SUPPLEMENTAL MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			123
INDUSTRY			143
BUSINESS			146
MANAGEMENT			164
EXECUTIVE COMPENSATION			172
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS			203
PRINCIPAL STOCKHOLDERS			207
DESCRIPTION OF CAPITAL STOCK			209
DESCRIPTION OF THE KOCH PREFERRED SECURITIES			217
DESCRIPTION OF MATERIAL INDEBTEDNESS			219
SHARES ELIGIBLE FOR FUTURE SALE			223
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS			225
UNDERWRITING (CONFLICT OF INTEREST)			229
LEGAL MATTERS			236
EXPERTS			236
WHERE YOU CAN FIND MORE INFORMATION			236
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS			F-1

You should rely only on the information contained in this prospectus and any related free writing prospectus that we may provide to you in connection with this offering. We have not, and the underwriters have not, authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations, and prospects may have changed since that date.

TRADEMARKS, TRADE NAMES, AND SERVICE MARKS

We use various trademarks, trade names and service marks in our business, including registered trademarks relating to the names “ASG SECURITY,” “PROTECTION ONE,” “ADT,” “ADT PULSE,” “CANOPY,” “ADT ALWAYS THERE,” “COMPANION SERVICE,” and “CREATING CUSTOMERS FOR LIFE,” as well as ADT’s (as defined herein) signature blue octagon logo. Pursuant to a Trademark Agreement between The ADT Corporation (as defined herein) and Tyco International Ltd., we may not use certain trademarks associated with ADT’s brand, including “ADT,” outside of the United States, Canada, Puerto Rico, and the U.S. Virgin Islands. This prospectus contains references to our trademarks and service marks. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the ^® or TM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks, or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

INDUSTRY AND MARKET DATA

We include in this prospectus statements regarding factors that have impacted our and our customers’ industries. Such statements are statements of belief and are based on industry data and forecasts that we have obtained from industry publications and surveys, including those published by Barnes Associates, as well as internal company sources. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of such information. In addition, while we believe that the industry information included herein is generally reliable, such information is inherently imprecise. While we are not aware of any misstatements regarding the industry data presented herein, our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the caption “Risk Factors” in this prospectus.

BASIS OF PRESENTATION

In this prospectus, unless otherwise indicated or the context otherwise requires, references to the “Company,” the “Issuer,” “we,” “us,” “our,” and “ADT” refer to ADT Inc., a Delaware corporation (formerly named Prime Security Services Parent, Inc.), and its current and former consolidated subsidiaries, including Prime Security Services Borrower, LLC (“Prime Borrower”), The ADT Security Corporation (formerly named The ADT Corporation) (“The ADT Corporation”), Protection One, Inc. (“Protection One”), and ASG Intermediate Holding Corp. (“ASG”). References to our “Sponsor” refer to certain investment funds directly or indirectly affiliated with or managed by Apollo Global Management, LLC and its subsidiaries and its affiliates (“Apollo”) as described under “Prospectus Summary—Our Sponsor.”

On July 1, 2015, the Company’s indirect wholly owned subsidiary, Prime Protection One MS, Inc. (“Merger Sub”), was merged with and into Protection Holdings II, Inc. (the “Protection One Acquisition”). Upon consummation of the Protection One Acquisition, the separate corporate existence of Merger Sub ceased and Protection Holdings II, Inc. continued as an indirect wholly owned subsidiary of the Company. Prior to the Protection One Acquisition, Protection Holdings II, Inc. was owned by affiliates of GTCR Golder Rauner II, LLC (collectively, “GTCR”), management investors and certain co-investors.

On July 1, 2015, the Company acquired all of the outstanding stock of ASG (the “ASG Acquisition” and, together with the Protection One Acquisition, the “Formation Transactions”). Following the ASG Acquisition, ASG became an indirect wholly owned subsidiary of the Company.

iii

On May 2, 2016, Prime Security One MS, Inc., a Delaware corporation and an indirect wholly owned subsidiary of the Company (“Prime Merger Sub”), merged with and into The ADT Corporation (the “ADT Acquisition”). Upon consummation of the ADT Acquisition, the separate corporate existence of Prime Merger Sub ceased and The ADT Corporation survived as an indirect wholly owned subsidiary of the Company. Prior to the ADT Acquisition, The ADT Corporation was a publicly traded corporation listed on The New York Stock Exchange.

Protection One is the predecessor of ADT Inc. for accounting purposes. The period presented prior to the Protection One Acquisition (which occurred on July 1, 2015), is comprised solely of predecessor activity and is hereinafter referred to as the “Predecessor.” The period presented after the Successor’s (as defined below) inception on May 15, 2015 (“Inception”) is comprised of Company activity which is, prior to the ADT Acquisition on May 2, 2016, the collective activity of Protection One and ASG, and after the ADT Acquisition on May 2, 2016, the collective activity of The ADT Corporation, Protection One, and ASG, and is hereinafter referred to as the “Successor.”

This prospectus contains financial statements for the years ended December 31, 2016, 2015, and 2014 and for the nine months ended September 30, 2017 and 2016. The historical consolidated financial statements of the Company include (a) the consolidated results of ADT Inc. and its subsidiaries for the year ended December 31, 2016 and from Inception through December 31, 2015, and (b) Protection One and its subsidiaries for the period from January 1, 2015 through June 30, 2015 and for the year ended December 31, 2014.

This prospectus also contains the financial statements of Alarm Security Holdings LLC, the parent company of ASG, for the six months ended June 30, 2015 and the year ended December 31, 2014.

This prospectus further contains the financial statements of The ADT Corporation for the fiscal years ended September 25, 2015, September 26, 2014, and September 27, 2013 and the six months ended March 31, 2016 and March 31, 2015.

All financial statements presented in this prospectus supplement have been prepared in U.S. dollars in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

The Company reports financial and operating information in one segment. The Company’s operating segment is also the Company’s reportable segment.

USE OF NON-GAAP FINANCIAL INFORMATION

We have provided Adjusted EBITDA, Covenant Adjusted EBITDA, Pro Forma Adjusted EBITDA, Supplemental Pro Forma Adjusted EBITDA, Historical Combined Free Cash Flow, and Free Cash Flow in this prospectus because we believe such measures provide investors with additional information to measure our performance.

We believe that the presentation of Adjusted EBITDA is appropriate to provide additional information to investors about certain material non-cash items and about unusual items that we do not expect to continue at the same level in the future, as well as other items. Further, we believe Adjusted EBITDA provides a meaningful measure of operating profitability because we use it for evaluating our business performance, making budgeting decisions, and comparing our performance against that of other peer companies using similar measures. We believe that the presentation of Covenant Adjusted EBITDA is appropriate to provide additional information to investors about our ability to operate our business in compliance with the restrictions set forth in our debt agreements and is a component of compensation measures for our executives by supplementing GAAP measures of performance in the evaluation of the effectiveness of our business strategies. We also believe that Pro Forma Adjusted EBITDA appropriately illustrates the effect that the ADT Acquisition had, and the completion of this

offering will have, on our Adjusted EBITDA, assuming that such transactions took place on January 1, 2016, as required under Article 11 of Regulation S-X. We also believe that Supplemental Pro Forma Adjusted EBITDA is appropriate to illustrate the effect that the ADT Acquisition and the Formation Transactions had on our Adjusted EBITDA, assuming that such transactions took place on January 1, 2015.

Adjusted EBITDA, Covenant Adjusted EBITDA, Pro Forma Adjusted EBITDA, and Supplemental Pro Forma Adjusted EBITDA are not presentations made in accordance with GAAP. Our use of the terms Adjusted EBITDA, Covenant Adjusted EBITDA, Pro Forma Adjusted EBITDA, and Supplemental Pro Forma Adjusted EBITDA may vary from others in our industry. Adjusted EBITDA, Covenant Adjusted EBITDA, Pro Forma Adjusted EBITDA, and Supplemental Pro Forma Adjusted EBITDA should not be considered as alternatives to operating income or net income. Adjusted EBITDA, Covenant Adjusted EBITDA, Pro Forma Adjusted EBITDA, and Supplemental Pro Forma Adjusted EBITDA have important limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. For example, Adjusted EBITDA, Covenant Adjusted EBITDA, Pro Forma Adjusted EBITDA, and Supplemental Pro Forma Adjusted EBITDA:

•

exclude certain tax payments that may represent a reduction in cash available to us;

•

do not reflect any cash capital expenditure requirements for the assets being depreciated and amortized that may have to be replaced in the future;

•

do not reflect changes in, or cash requirements for, our working capital needs;

•

do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our indebtedness;

•

exclude certain non-cash and non-recurring charges; and

•

exclude charges and gains related to acquisitions, integrations, restructurings, impairments, and other income or charges.

Our definitions of Adjusted EBITDA, Covenant Adjusted EBITDA, Pro Forma Adjusted EBITDA, and Supplemental Pro Forma Adjusted EBITDA allow us to add back certain non-cash and non-recurring charges that are deducted in calculating net income and to deduct certain non-recurring gains that are included in calculating net income. However, these expenses and gains may recur in the future, vary greatly, and are difficult to predict. They can represent the effect of long-term strategies as opposed to short-term results. In addition, in the case of charges or expenses, these items can represent the reduction of cash that could be used for other corporate purposes.

Historical Combined Free Cash Flow is defined as cash from operating activities less cash outlays related to capital expenditures and reports, on a combined basis, the Historical Free Cash Flow results for the Company, The ADT Corporation, Protection One, and ASG Intermediate Holding Corp., where applicable, for the periods presented. Free Cash Flow is defined as cash from operating activities less cash outlays related to capital expenditures. We define capital expenditures to include purchases of property and equipment; capitalized costs associated with transactions in which we retain ownership of the security system; and accounts purchased through our network of authorized dealers or third parties outside of our authorized dealer network. In arriving at Historical Combined Free Cash Flow and Free Cash Flow, we subtract these items from cash from operating activities because they represent long-term investments that are required for normal business activities. As a result, subject to the limitations described below, Historical Combined Free Cash Flow and Free Cash Flow are useful measures of our cash available to repay debt, make other investments, and pay dividends.

Historical Combined Free Cash Flow and Free Cash Flow adjust for cash items that are ultimately within management’s discretion to direct and therefore may imply that there is less or more cash that is available than the most comparable GAAP measure. Historical Combined Free Cash Flow and Free Cash Flow are not intended

to represent residual cash flow for discretionary expenditures since debt repayment requirements and other non-discretionary expenditures are not deducted. These limitations are best addressed by using Historical Combined Free Cash Flow and Free Cash Flow in combination with the GAAP cash flow measures.

Due to these limitations, we rely primarily on our GAAP results and use Adjusted EBITDA, Covenant Adjusted EBITDA, Pro Forma Adjusted EBITDA, Supplemental Pro Forma Adjusted EBITDA, Historical Combined Free Cash Flow, and Free Cash Flow only supplementally.

For more information on the use of non-GAAP financial information and reconciliations to the nearest GAAP measures, see “Prospectus Summary—Summary Historical and Pro Forma Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Measures,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Covenant Adjusted EBITDA,” and “Supplemental Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

PROSPECTUS SUMMARY

The following summary contains selected information about us and about this offering. It does not contain all of the information that is important to you and your investment decision. Before you make an investment decision, you should review this prospectus in its entirety, including matters set forth under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” consolidated financial statements and the related notes thereto included elsewhere in this prospectus, and the Company’s historical financial statements and the related notes thereto included elsewhere in this prospectus. Some of the statements in the following summary constitute forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements.”

Unless otherwise indicated or the context otherwise requires, references in this prospectus supplement to (i) ”we,” “our,” “us,” “ADT,” and the “Company” refer to ADT Inc. (the “Issuer”) (formerly named Prime Security Services Parent, Inc.) and each of its consolidated subsidiaries, (ii) “The ADT Corporation” refers to The ADT Security Corporation (formerly named The ADT Corporation) and each of its consolidated subsidiaries prior to the consummation of the ADT Acquisition described below under “—Our Formation,” (iii) “ASG” refers to ASG Intermediate Holding Corp and each of its consolidated subsidiaries prior to the consummation of the ASG Acquisition described below under “—Our Formation,” (iv) “Protection One” refers to Protection One, Inc. and each of its consolidated subsidiaries prior to the consummation of the Protection One Acquisition described below under “—Our Formation,” (v) “Holdings” refers to Prime Security Services Holdings, LLC, (vi) “Prime Borrower” refers to Prime Security Services Borrower, LLC, our operating company, (vii) “Ultimate Parent” refers to Prime Security Services TopCo Parent, LP, our direct parent company, and (viii) our “Sponsor” refers to certain investment funds directly or indirectly managed by Apollo Global Management, LLC, its subsidiaries and its affiliates (“Apollo”) as described under “—Our Sponsor.”

COMPANY OVERVIEW

We are the leading provider of monitored security, interactive home and business automation and related monitoring services in the United States and Canada. Our mission is to help our customers protect and connect to what matters most—their families, homes, and businesses. The ADT brand is synonymous with security and, as the most recognized and trusted brand in the industry, is a key driver of our success. A 2017 survey found that the ADT brand had approximately 95% brand awareness, and nearly half of ADT customers surveyed did not consider any other security alarm provider during their purchase process. We estimate that we are approximately five times larger than the next largest residential competitor, with an approximate 30% market share of the residential monitored security industry in the United States and Canada. Excluding contracts monitored but not owned, we currently serve approximately 7.2 million residential and business customers, making us the largest company of our kind in the United States and Canada. We are one of the largest full-service companies with a national footprint providing both residential and commercial monitored security. We deliver an integrated customer experience by maintaining the industry’s largest sales, installation, and service field force, as well as a 24/7 professional monitoring network, all supported by approximately 18,000 employees visiting approximately 10,000 homes and businesses daily. We handle approximately 15 million alarms annually. We provide support from over 200 sales and service locations and through our 12 monitoring centers listed by Underwriters Laboratories (“U.L.”).

Largest Security Monitoring Companies by Monitoring and Related Services Revenue ($ amounts in millions) ⁽¹⁾

LOGO

(1)

Information for companies other than ADT, Stanley, Comcast, and AT&T is based on monthly recurring monitoring and related services revenue as of December 31, 2016 published in SDM Magazine’s 2017 rankings, a publicly available report, which we annualized for the twelve-month period ended December 31, 2016. Information for Stanley is based on Stanley’s monthly recurring monitoring and related services revenue published in Stanley’s investor day presentation, dated May 16, 2017. Information for ADT is monitoring and related services revenue for the supplemental pro forma year ended December 31, 2016. We present monitoring and related services revenue as of the twelve-month period ended on December 31, 2016 because that is the latest period for which we have access to reliable information for other large security monitoring companies. We believe that ADT continues to have comparably larger monitoring and related services revenue than other security monitoring companies for the periods following December 31, 2016.

(2)

Information for Comcast and AT&T is not available for the twelve-month period ended December 31, 2016. We have estimated the above figures assuming that Comcast and AT&T have 1,000,000 and 400,000 customers, respectively, which numbers are derived from public reports. Additionally, we have assumed revenues of $40 per month per customer for each company, which is the cost of the most affordable plan they offer.

Our brand, scale, and national footprint underpin our extremely attractive business model, which is characterized by significant and stable cash flow on recurring services and contractually committed revenue streams, attractive returns on new customer acquisition expenditures, and attractive growth opportunities for new complementary products and services.

Significant and Stable Operating Cash Flow Generatio n. More than 90% of our revenue is recurring from contractually-committed monthly payments under customer contract terms that are generally three to five years in length and where the average customer tenure exceeds the initial contract term. The stability of our revenues is further driven by our industry’s resilience to economic recessions, as demonstrated by the positive market growth in every year through the 2008-2010 economic crisis. As a result of our approximately $3.5 billion net operating loss position, we do not expect to be a material cash taxpayer until approximately 2022 to 2024. This estimate could be impacted by several factors as outlined in “Risk Factors—Risks Related to our Business—We have significant deferred tax assets, and any impairments of or valuation allowances against these deferred tax assets in the future could materially adversely affect our results of operations, financial condition, and cash flows.” Additionally, we have limited working capital needs and are able to reduce capitalized and

expensed subscriber acquisition costs as attrition continues to decrease. As a result of our high margins, we are able to generate significant cash flow from operating activities.

Highly Attractive Rate of Return on Customer Acquisition Expenditures. We generate attractive returns on new customer acquisition expenditures and believe we will be able to further increase these returns through several key initiatives, including our focus on improving attrition and reducing subscriber acquisition costs. The expansion of our offerings through new channels to market such as Do-it-Yourself (“DIY”) and retail, along with growth in commercial markets, where subscriber acquisition costs are lower, will also drive improvement in our internal rates of return.

Attractive Growth Opportunities. We are well-positioned to drive growth in our residential channel by leveraging ADT’s brand and scale and our renewed focus on the customer experience. We are also well-positioned to drive growth in our commercial and multi-site customer channels as a result of these factors coupled with Protection One’s strong existing commercial and multi-site customer base and expertise. In addition, we have attractive growth opportunities for complementary products and services, including through partnerships with leading technology firms such as Honeywell, Samsung, Amazon, Life 360, and Cisco Meraki. These partnerships collectively extend our presence to new channels (including DIY, retail, and e-commerce) and new and complementary offerings in automation, cyber security, and mobile on-the-go applications.

We offer our residential, commercial, and multi-site customers a comprehensive set of burglary, video, access control, fire and smoke alarm, and medical alert solutions. Our 24/7 monitoring capabilities are enabled by our 12 monitoring centers listed by U.L., which ensure that any detected threats are met with a rapid response by a trained ADT professional. Our core professional monitored security offering is complemented by a broad set of innovative products and services, including interactive home and business automation solutions that are designed to control access, react to movement, and sense carbon monoxide, flooding, and changes in temperature or other environmental conditions, as well as address personal emergencies, such as injuries, medical incidents or incapacitation. These products and services include interactive technologies to enhance our monitored solutions and to allow our customers to remotely manage their residential and commercial environments by adding increased automation through video, access control and other smart building functionality. Through ADT’s interactive platform, customers can use their smart phones, tablets, and laptops to arm and disarm their security systems, adjust lighting or thermostat levels, view real-time video of their premises, and program customizable schedules for the management of a range of smart home products. ADT customers can also arm their systems via Amazon Alexa-enabled devices, such as an Amazon Echo or Echo Dot. To further complement security beyond the home, ADT will soon offer a mobile security service available via a downloadable application, which provides family location technology, 24/7 crash detection, and roadside assistance with professional panic response monitoring via ADT. In addition, we offer professional monitoring of third party devices through our ADT Canopy platform. ADT Canopy enables other companies to integrate solutions into our monitoring and billing platform and allows us to provide monitoring solutions to customers who do not currently have an ADT security system or interactive automation platform installed on premise. The ADT platform easily integrates third-party hubs, DIY solutions, and Internet-of-Things (“IoT”) devices to our professional monitoring network on a contracted or per-month billing basis.

Our significant size and scale provide us several competitive advantages when compared to smaller local and regional companies. We achieve meaningful economies of scale in monitoring, customer service, and purchasing power, while significant density in major markets reduces our installation and service costs per customer. Our national footprint drives marketing efficiency, and our leading brand allows us to reduce new customer acquisition costs. Importantly, our scale, distribution platform, and brand strength make us the “partner of choice” for major technology companies, which has enabled us to leverage our service and monitoring expertise to expand our addressable market to include a wide range of technology-driven monitoring and service solutions.

In the nine months ended September 30, 2017 and the year ended December 31, 2016, we had total revenues of $3,210 million and $2,950 million, respectively, and net losses of $296 million and $537 million, respectively. In the twelve months ended September 30, 2017, we generated $4,007 million of monitoring and related services revenue and $2,308 million of Adjusted EBITDA, see footnote (k) under “—Summary Historical and Pro Forma Financial Information.” On a supplemental pro forma basis, for the year ended December 31, 2016, we generated $3,954 million of pro forma monitoring and related services revenue and $2,177 million of Supplemental Pro Forma Adjusted EBITDA. We use the non-GAAP measures Adjusted EBITDA and Supplemental Pro Forma Adjusted EBITDA as measures of our performance. Adjusted EBITDA and Supplemental Pro Forma Adjusted EBITDA are reconciled to net loss in the section titled “—Summary Historical and Pro Forma Financial Information” and “—Supplemental Information.”

OUR HISTORY AND TRANSFORMATION

LOGO

ADT has a long legacy as a trusted and innovative security service provider for homes and businesses. Now an iconic American brand, ADT’s history began in 1874, when it was established as The American District Telegraph Company, embracing the most advanced communications technology of the 1800s. A core aspect of ADT’s success over our more than 140-year history has been our culture of technological and service innovations that have allowed us to remain a market leader and to pursue our core mission of keeping our customers safe and their property protected.

Over the last 20 years we have continued to bring new products and services to market to meet changing customer needs and make use of newly emerging technologies. In 2001, we became the first security company to offer a web-enabled home security system, ADT Safewatch iCenter. We diversified our offerings further with the introduction of the ADT Companion Services System, designed to make sure people could live comfortably and safely in their own homes for as long as possible. In 2010, we launched ADT Pulse, making it possible to meet the expanding customer security, professional monitoring, and interactive automation needs for today’s increasingly active, mobile, and technology-centered lifestyles. ADT also continues to innovate through partnerships with leading technology providers.

Since the ADT Acquisition and our integration with Protection One, a new executive management team has driven a transformation that has resulted in a “New ADT” with a substantially improved customer experience and operating culture. As part of the ADT Acquisition, we combined the brand, history, and scale of legacy ADT with the customer service and operational excellence of Protection One to create an industry leader with the broadest portfolio, largest scale, and leading financial and operating metrics.

Our transformation has been led by our Chief Executive Officer Tim Whall, an industry veteran and former Protection One Chief Executive Officer with more than 35 years of industry experience, and a senior team comprised of both industry veterans and executives with deep functional expertise hired from outside the industry. This leadership team has coalesced to drive a culture centered on the customer, and one where all of our employees are fully aligned to the importance of our mission of helping our customers protect and connect to what matters most—their families, homes, and businesses. In addition to customer centricity, our internal cultural markers are characterized by a bias to act with urgency, high levels of teamwork and collaboration, individual accountability, and discretionary effort.

Through high levels of customer satisfaction and disciplined operating processes, the new management team has notably improved customer retention, reduced customer acquisition costs and improved profitability, thereby improving cash flow generation and increasing expected rates of return on new customer acquisition expenditures. Our strategy in this regard is organized around the following: (i) a strong focus on serving and satisfying our customer base to drive down attrition; (ii) disciplined and intelligent customer acquisition based on, among other factors, credit quality; (iii) improvements in the efficiency with which we acquire new customers; (iv) optimization of our cost structure including cost savings achieved through the combination of Protection One and The ADT Corporation; (v) expansion of our total addressable market through continued innovation and growth in technology-driven products and services, commercial security and other customer channels; and (vi) creation of a culture of engagement that breeds collaboration, accountability and discretionary effort among our employees.

We believe these strategies have already delivered significant improvements in operational and financial results. Importantly, we believe that we can drive further improvements that will create and capture additional value in the future. Our progress achieved since the ADT Acquisition includes:

•

Improved Operational and Financial Metrics . Comparing pre-acquisition Legacy ADT (as defined below) for its fiscal year ended September 25, 2015 to post-acquisition Legacy ADT (as defined below) in the trailing twelve-month period ended September 30, 2017, we reduced gross customer revenue attrition from 16.5% to 13.9%. In addition, in comparing pre-acquisition Legacy ADT for its fiscal year ended September 25, 2015 to the post-acquisition Company in the trailing twelve-month period ended September 30, 2017, we increased Adjusted EBITDA margins as a percentage of monitoring and related services revenues from 54.1% to 57.6%, and we reduced the customer revenue payback period from 2.7 years to 2.5 years. We also reduced total net capital expenditures as a percentage of Adjusted EBITDA and improved our cash flow.

We present these comparisons of pre-acquisition Legacy ADT to the post-acquisition combined Company of Protection One, ASG, and ADT because we believe pre-acquisition Legacy ADT is a familiar and meaningful historical data point, with which users of our financial statements may be familiar as it was a public company until May 2, 2016. Additionally, we believe these are meaningful comparisons as the operations of pre-acquisition Legacy ADT comprise a significant portion of the combined Company. We use the non-GAAP measure Adjusted EBITDA to measure our operating performance. Adjusted EBITDA is reconciled to net loss in the section titled “—Summary Historical and Pro Forma Financial Information.” Customer revenue payback period measures the approximate time in years required to recover our initial investment through contractual monthly recurring fees.

•

Strengthened Operating Discipline. We manage our business with a heavy reliance on data and daily operational measurements. We analyze specific and detailed reports, many of which go to transactional level detail, to evaluate performance across branches, teams, and individual employees. We place an emphasis on identifying variances and taking actions to improve outliers. This approach allows us to drive optimized performance across the business to improve customer service, operational execution, and financial performance.

•

Improved Customer Experience. Since the ADT Acquisition, we have made substantial progress in improving the experience of our customers through better processes, employee training, and the

implementation of key initiatives at our call centers, across our sales teams, and at our local branch operations. We believe these improvements are demonstrated by some of the following key performance metrics: substantially reduced longest and average call wait times at our call centers, resulting in a significantly improved experience for customers calling for service on their accounts; reduced service backlog, enabling us to dispatch installation and service technicians to a customer’s premises far more quickly than before; lower call abandonment rates resulting from new processes at our call centers; and lower call center employee turnover. We believe these improvements create a virtuous cycle of more satisfied customers, leading to more engaged employees who, in turn, continue to improve service to our customers.

•

Reduced Customer Revenue Attrition. As a result of a combination of (i) increased discipline related to the credit quality of the new customers we acquire, including the expansion of credit scoring metrics to substantially all new customers, (ii) improved customer service, especially in the speed of our responsiveness in our call centers and field operations, and (iii) a technology-driven product and service offering that increases customer contact and allows us to provide tailored offerings, we have improved annual customer revenue attrition at legacy ADT by more than two and a half percentage points since the consummation of the ADT Acquisition. Customer revenue attrition is one of the most important drivers of value creation in security monitoring businesses, and based on our estimates every one percentage point improvement in attrition frees up more than $100 million of cash flow we would otherwise need to spend to replace those lost customers. We believe that substantial additional opportunities remain to further reduce attrition.

The ADT Corporation Trailing Twelve Month Gross Customer Revenue Attrition ⁽¹⁾

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Note: Post-close and pre-close refer to the periods before and after the closing of the ADT Acquisition.

(1)

Gross Customer Revenue Attrition means recurring revenue lost as a result of customer attrition, net of dealer chargebacks and reinstatements, excluding contracts monitored but not owned. The information in this graph presents gross customer revenue attrition (a) prior to The ADT Acquisition, of The ADT Corporation (“pre-acquisition Legacy ADT”) and (b) following the consummation of the ADT Acquisition, of the Company excluding customers acquired under the Protection One and ASG brands (“post-acquisition Legacy ADT”).

•

Progress in Growth Areas . We have made substantial progress in the development of numerous potential growth areas for our Company, including: leveraging Protection One’s history in the commercial market to continue building a world-class commercial security business; expanding our total addressable market by leveraging the ADT brand to bring security monitoring to innovative new customer experiences and offerings, evidenced by progress in developing cyber security and our new on-the-go mobile offerings; and continuing to take advantage of our status as a “partner of choice” to leading technology companies, evidenced by our recently announced partnership with Amazon.

COMPETITIVE STRENGTHS

We believe the following competitive strengths position us to remain the leader in the markets we serve and to capture growth opportunities with complementary products and services:

Highest Brand Recognition

Trusted by customers since 1874, the ADT brand is synonymous with security. In an industry where customers rely on their security service provider to respond quickly in moments of detected threats, we have maintained that trust. In a 2017 survey, our scale, high-quality customer care, and service expertise have earned us the highest brand awareness among consumers (approximately 95%) and make us the “best brand,” according to approximately 54% of consumers surveyed (compared to the next highest competitor mention with approximately 6%). Additionally, nearly half of ADT’s customers surveyed do not consider other competitors during their monitored security purchase process. In combination with our scale and national footprint, our brand drives marketing efficiencies enabling us to optimize new customer acquisition costs. We also believe our iconic brand will continue to differentiate our business and provide us with the opportunity to grow our product and service offerings and enter new channels.

Clear Market Leader with Five Times the Market Share of the Next Largest Competitor

We are the clear market leader in the large, fragmented, growing, and economically resilient residential, commercial, and multi-site monitored security industry. We serve approximately 7.2 million customers, excluding contracts monitored but not owned. We estimate that we are approximately five times larger than the next residential competitor, with an approximate 30% market share in the residential monitored security industry in the United States and Canada. Our significant size and scale provide us with several competitive advantages when compared to smaller and local regional companies, including meaningful economies of scale in monitoring, customer service, and purchasing power, and reduced installation and acquisition costs per customer.

Nationwide Presence with the Most Diverse Distribution and Support Network

We are one of the largest nationwide, multi-channel security monitoring companies. Our installed security system and professional monitoring customers include residences, commercial facilities, and multi-site locations. As of September 30, 2017, our customers were supported by more than 200 customer sales and service offices and a team of approximately 18,000 employees across the United States and Canada. Our team represents the industry’s largest sales, installation, and service field force, and includes over 2,800 field sales professionals, approximately 450 phone sales agents, a dedicated health sales team, an exclusive network of approximately 300 authorized dealer partners across the United States and Canada, and approximately 4,600 installation and service technicians. We also maintain the industry’s largest 24/7, professional monitoring network of 12 U.L.-listed monitoring centers in the United States and Canada. Combined with our leading brand and scale, we believe our national footprint makes us the “partner of choice” for major technology companies, which has enabled us to leverage our service and monitoring expertise to expand our addressable market to include a wide range of technology-driven monitoring and service solutions.

Comprehensive, Innovative Security Platform with Extensions Beyond the Home and Business

We believe we offer the most comprehensive and innovative suite of products and services that meet a range of customer security and professional monitoring needs for today’s increasingly active, mobile, and technology-centered lifestyles. Our principal service offerings involve the installation and professional monitoring of residential and commercial security systems designed to detect intrusion, control access, and react to movement, smoke, carbon monoxide, flooding, temperature, and other environmental conditions and hazards, as well as to address personal emergencies such as injuries, medical incidents, or incapacitation.

We have complemented and extended these security and interactive automation solutions with a number of innovative offerings delivered through our platforms. Our ADT interactive platform enables our customers to integrate compatible devices and services into existing security systems to permit remote management and professional monitoring. ADT provides remote management and professional monitoring, as well as professional monitoring to owners and users of DIY solutions, IoT devices, and artificial intelligence hubs who do not currently have an installed ADT security system.

By integrating advanced and internet-based technologies into our installed security systems and professional monitoring network, we believe we represent an attractive collaboration partner for third-party technology companies and vendors, such as Honeywell, Samsung, Amazon, Cisco Meraki, Apple HomeKit, Life360, and the growing list of companies in smart home technologies who may seek to introduce their products and services to our customer base.

We will soon make commercially available ADT Go, a new family safety service and mobile application built in conjunction with trusted partner and family location market leader, Life360, offering customers peace of mind by combining Life360’s proprietary family location technology, 24/7 crash detection, and roadside assistance with professional beyond-premise and on-the-go panic response monitoring via ADT. This combination brings our professional monitoring capabilities to individuals and families when they are outside of their home or business.

Customer-First Culture Delivering an Exceptional Customer Experience

To complement our advanced security and monitoring solutions, we are committed to providing superior customer service with a focus on speed and quality of responsiveness. Our key customer service objectives include the following, which we believe provide significant differentiation relative to our industry competitors:

•

target of under 60 seconds wait time for all calls,

•

minimize call abandonment rate,

•

live call answer with no or limited auto-attendant,

•

minimize field service backlog with a pledge to provide same day or next day service, and

•

low employee turnover.

We are also highly focused on offering a fully-integrated and seamless customer experience by fostering close collaboration between our sales representatives, customer service representatives, and installation and service technicians. We believe our commitment to delivering high-quality customer service will further enhance our brand, improve customer satisfaction, increase customer retention, and drive our internal rates of return and cash flow generation.

Attractive Financial Profile with Strong Rates of Return and Cash Flow Generation

We benefit from a stable revenue profile, with more than 90% of our revenue coming from recurring contractually-committed monthly payments under contracts with initial terms that are generally three to five years in length, and where the average customer tenure exceeds the initial contract term. The stability of our revenues is further driven by our industry’s resilience to economic recessions, as demonstrated by the positive market growth in every year through the 2008-2010 economic crisis. We are able to generate significant cash flow from operating activities as a result of our high margins, limited cash taxes and limited working capital needs. We also believe that our returns on new customer acquisition expenditures relating to new residential, commercial, and multi-site customers are attractive, as they generally achieve a revenue break-even point in less than three years.

Significant Growth Opportunities in Commercial and Multi-Site Customer Channels

We believe the commercial and multi-site channels represent attractive opportunities for disciplined growth and are characterized by higher returns on new customer acquisition expenditures relative to the residential channel. The commercial and multi-site customer channels generally have higher customer retention, higher average revenue per customer, and lower costs to add new customers relative to the recurring revenue they generate. These characteristics provide further opportunity to optimize our key business drivers that focus on, and yield, strong cash flow generation. We believe that ADT’s combination with Protection One has enabled, and will continue to enable, us to combine Protection One’s expertise in the commercial and multi-site customer space with the strength of the ADT brand and customer network to capture additional commercial and multi-site customer market share.

Highly Experienced, Expert Management Team with Successful Track Record of Delivering Results

Our highly experienced management team shares a long and successful history of collaboration and accomplishments in the security monitoring industry. Led by Chief Executive Officer Tim Whall, a security industry veteran with over 35 years of industry experience, core members of our management team have decades of combined operating experience, and, prior to joining our Company, had driven operational success followed by profitable growth at five different companies: legacy ADT, SecurityLink, Honeywell Security Monitoring, Stanley Convergent Security, and Protection One. Since joining our Company, the management team has further enhanced our strong foundation with an integrated strategy based on productivity, customer selection, exceptional customer service, and delivery on financial commitments.

Strengthened Operating Discipline

We manage our business with a heavy reliance on data and daily operational measurements. We analyze specific and detailed reports, many of which go to transactional level detail, to evaluate performance across branches, teams, and individual employees. We focus especially on identifying variances and taking actions to improve outliers. This approach allows us to drive optimized performance across the business to improve customer service, operational execution, and financial performance.

BUSINESS STRATEGIES

We believe the following core business strategies will continue to position our Company as the leader in the markets we serve:

Optimize Key Business Drivers that Drive Returns and Cash Flow Generation

We intend to optimize returns on new customer acquisition expenditures and cash flow generation by continuing to focus on the following key drivers of our business: best-in-class customer service; disciplined, high-quality residential, commercial, and multi-site customer additions; efficient customer acquisition; reduced costs incurred to provide ongoing services to customers; and increased customer retention. We believe we have already demonstrated a track record under our new management team of successfully executing on these key business drivers and delivering optimized cash flow generation. By utilizing best-in-class industry practices, we believe we are well-positioned to further optimize financial returns and drive continued value creation.

Maintain Our Commitment to Best-in-Class Customer Service

retention, and as a result, greater cash flow generation. We serve our customer base from more than 200 locations throughout the United States and Canada, including 12 U.L.-listed monitoring centers. From these locations, our teams provide monitored security and interactive residential and commercial automation solutions including installation, field service and repair, and ongoing monitoring and customer support. Our installation and service technicians and customer service representatives deliver a high-quality customer service experience that enhances our brand, improves customer satisfaction, increases customer retention, and accelerates the adoption of additional interactive automation solutions, and therefore drives returns on new customer acquisition expenditures and greater cash flow generation. In the past year, we believe we have revitalized the customer service culture at ADT—our daily call abandonment rates are almost always less than 1% and more than 99% of our customer calls are answered within sixty seconds, and we pride ourselves on being responsive to our customers and providing same or next day service for the majority of our customers.

Maintain Our High-Quality Customer Base

In addition to customer service improvements, we believe customer retention is also strongly correlated with the credit quality of our customers. We plan to maintain our focus on strict underwriting standards, and have established processes to evaluate potential new customers’ creditworthiness to improve our customer selection or require upfront payments for higher risk customers. We expect our focus on generating high-quality customers will continue to result in a portfolio of customers with attractive credit scores, thereby improving retention, decreasing credit risk exposure, and generating a strong, long-term customer portfolio that generates robust returns on new customer acquisition expenditures and drives strong cash flow generation.

Partner with Leading Third Parties to Extend and Enhance Our Product Offering and Customer Base

ADT has a proven history of partnering with leading third-party vendors, and we intend to continue to leverage these relationships to expand and enhance our digital footprint to create a platform for further integration. In January 2016, we announced a new nationwide professional monitoring service via the ADT platform, which is positioned to provide on demand services to compatible DIY and IoT devices such as cameras, sensors, and wearables. Compatible devices and platforms include those manufactured by Samsung, Honeywell, NETGEAR, and Apple’s HomeKit. In January 2017, we announced integration with Amazon Alexa to aid ADT customers in facilitating home security through voice commands via our ADT interactive platform. In January 2017, we announced a partnership with Life360, to develop a family safety service and mobile application we expect to launch later this year. We also announced in June 2017 that we will feature advanced managed and monitored network security and location analytics capabilities for retailers, such as foot traffic, heat mapping, dwell time, and new versus repeat customer visit analysis, using Cisco Meraki Access Points (AP). In August 2017, we also launched the ADT Panic Response service with the Samsung Gear S2 and S3 smartwatches, which are the first wearable devices to include this new level of personal protection. Together with Samsung, in October 2017, we introduced the Samsung SmartThings ADT home security system, which is a safe, easy, and flexible DIY security and smart home solution that gives consumers the ability to create a safe and secure home and grow their connected home ecosystem as their needs evolve. We expect a growing opportunity to expand from our core business to drive growth in adjacent markets, capitalizing on our core expertise and monitoring and service capabilities—along with our brand strength and high degree of customer trust—to expand our addressable market. We intend to pursue additional opportunities in adjacent markets, including through potential selective acquisitions.

Disciplined Expansion of Our Commercial and Multi-Site Account Customer Base

further opportunity to optimize our key business drivers that focus on, and yield, strong cash flow generation. We believe returns on new customer acquisition expenditures in these channels are attractive relative to our residential channels, as they have traditionally produced higher average revenues per customer and have lower customer acquisition costs as a multiple of recurring revenues. In fact, many multi-site customers often seek customized solutions with little-to-no upfront net customer acquisition costs. Commercial and multi-site customers also generally have stronger retention rates than residential customers as a result of higher vendor switching costs, longer contract terms, and a more limited set of competitors in the commercial market.

OUR MARKET OPPORTUNITY

Overview of U.S. Monitored Security Market

According to Barnes Associates, the U.S. monitored security market is a $55 billion industry as of 2016 and includes all companies that design, sell, install, monitor, and service alarm systems for residential, commercial, and multi-site customers. Monitoring and service revenue, estimated at $27 billion in 2016, has grown every year for the past 15 years, and we believe is well-positioned to benefit from additional growth generated by value-added services and additional market penetration. The recurring revenue portion of the industry is highly predictable and economically resilient, as evidenced by its continued growth during the recent economic downturn. From 2000 to 2016, monitoring and service revenue increased every year from $8 billion to $27 billion, representing a compound annual growth rate (“CAGR”) of approximately 7.7%. We believe that the historical rates of growth will continue going forward, with potential upside from the evolution and advancement of industry products and services which could grow the total addressable market and may result in increases in penetration.

Historical Industry Monitoring and Service Revenue

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Source: Barnes Associates, Security Alarm Industry Overview, February 2017.

Residential Market

The residential monitored security market in the United States and Canada is highly fragmented, with a small number of major firms and thousands of smaller regional and local companies. We are the clear market leader, based on our estimates that we are approximately five times larger than the next largest residential competitor, with an approximate 30% market share of the residential monitored security industry in the United States and Canada.

UNC Charlotte Department of Criminal Justice and Criminology, approximately 83% of burglars said they would try to determine if an alarm were present before attempting a burglary, and approximately 60% said they would seek an alternative target if there was an alarm on-site. Among those who discovered the presence of an alarm while attempting a burglary, half reported they would discontinue the attempt. Additionally, the Rutgers University School of Criminal Justice conducted a four-year study of the relationship between break-ins and the presence of home security systems in New Jersey. It found that a security system not only deters burglars from breaking into a home, but also acts as a protection for nearby homes, indicating the presence of several homes with security systems in the same neighborhood deterred burglars from the entire area. Moreover, according to the Alarm Industry Research and Educational Foundation, average losses on homes without an alarm are over 60% higher than homes equipped with alarms. We believe the effectiveness of professionally monitored alarms will continue to be recognized by the market. In addition, we believe many of our customers purchase monitored security and automation services as a result of their insurance carriers, who may offer lower insurance premium rates if a security system is installed or may require that a system be installed as a condition of coverage.

The residential security and smart home industry has the following key characteristics:

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Stable, Growing Core Security Market. Customer demand for monitored security services has grown every year since 2000. Customers demand a trusted brand, a high level of ongoing customer service, and rapid response in the event of a detected threat. Because of how ingrained the security providers are within the home, we believe that security is one of the key anchors in the broader smart home offering.

•

Economically-Resilient Industry that Grew During Recession. The monitored security market demonstrates a high degree of economic resilience, and grew approximately 3% annually during the 2008-2010 recession. The economic resilience of the industry is driven by several key factors including: (i) the contractual, recurring nature of industry revenues; (ii) reduced attrition during economic downturns, due to a decline in home moves which is typically among the biggest drivers of system disconnects; and (iii) a perceived increase in the threat of crime that historically accompanies economic downturns.

•

Low Current Penetration Rates Expanding with the Smart Home. According to a 2017 Parks Associates Industry Report, the residential monitored security industry in the United States has an estimated penetration rate of only approximately 20% and remains underpenetrated relative to other subscription-based services such as pay-TV and the Internet with greater than approximately 80% penetration rates. Many industry observers expect that the increased awareness and emergence of smart home applications, such as interactive security and energy management, will drive increased penetration for home services from approximately 20% as of 2017 to approximately 40% by 2020. The value proposition for customers offered by a broader range of technology and applications seeking to automate the home will continue to be attractive, and as the technology and systems become more integrated, the increased ease of use will enhance this attractive value proposition.

•

Evolving Smart Home Ecosystem. According to industry analysts, the global connected home market, including services, is expected to grow from approximately $24 billion in 2015 to approximately $112 billion by 2020, representing approximately 36% CAGR over that period. Smart home devices worldwide are expected to grow from 0.3 billion units in 2015 to 5.3 billion units in 2020, representing approximately 75% annual growth. While manufacturers of a range of products in the home, from thermostats to home appliances, will strive for increased connectivity and automation, the smart home ecosystem will likely develop around hubs to manage the breadth of connected products and related services and software. For any smart home services or technology provider, integration with these smart home hubs will be critically important, as will the continued collaboration with technology partners within the evolving landscape.

•

Fragmented Competitive Landscape. While the top five industry players represent roughly half of the market, with our Company maintaining approximately 30% estimated residential market share in the United States and Canada, there are more than 10,000 players comprising the remainder of the industry. Scale is a significant advantage for security monitoring businesses, providing the ability to monitor and service a national subscriber base, to develop technology for next generation applications, and to attract technology partners.

Commercial and Multi-Site Market

The commercial and multi-site monitored security industry is less fragmented than the residential monitored security industry, with only a handful of principal competitors, including Johnson Controls (formerly named Tyco) and Stanley Security Solutions, as well as local and regional providers. The commercial and multi-site monitored security market is also, unlike the residential market and as a result of fire code regulations and insurance requirements, almost fully penetrated.

Commercial and multi-site customers often utilize fully-integrated solutions that combine multiple products and technologies, including video surveillance, alarm monitoring, biometrics, access control, fire alarm systems, identity management, and perimeter intrusion detection. Some participants in the space, such as our Company, Johnson Controls, and Stanley Security Solutions, are full-service providers who sell, install, service, and provide monitoring services for these customers. Other participants are integration-only companies, typically receiving project-based revenue for the design and installation of security systems and arranging for the provision of outsourced monitoring services.

Commercial and multi-site security solutions are comprised of complex systems that are often integrated with other critical systems, including HVAC, building automation controls, and other more standardized solutions frequently utilized by customers that require multi-site deployments. Multi-site customer accounts are particularly attractive in that they offer the opportunity for service providers to complete a single sale at the corporate level followed by large, multi-site deployments. These customers also tend to be large, stable companies with low attrition rates.

Multi-site customers place substantial emphasis on the importance of a single point of contact from the service provider and require coverage for installation, service, and monitoring across all the geographies in which they operate. Accordingly, incumbent service providers are well-positioned to grow with existing customers as they open new locations. Very few national platforms exist today. Due to limited competition and strong demand for comprehensive solutions, customers are often willing to pay for installation costs and design capabilities, resulting in lower upfront costs to acquire new customers or new sites. Customer service and client responsiveness are the primary market share drivers for multi-site account customers.

OUR FORMATION

On July 1, 2015, we consummated two acquisitions that were instrumental in the formation of our company. First, we acquired Protection One for total consideration of $1,526 million (the “Protection One Acquisition”). Protection One is the predecessor of the Company for accounting purposes, and is hereinafter referred to as the “Predecessor.” Second, on July 1, 2015, we acquired ASG for total consideration of $509 million (the “ASG Acquisition”).

The Protection One Acquisition and the ASG Acquisition were funded by a combination of equity invested by our Sponsor and the Predecessor’s management of $755 million, as well as borrowings under (i) first lien credit facilities, which included a $1,095 million term loan facility and a $95 million revolving credit facility, and (ii) a $260 million second lien term loan facility.

On May 2, 2016, we acquired The ADT Corporation (the “ADT Acquisition” and, together with the Protection One Acquisition and the ASG Acquisition, the “Transactions”). The ADT Acquisition significantly increased our market share in the security industry, making us the largest monitored security company in the United States and Canada.

Total consideration in connection with the ADT Acquisition was $12,114 million, which includes the assumption, on the acquisition date, of The ADT Corporation’s outstanding debt (inclusive of capital lease obligations) at a fair value of $3,551 million and cash of approximately $54 million.

We funded the ADT Acquisition, as well as amounts due for merger costs, using the net proceeds from a combination of the following:

(i)

equity proceeds of $3,571 million, net of issuance costs, which resulted from equity issuances by the Company and Ultimate Parent to our Sponsor and certain other investors;

(ii)

incremental first lien term loan borrowings of $1,555 million and the issuance of $3,140 million second priority senior secured notes (the “Prime Notes”); and

(iii)

issuance by the Company of 750,000 shares of preferred securities (the “Koch Preferred Securities”) and issuance by Ultimate Parent of detachable warrants for the purchase of 7,620,730 Class A-1 Units in Ultimate Parent (the “Warrants”) to an affiliate of Koch Industries, Inc. (the “Koch Investor”) for an aggregate amount of $750 million. The Company allocated $659 million to the Koch Preferred Securities, which is reflected net of issuance costs of $27 million as a liability in the Company’s historical consolidated balance sheet. The Company allocated the remaining $91 million in proceeds to the Warrants, which was contributed by Ultimate Parent in the form of common equity to the Company, net of $4 million in issuance costs.

RECENT DEVELOPMENTS

Our audited consolidated financial statements for the year ended December 31, 2017 are not yet available. We have presented preliminary estimated ranges of certain of our financial results below for the year ended December 31, 2017 based on information currently available to management. Our financial closing procedures for the three months and year ended December 31, 2017 are not yet complete. As a result, our actual results for the year ended December 31, 2017 may differ materially from the preliminary estimated financial results set forth below upon the completion of our financial closing procedures, final adjustments, and other developments that may arise prior to the time our financial results are finalized. You should not place undue reliance on these estimates. The preliminary estimated financial results set forth below have been prepared by, and are the responsibility of, management and are based on a number of assumptions. Our independent registered certified public accounting firm, PricewaterhouseCoopers LLP, has not audited, reviewed, compiled, or performed any procedures with respect to the preliminary estimated financial results. Accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto. See “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Cautionary Note Regarding Forward-Looking Statements” for additional information regarding factors that could result in differences between the preliminary estimated ranges of certain of our financial results that are presented below and the actual financial results we will report for the year ended December 31, 2017.

The preliminary estimated financial results set forth below should not be viewed as a substitute for full financial statements prepared in accordance with GAAP. We will not publicly file our actual audited consolidated financial statements and related notes for the year ended December 31, 2017 with the U.S. Securities and Exchange Commission (the “SEC”) until after the consummation of this offering. In addition, the preliminary estimated financial results set forth below are not necessarily indicative of results we may achieve in

any future period. While we currently expect that our actual results will be within the ranges described below, it is possible that our actual results may not be within the ranges we currently estimate. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Supplemental Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information regarding our historical financial results.

We have presented the following preliminary estimated ranges of certain of our financial results for the year ended December 31, 2017:


	For the Year Ended December 31, 2017
	Low		High
	(in thousands)
Statement of Operations Data:
Total revenue	$		$
Net loss	$		$
Key Performance Indicators:
Gross customer revenue attrition (percent) ^(a)		%		%
Adjusted EBITDA ^(b)	$		$

(a)	See footnote (h) under “—Summary Historical and Pro Forma Financial Information.”

(b)	Adjusted EBITDA is a non-GAAP measure and is defined in the section “Use of Non-GAAP Financial Information.” The following table presents a reconciliation of Adjusted EBITDA to net loss.


		For the Year Ended December 31, 2017
		(in thousands)
Other Information :
Aggregate principal amount of debt outstanding
Aggregate liquidation preference of Koch Preferred Securities ⁽¹⁾

(1)

Excludes accumulated dividends associated with the Koch Preferred Securities of $ .


	For the Year Ended December 31, 2017
	Low	High
	(in thousands)
Net loss	$	$
Interest expense, net
Income tax benefit
Depreciation and intangible asset amortization
Merger, restructuring, integration, and other costs ⁽¹⁾
Financing and consent fees ⁽²⁾
Foreign currency gains ⁽³⁾
Loss on extinguishment of debt ⁽⁴⁾
Other non-cash items ⁽⁵⁾
Radio conversion costs ⁽⁶⁾
Amortization of deferred subscriber acquisition costs and revenue, net ⁽⁷⁾
Share-based compensation expense ⁽⁸⁾
Management fees and other charges ⁽⁹⁾

Adjusted EBITDA	$	$

(1)

(2)

Includes fees incurred in connection with the Special Dividend (as defined herein), and fees incurred in connection with the 2017 First Lien Credit Agreement Amendments and the 2017 Incremental First Lien Term B-1 Loan, each (as defined herein).

(3)

Foreign currency gains relate to the translation of monetary assets and liabilities that are denominated in Canadian dollars, primarily due to intercompany loans.

(4)

Loss on extinguishment of debt primarily relates to the write-off of debt discount and issuance costs associated with amendments to the First Lien Credit Facilities (as defined herein).

(5)

Primarily includes certain asset write-downs as well as other non-cash items.

(6)

Represents costs associated with our program that began in 2015 to upgrade cellular technology used in many of our security systems.

(7)

Represents non-cash amortization expense associated with deferred subscriber acquisition costs, net of non-cash amortization of deferred installation revenue.

(8)

Share based compensation expense represents compensation expense associated with our equity compensation plans. Refer to Note 12 to the Company’s audited consolidated financial statements for additional information.

(9)

Primarily includes fees paid under the Management Consulting Agreement (as defined herein). This agreement will terminate in accordance with its terms upon the consummation of this offering (See “Certain Relationships and Related Party Transactions—Management Consulting Agreement”).

CORPORATE STRUCTURE

The following diagram sets forth our corporate structure and our principal indebtedness (excluding capital leases) as of September 30, 2017 after the consummation of the offering and after giving effect to the use of proceeds therefrom; see “Use of Proceeds.” This chart is for illustrative purposes only and does not represent all legal entities affiliated with, or all obligations of, the entities depicted ⁽¹⁾ :

LOGO

(1)	Unless otherwise indicated, subsidiaries are 100% owned by their immediate parent company. Certain of our subsidiaries are omitted.

(2)

Parent GP owns 100% of the general partner interests, but none of the economic interests, in Ultimate Parent. Our Sponsor, certain other investors, members of management and certain of our employees, directly or indirectly, as applicable, own 100% of the economic interests in Ultimate Parent. See “Principal Stockholders” and “Executive Compensation.”

(3)

We intend to deposit a portion of the proceeds from this offering into a separate account, which amount will be used to redeem the Koch Preferred Securities following the consummation of this offering; the Koch Investor will continue to own the Warrants following the consummation of this offering. See “Use of Proceeds.”

(4)	The Issuer was formerly named Prime Security Services Parent, Inc.

(5)

Prior to this offering, there was $3,140 million aggregate principal amount of Prime Notes outstanding as of September 30, 2017. Following the consummation of this offering and the use of proceeds therefrom, including the redemption of $ million aggregate principal amount of Prime Notes, there will be $ million aggregate principal amount of Prime Notes outstanding. See “Use of Proceeds.”

(6)	The ADT Corporation, issuer of the ADT Notes, is one of our operating subsidiaries.

(7)

Simultaneously with this offering, each holder of Class B Units will have all of his or her Class B interests in Ultimate Parent redeemed in full for a combination of common stock and options in the Issuer. See “Executive Compensation—Looking Ahead—Post-IPO Compensation—Redemption of Class B Units.”

RISK FACTORS

Participating in this offering involves substantial risk. Our ability to execute our strategy also is subject to certain risks. The risks described under the heading “Risk Factors” immediately following this summary may cause us not to realize the full benefits of our competitive strengths or may cause us to be unable to successfully execute all or part of our strategy. Some of the more significant challenges and risks we face include the following:

•

changing economic conditions, changing regulations, new interpretations of existing laws, and difficulties and delays in obtaining or maintaining required licenses or approvals;

•

our ability to successfully offer, develop, enhance, and/or introduce products that keep pace with evolving technology related to our business;

•

our ability to retain customers for a long period of time;

•

our ability to comply with evolving laws, regulations, and industry standards addressing information and technology networks, privacy, and data security;

•

our ability to protect our products and services from potential vulnerabilities of wireless and IoT devices; and

•

our ability to operate within the restrictions set by, and service the obligations under, our substantial indebtedness.

OUR SPONSOR

Founded in 1990, Apollo is a leading global alternative investment manager with offices in New York, Los Angeles, Houston, Bethesda, Chicago, St. Louis, Toronto, London, Frankfurt, Madrid, Luxembourg, Mumbai, Delhi, Singapore, Hong Kong, and Shanghai. Apollo had assets under management of approximately $242 billion, as of September 30, 2017, in its affiliated private equity, credit, and real estate funds invested across a core group of nine industries where Apollo has considerable knowledge and resources. In 2017, we distributed a Special Dividend (as defined herein) of $750 million to certain of our investors, which primarily included distributions to our Sponsor. An affiliate of our Sponsor, Apollo Global Securities, LLC, is acting as an underwriter in connection with this offering and will receive customary underwriting commissions and discounts in connection with the offering. Except as set forth in the preceding sentence, our Sponsor will not receive any fees or proceeds from this offering.

CORPORATE INFORMATION

We were incorporated under the laws of the state of Delaware, on May 15, 2015, under the name Apollo Security Services Parent, Inc. and changed our name to Prime Security Services Parent, Inc., on April 29, 2016. We changed our name to ADT Inc., on September 27, 2017. Our principal executive offices are located at 1501 Yamato Road, Boca Raton, FL 33431. Our telephone number is (561) 988-3600. Our website is located at https://investor.adt.com. Our website and the information contained on, or that can be accessed through, our website will not be deemed to be incorporated by reference in, and are not considered part of, this prospectus. You should not rely on our website or any such information in making your decision whether to purchase shares of our common stock.

The Offering

Issuer

ADT Inc.

Common stock offered by us

shares (or shares, if the underwriters exercise in full their over-allotment option as described below).

Over-allotment option

We have granted the underwriters an option to purchase up to an additional shares. The underwriters may exercise this option at any time within 30 days from the date of this prospectus. See “Underwriting (Conflict of Interest).”

Common stock outstanding after giving effect to this offering

shares (or shares if the underwriters exercise their over-allotment option in full).

Use of proceeds

We estimate that our net proceeds from this offering will be approximately $ million (or approximately $ million if the underwriters exercise their over-allotment option), after deducting underwriting discounts and commissions and estimated offering expenses, based on an assumed initial offering price of $ per share (the midpoint of the estimated public offering price range set forth on the cover page of this prospectus).

We currently expect to use (i) an amount equal to approximately $ million of the proceeds of this offering to redeem $ million aggregate principal amount of the Prime Notes and pay the related call premium, and (ii) approximately $ million of the proceeds from this offering to pay related fees and expenses. In addition, we intend to deposit approximately $ million of the proceeds from this offering into a separate account, which amount will be used to redeem the Koch Preferred Securities on a date to be determined following the consummation of this offering. See “Use of Proceeds” and “Description of Koch Preferred Securities.” We intend to use any remaining proceeds for general corporate purposes. See “Use of Proceeds.”

Directed Share Program

At our request, the underwriters have reserved percent of the shares of common stock to be issued by the Company and offered by this prospectus for sale, at the initial public offering price, to . If purchased by these persons, these shares will be subject to a lock-up restrictions for a period of . The number of shares of common stock available for sale to the general public will be reduced to the extent these individuals purchase such reserved shares. Any reserved shares that are not so purchased will be offered by the underwriters to the general public on the same basis as the other shares offered by this prospectus.

Controlled company

Upon completion of this offering, funds affiliated with or managed by Apollo will continue to beneficially own more than 50% of our outstanding common stock. As a result, we intend to avail ourselves of the “controlled company” exemptions under the rules of the NYSE,

including exemptions from certain of the corporate governance listing requirements. See “Management—Controlled Company.”

Dividend policy

We intend to initiate the payment of dividends after the consummation of this offering, although any declaration and payment of cash dividends in the future, if any, will be at the discretion of our board of directors and will depend upon such factors as earning levels, cash flows, capital requirements, levels of indebtedness, restrictions imposed by applicable law, our overall financial condition, restrictions in our debt agreements and the restrictions in the Koch Preferred Securities, and any other factors deemed relevant by our board of directors. See “Description of the Koch Preferred Securities” and “Description of Material Indebtedness.”

Listing

We have applied to list our common stock on the NYSE under the symbol “ADT.”

Risk Factors

You should read the section titled “Risk Factors” beginning on page 35 of, and the other information included in, this prospectus for a discussion of some of the risks and uncertainties you should carefully consider before deciding to invest in our common stock.

Conflict of Interest

Apollo Global Securities, LLC, an affiliate of Apollo, is an underwriter in this offering. Affiliates of Apollo beneficially own, through their ownership of Class A-1 Units in Ultimate Parent (which owns 100% of shares of our common stock), in excess of 10% of our issued and outstanding common stock. As a result, Apollo Global Securities, LLC is deemed to have a “conflict of interest” under FINRA Rule 5121, and this offering will be conducted in compliance with the requirements of Rule 5121. Pursuant to that rule, the appointment of a “qualified independent underwriter” is not required in connection with this offering as the members primarily responsible for managing the public offering do not have a conflict of interest, are not affiliates of any member that has a conflict of interest and meet the requirements of paragraph (f)(12)(E) of Rule 5121. Apollo Global Securities, LLC will not confirm sales of the securities to any account over which it exercises discretionary authority without the specific written approval of the account holder.

Except as otherwise indicated, all of the information in this prospectus assumes:

•

an initial public offering price of $ per share of common stock, the midpoint of the price range set forth on the cover page of this prospectus;

•

no exercise of the underwriters’ over-allotment option to purchase up to additional shares of common stock in this offering; and

•

our restated certificate of incorporation and our restated bylaws in connection with this offering are in effect, pursuant to which the provisions described under “Description of Capital Stock” would become operative.

The number of shares of common stock to be outstanding after consummation of this offering is based on shares of our common stock to be sold by us in this offering and, except where we state otherwise, the information with respect to our common stock we present in this prospectus:

•

does not reflect 2,848,419 shares of common stock that may be issued upon the exercise of options outstanding as of the consummation of this offering issued under our 2016 Equity Incentive Plan (the “Equity Incentive Plan”). See “Shares Eligible for Future Sales”. No further issuances of securities shall take place under the Equity Incentive Plan. The following table sets forth the outstanding stock options under the Equity Incentive Plan as of December 19, 2017:


	Number of Options ⁽¹⁾		Weighted-Average Exercise Price Per Share
Vested stock options (service-based vesting)		176,944	$	11.07
Unvested stock options (service-based vesting)		1,236,293	$	11.46
Unvested stock options (performance-based vesting)		1,435,182	$	11.41

⁽¹⁾

Upon a holder’s exercise of one option, the Company shall issue to such holder one share of common stock.

•

does not reflect an additional shares of our common stock reserved for future grants under our new equity incentive plan before giving effect to the redemption of the Class B Units as described below. See “Executive Compensation—2018 Omnibus Incentive Plan” and “Shares Eligible for Future Sales”; and

•

does not reflect unvested shares of common stock and shares of common stock that may be issued upon exercise of stock options issued under the ADT Inc. 2018 Omnibus Incentive Plan in connection with the redemption of Class B Units of Ultimate Parent in connection with this offering. See “Executive Compensation—Looking Ahead—Post-IPO Compensation—Redemption of Class B Units.” The table below sets forth the number of shares of vested and unvested common stock (subject to certain transfer restrictions), in the aggregate, that would be distributed in connection with the redemption of Class B Units of Ultimate Parent, and the number of stock options, in the aggregate, that would be granted in connection with the redemption of Class B Units of Ultimate Parent in connection with this offering, assuming, in each case an initial public offering price of $ per share of common stock, the midpoint of the price range set forth on the cover page of this prospectus. See “Executive Compensation—Looking Ahead—Post-IPO Compensation” for additional details:


	Number of Shares or Options ⁽³⁾	Weighted-Average Exercise Price Per Share
Vested distributed shares of common stock ⁽¹⁾ (service-based vesting)		n/a
Unvested distributed shares of common stock ⁽¹⁾ (service-based vesting)		n/a
Unvested distributed shares of common stock ⁽¹⁾ (performance-based vesting)		n/a
Vested stock options ⁽²⁾ (service-based vesting)		$
Unvested stock options ⁽²⁾ (service-based vesting)		$
Unvested stock options ⁽²⁾ (performance-based vesting)		$

⁽¹⁾

Distributed shares of common stock (whether vested or unvested) are subject to certain transfer restrictions set forth in our Amended and Restated Management Investor Rights Agreement.

⁽²⁾

Upon a holder’s exercise of one option, the Company will issue to such holder one share of common stock.

⁽³⁾

The calculations below assume an initial public offering price of $ per share (the midpoint of the price range set forth on the cover page of this prospectus). A $1.00 increase in the assumed initial public offering price would (a) increase the number of shares of common stock that would be distributed to our employees in connection with the redemption of the Class B Units by shares of common stock and (b) decrease the stock options granted to our employees by stock options. A $1.00 decrease in the assumed initial public offering price would (a) decrease the number of shares of common stock that would be

distributed to our employees in connection with redemption of the Class B Units by shares of common stock and (b) increase the stock options granted to our employees by stock options. The distributed shares of common stock (whether vested or unvested) reflect an in-kind distribution of the common stock held by Ultimate Parent, while the granted options preserve the intended percentage of the future appreciation of Ultimate Parent that the Class B Units would have been allocated had such Class B Units not been redeemed in connection with this offering. As a result, and as indicated above, a change in the initial public offering price creates an opposite effect on the number of common stock and the number of stock options to be distributed .

SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION

The following tables present our summary historical and pro forma financial data for the periods presented.

The summary historical consolidated statements of operations for the nine months ended September 30, 2017 and September 30, 2016 and the summary historical consolidated balance sheet information as of September 30, 2017 have been derived from our unaudited interim condensed consolidated financial statements, included elsewhere in this prospectus.

The summary historical consolidated statements of operations for the year ended December 31, 2016, for the periods from May 15, 2015 (“Inception”) through December 31, 2015 (Successor) and from January 1, 2015 through June 30, 2015 (Predecessor), and for the year ended December 31, 2014 (Predecessor), and the summary historical consolidated balance sheet information as of December 31, 2016 and December 31, 2015 (Successor) have been derived from our audited consolidated financial statements, included elsewhere in this prospectus.

Prior to the Formation Transactions on July 1, 2015, ADT Inc. was a holding company with no assets or liabilities, and Protection One is the predecessor of ADT Inc. for accounting purposes. The summary historical consolidated statement of operations for the period from January 1, 2015 through June 30, 2015 and the year ended December 31, 2014 have been derived from the audited consolidated financial statements of Protection One, included elsewhere in this prospectus. The summary historical consolidated balance sheet information as of December 31, 2014 has been derived from the audited consolidated financial statements of Protection One, not included elsewhere in this prospectus. Our historical financial data through June 30, 2015 consists solely of Protection One’s historical financial data. From July 1, 2015, which was also the date of the ASG Acquisition, our historical financial data includes ASG’s financial data in addition to the financial data of Protection One. On May 2, 2016, we acquired The ADT Corporation. Our historical financial data beginning May 2, 2016 also includes The ADT Corporation’s financial data.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the Successor audited consolidated financial statements and, in the opinion of our management, consist only of normal and recurring adjustments necessary for a fair presentation of the information set forth herein.

The summary pro forma condensed combined statement of operations for the nine months ended September 30, 2017, and the summary pro forma condensed combined balance sheet information as of September 30, 2017 have been derived from our unaudited interim condensed consolidated financial statements, included elsewhere in this prospectus and have been adjusted to reflect the completion of this offering, including the issuance of common stock and the use of proceeds therefrom, as described under “Use of Proceeds,” to the extent they have not been fully reflected in our historical consolidated financial statements. These pro forma financial statements have been prepared pursuant to Article 11 of Regulation S-X.

The summary pro forma condensed combined statement of operations for the year ended December 31, 2016 has been derived from our audited consolidated financial statements, included elsewhere in this prospectus, and the unaudited condensed consolidated financial statements of The ADT Corporation for the period from January 1, 2016 to May 2, 2016 (the date of the ADT Acquisition), which are not included in this prospectus, and gives effect to the ADT Acquisition and the completion of this offering, including the issuance of common stock and the use of proceeds therefrom, as described under “Use of Proceeds,” to the extent they have not been fully reflected in our historical consolidated financial statements. The unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2017 and for the year ended December 31, 2016 give effect to this offering and the ADT Acquisition as if they had occurred on January 1, 2016. The summary pro forma condensed combined balance sheet gives effect to this offering as if it had occurred on September 30, 2017. These pro forma financial statements have been prepared pursuant to Article 11 of Regulation S-X.

The following financial information should be read in conjunction with “Selected Historical Consolidated Financial Data,” “Unaudited Pro Forma Condensed Combined Financial Information,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our historical consolidated financial statements and the related notes included elsewhere in this prospectus. Historical results are not necessarily indicative of the results to be expected in the future, and interim financial results are not necessarily indicative of results that may be expected for the full fiscal year.


	Successor												Predecessor						Pro Forma (ADT Acquisition and Completion of Offering) ^(b)
	Nine Months Ended Septem- ber 30, 2017 ^(k)			Nine Months Ended Septem- ber 30, 2016 ^(a) ^(k)			Year Ended Decem- ber 31, 2016 ^(a) ^(k)			From Inception through Decem- ber 31, 2015 ^(a)			Period from January 1, 2015 through June 30, 2015			Year Ended Decem- ber 31, 2014			Nine Months Ended Septem- ber 30, 2017	Year Ended Decem- ber 31, 2016
	(in thousands, except per share data)
Statement of Operations Data:
Monitoring and related services	$	3,017,026		$	1,757,923		$	2,748,222		$	238,257		$	189,028		$	358,439
Installation and other		192,944			140,691			201,544			73,310			48,681			108,118

Total revenue		3,209,970			1,898,614			2,949,766			311,567			237,709			466,557
Cost of revenue		658,095			465,357			693,430			148,521			100,591			200,054
Selling, general and administrative expenses		923,048			561,337			858,896			84,134			74,977			134,299
Depreciation and intangible asset amortization		1,387,245			805,389			1,232,967			83,650			41,548			79,650
Merger, restructuring, integration, and other costs ^(c)		54,170			370,860			393,788			35,036			9,361			10,252

Operating income (loss)		187,412			(304,329	)		(229,315	)		(39,774	)		11,232			42,302
Interest expense, net ^(e)		(553,529	)		(337,441	)		(521,491	)		(45,169	)		(29,129	)		(59,329	)
Other income (expense)		31,634			(39,567	)		(51,932	)		325			331			1,087

Loss before income taxes		(334,483	)		(681,337	)		(802,738	)		(84,618	)		(17,566	)		(15,940	)
Income tax benefit (expense)		38,922			229,695			266,151			30,365			(1,025	)		(2,548	)

Net loss	$	(295,561	)	$	(451,642	)	$	(536,587	)	$	(54,253	)	$	(18,591	)	$	(18,488	)

Net loss per share:
Basic and diluted	$	(0.78	)	$	(1.18	)	$	(1.41	)	$	(0.14	)	$	(185,910	)	$	(184,880	)
Weighted average shares used to compute net loss per share		381,357			381,156			381,157			381,156			0.1			0.1
Cash dividends per share	$	1.97			—			—			—			—			—
Balance Sheet Data (at period end):
Cash and cash equivalents	$	170,657		$	163,027		$	75,891		$	15,759					$	89,834
Total assets ^(d)	$	17,086,997		$	17,333,976		$	17,176,481		$	2,319,515					$	1,099,531
Total debt ^(d)	$	10,174,465		$	9,489,221		$	9,509,970		$	1,346,958					$	872,904
Mandatorily redeemable preferred securities ^(e)	$	658,402		$	633,277		$	633,691		$	—					$	—
Total liabilities ^(d)	$	14,290,295		$	13,455,292		$	13,371,505		$	1,616,618					$	1,057,639
Total stockholders’ equity ^(e)(f)	$	2,796,702		$	3,878,684		$	3,804,976		$	702,897					$	41,892
Statement of cash flows data:
Net cash provided by operating activities	$	1,262,340		$	381,813		$	617,523		$	1,754		$	34,556		$	60,825
Net cash used in investing activities	$	(1,038,049	)	$	(9,062,956	)	$	(9,384,869	)	$	(2,062,022	)	$	(39,638	)	$	(58,219	)
Net cash (used in) provided by financing activities	$	(129,586	)	$	8,829,270		$	8,828,775		$	2,076,027		$	(6,212	)	$	83,863
Other historical and pro forma data:
RMR ^(g)	$	333,814		$	327,228		$	327,948		$	40,142		$	30,598		$	29,722
Gross customer revenue attrition (percent) ^(h)		13.8	%		15.2	%		14.8	%		15.9	%		N/A			16.0	%
Adjusted EBITDA ⁽ⁱ⁾	$	1,754,383		$	979,758		$	1,532,889		$	104,828		$	72,326		$	146,532
Free Cash Flow ^(j)	$	228,431		$	(249,511	)	$	(336,672	)	$	(32,292	)	$	3,934		$	2,913

N/A—Not applicable or not meaningful.

(a)

During the third quarter of 2015, the Company acquired Protection One, our Predecessor. The operating results of our Predecessor have been included for the year ended December 31, 2014 and the period from January 1, 2015 through June 30, 2015. During the third quarter of 2015 and second quarter of 2016, we completed the Formation Transactions and the ADT Acquisition, respectively. The impact of these transactions on our operating results has been included from the dates of these acquisitions. See the notes to the consolidated financial statements included elsewhere in this prospectus for details on these acquisitions.

(b)

In accordance with Article 11 of Regulation S-X, these pro forma financial statements give effect to the ADT Acquisition and the completion of this offering, including the issuance of common stock and the use of proceeds therefrom, as described under “Use of Proceeds.” In connection with this offering, the Company will deposit into a separate account an amount equal to at least $750 million, which amounts may only be used by the Company to redeem the Koch Preferred Securities. Such amounts will be restricted cash on our balance sheet.

(c)

Includes certain direct and incremental costs resulting from acquisitions and certain related integration efforts as a result of those acquisitions, as well as costs related to our restructuring efforts. For the nine months ended September 30, 2017, these costs primarily include restructuring and integration efforts incurred in connection with the ADT Acquisition and certain asset impairment charges. For the nine months ended September 30, 2016 and year ended December 31, 2016, these costs are primarily related to transaction costs and restructuring efforts incurred in connection with the ADT Acquisition. Costs incurred during the Successor and Predecessor 2015 periods primarily relate to charges associated with the Formation Transactions. Costs incurred during the Predecessor year ended December 31, 2014 were not material.

(d)

Total assets and total liabilities for 2015 and 2014 were adjusted to reflect the impact of the accounting standards adopted in 2016 related to the presentation of debt issuance costs and income tax. Total debt for these years was also adjusted to reflect the impact from the accounting standard adoption related to the presentation of debt issuance costs.

(e)

(f)

During the nine months ended September 30, 2017, we paid $750 million of dividends to certain investors of the Company and Ultimate Parent, which primarily include distributions to our Sponsor. Such dividends are presented on the unaudited interim condensed consolidated statement of stockholders’ equity for the nine months ended September 30, 2017 included elsewhere in this prospectus.

(g)	Recurring Monthly Revenue (“RMR”) is defined as contractual monthly recurring fees for monitoring and other recurring services provided to our customers, including contracts monitored but not owned at the end of each respective period.

(h)

Gross customer revenue attrition is defined as the recurring revenue lost as a result of customer attrition, net of dealer charge-backs and reinstatements, excluding contracts monitored but not owned. Customer sites are considered canceled when all services are terminated. Dealer charge-backs represent customer cancellations charged back to the dealers because the customer canceled service during the charge-back period, generally twelve to fifteen months.

Gross customer revenue attrition is calculated on a trailing twelve month basis, the numerator of which is the annualized recurring revenue lost during the period due to attrition, net of dealer charge-backs and reinstatements, and the denominator of which is total annualized recurring revenue based on an average of recurring revenue under contract at the beginning of each month during the period. Recurring revenue is generated by contractual monthly recurring fees for monitoring and other recurring services provided to our customers. Gross customer revenue attrition (percent) is presented on a pro forma basis for The ADT Corporation business and ASG, as applicable.

(i)	Adjusted EBITDA is a non-GAAP measure and is defined above in the section “Use of Non-GAAP Financial Information.” The following table presents a reconciliation of Adjusted EBITDA to net loss.


	Successor												Predecessor						Pro Forma (ADT Acquisition and Completion of Offering) ⁽¹¹⁾
	Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016			Year Ended December 31, 2016			From Inception through December 31, 2015			Period from January 1, 2015 through June 30, 2015			Year Ended December 31, 2014			Nine Months Ended September 30, 2017	Year Ended December 31, 2016
	(in thousands)
Net loss	$	(295,561	)	$	(451,642	)	$	(536,587	)	$	(54,253	)	$	(18,591	)	$	(18,488	)
Interest expense, net		553,529			337,441			521,491			45,169			29,129			59,329
Income tax (benefit) expense		(38,922	)		(229,695	)		(266,151	)		(30,365	)		1,025			2,548
Depreciation and intangible asset amortization		1,387,245			805,389			1,232,967			83,650			41,548			79,650
Merger, restructuring, integration, and other costs ⁽¹⁾		54,170			370,860			393,788			35,036			9,361			10,252
Financing and consent fees ⁽²⁾		63,593			2,878			5,302			—			—			—
Foreign currency (gains) / losses ⁽³⁾		(26,773	)		16,336			16,042			—			—			—
Loss on extinguishment of debt ⁽⁴⁾		4,331			16,051			28,293			—			—			377
Purchase accounting deferred revenue fair value adjustment ⁽⁵⁾		—			59,348			62,845			18,574			—			—
Other non-cash items ⁽⁶⁾		10,122			12,146			16,276			—			—			209
Radio conversion costs ⁽⁷⁾		9,597			26,668			34,405			4,312			1,014			—
Amortization of deferred subscriber acquisition costs and revenue, net ⁽⁸⁾		3,987			3,169			6,052			770			7,578			10,656
Share-based compensation expense ⁽⁹⁾		8,498			2,763			4,625			2,259			781			1,913
Management fees and other charges ⁽¹⁰⁾		20,567			8,046			13,541			(324	)		481			86

Adjusted EBITDA	$	1,754,383		$	979,758		$	1,532,889		$	104,828		$	72,326		$	146,532

(1)

(2)

Nine months ended September 30, 2017 includes fees incurred in connection with the Special Dividend, and fees incurred in connection with the 2017 First Lien Credit Agreement Amendments and the 2017 Incremental First Lien Term B-1 Loan.

(3)

Foreign currency (gains) / losses relate to the translation of monetary assets and liabilities that are denominated in Canadian dollars, primarily due to intercompany loans.

(4)

Loss on extinguishment of debt for the nine months ended September 30, 2017 and nine months ended September 30, 2016 primarily relates to the write-off of debt discount and issuance costs associated with amendments to the First Lien Credit Facilities. Loss on extinguishment of debt for the year ended December 31, 2016 includes $14 million relating to the write-off of debt discount and issuance costs associated with the voluntary paydown of $260 million of the second lien term loans, and $14 million relating to the write-off of debt discount and issuance costs associated with amendments to the First Lien Credit Facilities.

(5)

Includes purchase accounting adjustments related to fair value of deferred revenue under GAAP.

(6)

Primarily includes a net loss on the settlement of derivative contracts that were executed to hedge future cash flows associated with the ADT Acquisition during the nine months ended September 30, 2016 and year ended December 31, 2016, and primarily certain asset write-downs during the nine months ended September 30, 2017, and in each case, as well as other non-cash items.

(7)

Represents costs associated with our program that began in 2015 to upgrade cellular technology used in many of our security systems.

(8)

Represents non-cash amortization expense associated with deferred direct and incremental selling expenses (“deferred subscriber acquisition costs”), net of non-cash amortization of revenue associated with deferred non-refundable fees received in connection with the initiation of a monitoring contract (“deferred installation revenue”).

(9)

(10)

The nine months ended September 30, 2017 and year ended December 31, 2016 primarily include $15 million and $13 million, respectively, of fees paid under the Management Consulting Agreement (as defined herein). This agreement will terminate in accordance with its terms upon the consummation of this offering (See “Certain Relationships and Related Party Transactions—Management Consulting Agreement”).

(11)

(j)	Free Cash Flow is a non-GAAP measure and is defined above in the section “Use of Non-GAAP Financial Information.” The following table presents a reconciliation of Free Cash Flow to net cash provided by (used in) operating activities.


	Successor												Predecessor
	Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016			Year Ended December 31, 2016			From Inception through December 31, 2015			Period from January 1, 2015 through June 30, 2015			Year Ended December 31, 2014
	(in thousands)
Net cash provided by operating activities	$	1,262,340		$	381,813		$	617,523		$	1,754		$	34,556		$	60,825
Dealer generated customer accounts and bulk account purchases		(486,037	)		(259,330	)		(407,102	)		—			—			—
Subscriber system assets and deferred subscriber installation costs		(445,201	)		(320,906	)		(468,594	)		(29,556	)		(24,527	)		(48,996	)
Capital expenditures		(102,671	)		(51,088	)		(78,499	)		(4,490	)		(6,095	)		(8,916	)

Free Cash Flow	$	228,431		$	(249,511	)	$	(336,672	)	$	(32,292	)	$	3,934		$	2,913

(k)

Monitoring and related services revenue of $4,007 million and Adjusted EBITDA of $2,308 million for the twelve months ended September 30, 2017 are derived by deducting the historical unaudited consolidated statement of operations data for the nine months ended September 30, 2016 from the historical audited statement of operations data for the year ended December 31, 2016, and then adding thereto the historical unaudited consolidated statement of operations data for the nine months ended September 30, 2017.

SUPPLEMENTAL INFORMATION

We believe that presenting supplemental pro forma financial information and Historical Combined Free Cash Flow promotes the overall usefulness of information presented herein and is consistent with how our management team evaluates our performance. This approach may yield results that are not strictly comparable on a period to period basis. These results are not necessarily indicative of results that may be expected for any future period and interim financial results are not necessarily indicative of results that may be expected for the full fiscal year. This information is for illustrative and informational purposes only and is not intended to represent or be indicative of what our financial condition or results of operations would have been had the underlying transactions occurred on the dates indicated.

Supplemental Pro Forma Financial Information

We have presented unaudited supplemental pro forma financial information for the periods presented below, which includes pro forma adjustments necessary to reflect the ADT Acquisition and the Formation Transactions as if they had occurred on January 1, 2015. The unaudited supplemental pro forma financial information does not give effect to the completion of this offering, including the issuance of common stock and the use of proceeds therefrom and related adjustments. We refer investors to the Supplemental Management’s Discussion and Analysis of Financial Condition and Results of Operations section, included elsewhere in this prospectus, which provides additional information to investors about our financial performance in a manner consistent with how management views our performance and reflects the Formation Transactions and the ADT Acquisition as if they had occurred on January 1, 2015.

The information below has been prepared on a basis consistent with Article 11 of Regulation S-X, but does not constitute Article 11 pro forma information since it reflects the ADT Acquisition and the Formation Transactions as if they occurred on January 1, 2015. The information contained below should therefore be read in conjunction with our historical consolidated financial statements and the related notes included elsewhere in this prospectus.


	Supplemental Pro Forma Nine Months Ended September 30, 2016			Supplemental Pro Forma December 31, 2016			Supplemental Pro Forma December 31, 2015
	(in thousands, except as otherwise indicated)
Results of Operations:
Monitoring and related services	$	2,960,628		$	3,954,424		$	3,897,107
Installation and other		151,639			212,492			160,135

Total revenue		3,112,267			4,166,916			4,057,242
Cost of revenue		641,616			869,689			807,536
Selling, general and administrative expenses		941,364			1,238,923			1,331,326
Depreciation and intangible asset amortization		1,155,145			1,574,219			1,591,410
Merger, restructuring, integration, and other costs		65,403			86,186			33,224

Operating income		308,739			397,899			293,746
Interest expense, net		(565,956	)		(750,006	)		(768,789	)
Other income (expense)		(39,323	)		(51,688	)		4,422

Loss before income taxes		(296,540	)		(403,795	)		(470,621	)
Income tax benefit		87,830			118,854			189,251

Net loss	$	(208,710	)	$	(284,941	)	$	(281,370	)

Key Performance Indicators:
RMR	$	327,228		$	327,948		$	322,106
Gross customer revenue attrition (percent)		15.2	%		14.8	%		15.9	%
Supplemental Pro Forma Adjusted EBITDA ⁽¹⁾	$	1,623,812		$	2,176,943		$	2,031,281

(1)

Supplemental Pro Forma Adjusted EBITDA is a non-GAAP measure. Refer to “Supplemental Management’s Discussion and Analysis of Financial Condition and Results of Operations—Notes to the Unaudited Supplemental Pro Forma Supplemental Financial Information Presented in the Supplemental Management’s Discussion and Analysis of Financial Conditions and Results of Operations” for further information on the components of Supplemental Pro Forma Adjusted EBITDA. The following table presents a reconciliation of Supplemental Pro Forma Adjusted EBITDA to net loss for the periods presented.


	Supplemental Pro Forma Nine Months Ended September 30, 2016			Supplemental Pro Forma December 31, 2016			Supplemental Pro Forma December 31, 2015
	(in thousands)
Net loss	$	(208,710	)	$	(284,941	)	$	(281,370	)
Interest expense, net		565,956			750,006			768,789
Income tax benefit		(87,830	)		(118,854	)		(189,251	)
Depreciation and intangible asset amortization		1,155,145			1,574,219			1,591,410
Merger, restructuring, integration, and other costs ⁽¹⁾		65,403			86,186			33,224
Financing and consent fees ⁽²⁾		2,878			5,302			—
Foreign currency losses ⁽³⁾		16,336			16,042			—
Loss on extinguishment of debt ⁽⁴⁾		16,051			28,293			—
Other non-cash items ⁽⁵⁾		12,146			16,276			—
Radio conversion costs ⁽⁶⁾		60,079			67,816			60,410
Amortization of deferred subscriber acquisition costs and revenue, net ⁽⁷⁾		3,169			6,052			1,063
Share-based compensation expense ⁽⁸⁾		8,246			10,108			28,103
Management fees and other charges ⁽⁹⁾		14,943			20,438			18,903

Supplemental Pro Forma Adjusted EBITDA	$	1,623,812		$	2,176,943		$	2,031,281

(1)

Includes certain direct and incremental costs resulting from acquisitions and certain related integration efforts as a result of those acquisitions, as well as costs related to our restructuring efforts. For the supplemental pro forma nine months ended September 30, 2016 and supplemental pro forma year ended December 31, 2016, these costs are primarily related to restructuring charges incurred in connection with the ADT Acquisition.

(2)

Financing and consent fees represents fees associated with amendments and restatements to our First Lien Credit Agreement.

(3)

Foreign currency losses relates to the translation of monetary assets and liabilities that are denominated in Canadian dollars, primarily due to intercompany loans.

(4)

Loss on extinguishment of debt primarily relates to the write-off of debt discount and issuance costs associated with amendments to the First Lien Credit Agreement on June 23, 2016 in the amount of $9 million for both the supplemental pro forma nine months ended September 30, 2016 and supplemental pro forma year ended December 31, 2016. In addition, loss on extinguishment of debt for the supplemental pro forma year ended December 31, 2016 also includes the write-off of debt discount and issuance costs associated with the voluntary paydown of $260 million of the second lien term loans in July and October 2016 in the amount of $14 million, as well as $5 million related to the amendment to the First Lien Credit Agreement on December 28, 2016.

(5)

Represents items including a net loss on the settlement of derivative contracts that were executed to hedge future cash flows associated with the ADT Acquisition during the supplemental pro forma nine months ended September 30, 2016 and supplemental pro forma year ended December 31, 2016, as well as other non-cash items including certain asset write-downs.

(6)

Represents costs associated with our program that began in 2015 to upgrade cellular technology used in many of our security systems.

(7)

Represents non-cash amortization expense associated with deferred subscriber acquisition costs, net of non-cash amortization of deferred installation revenue.

(8)

(9)

Primarily includes management fees to our Sponsor for certain management consulting and advisory services under the Management Consulting Agreement. This agreement will terminate in accordance with its terms upon the consummation of this offering (See “Certain Relationships and Related Party Transactions—Management Consulting Agreement”).

Historical Combined Free Cash Flow

Historical Combined Free Cash Flow is defined as cash from operating activities less cash outlays related to capital expenditures, and represents the mathematical additions of Free Cash Flow of the Company, The ADT Corporation, Protection One, and ASG, where applicable, for the periods presented. Investors should be aware that Free Cash Flow of the respective companies may not be comparable to the Company’s measures of Free Cash Flow included elsewhere in this prospectus. Historical Combined Free Cash Flow has not been prepared in accordance with the requirements of Regulation S-X or any other securities laws relating to the presentation of pro forma financial information, and has not been prepared in accordance with Article 11. In addition, the financial results for the Successor period include the impact of applying purchase accounting. Historical Combined Free Cash Flow and Free Cash Flow are non-GAAP measures and are defined above in the section “Use of Non-GAAP Financial Information.”

The table below is an illustration of our Historical Combined Free Cash Flow for the periods presented.


	Nine Months Ended September 30, 2016 ^(a)			Year Ended December 31, 2016 ^(b)			Year Ended December 31, 2015 ^(c)
				(in thousands)
Successor Free Cash Flow ^(d)	$	(249,511	)	$	(336,672	)	$	(32,292	)
Predecessor Free Cash Flow ^(d)		N/A			N/A			3,934
The ADT Corporation Free Cash Flow ^(e)		105,587			105,587			256,623
ASG Free Cash Flow ^(f)		N/A			N/A			(7,232	)

Historical Combined Free Cash Flow	$	(143,924	)	$	(231,085	)	$	221,033

N/A—Not applicable for the period as Free Cash Flow results are included in Successor from the date of the Formation Transactions.

(a)

The Historical Combined Free Cash Flow for the nine months ended September 30, 2016 includes cash interest paid by Successor, The ADT Corporation for the three months ended March 31, 2016, and The ADT Corporation for the period from April 1, 2016 to May 1, 2016 of approximately $174 million, $59 million, and $21 million, respectively; cash paid for merger costs primarily related to the ADT Acquisition by Successor, The ADT Corporation for the three months ended March 31, 2016, and The ADT Corporation for the period from April 1, 2016 to May 1, 2016 of approximately $347 million, $4 million, and $3 million, respectively; cash paid for radio conversion costs by Successor, The ADT Corporation for the three months ended March 31, 2016, and The ADT Corporation for the period from April 1, 2016 to May 1, 2016 of approximately $33 million, $27 million, and $8 million, respectively; cash paid by Successor in connection with certain fees associated with amendments and restatements to the First Lien Credit Facilities and management fees and other of approximately $26 million and $9 million, respectively; and cash paid for restructuring and integration activities primarily associated with the ADT Acquisition by Successor, The ADT Corporation for the three months ended March 31, 2016, and The ADT Corporation for the period from April 1, 2016 to May 1, 2016 of approximately $46 million, $2 million, and $1 million, respectively. In addition, capital expenditures include cash payments for integration related capital expenditures by Successor, The ADT Corporation for the three months ended March 31, 2016, and The ADT Corporation for the period from April 1, 2016 to May 1, 2016 of approximately $7 million, $1 million, and $1 million, respectively.

(b)

The Historical Combined Free Cash Flow for the year ended December 31, 2016 includes cash interest paid by Successor, The ADT Corporation for the three months ended March 31, 2016, and The ADT Corporation for the period from April 1, 2016 to May 1, 2016 of approximately $431 million, $59 million, and $21 million, respectively; cash paid for merger costs primarily related to the ADT Acquisition by Successor, The ADT Corporation for the three months ended March 31, 2016, and The ADT Corporation for the period from April 1, 2016 to May 1, 2016 of approximately $347 million, $4 million, and $3 million, respectively; cash paid for radio conversion costs by Successor, The ADT Corporation for the three months ended March 31, 2016, and The ADT Corporation for the period from April 1, 2016 to May 1, 2016 of approximately $43 million, $27 million, and $8 million, respectively; cash paid by Successor in connection with certain fees associated with amendments and restatements to the First Lien Credit Facilities and management fees and other of approximately $29 million and $14 million, respectively; and cash paid for restructuring

and integration activities primarily associated with the ADT Acquisition by Successor, The ADT Corporation for the three months ended March 31, 2016, and The ADT Corporation for the period from April 1, 2016 to May 1, 2016 of approximately $67 million, $2 million, and $1 million, respectively. In addition, capital expenditures include cash payments for integration related capital expenditures by Successor, The ADT Corporation for the three months ended March 31, 2016, and The ADT Corporation for the period from April 1, 2016 to May 1, 2016 of approximately $15 million, $1 million, and $1 million, respectively.

(c)

The Historical Combined Free Cash Flow for the year ended December 31, 2015 includes cash interest paid by Successor and Predecessor combined, The ADT Corporation for the twelve months ended December 31, 2015, and ASG for the six months ended June 30, 2015 of approximately $69 million, $205 million, and $6 million, respectively; cash paid for merger costs primarily related to the Formation Transactions by Successor and Predecessor of approximately $34 million and $7 million, respectively; cash paid for radio conversion costs by Successor, Predecessor, and The ADT Corporation of approximately $4 million, $1 million, and $54 million, respectively; cash paid for management fees and other by Predecessor of approximately $1 million; and cash paid for restructuring and integration activities by Successor, Predecessor, and The ADT Corporation of approximately $1 million, $3 million, and $10 million, respectively.

(d)	Refer to the table shown in footnote (j) under “—Summary Historical and Pro Forma Financial Information” above for the reconciliation of Free Cash Flow for the Successor and Predecessor periods to net cash provided by (used in) operating activities.

(e)	Refer to the table below for the reconciliation of Free Cash Flow for the ADT Corporation for the respective periods to net cash provided by (used in) operating activities.

(f)	Refer to the table below for the reconciliation of Free Cash Flow for ASG for the year ended December 31, 2015 to net cash provided by operating activities.

The ADT Corporation Free Cash Flow for the nine months ended September 30, 2016, and for the year ended December 31, 2016 reflects Free Cash Flow for the period from January 1, 2016 to May 1, 2016, which has been derived by adding the historical Free Cash Flow for the three months ended March 31, 2016 and the historical Free Cash Flow from the period from April 1, 2016 to May 1, 2016, as illustrated in the table below:


	The ADT Corporation
	For the period from January 1, 2016 to May 1, 2016

				Add:
	Three Months Ended March 31, 2016			Period from April 1, 2016 to May 1, 2016			The ADT Corporation
	(in thousands)
Net cash provided by operating activities	$	413,918		$	111,483		$	525,401
Dealer generated customer accounts and bulk account purchases		(133,080	)		(42,538	)		(175,618	)
Subscriber system assets and deferred subscriber installation costs		(165,462	)		(56,050	)		(221,512	)
Capital expenditures		(18,570	)		(4,114	)		(22,684	)

The ADT Corporation Free Cash Flow	$	96,806		$	8,781		$	105,587

The ADT Corporation Free Cash Flow for the three months ended March 31, 2016 has been derived by deducting the historical Free Cash Flow for the three months ended December 31, 2015 from the historical Free Cash Flow for the six months ended March 31, 2016, as illustrated in the table below:


	The ADT Corporation
	For the Three Months Ended March 31, 2016
	Less:

	Six Months Ended March 31, 2016			Three Months Ended December 31, 2015			Three Months Ended March 31, 2016
	(in thousands)
Net cash provided by operating activities	$	789,103		$	375,185		$	413,918
Dealer generated customer accounts and bulk account purchases		(282,369	)		(149,289	)		(133,080	)
Subscriber system assets and deferred subscriber installation costs		(340,034	)		(174,572	)		(165,462	)
Capital expenditures		(43,417	)		(24,847	)		(18,570	)

The ADT Corporation Free Cash Flow	$	123,283		$	26,477		$	96,806

The ADT Corporation Free Cash Flow for the year ended December 31, 2015 includes Free Cash Flow for the twelve months ended December 31, 2015, which has been derived by deducting the historical Free Cash Flow for the three months ended December 26, 2014 from the historical Free Cash Flow for the fiscal year ended September 25, 2015, and then adding thereto the historical Free Cash Flow from the three months ended December 31, 2015, as illustrated in the table below:


	The ADT Corporation
	For the Twelve Months Ended December 31, 2015

				Less:			Add:
	Fiscal Year Ended September 25, 2015			Three Months Ended December 26, 2014			Three Months Ended December 31, 2015			Twelve Months Ended December 31, 2015
	(in thousands)
Net cash provided by operating activities	$	1,604,809		$	369,104		$	375,185		$	1,610,890
Dealer generated customer accounts and bulk account purchases		(559,290	)		(145,948	)		(149,289	)		(562,631	)
Subscriber system assets and deferred subscriber installation costs		(699,344	)		(177,163	)		(174,572	)		(696,753	)
Capital expenditures		(102,398	)		(32,362	)		(24,847	)		(94,883	)

The ADT Corporation Free Cash Flow	$	243,777		$	13,631		$	26,477		$	256,623

(f)

Refer to the table below for the reconciliation of Free Cash Flow for ASG for the six months ended June 30, 2015 to net cash provided by operating activities. ASG Free Cash Flow for the year ended December 31, 2015 includes historical Free Cash Flow for the six months ended June 30, 2015, as illustrated in the table below:


	Six Months Ended June 30, 2015
	(in thousands)
Net cash provided by operating activities	$	11,665
Payments for acquisitions of purchased accounts		(9,726	)
Deferred customer acquisition costs		(15,399	)
Deferred customer acquisition revenue		6,964
Purchases of property and equipment		(736	)

ASG Free Cash Flow	$	(7,232	)

RISK FACTORS

You should carefully consider the risks and uncertainties described below, as well as the other information contained in this prospectus, including our consolidated financial statements and the related notes thereto included elsewhere in this prospectus, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding to invest in our common stock. In addition, past financial performance may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods. Any of the following risks could materially adversely affect our business, financial condition and results of operations, in which case the trading price of our common stock could decline and you could lose all or part of your investment.

Risks Related to Our Business

Our future growth is dependent upon our ability to keep pace with rapid technological and industry changes in order to develop or acquire new technologies for our products and service introductions that achieve market acceptance with acceptable margins.

Our business operates in markets that are characterized by rapidly changing technologies, evolving industry standards, potential new entrants, and changes in customer needs and expectations. For example, a number of cable and other telecommunications companies and large technology companies with home automation solutions offer interactive security services that are competitive with our products and services. If these services gain greater market acceptance and traction, our ability to grow our business, in particular our ADT Pulse and other interactive service offerings, could be materially and adversely affected. Accordingly, our future success depends in part on our ability to accomplish the following: identify emerging technological trends in our target end-markets; develop, acquire, and maintain competitive products and services that capitalize on existing and emerging trends; enhance our existing products and services by adding innovative features on a timely and cost-effective basis that differentiates us from our competitors; sufficiently capture intellectual property rights in new inventions and other innovations; and develop or acquire and bring products and services, including enhancements, to market quickly and cost-effectively. Our ability to develop or acquire new products and services that are technologically innovative requires the investment of significant resources and can affect our competitive position. These acquisition and development efforts divert resources from other potential investments in our businesses, and they may not lead to the development of new commercially successful technologies, products, or services on a timely basis. Moreover, as we introduce new products and services, we may be unable to detect and correct defects in the product or in its installation, which could result in loss of sales or delays in market acceptance. New or enhanced products and services may not satisfy customer preferences and potential product failures may cause customers to reject our products. As a result, these products and services may not achieve market acceptance and our brand image could suffer. In addition, our competitors may introduce superior products or business strategies, impairing our brand and the desirability of our products and services, which may cause customers to defer or forego purchases of our products and services, and impacting our ability to charge monthly service fees. If our competitors implement new technologies before we are able to implement them, those competitors may be able to provide more effective products than ours, possibly at lower prices. Any delay or failure in the introduction of new or enhanced solutions could harm our business, results of operations and financial condition. In addition, the markets for our products and services may not develop or grow as we anticipate. The failure of our technology, products, or services to gain market acceptance, the potential for product defects, or the obsolescence of our products and services could significantly reduce our revenue, increase our operating costs, or otherwise materially adversely affect our business, financial condition, results of operations and cash flows.

In addition to developing and acquiring new technologies and introducing new offerings, we may need, from time to time, to phase out outdated and unsuitable technologies and services. See “—Shifts in our customers’ choice of, or telecommunications providers’ support for, telecommunications services and equipment could materially adversely affect our business and require significant capital expenditures.” If we are unable to do so on a cost-effective basis, we could experience reduced profits.

We sell our products and services in highly competitive markets, including the home automation market, which may result in pressure on our profit margins and limit our ability to maintain or increase the market share of our products and services.

The monitored security industry is highly fragmented and subject to significant competition and pricing pressures. We experience significant competitive pricing pressures on installation, monitoring, and service fees. Several competitors offer installation fees that match or are lower than ours. Other competitors charge significantly more for installation, but in many cases, less for monitoring. In addition, cable and telecommunications companies have expanded into the monitored security industry and are bundling their existing offerings with monitored security services.

In many cases, we face competition for direct sales from our independent, third-party authorized dealers, who may offer installation for considerably less than we do in particular markets. We believe that the monitoring and service fees we offer are generally competitive with rates offered by other security service providers. We face competition from other providers such as cable and telecommunications companies that may have existing access to and relationship with subscribers and highly recognized brands, which may drive increased awareness of their security/automation offerings relative to ours, have access to greater capital and resources than us, and may spend significantly more on advertising, marketing, and promotional resources, any of which could have a material adverse effect on our ability to drive awareness and demand for our products and services. In particular, these companies may be able to offer subscribers a lower price by bundling their services. We also face potential competition from DIY products, which enable customers to self-monitor and control their environments without third-party involvement through the Internet, text messages, emails, or similar communications, but with the disadvantage that alarm events may go unnoticed. Some DIY providers may also offer professional monitoring with the purchase of their systems and equipment without a contractual commitment, which may be attractive to some customers and put us at a competitive disadvantage. Other DIY providers may offer new IoT devices and services with automated features and capabilities that may be appealing to customers. Shifts in customer preferences towards DIY systems could increase our attrition rates over time and the risk of accelerated amortization of customer contracts resulting from a declining customer base. It is possible that one or more of our competitors could develop a significant technological advantage over us that allows them to provide additional service or better quality service or to lower their price, which could put us at a competitive disadvantage. Continued pricing pressure, improvements in technology, and shifts in customer preferences towards self-monitoring or DIY could adversely impact our customer base and/or pricing structure and have a material adverse effect on our business, financial condition, results of operations, and cash flows.

We rely on a significant number of our customers remaining with us as customers for long periods of time.

We operate our business with the goal of retaining customers for long periods of time in order to recoup our initial investment in new customers, and we generally achieve cash flow break-even in less than three years. Accordingly, our long-term profitability is dependent on long customer tenure. This requires that we minimize our rate of customer disconnects, or attrition. One reason for disconnects is when customers relocate and do not reconnect. Customer relocations are impacted by changes in the housing market. See “ — General economic conditions can affect our business, and we are susceptible to changes in the business economy, housing market, and business and consumer discretionary income, which may inhibit our ability to sustain customer base growth rates and impact our results of operations.” Other factors that can increase disconnects include problems experienced with our product or service quality, customer service, customer non-pay, unfavorable general economic conditions, and the preference for lower pricing of competitors’ products and services over ours. If we fail to keep our customers for a sufficiently long period of time, our profitability, business, financial condition, results of operations and cash flows could be materially adversely affected.

If we experience significantly higher rates of customer revenue attrition than we anticipate, we may be required to change the estimated useful lives and/or the accelerated method of depreciation and amortization related to accounts associated with our security monitoring customers, increasing our depreciation and amortization expense or causing asset impairment.

We amortize the costs of our acquired and dealer-generated contracts and related customer relationships based on the estimated life of the customer relationships. We similarly depreciate the cost of our direct channel subscriber system assets and deferred subscriber acquisition costs. If attrition rates rise significantly, we may be required to accelerate the amortization of expenses related to such contracts and the depreciation/amortization of our subscriber system assets/deferred subscriber acquisition costs or to impair such assets, which could cause a material adverse effect on our business, financial condition and results of operations.

Our reputation as a service provider of high quality security offerings may be materially adversely affected by product defects or shortfalls in customer service.

Our business depends on our reputation and ability to maintain good relationships with our subscribers, dealers and local regulators, among others. Our reputation may be harmed either through product defects, such as the failure of one or more of our subscribers’ alarm systems, or shortfalls in customer service. Subscribers generally judge our performance through their interactions with the staff at the monitoring and customer care centers, dealers, and technicians who perform on-site maintenance services. Any failure to meet subscribers’ expectations in such customer service areas could cause an increase in attrition rates or make it difficult to recruit new subscribers. Any harm to our reputation or subscriber relationships caused by the actions of our dealers, personnel, or third-party service providers or any other factors could have a material adverse effect on our business, financial condition, and results of operations.

General economic conditions can affect our business, and we are susceptible to changes in the business economy, housing market, and business and consumer discretionary income, which may inhibit our ability to sustain customer base growth rates and impact our results of operations.

Demand for alarm monitoring services and home automation systems is affected by the general economy, the business environment, and the turnover in the housing market, among other things. Downturns in the rate of the sale of new and existing homes, which we believe drives a substantial portion of our new customer volume in any given year, would reduce opportunities to make sales of new security and home automation systems and services and reduce opportunities to take over existing security and home automation systems. Recoveries in the housing market increase the occurrence of relocations, which may lead to customers disconnecting service and not contracting with us in their new homes.

Further, the alarm monitoring business is dependent, in part, on national, regional, and local economic conditions. In particular, where disposable income available for discretionary spending is reduced (such as by higher housing, energy, interest or other costs, or where the actual or perceived wealth of customers has decreased because of circumstances such as lower residential real estate values, increased foreclosure rates, inflation, increased tax rates or other economic disruptions), the alarm monitoring business could experience increased attrition rates and reduced customer demand. No assurance can be given that we will be able to continue acquiring quality alarm monitoring contracts or that we will not experience higher attrition rates. Changes in individualized economic circumstances could cause current security alarm and home automation customers to disconnect our services in an effort to reduce their monthly spending, or such customers could default on their remaining contractual obligations to us.

Our long-term revenue growth rate depends on installations and new contracts exceeding disconnects. If customer disconnects and defaults increase, our business, financial condition, results of operations, and cash flows could be materially adversely affected. See “ — We rely on a significant number of our customers remaining with us as customers for long periods of time.”

We are subject to credit risk and other risks associated with our subscribers.

A substantial part of our revenues is derived from the recurring monthly revenue due from subscribers under the alarm monitoring contracts. Therefore, we are dependent on the ability and willingness of subscribers to pay amounts due under the alarm monitoring contracts on a monthly basis in a timely manner. Although subscribers are contractually obligated to pay amounts due under an alarm monitoring contract, and are generally contractually obligated to pay early cancellation fees if they prematurely cancel the alarm monitoring contract during the initial term of the alarm monitoring contract (typically between three and five years), subscribers’ payment obligations are unsecured, which could impair our ability to collect any unpaid amounts from our subscribers. To the extent payment defaults by subscribers under the alarm monitoring contracts are greater than anticipated, our business, financial condition and results of operations could be materially adversely affected.

We are also exploring different pricing plans for our products and services, including larger up-front payments and consumer financing options for residential equipment purchases. We currently have arrangements with a third-party financing company to provide financing to small business and commercial customers who wish to finance their equipment purchases from us. We also recently launched a pilot program in a small number of markets for residential customers to pay for equipment purchases through installments to the Company under a consumer financing arrangement. These lending services could increase the credit risks associated with our subscribers. While we intend to manage such credit risk by monitoring the credit quality of our financing portfolios, our efforts to mitigate risk may not be sufficient to prevent an adverse effect on our business, financial condition and results of operations.

If the insurance industry changes its practice of providing incentives to homeowners for the use of alarm monitoring services, we may experience a reduction in new customer growth or an increase in our subscriber attrition rate.

It has been common practice in the insurance industry to provide a reduction in rates for policies written on homes that have monitored alarm systems. There can be no assurance that insurance companies will continue to offer these rate reductions. If these incentives were reduced or eliminated, new homeowners who otherwise might not feel the need for alarm monitoring services would be removed from our potential customer pool, which could hinder the growth of our business, and existing subscribers may choose to disconnect or not renew their service contracts, which could increase our attrition rates. In either case, our results of operations and growth prospects could be materially adversely affected.

We have and will continue to invest in new businesses, services, and technologies outside the traditional security and interactive services market, which is inherently risky, and could disrupt our current operations.

We have invested and will continue to invest in new businesses, products, services, and technologies beyond traditional security and interactive services. Our investments may involve significant risks and uncertainties, including capital loss on some or all of our investments, insufficient revenues from such investments to offset any new liabilities assumed and expenses associated with these new investments, distraction of management from current operations, and issues not identified during pre-investment planning and due diligence that could cause us to fail to realize the anticipated benefits of such investments and incur unanticipated liabilities. Since these investments are inherently risky, these new businesses, products, services, and technologies may not be successful and as a result, may materially adversely affect our reputation, financial condition, and results of operations.

Failure to successfully upgrade and maintain the security of our information and technology networks, including personally identifiable information and other data, could materially adversely affect us.

We are dependent on information technology networks and systems, including Internet and Internet-based or “cloud” computing services, to collect, process, transmit, and store electronic information. We are currently

implementing modifications and upgrades to these information technology systems, including making changes to legacy systems, replacing legacy systems with successor systems with new functionality, and implementing new systems. There are inherent costs and risks associated with replacing and changing these systems and implementing new systems, including potential disruption of our sales, operations and customer service functions, potential disruption of our internal control structure, substantial capital expenditures, additional administration and operating expenses, retention of sufficiently skilled personnel to implement and operate the new systems, demands on management time, and other risks and costs of delays or difficulties in transitioning to new systems or of integrating new systems into our current systems. In addition, our information technology system implementations may not result in productivity improvements at a level that outweighs the costs of implementation, or at all. The implementation of new information technology systems may also cause disruptions in our business operations and have a material adverse effect on our business, cash flows, and results of operations.

If we fail to comply with constantly evolving laws, regulations, and industry standards addressing information and technology networks, privacy and data security, we could face substantial penalties, liability, and reputational harm, and our business, operations, and financial condition could be materially adversely affected.

Along with our own confidential data and information in the normal course of our business, we or our partners collect and retain significant volumes of certain types of data, some of which are subject to certain laws and regulations. Our ability to analyze this data to present the subscriber with improved user experience is a valuable component of our services, but we cannot assure you that the data we require will be available from these sources in the future or that the cost of such data will not increase. If the data that we require is not available to us on commercially reasonable terms or at all, we may not be able to provide certain parts of our current or planned products and services, and our business and financial condition could be materially adversely affected.

For example, the data that we collect and retain includes personally identifiable information related to our consumers and employees and may be protected health information subject to certain requirements under the Health Insurance Portability Accountability Act (“HIPAA”) and its implementing regulations, which regulate the use, storage, and disclosure of personally identifiable health information. We may change our processes or modify our product and service offerings in a manner that requires us to adopt additional or different policies and procedures to meet our obligations under HIPAA. Becoming fully HIPAA compliant involves adopting and implementing privacy and security policies and procedures as well as administrative, physical, and technical safeguards. Additionally, HIPAA compliance requires certain agreements with contracting partners to be in place. Endeavoring to become fully HIPAA compliant may be costly both financially and in terms of administrative resources. It may take substantial time and require the assistance of external resources, such as attorneys, information technology, and/or other consultants. We would have to be HIPAA compliant to provide services pursuant to which we are required to collect or manage patient information for or on behalf of a health care provider or health plan. Thus, if we do not become fully HIPAA compliant, our expansion opportunities may be limited. Furthermore, it is possible that HIPAA may be expanded in the future to apply to certain of our current products or services.

In addition, we may also collect and retain other sensitive types of data, including audio recordings of telephone calls and video images of customer sites. We must comply with applicable federal and state laws and regulations governing the collection, retention, processing, storage, disclosure, access, use, security, and privacy of such information in addition to our own posted information security and privacy policies and applicable industry standards. The legal, regulatory, and contractual environment surrounding the foregoing continues to evolve, and there has been an increasing amount of focus on privacy and data security issues with the potential to affect our business. These privacy and data security laws and regulations, as well as contractual requirements, could increase our cost of doing business, and failure to comply with these laws, regulations and contractual requirements could result in government enforcement actions (which could include civil or criminal penalties), private litigation, and/or adverse publicity.

In the event of a breach of personal information that we hold, we may be subject to governmental fines, individual and class action claims, remediation expenses, and/or harm to our reputation. Further, if we fail to comply with applicable privacy and security laws, regulations, policies and standards, properly protect the integrity and security of our facilities and systems and the data located within them, or defend against cybersecurity attacks, or if our third-party service providers, partners, or vendors fail to do any of the foregoing with respect to data and information assessed, used, stored, or collected on our behalf, our business, reputation, results of operations, and cash flows could be materially adversely affected.

Due to the ever-changing threat landscape, our products may be subject to potential vulnerabilities of wireless and IoT devices and our services may be subject to certain risks, including hacking or other unauthorized access to control or view systems and obtain private information.

Companies that collect and retain sensitive and confidential information are under increasing attack by cyber-criminals around the world. While we implement security measures within our products, services, operations and systems, those measures may not prevent cybersecurity breaches, the access, capture or alteration of information by criminals, the exposure or exploitation of potential security vulnerabilities, distributed denial of service attacks, the installation of malware or ransomware, acts of vandalism, computer viruses, misplaced data or data loss that could be detrimental to our reputation, business, financial condition, and results of operations. Third parties, including our partners and vendors, could also be a source of security risk to us in the event of a failure of their own products, components, networks, security systems, and infrastructure. In addition, we cannot be certain that advances in criminal capabilities, new discoveries in the field of cryptography, or other developments will not compromise or breach the technology protecting the networks that access our products and services.

A significant actual or perceived (whether or not valid) theft, loss, fraudulent use or misuse of customer, employee, or other personally identifiable data, whether by us, our partners and vendors, or other third parties, or as a result of employee error or malfeasance or otherwise, non-compliance with applicable industry standards or our contractual or other legal obligations regarding such data, or a violation of our privacy and information security policies with respect to such data, could result in costs, fines, litigation, or regulatory actions against us. Such an event could additionally result in unfavorable publicity and therefore materially and adversely affect the market’s perception of the security and reliability of our services and our credibility and reputation with our customers, which may lead to customer dissatisfaction and could result in lost sales and increased customer revenue attrition.

In addition, we depend on our information technology infrastructure for business-to-business and business-to-consumer electronic commerce. Security breaches of, or sustained attacks against, this infrastructure could create system disruptions and shutdowns that could negatively impact our operations. Increasingly, our products and services are accessed through the Internet, and security breaches in connection with the delivery of our services via the Internet may affect us and could be detrimental to our reputation, business, operating results, and financial condition. We continue to invest in new and emerging technology and other solutions to protect our network and information systems, but there can be no assurance that these investments and solutions will prevent any of the risks described above. While we maintain cyber liability insurance that provides both third-party liability and first-party insurance coverages, our insurance may not be sufficient to protect against all of our losses from any future disruptions or breaches of our systems or other event as described above.

We depend on third-party providers and suppliers for components of our security and automation systems, third-party software licenses for our products and services, and third-party providers to transmit signals to our monitoring facilities and provide other services to our subscribers. Any failure or interruption in products or services provided by these third parties could harm our ability to operate our business.

The components for the security and automation systems that we install are manufactured by third parties. We are therefore susceptible to interruptions in supply and to the receipt of components that do not meet our

standards. Any financial or other difficulties our providers face may have negative effects on our business. We exercise little control over our suppliers, which increases our vulnerability to problems with the products and services they provide. While we strive to utilize dual-sourcing methods to allow similar hardware components for our security systems to be interchangeable in order to minimize the risk of a disruption from a single supplier, any interruption in supply could cause delays in installations and repairs and the loss of current and potential customers. Also, if a previously installed component were found to be defective, we might not be able to recover the costs associated with its repair or replacement across our installed customer base, and the diversion of technical personnel to address the defect could materially adversely affect our business, financial condition, results of operations, and cash flows.

We rely on third-party software for key automation features in certain of our offerings, and on the interoperation of that software with our own, such as our mobile applications and related platform. We could experience service disruptions if customer usage patterns for such offerings exceed, or are otherwise outside of, design parameters for the system and the ability for us or our third-party provider to make corrections. Such interruptions in the provision of services could result in our inability to meet customer demand, damage our reputation and customer relationships, and materially and adversely affect our business. We also rely on certain software technology that we license from third parties and use in our products and services to perform key functions and provide critical functionality. For example, we license the software platform for our monitoring operations from third parties. Because a number of our products and services incorporate technology developed and maintained by third parties, we are, to a certain extent, dependent upon such third parties’ ability to update, maintain, or enhance their current products and services, to ensure that their products are free of defects or security vulnerabilities, to develop new products and services on a timely and cost-effective basis, and to respond to emerging industry standards, customer preferences, and other technological changes. Further, these third-party technology licenses may not always be available to us on commercially reasonable terms, or at all. If our agreements with third-party vendors are not renewed or the third-party software becomes obsolete, is incompatible with future versions of our products or services, or otherwise fails to address our needs, we cannot provide assurance that we would be able to replace the functionality provided by the third-party software with technology from alternative providers. Furthermore, even if we obtain licenses to alternative software products or services that provide the functionality we need, we may be required to replace hardware installed at our monitoring centers and at our customers’ sites, including security system control panels and peripherals, in order to execute our integration of or migration to alternative software products. Any of these factors could materially adversely affect our business, financial condition, results of operations, and cash flows.

We also rely on various third-party telecommunications providers and signal processing centers to transmit and communicate signals to our monitoring facility in a timely and consistent manner. These telecommunications providers and signal processing centers could fail to transmit or communicate these signals to the monitoring facility for many reasons, including disruptions from fire, natural disasters, weather, transmission interruption, malicious acts, or terrorism. The failure of one or more of these telecommunications providers or signal processing centers to transmit and communicate signals to the monitoring facility in a timely manner could affect our ability to provide alarm monitoring, home automation, and interactive services to our subscribers. We also rely on third-party technology companies to provide home automation and interactive services to our subscribers. These technology companies could fail to provide these services consistently, or at all, which could result in our inability to meet customer demand and damage our reputation. There can be no assurance that third-party telecommunications providers, signal processing centers, and other technology companies will continue to transmit and communicate signals to the monitoring facility or provide home automation and interactive services to subscribers without disruption. Any such disruption, particularly one of a prolonged duration, could have a material adverse effect on our business. See also “—Shifts in our customers’ choice of, or telecommunications providers’ support for, telecommunications services and equipment could materially adversely affect our business and require significant capital expenditures” with respect to risks associated with changes in signal transmissions.

An event causing a disruption in the ability of our monitoring facilities to operate could materially adversely affect our business.

A disruption in our ability to provide security monitoring services and otherwise serve our customers could have a material adverse effect on our business. A disruption could occur for many reasons, including fire, natural disasters, weather, health epidemics or pandemics, transportation interruption, extended power outages, human or other error, war, terrorism, sabotage, or other conflicts, or as a result of disruptions to internal and external networks or third-party transmission lines. Monitoring could also be disrupted by information systems and network-related events or cyber security attacks, such as computer hacking, computer viruses, worms or other malicious software, distributed denial of service attacks, malicious social engineering, or other destructive or disruptive activities that could also cause damage to our properties, equipment, and data. While our monitoring systems are redundant, a failure of our back-up procedures or a disruption affecting multiple monitoring facilities could disrupt our ability to provide security monitoring services to our customers. These events could also make it difficult or impossible to receive equipment from suppliers or impair our ability to deliver products and services to customers on a timely basis. If we experience such disruptions, we may experience customer dissatisfaction and potential loss of confidence, and liabilities to customers or other third parties, each of which could harm our reputation and impact future revenues from these customers. We could also be subject to claims or litigation with respect to losses caused by such disruptions. Our property and business interruption insurance and our cyber liability insurance may not be sufficient to fully cover our losses or may not cover a particular event at all. Any of these outcomes could have a material adverse effect on our business, results of operations, and financial condition.

Our independent, third-party authorized dealers may not be able to mitigate certain risks such as information technology breaches, data security breaches, product liability, errors and omissions, and marketing compliance.

We generate a portion of our new customers through our authorized dealer network. We rely on independent, third-party authorized dealers to implement mitigation plans for certain risks they may experience, including but not limited to, information technology breaches, data security breaches, product liability, errors and omissions, and marketing compliance. If our authorized dealers experience any of these risks, or fail to implement mitigation plans for their risks, or if such implemented mitigation plans are inadequate or fail, we may be susceptible to risks associated with our authorized dealers on which we rely to generate customers. Any interruption or permanent disruption in the generation of customer accounts or services provided by our authorized dealers could materially adversely affect our business, financial condition, results of operations, and cash flows.

We may pursue business opportunities that diverge from our current business model, which may materially adversely affect our business results.

We may pursue business opportunities that diverge from our current business model, including expanding our products or service offerings, investing in new and unproven technologies, adding customer acquisition

channels, and forming new alliances with companies to market our services. We can provide no assurance that any such business opportunities will prove to be successful. Among other negative effects, our pursuit of such business opportunities could cause our cost of investment in new customers to grow at a faster rate than our recurring revenue and fees collected at the time of installation. We recently acquired DataShield, LLC, a provider of cybersecurity services for mid-sized companies, which expands our suite of services. We are also currently exploring the option of offering certain of our monitoring and cybersecurity services under non-ADT brands to international markets outside of the United States and Canada. Additionally, any new alliances or customer acquisition channels could require developmental investments or have higher cost structures than our current arrangements, which could reduce operating margins and require more working capital. In the event that working capital requirements exceed operating cash flow, we could be required to draw on our Revolving Credit Facilities (as defined herein), which are described in Note 5 to our audited consolidated financial statements included

elsewhere in this prospectus and “Description of Material Indebtedness,” or pursue other external financing, which may not be readily available. Any of these factors could materially adversely affect our business, financial condition, results of operations and cash flows.

We continue to integrate the acquisition of The ADT Corporation with our business, which may divert management’s attention from our ongoing operations. We may not achieve all of the anticipated benefits, synergies, and cost savings from the acquisition.

Our acquisition of The ADT Corporation in May 2016 involves the integration of two companies that have previously operated independently. While the integration of The ADT Corporation with our business is ongoing, the anticipated financial and operational benefits, including increased revenues, synergies, and cost savings from the acquisition of The ADT Corporation, depends in part on our ability to successfully continue to combine and integrate The ADT Corporation with our other business. Since the integration is not yet complete, there can be no assurance regarding the extent to which we will be able to realize these increased revenues, synergies, cost savings, or other benefits. These benefits may not be achieved within the anticipated time frame and we may not realize all of these anticipated benefits.

The continued integration of The ADT Corporation’s operations, products, and personnel will continue to require the attention of our management and place demands on other internal resources. The diversion of management’s attention, and any difficulties encountered in the transition and integration process, could materially adversely affect our business, financial condition and results of operations.

In addition, the overall continued integration of the businesses may result in material unanticipated problems, expenses, liabilities, competitive responses, and loss of customer relationships. The difficulties of combining the operations of the companies may generally include, among others:

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difficulties in achieving anticipated cost savings, synergies, business opportunities, and growth prospects from the combination;

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difficulties in the integration of operations and systems;

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difficulties in replacing numerous systems, including those involving management information, purchasing, accounting and finance, sales, billing, employee benefits, payroll, data privacy, and security and regulatory compliance, many of which may be dissimilar;

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conforming standards, controls, procedures, accounting and other policies, business cultures, and compensation structures between the two companies;

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difficulties in the assimilation of employees, including possible culture conflicts and different opinions on technical decisions and product roadmaps;

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difficulties in managing the expanded operations of a significantly larger and more complex company;

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challenges in keeping existing customers and obtaining new customers;

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challenges in attracting and retaining key personnel; and

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coordinating a geographically dispersed organization.

While we have not experienced any material difficulties to date in connection with the integration, many of these factors are outside our control and any one of them could result in increased costs, decreases in the amount of expected revenues, and further diversion of management’s time and energy, which could materially adversely affect our business, financial condition, and results of operations.

Our customer generation strategies through third parties, including our authorized dealer and affinity marketing programs, and the competitive market for customer accounts may affect our future profitability.

An element of our business strategy is the generation of new customer accounts through third parties, including our authorized dealers, which accounted for over 40% of our new customer accounts for 2016 and for

the nine months ended September 30, 2017. Our future operating results will depend in large part on our ability to continue to manage this business generation strategy effectively. Although we currently generate accounts through hundreds of independent third parties, including authorized dealers, a significant portion of our accounts originate from a smaller number of such third parties, including an authorized premier provider that signed a nine-year renewal agreement with us in December 2017 and accounted for approximately 19% of all our new accounts in 2016. We experience loss of third-party sales partnerships, including authorized dealers from our authorized dealer program, due to various factors, such as dealers and third parties becoming inactive or discontinuing their electronic security business, non-renewal of our dealer and sales generation contracts, and competition from other alarm monitoring companies. If we experience a loss of authorized dealers or third-party sellers representing a significant portion of our customer account generation, or if we are unable to replace or recruit authorized dealers, other third-party sellers, or alternate distribution channel partners in accordance with our business strategy, our business, financial condition, results of operations, and cash flows could be materially adversely affected.

In addition, successful promotion of our brands depends on the effectiveness of our marketing efforts and on our ability to offer member discounts and special offers for our products and services to our partners. We have actively pursued affinity marketing programs, which provide members of participating organizations with special offers on our products and services. The organizations with which we have affinity marketing programs typically closely monitor their relationships with us, as well as their members’ satisfaction with our products and services. These organizations may require us to pay higher fees to them, decrease our pricing for their members, introduce additional competitive options, or otherwise alter the terms of our participation in their marketing programs in ways that are unfavorable to us. These organizations may also terminate their relationships with us if we fail to meet member satisfaction standards, among other things. If any of our affinity or marketing relationships is terminated or altered in an unfavorable manner, we may lose a source of sales leads, and our business, financial condition, results of operations, and cash flows could be materially adversely affected.

We may not be able to continue to develop and execute a competitive yet profitable pricing structure.

We face competition from cable and telecommunications companies that are actively targeting the home automation and monitored security market, as well as from large technology companies that are expanding into the connected home market either through the development of their own solutions or the acquisition of other companies with home automation solution offerings. This increased competition could result in pricing pressure, a shift in customer preferences towards the services of these companies, reduce our market share and make it more difficult for us to compete on brand-name recognition and reputation. Continued pricing pressure from these competitors or failure to achieve pricing based on the competitive advantages previously identified above could prevent us from maintaining competitive price points for our products and services resulting in lost customers or in our inability to attract new customers and have a material adverse effect on our business, financial condition, results of operations, and cash flows.

We face risks in acquiring and integrating customer accounts.

An element of our business strategy may involve the bulk acquisition of customer accounts. Acquisitions of customer accounts involve a number of special risks, including the possibility of unexpectedly high rates of attrition and unanticipated deficiencies in the accounts and systems acquired despite our investigations prior to acquisition. We face competition from other alarm monitoring companies, including companies that may offer higher prices and more favorable terms for customer accounts purchased, and/or lower minimum financial or operational qualification or requirements for purchased accounts. This competition could reduce the acquisition opportunities available to us, slowing our rate of growth, and/or increase the price we pay for such account acquisitions, thus reducing our return on investment and negatively impacting our revenue and results of operations. We can provide no assurance that we will be able to purchase customer accounts on favorable terms in the future.

The purchase price we pay for customer accounts is affected by the recurring revenue historically generated by such accounts, as well as several other factors, including the level of competition, our prior experience with accounts purchased in bulk from specific sellers, the geographic location of accounts, the number of accounts purchased, the customers’ credit scores, and the type of security or automation equipment or platform used by the customers. In purchasing accounts, we have relied on management’s knowledge of the industry, due diligence procedures, and representations and warranties of bulk account sellers. We can provide no assurance that in all instances the representations and warranties made by bulk account sellers are true and complete or, if the representations and warranties are inaccurate, that we will be able to recover damages from bulk account sellers in an amount sufficient to fully compensate us for any resulting losses. If any of these risks materialize, our business, financial condition, results of operations, and cash flows could be materially adversely affected.

Shifts in our customers’ choice of, or telecommunications providers’ support for, telecommunications services and equipment could materially adversely affect our business and require significant capital expenditures.

Certain elements of our operating model have historically relied on our customers’ continued selection and use of traditional land-line telecommunications to transmit alarm signals to our monitoring centers. There is a growing trend for customers to switch to the exclusive use of cellular, satellite, or Internet communication technology in their homes and businesses, and telecommunication providers may discontinue their land-line services in the future. Some older installed security systems use technology that is not compatible with the newer cellular, satellite or Internet communication technology, such as 3G and 4G networks, and will not be able to transmit alarm signals on these networks. The discontinuation of land-line, older cellular technologies, and any other services by telecommunications providers, and the switch by customers to the exclusive use of cellular, satellite, or Internet communication technology, may require system upgrades to alternative, and potentially more expensive, technologies to transmit alarm signals and for systems to function properly. This could increase our customer revenue attrition and slow new customer generation. In January 2017, most major wireless network providers had fully retired their 2G networks. In order to maintain our customer base that uses security and automation system components that communicate over 2G networks, we substantially completed a conversion program to replace 2G cellular technology used in many of our security systems at little or no additional cost to our customers. Certain existing subscribers chose not to replace their 2G cellular technology, thereby increasing our attrition rates. We continue to incur additional costs associated with upgrades and modifications to subscribers’ cellular technology resulting from the retirement of 2G networks. In December 2017, as part of the Federal Communication Commission’s (the “FCC”) efforts to facilitate the transition from traditional copper-based wireline networks to IP-based fiber broadband networks, the FCC repealed its rules requiring telecommunications carriers to provide direct advanced public notice to consumers of the retirement of copper-based wireline networks used for traditional land-line telecommunications. Many of our customers rely solely on copper-based telephone networks to transmit alarm signals from their premises to our monitoring stations. In response to changes to existing network technology such as the eventual retirement of 3G and copper-based wireline networks, we will be required to upgrade or implement other new technologies in the future, including offering to subsidize the replacement of customers’ outdated systems at our expense. The FCC’s changes to copper-based wireline network retirement rules could lead to customer confusion and impede our ability to timely transfer customers to new network technologies. Any technology upgrades or implementations could require significant capital expenditures, may increase our attrition rates, and may also divert management’s attention and other important resources away from our customer service and sales efforts for new customers. In the future, we may not be able to successfully implement new technologies or adapt existing technologies to changing market demands. If we are unable to adapt timely to changing technologies, market conditions or customer preferences, our business, financial condition, results of operations, and cash flows could be materially adversely affected.

In addition, we use broadband Internet access service, including video streaming services, to support our product offerings, and we may choose to implement broadband Internet access in our intrusion panels as a communications option for our services. Video streaming services use significantly more bandwidth than non-video Internet activity. As utilization rates and penetration of these services increases, our high-speed

customers may use more bandwidth than in the past. If this occurs, we could be required to make significant capital expenditures to increase network capacity in order to avoid service disruptions or reduced capacity for customers and potentially increase our cost for the corresponding network usage. See “ — Our future growth is dependent upon our ability to keep pace with rapid technological and industry changes in order to develop or acquire new technologies for our products and service introductions that achieve market acceptance with acceptable margins.”

Unauthorized use of our brand names by third parties, and the expenses incurred in developing and preserving the value of our brand names, may materially adversely affect our business.

Our brand names are critical to our success. Unauthorized use of our brand names by third parties may materially adversely affect our business and reputation, including the perceived quality and reliability of our products and services. We rely on trademark law, company brand name protection policies, and agreements with our employees, customers, business partners, and others to protect the value of our brand names. Despite our precautions, we cannot provide assurance that those procedures are sufficiently effective to protect against unauthorized third-party use of our brand names. In particular, in recent years, various third parties have used our brand names to engage in fraudulent activities, including unauthorized telemarketing conducted in our names to induce our existing customers to switch to competing monitoring service providers, lead generation activities for competitors, and obtaining personally identifiable or personal financial information. Third parties sometimes use our names and trademarks, or other confusingly similar variances thereof, in other contexts that may impact our brands. We may not be successful in detecting, investigating, preventing, or prosecuting all unauthorized third-party use of our brand names. Future litigation with respect to such unauthorized use could also result in substantial costs and diversion of our resources. These factors could materially adversely affect our reputation, business, financial condition, results of operations and cash flows.

Third parties hold rights to certain key brand names outside of the United States and Canada.

Our success depends in part on our continued ability to use trademarks in order to capitalize on our brands’ name-recognition and to further develop our brands in U.S. and Canadian markets, as well as in other international markets should we choose to expand our business in the future. Not all of the trademarks that are used by our brands have been registered in all of the countries in which we may do business in the future, and some trademarks may never be registered in any or all of these countries. Rights in trademarks are generally territorial in nature and are obtained on a country-by-country basis by the first person to obtain protection through use or registration in that country in connection with specified products and services. Some countries’ laws do not protect unregistered trademarks at all, or make them more difficult to enforce, and third parties may have filed for “ADT,” “ASG SECURITY,” “PROTECTION ONE,” or similar marks in countries where we have not registered these brands as trademarks. Accordingly, we may not be able to adequately protect our brands everywhere in the world, and use of such brands may result in liability for trademark infringement, trademark dilution, or unfair competition.

In particular, certain trademarks associated with the ADT brand, including “ADT” and the blue octagon, are owned in all territories outside of the United States and Canada by Johnson Controls International plc, which recently acquired and merged with and into Tyco International plc (“Johnson Controls” or “Tyco”). In certain instances, such trademarks are licensed in certain territories outside the United States and Canada by Johnson Controls to third parties. Pursuant to a trademark agreement entered into between The ADT Corporation and Tyco (the “Tyco Trademark Agreement”) in connection with the separation of The ADT Corporation from Tyco in 2012, which endures in perpetuity, The ADT Corporation and its affiliates are prohibited from ever registering, attempting to register or using such trademarks outside the United States (including Puerto Rico and the US Virgin Islands) and Canada, and The ADT Corporation may not challenge Tyco’s rights in such trademarks outside the United States and Canada. Additionally, under the Tyco Trademark Agreement, each of The ADT Corporation and Tyco has the right to propose new secondary source indicators (e.g., ‘Pulse’) to become designated source indicators of such party. To qualify as a designated source indicator, certain specified criteria

must be met, including that the indicator has not been used as a material indicator by the non-proposing party or its affiliates over the previous seven years. If The ADT Corporation were unable to object to Tyco’s proposal for a new designated source indicator by successfully asserting that the new indicator did not meet the requisite criteria, The ADT Corporation would subsequently be precluded from using, registering, or attempting to register such indicator in any jurisdiction, including the United States and Canada, whether alone or in connection with an ADT brand. While The ADT Corporation and Tyco are each required to (i) adhere to specified quality control standards with respect to the use of the subject trademarks in their respective jurisdictions, (ii) cooperate with respect to enforcement in their respective territories, and (iii) cooperate to avoid and correct any potential or actual customer confusion over the proper ownership of the ADT brand in any particular territory, it is nonetheless possible that dilution, infringement, or customer confusion may result from the arrangement.

Infringement of our intellectual property rights could negatively affect us.

We rely on a combination of patents, copyrights, trademarks, trade secrets, confidentiality provisions, and licensing arrangements to establish and protect our proprietary rights. We cannot guarantee, however, that the steps we have taken to protect our intellectual property rights will be adequate to prevent infringement of our rights or misappropriation of our intellectual property or technology. Adverse events affecting the use of our trademarks could affect our use of those trademarks and negatively impact our brands. In addition, if we expand our business outside of the United States and Canada in the future, effective patent, trademark, copyright, and trade secret protection may be unavailable or limited in some jurisdictions. Furthermore, while we enter into confidentiality agreements with certain of our employees and third parties to protect our intellectual property, such confidentiality agreements could be breached or otherwise may not provide meaningful protection for our confidential information, trade secrets and know-how related to the design, manufacture, or operation of our products and services. If it becomes necessary for us to resort to litigation to protect our intellectual property rights, any proceedings could be burdensome and costly, and we may not prevail. Further, adequate remedies may not be available in the event of an unauthorized use or disclosure of our confidential information, trade secrets, or know-how. If we fail to successfully enforce our intellectual property rights, our competitive position could suffer, which could materially adversely affect our business, financial condition, results of operations, and cash flows.

Allegations that we have infringed the intellectual property rights of third parties could negatively affect us.

We may be subject to claims of intellectual property infringement by third parties. In particular, as our services have expanded, we have become subject to claims alleging infringement of intellectual property, including litigation brought by special purpose or so-called “non-practicing” entities that focus solely on extracting royalties and settlements by alleging infringement and threatening enforcement of patent rights. These companies typically have little or no business or operations, and there are few effective deterrents available to prevent such companies from filing patent infringement lawsuits against us. In addition, we rely on licenses and other arrangements with third parties covering intellectual property related to the products and services that we market. Notwithstanding these arrangements, we could be at risk for infringement claims from third parties. Additionally, while The ADT Corporation is party to a patent agreement with Tyco, which generally includes a covenant by Tyco not to bring an action against The ADT Corporation alleging that the manufacture, use, or sale of any products or services in existence as of the date of The ADT Corporation’s separation from Tyco infringes any patents owned or controlled by Tyco and used by The ADT Corporation on or prior to such date, such agreement does not protect the Company, including The ADT Corporation, from infringement claims for future product or service expansions. In general, if a court determines that one or more of our services infringes on intellectual property rights owned by others, we may be required to cease marketing those services, to obtain licenses from the holders of the intellectual property at a material cost or on unfavorable terms, or to take other potentially costly or burdensome actions to avoid infringing third-party intellectual property rights. The litigation process is costly and subject to inherent uncertainties, and we may not prevail in litigation matters regardless of the merits of our position. Intellectual property lawsuits or claims may become extremely disruptive if the plaintiffs succeed in blocking the trade of our products and services and may have a material adverse effect on our business, financial condition, results of operations, and cash flows.

We are subject to credit risk and other risks associated with our dealers.

Under the standard alarm monitoring contract acquisition agreements that we enter into with our dealers, if a subscriber terminates their service with us during the first twelve months after the alarm monitoring contract has been acquired, the dealer is typically required to elect between substituting another alarm monitoring contract for the terminating alarm monitoring contract or compensating us in an amount based on the original acquisition cost of the terminating alarm monitoring contract. We are subject to the risk that dealers will breach their obligation to provide a comparable substitute alarm monitoring contract for a terminating alarm monitoring contract or compensate us in an amount based on the original acquisition cost of the terminating alarm monitoring contract. Although we withhold specified amounts from the acquisition cost paid to dealers for alarm monitoring contracts (“holdback”), which may be used to satisfy or offset these and other applicable dealer obligations under the alarm monitoring contract acquisition agreements, there can be no guarantee that these amounts will be sufficient to satisfy or offset the full extent of the default by a dealer of its obligations under its agreement. If the holdback does prove insufficient to cover dealer obligations, we are also subject to the credit risk that the dealers may not have sufficient funds to compensate us or that any such dealer will otherwise breach its obligation to compensate us for a terminating alarm monitoring contract. To the extent defaults by dealers of the obligations under their agreements are greater than anticipated, our business, financial condition, and results of operations could be materially adversely affected.

Our dealers may expose us to additional risks.

We are subject to reputational risks that may arise from the actions of our dealers and their employees, independent contractors, and other agents that are wholly or partially beyond our control, such as violations of our marketing policies and procedures as well as any failure to comply with applicable laws and regulations. If our dealers engage in marketing practices that are not in compliance with local laws and regulations, we may be in breach of such laws and regulations, which may result in regulatory proceedings and potential penalties that could materially impact our financial results, and results of operations. In addition, unauthorized activities in connection with sales efforts by employees, independent contractors, and other agents of our dealers, including calling consumers in violation of the Telephone Consumer Protection Act and predatory door-to-door sales tactics and fraudulent misrepresentations, could subject us to governmental investigations and class action lawsuits for, among others, false advertising and deceptive trade practice damage claims, against which we will be required to defend. Such defense efforts will be costly and time-consuming, there can be no assurance that such defense efforts will be successful, and could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

We may be subject to securities class actions which may harm our business and results of operations.

We have previously been subject to securities class actions in connection with issues that arose prior to the ADT Acquisition while The ADT Corporation was still a publicly traded company. Following certain periods of volatility in the market price of The ADT Corporation’s securities, The ADT Corporation became the subject of securities litigation as described in The ADT Corporation’s filings with the SEC. We may be subject to additional suits in the future in connection with issues that may have arisen prior to the ADT Acquisition while The ADT Corporation was still a publicly traded company. This type of litigation may be lengthy, and may result in substantial costs and a diversion of management’s attention and resources. Results cannot be predicted with certainty and an adverse outcome in such litigation could result in monetary damages or injunctive relief that could materially adversely affect our business, results of operations, financial condition and cash flows.

In addition, we are currently and may in the future become subject to legal proceedings and commercial or contractual disputes. These are typically claims that arise in the normal course of business including, without limitation, commercial or contractual disputes with our suppliers, intellectual property matters, third party liability, including product liability claims and employment claims. There is a possibility that such claims may have a material adverse effect on our results of operations that is greater than we anticipate and/or negatively affect our reputation.

Increasing government regulation of telemarketing, email marketing, door-to-door sales and other marketing methods may increase our costs and restrict the operation and growth of our business.

We rely on telemarketing, email marketing, door-to-door sales, and other marketing methods conducted internally and through third parties to generate a substantial number of leads for our business. The telemarketing and email marketing services industries are subject to an increasing amount of regulation in the United States and Canada. Regulations have been issued in the United States by the Federal Trade Commission (“FTC”) and the FCC and in Canada by the Canada Radio-television and Telecommunications Commission (“CRTC”) that place restrictions on unsolicited telephone calls to residential and wireless telephone subscribers, whether direct dial or by means of automatic telephone dialing systems, prerecorded, or artificial voice messages and telephone fax machines, and require us to maintain a “do not call” list and to train our personnel to comply with these restrictions. In the United States, the FTC regulates sales practices generally and email marketing and telemarketing specifically and has broad authority to prohibit a variety of advertising or marketing practices that may constitute “unfair or deceptive acts or practices.” Most of the statutes and regulations in the United States applicable to telemarketing and email marketing allow a private right of action for the recovery of damages or provide for enforcement by the FTC and FCC, state attorneys general, or state agencies permitting the recovery of significant civil or criminal penalties, costs and attorneys’ fees in the event that regulations are violated. In Canada, the CRTC enforces the Unsolicited Telecommunications Rules restricting unsolicited communications from telemarketers using direct dial, automatic dialing and announcing devices and fax. The CRTC also enforces the Canadian Anti-Spam Law (“CASL”), which prohibits the sending of commercial emails without prior consent of the consumer or an existing business relationship and sets forth rules governing the sending of commercial emails. Rules have been approved under CASL to allow private rights of action for the recovery of damages, which rules may come into force at any time. CASL also allows the CRTC to recover significant civil penalties, costs, and legal fees in the event that email or telemarketing regulations are violated. We strive to comply with all such applicable regulations, but provide no assurance that we, our authorized dealers or third parties that we rely on for telemarketing, email marketing, and other lead generation activities will be in compliance with all applicable regulations at all times. Although our contractual arrangements with our authorized dealers, affinity marketing partners, and other third parties generally require them to comply with all such regulations and to indemnify us for damages arising from their failure to do so, we can provide no assurance that the FTC, FCC, CRTC, private litigants, or others will not attempt to hold us responsible for any unlawful acts conducted by our authorized dealers, affinity marketing partners and other third parties or that we could successfully enforce or collect upon any indemnities. Additionally, certain FCC rulings and FTC enforcement actions may support the legal position that we may be held vicariously liable for the actions of third parties, including any telemarketing violations by our independent, third-party authorized dealers that are performed without our authorization or that are otherwise prohibited by our policies. The FCC, the FTC, and the CRTC have relied on certain actions to support the notion of vicarious liability, including but not limited to the use of the company brand or trademark, the authorization or approval of telemarketing scripts, or the sharing of consumer prospect lists. Changes in such regulations or the interpretation thereof that further restrict such activities could result in a material reduction in the number of leads for our business and could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

Our business operates in a regulated industry.

Our operations and employees are subject to various federal, state, provincial, and local laws and regulations in the United States and Canada in such areas as consumer protection, occupational licensing, environmental protection, labor and employment, tax and other laws and regulations. Most states and provinces in which we operate have licensing laws directed specifically toward the security services industry. Our business relies heavily upon the use of both wireline and wireless telecommunications to communicate signals, and telecommunications companies are regulated by federal, state, provincial, and local governments.

In certain jurisdictions, we are required to obtain licenses or permits in order to comply with standards governing employee selection and training and to meet certain standards in the conduct of our business. The loss

of such licenses or permits or the imposition of conditions to the granting or retention of such licenses or permits could have a material adverse effect on us. Furthermore, in certain jurisdictions, certain security systems must meet fire and building codes in order to be installed, and it is possible that our current or future products and service offerings will fail to meet such codes, which could require us to make costly modifications to our products and services or to forego marketing in certain jurisdictions.

We must also comply with numerous federal, state, provincial, and local laws and regulations that govern matters relating to our interactions with residential customers, including those pertaining to privacy and data security, consumer financial and credit transactions, home improvement contracts, warranties, and door-to-door solicitation. These laws and regulations are dynamic and subject to potentially differing interpretations, and various federal, state, provincial, and local legislative and regulatory bodies may initiate investigations, expand current laws or regulations, or enact new laws and regulations, regarding these matters. As we expand our product and service offerings and enter into new jurisdictions, we may be subject to more expansive regulation and oversight. For example, as a result of our acquisition of DataShield, we are expanding our cybersecurity services and exploring markets outside of United States and Canada, and we will need to identify and comply with laws and regulations that apply to such services in the relevant jurisdictions. In addition, any financing or lending activity will subject us to various rules and regulations, such as the U.S. federal Truth in Lending Act and analogous U.S. state and Canadian federal and provincial legislation.

Changes in these laws or regulations or their interpretation could dramatically affect how we do business, acquire customers, and manage and use information we collect from and about current and prospective customers and the costs associated therewith. We strive to comply with all applicable laws and regulations relating to our interactions with all customers. It is possible, however, that these requirements may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices.

Changes in laws or regulations could require us to change the way we operate or to utilize resources to maintain compliance, which could increase costs or otherwise disrupt operations. In addition, failure to comply with any applicable laws or regulations could result in substantial fines or revocation of our operating permits and licenses. If laws and regulations were to change or if we or our products failed to comply with them, our business, financial condition, results of operations, and cash flows could be materially adversely affected.

We could be assessed penalties for false alarms.

Some local governments impose assessments, fines, penalties, and limitations on either customers or the alarm companies for false alarms. Certain municipalities have adopted ordinances under which both permit and alarm dispatch fees are charged directly to the alarm companies. Our alarm service contracts generally allow us to pass these charges on to customers, but we may not be able to collect these charges if customers are unwilling or unable to pay them and such outcome may materially and adversely affect our operating results. Furthermore, our customers may elect to terminate or not renew our services if assessments, fines, or penalties for false alarms become significant. If more local governments were to impose assessments, fines, or penalties, our customer base, financial condition, results of operations, and cash flows could be materially adversely affected.

Police departments could refuse to respond to calls from monitored security service companies.

Police departments in certain U.S. and Canadian jurisdictions do not respond to calls from monitored security service companies unless certain conditions are met, such as video or other verification or eyewitness accounts of suspicious activities, either as a matter of policy or by local ordinance. We offer video verification in certain jurisdictions which increases costs of some security systems, which may increase costs to customers. As an alternative to video cameras in some jurisdictions, we have offered affected customers the option of receiving response from private guard companies, at least as an initial means to verify suspicious activities. In most cases this is accomplished through contracts with private guard companies, which increases the overall cost to customers. If more police departments were to refuse to respond or be prohibited from responding to calls from

monitored security service companies unless certain conditions are met, such as video or other verification or eyewitness accounts of suspicious activities, our ability to attract and retain customers could be negatively impacted and our business, financial condition, results of operations, and cash flows could be materially adversely affected.

Adoption of statutes and governmental policies purporting to characterize certain of our charges as unlawful may adversely affect our business.

Generally, if a customer cancels their contract with us prior to the end of the initial contract term, other than in accordance with the contract, we may charge the customer an early cancellation fee. Consumer protection policies or legal precedents could be proposed or adopted to restrict the charges we can impose upon contract cancellation. Such initiatives could compel us to increase our prices during the initial term of our contracts and consequently lead to less demand for our services and increased attrition. Adverse judicial determinations regarding these matters could cause us to incur legal exposure to customers against whom such charges have been imposed and expose us to the risk that certain of our customers may seek to recover such charges through litigation, including class action lawsuits. In addition, the costs of defending such litigation and enforcement actions could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

In the absence of regulation, certain providers of Internet access may block our services or charge their customers more for using our services, or government regulations relating to the Internet could change, which could materially adversely affect our revenue and growth.

Our interactive and home automation services are primarily accessed through the Internet and our security monitoring services, including those utilizing video streaming, are increasingly delivered using Internet technologies. Users who access our services through mobile devices, such as smart phones, laptops, and tablet computers must have a high-speed Internet connection, such as Wi-Fi, 3G, or 4G, to use our services. Currently, this access is provided by telecommunications companies and Internet access service providers that have significant and increasing market power in the broadband and Internet access marketplace. In the absence of government regulation, these providers could take measures that affect their customers’ ability to use our products and services, such as degrading the quality of the data packets we transmit over their lines, giving our packets low priority, giving other packets higher priority than ours, blocking our packets entirely, or attempting to charge their customers more for using our products and services. To the extent that Internet service providers implement usage-based pricing, including meaningful bandwidth caps, or otherwise try to monetize access to their networks, we could incur greater operating expenses and customer acquisition and retention could be negatively impacted. Furthermore, to the extent network operators were to create tiers of Internet access service and either charge us for or prohibit our services from being available to our customers through these tiers, our business could be negatively impacted. Some of these providers also offer products and services that directly compete with our own offerings, which could potentially give them a competitive advantage. While actions like these by Canadian providers would violate the net neutrality rules adopted by the CRTC described below, the FCC recently rolled back net neutrality protections in the United States as described below and most other countries have not adopted formal net neutrality or open Internet rules.

In 2009, the CRTC adopted Internet traffic management practices aimed at providing stronger net neutrality protections, and preventing Canadian Internet service providers from engaging in traffic shaping that are “unjustly discriminatory” or “unduly preferential.” On February 26, 2015, the FCC reclassified broadband Internet access services in the United States as a telecommunications service subject to some elements of common carrier regulation, including the obligation to provide service on just and reasonable terms, and adopted specific net neutrality rules prohibiting the blocking, throttling or “paid prioritization” of content or services. However, in May 2017, the FCC issued a notice of proposed rulemaking to roll back net neutrality rules and return to a “light touch” regulatory framework. Consistent with this notice, on December 14, 2017, the FCC once again classified broadband Internet access service as an unregulated information service and repealed the specific

rules against blocking, throttling or “paid prioritization” of content or services. It retained a rule requiring Internet service providers to disclose their practices to consumers, entrepreneurs and the FCC. A number of parties have already stated they would appeal this order and it is possible Congress may adopt legislation restoring some net neutrality requirements. The elimination of net neutrality rules and any changes to the rules could affect the market for broadband Internet access service in a way that impacts our business, for example, if Internet access providers provide better Internet access for their own alarm monitoring or interactive services that compete with ADT’s services or limit the bandwidth and speed for the transmission of data from ADT equipment, thereby depressing demand for our services or increasing the costs of services we provide.

Goodwill and other identifiable intangible assets represent a significant portion of our total assets, and we may never realize the full value of our intangible assets.

As of September 30, 2017, we had approximately $13 billion of goodwill and identifiable intangible assets, excluding deferred financing costs. Goodwill and other identifiable intangible assets are recorded at fair value on the date of acquisition. We review such assets for impairment at least annually. Impairment may result from, among other things, deterioration in performance, adverse market conditions, adverse changes in applicable laws or regulations, including changes that restrict the activities of or affect the products and services we offer, challenges to the validity of certain registered intellectual property, reduced sales of certain products or services incorporating registered intellectual property, increased attrition, and a variety of other factors. The amount of any quantified impairment must be expensed immediately as a charge to results of operations. Depending on future circumstances, it is possible that we may never realize the full value of our intangible assets. Any future determination of impairment of goodwill or other identifiable intangible assets could have a material adverse effect on our financial condition and results of operations.

We have significant deferred tax assets, and any impairments of or valuation allowances against these deferred tax assets in the future could materially adversely affect our results of operations, financial condition, and cash flows.

We are subject to income taxes in the United States and Canada and in various state, territorial, provincial, and local jurisdictions. The amount of income taxes we pay is subject to our interpretation and application of tax laws in jurisdictions in which we file. Changes in current or future laws or regulations, the imposition of new or changed tax laws or regulations or new related interpretations by taxing authorities in the jurisdictions in which we file could materially adversely affect our financial condition results of operations, and cash flows.

Our future consolidated federal and state income tax liability may be significantly reduced by tax credits and tax net operating loss (“NOL”) carryforwards available to us under the applicable tax codes. Each of ASG, Protection One, and The ADT Corporation had material NOL carryforwards prior to our acquisition of such entity. Our ability to fully utilize these deferred tax assets, however, may be limited for various reasons, such as if projected future taxable income becomes insufficient to recognize the full benefit of our NOL carryforwards prior to their expirations. If a corporation experiences an “ownership change,” Sections 382 and 383 of the Code (as defined herein) provide annual limitations with respect to the ability of a corporation to utilize its NOL (as well as certain built-in losses) and tax credit carryforwards against future U.S. taxable income. In general, an ownership change may result from transactions increasing the ownership of certain stockholders in the stock of the corporation by more than 50 percentage points over a three-year testing period.

Our acquisitions of The ADT Corporation, ASG, and Protection One resulted in an ownership change of each of those entities. Our ability to fully utilize the NOL carryforwards of those entities is subject to the limitations under Section 382 of the Code. We do not expect that this limitation will impact our ability to utilize these tax attributes (NOLs). However, it is possible that future changes in the direct or indirect ownership in our equity might result in additional ownership changes that may trigger the imposition of limitations under Section 382 of the Code with respect to these tax attributes.

In addition, audits by the U.S. Internal Revenue Service (“IRS”) as well as state, territorial, provincial, and local tax authorities could reduce our tax attributes and/or subject us to tax liabilities if tax authorities make adverse determinations with respect to our NOL or tax credits carryforwards. The ADT Corporation is currently subject to federal income tax audits covering the 2010-2012 tax years (not including a post-Tyco separation IRS audit for 2013). During the third quarter of 2017, Tyco was notified by the IRS of its intent to disallow amortization deductions claimed on the Company’s $987 million trademark. Tyco intends to challenge this decision before the Appeals Division of the IRS. If Tyco were to lose the dispute, it would result in minimal cash tax liabilities to ADT, no impact to the Company’s income statement, but material loss to the Company’s NOL deferred tax asset. The Company strongly disagrees with the IRS’s position and maintains that the deductions claimed are appropriate. Tyco has advised the Company that they intend to vigorously defend its originally filed tax return position. There can be no assurance that adjustments that would reduce The ADT Corporation’s tax attributes or otherwise affect The ADT Corporation’s tax liability will not be proposed by the IRS with respect to these tax years. Further, any future disallowance of some or all of our tax credits or NOL carryforwards as a result of legislative change could materially adversely affect our tax obligations. Accordingly, there can be no assurance that in the future we will not be subject to increased taxation or experience limitations with respect to recognizing the benefits of our NOL carryforwards and other tax attributes. Any such increase in taxation or limitation of benefits could have a material adverse effect on our financial condition, results of operations, or cash flows. Finally, in 2016, the IRS commenced an audit of The ADT Corporation related to the 2013 tax year. The issue discussed above related to the amortization of the Company’s trademark being disputed by the IRS and Tyco would have a carryforward impact into ADT’s 2013 tax year and forward. As of the date of this prospectus, the Company does not believe this audit will impair The ADT Corporation tax attributes.

U.S. federal income tax reform could adversely affect us.

The U.S. Congress has enacted legislation that significantly reforms the Internal Revenue Code of 1986, as amended. President Trump is expected to sign the Congressional bill into law as it reflects one of the top legislative priorities of his administration. The new legislation, among other things, includes changes to U.S. federal tax rates, imposes significant additional limitations on the deductibility of interest, allows for the expensing of capital expenditures, and puts into effect the migration from a “worldwide” system of taxation to a territorial system. We do not expect tax reform to have a material impact to our projection of minimal cash taxes or to our NOLs. Our net deferred tax assets and liabilities will be revalued at the newly enacted U.S. corporate rate, and the impact will be recognized in our tax expense in the year of enactment. We continue to examine the impact this tax reform legislation may have on our business. The impact of this tax reform on holders of our common shares is uncertain and could be adverse. This prospectus does not discuss any such tax legislation or the manner in which it might affect purchasers of our common stock. We urge our stockholders to consult with their legal and tax advisors with respect to any such legislation and the potential tax consequences of investing in our common stock.

We are exposed to greater risks of liability for employee acts or omissions or system failures than may be inherent in other businesses.

If a customer or third party believes that it has suffered harm to person or property due to an actual or alleged act or omission of one of our authorized dealers, employees, independent contractors, or other agents, or a security or interactive system failure, they (or their insurers) may pursue legal action against us, and the cost of defending the legal action and of any judgment against us could be substantial. In particular, because our products and services are intended to help protect lives and real and personal property, we may have greater exposure to litigation risks than businesses that provide other commercial, consumer, and small business products and services. Our standard customer contracts contain a series of risk-mitigation provisions that serve to limit our liability and/or limit a claimant’s ability to pursue legal action; however, in the event of litigation with respect to such matters, it is possible that these risk-mitigation provisions may be deemed not applicable or unenforceable and, regardless of the ultimate outcome, we may incur significant costs of defense that could materially adversely affect our business, financial condition, results of operations, and cash flows, and there can be no assurance that any such defense efforts will be successful.

If we are unable to recruit and retain key personnel, including an effective sales force, our ability to manage our business could be materially and adversely affected.

Our success will depend in part upon the continued services of our management team and sales representatives. Our ability to recruit and retain key personnel for management positions and effective sales representatives could be impacted adversely by the competitive environment for management and sales talent. The loss, incapacity, or unavailability for any reason of key members of our management team and the inability or delay in hiring new key employees, including sales force personnel, could materially adversely affect our ability to manage our business and our future operational and financial results.

The loss of our senior management could disrupt our business.

Our senior management is important to the success of our business because there is significant competition for executive personnel with experience in the security and home automation industry. As a result of this need and the competition for a limited pool of industry-based executive experience, we may not be able to retain our existing senior management. In addition, we may not be able to fill new positions or vacancies created by expansion or turnover. Moreover, we do not currently have and do not expect to have in the future “key person” insurance on the lives of any member of our senior management. The loss of any member of our senior management team without retaining a suitable replacement (either from inside or outside our existing management team) could have a material adverse effect on our business, financial condition, and results of operations.

Adverse developments in our relationship with our employees could materially and adversely affect our business, results of operations, and financial condition.

As of September 30, 2017, approximately 1,700 of our employees at various sites, or approximately 10% of our total workforce, were represented by unions and covered by collective bargaining agreements. We are currently party to approximately 39 collective bargaining agreements in the United States and Canada. Almost one-third of these agreements are up for renewal in any given year. We cannot predict the outcome of negotiations of the collective bargaining agreements covering our employees. If we are unable to reach new agreements or renew existing agreements, employees subject to collective bargaining agreements may engage in strikes, work slowdowns, or other labor actions, which could materially disrupt our ability to provide services. New labor agreements or the renewal of existing agreements may impose significant new costs on us, which could materially adversely affect our financial condition and results of operations in the future.

We may be required to make indemnification payments relating to The ADT Corporation’s separation from Tyco.

In connection with its separation from Tyco, The ADT Corporation entered into a tax sharing agreement (the “2012 Tax Sharing Agreement”) with Tyco and Pentair Ltd., formerly Tyco Flow Control International, Ltd. (“Pentair”), which governs the rights and obligations of The ADT Corporation, Tyco, and Pentair for certain pre-separation tax liabilities. The 2012 Tax Sharing Agreement provides that The ADT Corporation, Tyco, and Pentair will share (i) certain pre-separation income tax liabilities that arise from adjustments made by tax authorities to The ADT Corporation’s, Tyco’s, and Pentair’s U.S. and certain non-U.S. income tax returns, and (ii) payments required to be made by Tyco in respect of a tax sharing agreement it entered into in connection with a 2007 spinoff transaction (collectively, “Shared Tax Liabilities”). Tyco is responsible for the first $500 million of Shared Tax Liabilities. The ADT Corporation and Pentair share 58% and 42%, respectively, of the next $225 million of Shared Tax Liabilities. The ADT Corporation, Tyco, and Pentair share 27.5%, 52.5%, and 20.0%, respectively, of Shared Tax Liabilities above $725 million. In addition, The ADT Corporation retained sole liability for certain specified U.S. and non-U.S. income and non-income tax items. In 2010, The ADT Corporation acquired Broadview Security, a business formerly owned by The Brink’s Company. In connection with Broadview Security’s separation from The Brink’s Company, in 2008 it entered into a tax sharing agreement, which allocates historical and separation related tax liabilities between Broadview Security

and The Brink’s Company (the “2008 Tax Sharing Agreement”). Under the 2012 Tax Sharing Agreement, The ADT Corporation bears 100% of all tax liabilities related to Broadview Security, including any tax liability that may be asserted under the 2008 Tax Sharing Agreement. To our knowledge, no such tax liability has been asserted to date.

Under the terms of the 2012 Tax Sharing Agreement, Tyco controls all U.S. income tax audits relating to the pre-separation taxable period (including the separation itself). Tyco has been subject to federal income tax audits for the 1997—2009 tax years, and has resolved all aspects of its disputes before the U.S. Tax Court and before the Appeals Division of the IRS for audit cycles 1997 through 2009. The resolution had an immaterial impact on the Company’s financial position, results of operations, and cash flows. The 2010 through 2012 tax years are still under review with the IRS.

In addition, under the terms of the 2012 Tax Sharing Agreement, in the event the distribution of The ADT Corporation’s common shares to the Tyco stockholders, the distribution of Pentair common shares to the Tyco stockholders, or certain internal transactions undertaken in connection therewith were determined to be taxable as a result of actions taken by The ADT Corporation, Pentair, or Tyco after the distributions, the party responsible for such failure would be responsible for all taxes imposed on The ADT Corporation, Pentair, or Tyco as a result thereof. If such failure is not the result of actions taken after the distributions by The ADT Corporation, Pentair, or Tyco, then The ADT Corporation, Pentair, and Tyco would be responsible for any distribution taxes imposed on The ADT Corporation, Pentair, or Tyco as a result of such determination in the same manner and in the same proportions as the Shared Tax Liabilities.

See the Notes to the financial statements included elsewhere in this prospectus for additional discussion of the Tax Sharing Agreement and the status of the Company’s income tax audits.

We may be subject to liability for obligations of The Brink’s Company under the Coal Act or other coal-related liabilities of The Brink’s Company.

On May 14, 2010, The ADT Corporation acquired Broadview Security, a business formerly owned by The Brink’s Company. Under the Coal Industry Retiree Health Benefit Act of 1992, as amended (the “Coal Act”), The Brink’s Company and its majority-owned subsidiaries as of July 20, 1992 (including certain legal entities acquired in the Broadview Security acquisition) are jointly and severally liable with certain of The Brink’s Company’s other current and former subsidiaries for health care coverage obligations provided for by the Coal Act. A Voluntary Employees’ Beneficiary Association (“VEBA”) trust has been established by The Brink’s Company to pay for these liabilities, although the trust may have insufficient funds to satisfy all future obligations. We cannot rule out the possibility that certain legal entities acquired in the Broadview Security acquisition may also be liable for other liabilities in connection with The Brink’s Company’s former coal operations. At the time of the separation of Broadview Security from The Brink’s Company in 2008, Broadview Security entered into an agreement pursuant to which The Brink’s Company agreed to indemnify it for any and all liabilities and expenses related to The Brink’s Company’s former coal operations, including any health care coverage obligations. The Brink’s Company has agreed that this indemnification survives The ADT Corporation’s acquisition of Broadview Security. We in turn agreed to indemnify Tyco for such liabilities in our separation from it. We have evaluated Broadview Security’s potential liability under the Coal Act and otherwise with respect to The Brink’s Company’s former coal operations as a contingency in light of all known facts, including the funding of the VEBA, indemnification provided by The Brink’s Company and the absence of any such claims against us to date. We have concluded that no accrual is necessary due to the existence of the indemnification and our belief that The Brink’s Company and VEBA will be able to satisfy all future obligations under the Coal Act and any other coal-related liabilities of The Brink’s Company. However, if The Brink’s Company and the VEBA are unable to satisfy all such obligations, we could be held liable, which could have a material adverse effect on our financial condition, results of operations and cash flows.

Risks Related to our Indebtedness

Our substantial indebtedness could materially adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, and prevent us from making debt service payments.

As of September 30, 2017, on a consolidated basis, we had $10.4 billion face value of outstanding indebtedness (excluding capital leases), and our estimated debt service (including interest and non-discretionary principal repayments) is $650 million for 2017. Additionally, we had $772 million accumulated stated value of the Koch Preferred Securities and our estimated dividend obligation is $84 million for 2017.

During the nine months ended September 30, 2017, excluding borrowings and payments under our Revolving Credit Facilities, our cash flow used for debt service totaled $447 million, which includes scheduled quarterly principal payments of the First Lien Term B-1 Loan of $18 million, interest payments on our debt of $388 million, and dividend payments of $41 million on the Koch Preferred Securities. Also during the nine months ended September 30, 2017, our cash flows from operating activities totaled $1,262 million, which includes interest paid of $429 million. As such, our cash flows from operating activities (before giving effect to the payment of interest) amounted to $1,691 million. Cash payments used to service our debt represented approximately 26% of our net cash flows from operating activities (before giving effect to the payment of interest). Furthermore, we repaid $140 million of borrowings under our Revolving Credit Facilities and made $4 million of interest payment thereunder during the nine months ended September 30, 2017.

During 2016, excluding borrowings and payments under our Revolving Credit Facilities, our cash flow used for debt service totaled $698 million, which includes voluntary prepayments of our then outstanding Second Lien Term B Loan of $260 million, scheduled quarterly principal payments of the First Lien Term B-1 Loan of $10 million, interest payments on our debt of $375 million, and dividend payments of $53 million on the Koch Preferred Securities. Also during 2016, our cash flows from operating activities totaled $618 million, which includes interest paid of $428 million. As such, our cash flows from operating activities (before giving effect to the payment of interest) amounted to $1,046 million. Cash payments used to service our debt represented approximately 67% of our cash flows from operating activities (before giving effect to the payment of interest). Furthermore, we borrowed $210 million and repaid $92 million of borrowings under our Revolving Credit Facilities and made $3 million of interest payment thereunder during the year ended December 31, 2016. Refer to Note 4 and Note 5 to our unaudited and audited consolidated financial statements, respectively, included elsewhere in this prospectus and “Description of Material Indebtedness” for details of our debt outstanding and related restrictive covenants.

Our substantial indebtedness and the restrictive covenants under the agreements governing such indebtedness could:

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limit our ability to borrow money for our working capital, capital expenditures, debt service requirements, strategic initiatives, or other purposes;

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make it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations of any of our debt instruments, including restrictive covenants and borrowing conditions, could result in an event of default under the agreements governing our indebtedness;

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require us to dedicate a substantial portion of our cash flow from operations to the repayment of our indebtedness, thereby reducing funds available to us for other purposes;

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limit our flexibility in planning for, or reacting to, changes in our operations or business;

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make us more highly leveraged than some of our competitors, which may place us at a competitive disadvantage;

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make us more vulnerable to downturns in our business or the economy;

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restrict us from making strategic acquisitions, engaging in development activities, introducing new technologies, or exploiting business opportunities;

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cause us to make non-strategic divestitures;

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limit, along with the financial and other restrictive covenants in our indebtedness, among other things, our ability to borrow additional funds or dispose of assets; or

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expose us to the risk of increased interest rates, as certain of our borrowings are at variable rates of interest.

In addition, the agreements governing our indebtedness contain restrictive covenants that may limit our ability to engage in activities that may be in our long-term best interest. Our failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of substantially all of our indebtedness.

Despite our substantial indebtedness, we may still be able to incur significantly more debt, which could intensify the risks associated with our substantial indebtedness.

We and our subsidiaries may be able to incur substantial indebtedness in the future. Although the terms of the agreements governing our indebtedness contain certain restrictions on our and our subsidiaries’ ability to incur additional indebtedness, these restrictions are subject to a number of important qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial. These restrictions also will not prevent us from incurring obligations that do not constitute indebtedness. Additionally, the covenants under any future debt instruments could allow us to incur a significant amount of additional indebtedness. The more leveraged we become, the more we, and in turn our security holders, will be exposed to certain risks described above under “—Our substantial indebtedness could materially adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, and prevent us from making debt service payments.”

We may not be able to generate sufficient cash to service all of our indebtedness and to fund our working capital and capital expenditures, and may be forced to take other actions to satisfy our obligations under our indebtedness that may not be successful.

Our ability to satisfy our debt obligations depends upon, among other things:

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our future financial and operating performance (including the realization of any cost savings described herein), which will be affected by prevailing economic, industry, and competitive conditions and financial, business, legislative, regulatory and other factors, many of which are beyond our control; and

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our future ability to borrow under our Revolving Credit Facilities, the availability of which depends on, among other things, our complying with the covenants in the credit agreement governing such facilities.

We can provide no assurance that our business will generate cash flow from operations, or that we will be able to draw under our Revolving Credit Facilities or otherwise, in an amount sufficient to fund our liquidity needs.

If our cash flows and capital resources are insufficient to service our indebtedness, we may be forced to reduce or delay capital expenditures, sell assets, seek additional capital, or restructure or refinance our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business

operations. In addition, the terms of existing or future debt agreements may restrict us from adopting some of these alternatives. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. We may not be able to consummate those dispositions for fair market value or at all. Furthermore, any proceeds that we could realize from any such dispositions may not be adequate to meet our debt service obligations then due. Our Sponsor and its affiliates have no continuing obligation to provide us with debt or equity financing. Our inability to generate sufficient cash flow to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, could result in a material adverse effect on our business, financial condition and results of operations and could negatively impact our ability to satisfy our obligations under our indebtedness.

If we cannot make scheduled payments on our indebtedness, we will be in default and holders of the Prime Notes and the ADT Notes could declare all outstanding principal and interest to be due and payable, the lenders under our Revolving Credit Facilities could terminate their commitments to loan money, our secured lenders (including the lenders under our First Lien Credit Facilities (as defined herein) and the holders of the Notes) could foreclose against the assets securing the indebtedness owing to them, and we could be forced into bankruptcy or liquidation.

If our indebtedness is accelerated, we may need to repay or refinance all or a portion of our indebtedness before maturity. There can be no assurance that we will be able to obtain sufficient funds to enable us to repay or refinance our debt obligations on commercially reasonable terms, or at all.

Our debt agreements contain restrictions that limit our flexibility.

Our debt agreements contain, and any future indebtedness of ours would likely contain, a number of covenants that impose significant operating and financial restrictions on us, including restrictions on our and our subsidiaries’ ability to, among other things:

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incur additional debt, guarantee indebtedness, or issue certain preferred equity interests;

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pay dividends on or make distributions in respect of, or repurchase or redeem, our capital stock, or make other restricted payments;

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prepay, redeem, or repurchase certain debt;

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make loans or certain investments;

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sell certain assets;

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create liens on certain assets;

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consolidate, merge, sell, or otherwise dispose of all or substantially all of our assets;

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enter into certain transactions with our affiliates;

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alter the businesses we conduct;

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enter into agreements restricting our subsidiaries’ ability to pay dividends; and

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designate our subsidiaries as unrestricted subsidiaries.

As a result of these covenants, we will be limited in the manner in which we conduct our business, and we may be unable to engage in favorable business activities or finance future operations or capital needs.

We have pledged a significant portion of our assets as collateral under our debt agreements. If any of the holders of our indebtedness accelerate the repayment of such indebtedness, there can be no assurance that we will have sufficient assets to repay our indebtedness.

A failure to comply with the covenants under our debt agreements or any future indebtedness could result in an event of default, which, if not cured or waived, could have a material adverse effect on our business, financial condition, and results of operations. In the event of any such default, the lenders thereunder:

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will not be required to lend any additional amounts to us;

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could elect to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be immediately due and payable; or

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could require us to apply all of our available cash to repay these borrowings.

Such actions by the lenders could cause cross-defaults under our other indebtedness. If we are unable to repay those amounts, our secured lenders (including the lenders under our Credit Facilities and the holders of the Prime Notes and the ADT Notes) could proceed against the collateral granted to them to secure that indebtedness.

If any of our outstanding indebtedness were to be accelerated, there can be no assurance that our assets would be sufficient to repay such indebtedness in full.

Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Borrowings under our Credit Facilities are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on certain of our variable rate indebtedness will increase even though the amount borrowed remains the same, and our net income and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease. Assuming our Revolving Credit Facilities are fully drawn, each 0.125% change in assumed blended interest rates under the Credit Facilities would result in a $4 million change in annual interest expense on indebtedness under our Credit Facilities. We currently have entered into, and in the future we may continue to enter into, interest rate swaps that involve the exchange of floating for fixed rate interest payments in order to reduce interest rate volatility. However, we may not maintain interest rate swaps with respect to all of our variable rate indebtedness, and any such swaps may not fully mitigate our interest rate risk, may prove disadvantageous, or may create additional risks.

The certificate of designation and other definitive agreements governing the Koch Preferred Securities contain certain designations, rights, preferences, powers, restrictions and limitations that could materially and adversely affect our business, results of operations, and financial condition.

Under the certificate of designation and other definitive agreements governing the Koch Preferred Securities, the Koch Preferred Securities are required to be redeemed on May 2, 2030. Although we intend to redeem the Koch Preferred Securities in full prior to that time, if the Koch Preferred Securities remain outstanding, we will be required to redeem all remaining Koch Preferred Securities on May 2, 2030. There can be no assurance that we will have sufficient funds available to redeem in full the Koch Preferred Securities at such time.

In connection with this offering, the Company is required to deposit into a separate account (the “Segregated Account”) an amount in cash equal to at least $750 million, which may only be used by the Company to redeem the Koch Preferred Securities (in whole or in part, from time to time). In the event that the Company consummates an underwritten public offering of common stock following this offering, but prior to the date that all Koch Preferred Securities have been redeemed in full, the Company is required to increase the cash amount deposited in the Segregated Account to an amount sufficient to redeem the Koch Preferred Securities as of

certain dates. The Company has agreed with the Koch Investor to maintain at all times the balance of the Segregated Account in an amount equal to at least the Minimum Segregated Account Amount (as defined in the section entitled “Description of the Koch Preferred Securities”) until the Koch Preferred Securities have been redeemed in full. In the event the Company does not maintain the Minimum Segregated Account Amount at any time, the Company will be required to redeem the Koch Preferred Securities in full. There can be no assurance that we will have sufficient funds available to redeem in full the Koch Preferred Securities at such time.

The certificate of designation and other definitive agreements governing the Koch Preferred Securities also contain certain other designations, rights, preferences, powers, restrictions, and limitations that could require us to redeem all or a portion of the Koch Preferred Securities or require that we obtain the consent of the holders of a majority of the Koch Preferred Securities before taking certain actions or entering into certain transactions. Such designations, rights, preferences, powers, restrictions, and limitations could hinder or delay our operations and materially and adversely affect our business, results of operations, and financial condition. For example, prior to the redemption of the Koch Preferred Securities in full, the Company and its subsidiaries are subject to certain affirmative and negative covenants, such as engaging in transactions with affiliates and paying dividends on our common stock, among other things, under the certificate of designation and other definitive agreements governing the Koch Preferred Securities. See “Description of the Koch Preferred Securities.”

Risks Related to this Offering and Ownership of our Common Stock

Our stock price may fluctuate significantly.

The market price of our common stock could vary significantly as a result of a number of factors, some of which are beyond our control. In the event of a drop in the market price of our common stock, you could lose a substantial part or all of your investment in our common stock. The following factors could affect our stock price:

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our operating and financial performance and prospects;

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quarterly variations in the rate of growth (if any) of our financial indicators, such as net income per share, net income and revenues;

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the public reaction to our press releases, our other public announcements and our filings with the SEC;

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strategic actions by our competitors;

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changes in operating performance and the stock market valuations of other companies;

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announcements related to litigation;

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our failure to meet revenue or earnings estimates made by research analysts or other investors;

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changes in revenue or earnings estimates, or changes in recommendations or withdrawal of research coverage, by equity research analysts;

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speculation in the press or investment community;

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sales of our common stock by us or our stockholders, or the perception that such sales may occur;

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changes in accounting principles, policies, guidance, interpretations, or standards;

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additions or departures of key management personnel;

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actions by our stockholders;

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general market conditions;

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domestic and international economic, legal and regulatory factors unrelated to our performance;

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material weakness in our internal controls over financial reporting; and

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the realization of any risks described under this “Risk Factors” section, or other risks that may materialize in the future.

The stock markets in general have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock. Securities class action litigation has often been instituted against companies following periods of volatility in the overall market and in the market price of a company’s securities. Such litigation, if instituted against us, could result in very substantial costs, divert our management’s attention and resources and harm our business, financial condition, and results of operations.

We will incur significant costs and devote substantial management time as a result of operating as a public company.

As a public company, we will continue to incur significant legal, accounting, and other expenses. For example, we will be required to comply with certain of the requirements of the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules and regulations subsequently implemented by the SEC, and the rules of the NYSE, including the establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. We expect that compliance with these requirements will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. In addition, we expect that our management and other personnel will need to divert attention from operational and other business matters to devote substantial time to these public company requirements. In particular, we expect to continue incurring significant expenses and to devote substantial management effort toward ensuring compliance with the requirements of the Sarbanes-Oxley Act. In that regard, we may need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge. We cannot predict or estimate the amount of additional costs we may incur as a result of becoming a public company or the timing of such costs.

In addition, we are becoming a public company while continuing to integrate the financial reporting systems of the Successor and The ADT Corporation. Successfully implementing our business plan and complying with the Sarbanes-Oxley Act and other regulations described above requires us to be able to prepare timely and accurate financial statements. Any delay in this implementation of, or disruption in, the transition to new or enhanced systems, procedures or controls, may cause us, as we did in the third quarter of 2016, to present restatements, or cause our operations to suffer and we may be unable to conclude that our internal controls over financial reporting are effective and to obtain an unqualified report on internal controls from our auditors.

We continue to be controlled by Apollo, and Apollo’s interests may conflict with our interests and the interests of other stockholders.

Following this offering, Apollo will own % of our common equity (or % if the underwriters exercise their over-allotment option in full). As a result, Apollo will have the power to elect a majority of our directors. Therefore, individuals affiliated with Apollo will have effective control over the outcome of votes on all matters requiring approval by our stockholders, including entering into significant corporate transactions such as mergers, tender offers, and the sale of all or substantially all of our assets and issuance of additional debt or equity. The interests of Apollo and its affiliates, including funds affiliated with Apollo, could conflict with or differ from our interests or the interests of our other stockholders. For example, the concentration of ownership held by funds affiliated with Apollo could delay, defer, or prevent a change in control of our company or impede a merger, takeover, or other business combination which may otherwise be favorable for us. Additionally, Apollo and its affiliates are in the business of making investments in companies and may, from time to time, acquire and hold interests in or provide advice to businesses that compete directly or indirectly with us, or are suppliers or customers of ours. Apollo and its affiliates may also pursue acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us. Any such investment may increase the potential for the conflicts of interest discussed in this risk factor. So long as funds affiliated with

Apollo continue to directly or indirectly own a significant amount of our equity, even if such amount is less than 50%, Apollo and its affiliates will continue to be able to substantially influence or effectively control our ability to enter into corporate transactions. In addition, we have an executive committee that serves at the discretion of our Board and is composed of two Apollo designees and our CEO, who are authorized to take actions (subject to certain exceptions) that it reasonably determines are appropriate. See “Management—Board Committees—Executive Committee” for a further discussion.

We are a “controlled company” within the meaning of the NYSE rules and, as a result, qualify for and intend to rely on exemptions from certain corporate governance requirements.

Following this offering, Apollo will continue to control a majority of the voting power of our outstanding voting stock, and as a result we will be a controlled company within the meaning of the NYSE corporate governance standards. Under the NYSE rules, a company of which more than 50% of the voting power is held by another person or group of persons acting together is a controlled company and may elect not to comply with certain corporate governance requirements, including the requirements that:

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a majority of the board of directors consist of independent directors;

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the nominating and corporate governance committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities;

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the compensation committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and

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there be an annual performance evaluation of the nominating and corporate governance and compensation committees.

We intend to utilize these exemptions as long as we remain a controlled company. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the .

Our organizational documents may impede or discourage a takeover, which could deprive our investors of the opportunity to receive a premium of their shares.

Provisions of our amended and restated certificate of incorporation and amended and restated bylaws may make it more difficult for, or prevent a third party from, acquiring control of us without the approval of our board of directors. These provisions include:

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providing that our board of directors will be divided into three classes, with each class of directors serving staggered three-year terms;

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providing for the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class, if less than 50.1% of our outstanding common stock is beneficially owned by funds affiliated with Apollo;

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empowering only the board to fill any vacancy on our board of directors (other than in respect of a Sponsor Director (as defined below)), whether such vacancy occurs as a result of an increase in the number of directors or otherwise;

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authorizing the issuance of “blank check” preferred stock without any need for action by stockholders;

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prohibiting stockholders from acting by written consent if less than 50.1% of our outstanding common stock is beneficially owned by funds affiliated with Apollo;

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to the extent permitted by law, prohibiting stockholders from calling a special meeting of stockholders if less than 50.1% of our outstanding common stock is beneficially owned by funds affiliated with Apollo; and

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establishing advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted on by stockholders at stockholder meetings.

Additionally, Section 203 of the Delaware General Corporation Law (the “DGCL”) prohibits a publicly held Delaware corporation from engaging in a business combination with an interested stockholder, unless the business combination is approved in a prescribed manner. An interested stockholder includes a person, individually or together with any other interested stockholder, who within the last three years has owned 15% of our voting stock. However, our amended and restated certificate of incorporation, which will become effective on the consummation of this offering, will include a provision that restricts us from engaging in any business combination with an interested stockholder for three years following the date that person becomes an interested stockholder. Such restrictions shall not apply to any business combination between our Sponsor and any affiliate thereof or their direct and indirect transferees, on the one hand, and us, on the other.

Our issuance of shares of preferred stock could delay or prevent a change in control of us. Following the expected redemption of the Koch Preferred Securities, our board of directors shall have the authority to cause us to issue, without any further vote or action by the stockholders, shares of preferred stock, par value $0.01 per share, in one or more series, to designate the number of shares constituting any series, and to fix the rights, preferences, privileges, and restrictions thereof, including dividend rights, voting rights, rights and terms of redemption, redemption price or prices, and liquidation preferences of such series. The issuance of shares of our preferred stock may have the effect of delaying, deferring, or preventing a change in control without further action by the stockholders, even where stockholders are offered a premium for their shares.

In addition, as long as funds affiliated with or managed by Apollo beneficially own a majority of our outstanding common stock, Apollo will be able to control all matters requiring stockholder approval, including the election of directors, amendment of our certificate of incorporation, and certain corporate transactions. Together, these charter, bylaw and statutory provisions could make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our common stock. Furthermore, the existence of the foregoing provisions, as well as the significant common stock beneficially owned by funds affiliated with Apollo and its right to nominate a specified number of directors in certain circumstances, could limit the price that investors might be willing to pay in the future for shares of our common stock. They could also deter potential acquirers of us, thereby reducing the likelihood that you could receive a premium for your common stock in an acquisition. For a further discussion of these and other such anti-takeover provisions, see “Description of Capital Stock—Certain Corporate Anti-takeover Provisions.”

Our amended and restated certificate of incorporation will provide that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our amended and restated certificate of incorporation will provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the sole and exclusive forum for (a) any derivative action or proceeding brought on our behalf; (b) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders; (c) any action asserting a claim arising pursuant to any provision of the DGCL or of our amended and restated certificate of incorporation or our amended and restated bylaws; or (d) any action asserting a claim related to or involving the Company that is governed by the internal affairs doctrine. The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage such lawsuits against us and our directors, officers and other employees. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially adversely affect our business, financial condition and results of operations.

Our amended and restated certificate of incorporation will contain a provision renouncing our interest and expectancy in certain corporate opportunities.

Under our amended and restated certificate of incorporation, none of Apollo, the one Co-Investor that maintains a right to appoint a Co-Investor designee, the Koch Investor, or any of their respective portfolio companies, funds, or other affiliates, or any of their officers, directors, agents, stockholders, members, or partners will have any duty to refrain from engaging, directly or indirectly, in the same business activities, similar business activities, or lines of business in which we operate. In addition, our amended and restated certificate of incorporation provides that, to the fullest extent permitted by law, no officer or director of ours who is also an officer, director, employee, managing director, or other affiliate of Apollo, the Co-Investor, or the Koch Investor will be liable to us or our stockholders for breach of any fiduciary duty by reason of the fact that any such individual directs a corporate opportunity to Apollo, the Co-Investor, or the Koch Investor, as applicable, instead of us, or does not communicate information regarding a corporate opportunity to us that the officer, director, employee, managing director, or other affiliate has directed to Apollo, the Co-Investor, or the Koch Investor, as applicable. For instance, a director of our company who also serves as a director, officer, or employee of Apollo, the Co-Investor, the Koch Investor, or any of their respective portfolio companies, funds, or other affiliates may pursue certain acquisitions or other opportunities that may be complementary to our business and, as a result, such acquisition or other opportunities may not be available to us. As of the date of this prospectus, this provision of our amended and restated certificate of incorporation relates only to the Apollo Designees, the Co-Investor Designee, and the Koch Investor Designee. There are currently ten directors of the Company, six of whom are Apollo Designees, one of which is a Co-Investor Designee and one of which is a Koch Investor Designee. These potential conflicts of interest could have a material adverse effect on our business, financial condition, results of operations, or prospects if attractive corporate opportunities are allocated by Apollo, the Co-Investor, or the Koch Investor to itself or their respective portfolio companies, funds, or other affiliates instead of to us. A description of our obligations related to corporate opportunities under our amended and restated certificate of incorporation are more fully described in “Description of Capital Stock—Corporate Opportunity.”

We are a holding company and rely on dividends, distributions, and other payments, advances, and transfers of funds from our subsidiaries to meet our obligations.

We are a holding company that does not conduct any business operations of our own. As a result, we are largely dependent upon cash dividends and distributions and other transfers, including for payments in respect of our indebtedness, from our subsidiaries to meet our obligations. The agreements governing the indebtedness of our subsidiaries impose restrictions on our subsidiaries’ ability to pay dividends or other distributions to us. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” Each of our subsidiaries is a distinct legal entity, and under certain circumstances legal and contractual restrictions may limit our ability to obtain cash from them and we may be limited in our ability to cause any future joint ventures to distribute their earnings to us. The deterioration of the earnings from, or other available assets of, our subsidiaries for any reason could also limit or impair their ability to pay dividends or other distributions to us.

Investors in this offering will experience immediate and substantial dilution.

Based on our pro forma net tangible book value per share as of September 30, 2017 and an assumed initial public offering price of $ per share (the midpoint of the range set forth on the cover of this prospectus), purchasers of our common stock in this offering will experience an immediate and substantial dilution of $ per share, representing the difference between our pro forma net tangible book value per share and the assumed initial public offering price. This dilution is due in large part to earlier investors having paid substantially less than the initial public offering price when they purchased their shares. See “Dilution.”

You may be diluted by the future issuance of additional common stock or convertible securities in connection with our incentive plans, acquisitions or otherwise, which could adversely affect our stock price.

After the completion of this offering, we will have shares of common stock authorized but unissued (assuming no exercise of the underwriters’ over-allotment option). Our amended and restated certificate of incorporation will authorize us to issue these shares of common stock and options, rights, warrants and appreciation rights relating to common stock for the consideration and on the terms and conditions established by our Board of Directors in its sole discretion, whether in connection with acquisitions or otherwise. At the closing of this offering, we will have options outstanding, which are exercisable into shares of common stock. We have reserved shares for issuance upon exercise of outstanding stock options and for issuances under our 2016 Equity Incentive Plan and our new equity incentive plan. See “Executive Compensation—2018 Omnibus Incentive Plan.” Any common stock that we issue, including under our new equity incentive plan or other equity incentive plans that we may adopt in the future, as well as under outstanding options would dilute the percentage ownership held by the investors who purchase common stock in this offering.

From time to time in the future, we may also issue additional shares of our common stock or securities convertible into common stock pursuant to a variety of transactions, including acquisitions. Our issuance of additional shares of our common stock or securities convertible into our common stock would dilute your ownership of us and the sale of a significant amount of such shares in the public market could adversely affect prevailing market prices of our common stock.

Future sales of our common stock in the public market, or the perception in the public market that such sales may occur, could reduce our stock price.

After the completion of this offering and the use of proceeds therefrom, we will have outstanding shares of common stock outstanding. The number of outstanding shares of common stock includes shares beneficially owned by Apollo and certain of our employees, that are “restricted securities,” as defined under Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), and eligible for sale in the public market subject to the requirements of Rule 144. We, each of our officers and directors, Apollo and substantially all of our existing stockholders have agreed that (subject to certain exceptions), for a period of 180 days after the date of this prospectus, we and they will not, without the prior written consent of certain underwriters dispose of any shares of common stock or any securities convertible into or exchangeable for our common stock. See “Underwriting (Conflict of Interest).” Following the expiration of the applicable lock-up period, all of the issued and outstanding shares of our common stock will be eligible for future sale, subject to the applicable volume, manner of sale, holding periods, and other limitations of Rule 144. Certain underwriters may, in their sole discretion, release all or any portion of the shares subject to lock-up agreements at any time and for any reason. In addition, Apollo has certain rights to require us to register the sale of common stock held by Apollo including in connection with underwritten offerings. Sales of significant amounts of stock in the public market upon expiration of lock-up agreements, the perception that such sales may occur, or early release of any lock-up agreements, could adversely affect prevailing market prices of our common stock or make it more difficult for you to sell your shares of common stock at a time and price that you deem appropriate. See “Shares Eligible for Future Sale” for a discussion of the shares of common stock that may be sold into the public market in the future.

There can be no assurances that a viable public market for our common stock will develop.

Prior to this offering, our common stock was not traded on any market. An active, liquid, and orderly trading market for our common stock may not develop or be maintained after this offering. Active, liquid, and orderly trading markets usually result in less price volatility and more efficiency in carrying out investors’ purchase and sale orders. We cannot predict the extent to which investor interest in our common stock will lead to the development of an active trading market on the or otherwise or how liquid that market might

become. The initial public offering price for the common stock will be determined by negotiations between us and the representatives of the underwriters and may not be indicative of prices that will prevail in the open market following this offering. See “Underwriting (Conflict of Interest).” If an active public market for our common stock does not develop, or is not sustained, it may be difficult for you to sell your shares at a price that is attractive to you or at all.

The initial public offering price of our common stock may not be indicative of the market price of our common stock after this offering.

The initial public offering price was determined by negotiations between us and representatives of the underwriters, based on numerous factors which we discuss in “Underwriting (Conflict of Interest),” and may not be indicative of the market price of our common stock after this offering. If you purchase our common stock, you may not be able to resell those shares at or above the initial public offering price.

If securities or industry analysts do not publish research or reports about our business or publish negative reports, our stock price could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. Moreover, if one or more of the analysts who cover our company downgrades our common stock or if our operating results do not meet their expectations, our stock price could decline.

We may issue preferred securities, the terms of which could adversely affect the voting power or value of our common stock.

Our amended and restated certificate of incorporation will authorize us to issue, without the approval of our stockholders, one or more classes or series of preferred securities having such designations, preferences, limitations, and relative rights, including preferences over our common stock respecting dividends and distributions, as our board of directors may determine. The terms of one or more classes or series of preferred securities could adversely impact the voting power or value of our common stock. For example, we might grant holders of preferred securities the right to elect some number of our directors in all events or on the happening of specified events or the right to veto specified transactions. Similarly, the repurchase or redemption rights or liquidation preferences we might assign to holders of preferred securities could affect the residual value of the common stock.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements, which involve risks and uncertainties. These forward-looking statements are generally identified by the use of forward-looking terminology, including the terms “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and, in each case, their negative or other various or comparable terminology. All statements other than statements of historical facts contained in this prospectus, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management, and expected market growth are forward-looking statements. The forward-looking statements are contained principally in the sections entitled “Prospectus Summary,” “Risk Factors,” “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business” and include, among other things, statements relating to:

•

our strategy, outlook and growth prospects;

•

our operational and financial targets and dividend policy;

•

general economic trends and trends in the industry and markets; and

•

the competitive environment in which we operate.

These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Important factors that could cause our results to vary from expectations include, but are not limited to:

•

our ability to keep pace with the rapid technological and industry changes in order to develop or acquire new technologies for our products and services that achieve market acceptance with acceptable margins;

•

competition in the markets we serve, including the home automation market, which may result in pressure on our profit margins and limit our ability to maintain the market share of our products and services;

•

our reliance on retaining customers for long periods of time;

•

an increase in the rate of customer revenue attrition;

•

our reputation as a service provider of high quality security offerings may be materially adversely affected by product defects or shortfalls in customer service;

•

our susceptibility to general economic conditions, changes in the housing market, and consumer discretionary income;

•

credit risk associated with our subscribers;

•

any change to the insurance industry practice of providing incentives to homeowners for the use of alarm monitoring services;

•

risks associated with investing in new business, services and technologies outside the traditional security and interactive services market, which could disrupt our operations;

•

failure to successfully upgrade and maintain the security of our information and technology networks;

•

failure to comply with laws, regulations and industry standards addressing information and technology networks, privacy, and data security could lead to penalties, liability, and reputational harm;

•

our products may be subject to potential vulnerabilities of wireless and IoT devices and our services may be subject to risks including hacking or other unauthorized access to control or view systems and obtain private information;

•

our dependence on third-party providers and suppliers;

•

disruptions in our ability to provide security monitoring services and otherwise serve our customers;

•

risks associated with our independent, third-party authorized dealers, who may not be able to mitigate risks associated with information technology breaches, data security breaches, product liability, errors and omissions, and marketing compliance;

•

risks associated with pursuing business opportunities that diverge from our current business model;

•

risks associated with the continuing integration of The ADT Corporation with our business;

•

any failure of our customer generation strategies;

•

failure to continue to develop and execute a competitive yet profitable pricing structure;

•

risks associated with acquiring and integrating customer accounts;

•

shifts in customers’ choice of, or telecommunication providers’ support for, telecommunication services and equipment;

•

unauthorized use of our brand names by third parties;

•

third parties hold rights to certain key brand names outside of the United States and Canada;

•

infringement of our intellectual property rights and allegations that we have infringed the intellectual property rights of third parties;

•

failure of our independent, third-party authorized dealers to mitigate certain risks;

•

credit risk and other risks associated with our dealers;

•

current and potential securities litigation;

•

increasing government regulation of telemarketing, email marketing, door-to-door sales, and other marketing methods;

•

we operate in a regulated industry;

•

penalties for false alarms;

•

police departments could refuse to respond to calls from monitored security service companies;

•

adoption of statutes and governmental policies purporting to characterize certain of our charges as unlawful may materially adversely affect our business;

•

providers of Internet access may block our services or charge their customers more for using our services;

•

goodwill and other identifiable intangible assets represent a significant portion of our total assets, and we may never realize the full value of our intangible assets;

•

potential that the benefit of our deferred tax assets may not be realized;

•

we are exposed to greater risks of liability for employee acts or omissions or system failures than may be inherent in other businesses;

•

any inability to hire and retain key personnel, including an effective sales force and our senior management;

•

loss of senior management could cause disruption in our business;

•

any adverse developments in our relationship with our employees;

•

we may be required to make indemnification payments relating to The ADT Corporation’s separation from Tyco;

•

we may be subject to liability for obligations of The Brink’s Company under the Coal Act;

•

we may not be able to raise additional capital due to our substantial indebtedness;

•

we may incur more debt, which could increase the risks associated with our substantial indebtedness;

•

we may not be able to generate sufficient cash to service all of our indebtedness and to fund our working capital and capital expenditures;

•

restrictions in our debt agreements limiting our flexibility in operating our business;

•

a significant portion of our assets is pledged as collateral under our debt agreements;

•

risks associated with the interest rate due to our variable rate indebtedness;

•

fluctuations in our stock price;

•

the significant costs and time associated with operating as a public company;

•

risks associated with being controlled by Apollo and a “controlled company” within the meaning of the NYSE rules, including that Apollo’s interests may conflict with our own and the interests of our stockholders;

•

our organizational documents may impede or discourage a takeover;

•

we are a holding company and rely on dividends, distributions and other payments, advances and transfers of funds from our subsidiaries;

•

investors will experience immediate and substantial dilution in this offering and future dilution due to future issuances of common stock or convertible securities in connection with our incentive plans, acquisitions, or otherwise;

•

future sales of our common stock could lead to stock price reductions;

•

there are no assurances that a public market will develop for our stock;

•

the initial public offering price may not be indicative of the market price of our common stock;

•

stock price declines if securities or industry analysts do not publish research or reports about our business or publish negative reports;

•

we may issue preferred securities, which could adversely affect the voting power and value of our common stock; and

•

other risks, uncertainties, and factors set forth in this prospectus, including those set forth under “Risk Factors.”

These forward-looking statements reflect our views with respect to future events as of the date of this prospectus and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. These forward-looking statements represent our estimates and assumptions only as of the date of this prospectus and, except as required by law, we undertake no obligation to update or review publicly any forward-looking statements, whether as a result of new information, future events, or otherwise after the date of this prospectus. We anticipate that subsequent events and developments will cause our views to change. You should read this prospectus and the documents filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect. Our forward-looking statements do not reflect the potential impact of any future acquisitions, merger, dispositions, joint ventures, or investments we may undertake. We qualify all of our forward-looking statements by these cautionary statements.

USE OF PROCEEDS

We expect to receive approximately $ of net proceeds (based upon the assumed initial public offering price of $ per share, the midpoint of the range set forth on the cover page of this prospectus and assuming no exercise of the underwriters’ over-allotment option) from the sale of the common stock offered by us, after deducting underwriting discounts and commissions and estimated offering expenses payable by us. Assuming no exercise of the underwriters’ over-allotment option, each $1.00 increase (decrease) in the public offering would increase (decrease) our net proceeds by approximately $ million. We estimate that the net proceeds to us, if the underwriters exercise their right to purchase the maximum of additional shares of common stock from us, will be approximately $ , after deducting underwriting discounts and commissions and estimated offering expenses payable by us in connection with this offering (based upon the assumed initial public offering price of $ per share, the midpoint of the range set forth on the cover page of this prospectus).

We currently expect to use (i) an amount equal to approximately $ million of the proceeds from this offering to redeem $ million aggregate principal amount of Prime Notes and pay the related call premium and (ii) approximately $ million of the proceeds from this offering to pay fees and expenses in connection with this offering, which include legal and accounting fees, SEC and FINRA registration fees, printing expenses, and other similar fees and expenses. Following this offering, there will be $ million aggregate principal amount of Prime Notes outstanding. In addition, we intend to deposit approximately $ million of the proceeds from this offering into a separate account, which amount will be used to redeem the Koch Preferred Securities on a date to be determined following the consummation of this offering. See “Description of Koch Preferred Securities.”

The Prime Notes, issued on May 2, 2016, mature on May 15, 2023 and bear interest at a rate of 9.250% per annum, payable semi-annually in arrears on May 15 and November 15 of each year, commencing on November 15, 2016. See “Description of Material Indebtedness—Prime Notes.”

Any remaining net proceeds will be used for general corporate purposes. While we currently have no specific plan for the use of the remaining net proceeds of this offering, we anticipate using a significant portion of these proceeds to implement our growth strategies, generate funds for working capital, and opportunistically repay outstanding indebtedness. Our management team will retain broad discretion to allocate the net proceeds of this offering. The precise amounts and timing of our use of any remaining net proceeds will depend upon market conditions, among other factors.

DIVIDEND POLICY

On February 16, 2017, we paid a dividend in an aggregate amount of $550 million to equity holders of the Company and Ultimate Parent, which included distributions to our Sponsor. On April 18, 2017, we paid an additional dividend of $200 million to equity holders of the Company and Ultimate Parent, which included distributions to our Sponsor. We did not declare any dividend in the years ended December 31, 2016, 2015 and 2014.

While the certificate of designation of the Koch Preferred Securities restricts the Company from paying dividends on its common stock, the Koch Investor has consented to a one-time distribution in an aggregate amount not to exceed $50 million, in the event the Company elects to declare and pay a dividend on its common stock prior to June 30, 2018. See “Description of Koch Preferred Securities.”

As a holding company, our ability to pay dividends depends on our receipt of cash dividends from our operating subsidiaries. Our ability to pay dividends will therefore be restricted as a result of restrictions on their ability to pay dividends to us under the Credit Facilities, the Prime Notes and the ADT Notes and under future indebtedness that we or they may incur. See “Risk Factors—Risks Related to this Offering and Ownership of our Common Stock,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and “Description of Material Indebtedness.”

CAPITALIZATION

The following table sets forth our cash and cash equivalents, non-current restricted cash and cash equivalents, and our capitalization as of September 30, 2017, on:

•

an actual basis;

•

a pro forma basis to give effect to this offering and the application of the net proceeds of this offering as described under “Use of Proceeds;” and

•

a pro forma as adjusted basis to give effect to the redemption of the Koch Preferred Securities in full including payment of the related redemption premium and other related amounts following the closing of this offering, assuming a redemption date of July 1, 2018 and assuming a five-year Treasury Rate of %. See “Description of the Koch Preferred Securities.”

You should read this table together with the information included elsewhere in this prospectus, including “Prospectus Summary—Summary Historical and Pro Forma Financial Information,” “Selected Historical Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our consolidated financial statements and related notes thereto.


	As of September 30, 2017
	Actual			Pro forma			Pro forma as adjusted ⁽⁵⁾
	(in thousands, except per share data)
Cash and cash equivalents ⁽¹⁾	$	170,657		$			$
Non-current restricted cash and cash equivalents		—			⁽¹	⁾

Total	$	170,657		$			$

Total debt ⁽²⁾	$	10,174,465		$	⁽⁴	⁾	$

Mandatorily redeemable preferred securities—authorized 1,000,000 shares Series A of $0.01 par value; issued and outstanding 750,000 shares of $0.01 par value as of September 30, 2017 ⁽³⁾		658,402						—

Stockholders’ Equity:
Common stock—$0.01 par value; 406,155,769 shares authorized, 381,372,799 shares issued and outstanding (actual); shares authorized, shares issued and outstanding (Pro forma); shares authorized, shares issued and outstanding (Pro forma as adjusted) ⁽⁶⁾		2
Additional paid-in capital ⁽³⁾		4,432,599
Accumulated deficit ⁽³⁾		(1,636,400	)
Accumulated other comprehensive income		501

Total stockholders’ equity		2,796,702

Total capitalization	$	13,629,569		$			$

(1)

In connection with this offering, the Company will deposit into a separate account an amount in cash equal to at least $750 million, which amount may only be used by the Company to redeem the Koch Preferred Securities at a date to be determined following the consummation of this offering. See “Description of Koch Preferred Securities.”

(2)	The Company’s total debt as of September 30, 2017 primarily includes the following:

•

a first lien term loan facility, in an aggregate principal amount of $3,545 million, with a maturity date of May 2, 2022 (the “First Lien Term Loan Facility”);

•

a first lien revolving credit facility, in an aggregate principal amount of up to $95 million, maturing on July 1, 2020, including a letter of credit sub-facility (the “2020 Revolving Credit Facility”);

•

a first lien revolving credit facility, in an aggregate principal amount of up to $255 million, maturing on May 2, 2021, including a letter of credit sub-facility and a swingline loan sub-facility (the “2021 Revolving Credit Facility”);

•

$3,140 million aggregate principal amount of 9.250% second-priority senior secured notes due 2023 (the “Prime Notes”), $ million aggregate principal amount of which will remain outstanding after the completion of this offering after giving effect to the application of the net proceeds therefrom. See “Use of Proceeds”; and

•

$3,519 million aggregate principal amount in six series of senior secured notes issued by The ADT Corporation (the “ADT Notes”).

As of September 30, 2017, the Company had $47 million of letters of credit issued but undrawn under the First Lien Credit Facilities. All of the material wholly owned domestic subsidiaries of the Company, subject to certain exceptions, guarantee the Credit Facilities, the Prime Notes and the ADT Notes. Prime Borrower has pledged its capital stock and substantially all of its assets and those of each subsidiary guarantor, including capital stock of the subsidiary guarantors and 65% of the capital stock of the first-tier foreign subsidiaries that are not subsidiary guarantors, in each case subject to exceptions. See “Description of Material Indebtedness” for a description of the Credit Facilities, the Prime Notes and the ADT Notes. Actual total debt, as of September 30, 2017, in the capitalization table above reflects net reduction in the aggregate of approximately $87 million from unamortized discount and debt issuance costs, partially offset by $13 million from accretion of purchase accounting fair value adjustments.

(3)

On May 2, 2016, the Company issued the Koch Preferred Securities and Ultimate Parent issued the Warrants to the Koch Investor for aggregate consideration of $750 million. Of this amount, $659 million, net of issuance costs of $27 million, was allocated to the Koch Preferred Securities and reflected as a liability in the Company’s consolidated balance sheet. The remaining $91 million in proceeds was allocated to the Warrants and was contributed by Ultimate Parent in the form of common equity to the Company, net of $4 million in issuance costs. Refer to Note 6 to the Company’s audited consolidated financial statements for additional information. In accordance with the definitive agreements governing the Koch Preferred Securities, following the consummation of this offering, the Company is required to maintain cash in an amount equal to at least $750 million in a separate account until the Koch Preferred Securities have been redeemed in full. The Company intends to fund this separate account with the proceeds of this offering. Amounts held in the separate account will be used to redeem the Koch Preferred Securities. The Company expects that additional amounts necessary to redeem the Koch Preferred Securities in full, including the payment of the related redemption premium and other related amounts, will be funded with cash on hand at the time of redemption. The Company is required to increase the amounts held in this separate account in certain circumstances, such as the completion of a public equity offering of our common stock. The Company expects that upon the redemption of the Koch Preferred Securities, the Company’s interest expense (dividends on the Koch Preferred Securities are recorded as interest expense) will be reduced by approximately $ million on an annual basis, assuming the Koch Preferred Securities are redeemed on July 1, 2018 and assuming a five-year Treasury Rate of %. See “Use of Proceeds” and “Description of Koch Preferred Securities.”

(4)

The Company intends to use approximately $ million of the proceeds from this offering to redeem $ million aggregate principal amount of Prime Notes and pay the related call premium. Following this offering, there will be $ million aggregate principal amount of Prime Notes outstanding. The Company expects that upon the redemption of the Prime Notes, the Company’s interest expense will be reduced by approximately $ million on an annual basis.

(5)	Assuming the Company redeems the Koch Preferred Securities in full, and pays the related redemption premium and other related amounts on July 1, 2018 and the calculation of all such amounts is based on a fixed daily five-year treasury rate of %.

(6)

Includes unvested shares of common stock issued and outstanding (Pro Forma) and (Pro Forma as adjusted), which were distributed in connection with the redemption of unvested Class B Units of TopCo Parent in connection with this offering, see “Executive Compensation—Looking Ahead—Post-IPO Compensation—Redemption of Class B Units.”

DILUTION

Purchasers of the common stock in this offering will experience immediate and substantial dilution to the extent of the difference between the initial public offering price per share of our common stock and the net tangible book value per share of our common stock as of September 30, 2017.

Our historical net tangible book deficit as of September 30, 2017 was $10,219 million, or $ per share. Our historical net tangible book deficit represents the amount of our total tangible assets (total assets less goodwill and total intangible assets) less total liabilities. Historical net tangible book deficit per share represents historical net tangible book value divided by the number of shares of common stock issued and outstanding as of September 30, 2017.

Our pro forma net tangible book deficit as of September 30, 2017 was $ million, or $ per share of our common stock. Pro forma net tangible book deficit per share represents our pro forma net tangible book deficit divided by the total number of shares outstanding as of September 30, 2017, after giving effect to the sale of shares of common stock in this offering at the assumed initial public offering price of $ per share (the midpoint of the estimated price range on the cover page of this prospectus) and the application of the net proceeds from this offering.

The following table illustrates the dilution per share of our common stock, assuming the underwriters do not exercise their over-allotment option:


Assumed initial public offering price per share			$
Historical net tangible book deficit per share as of September 30, 2017	$	26.80
Increase per share attributable to the pro forma adjustments described above
Pro forma net tangible book deficit per share after this offering
Dilution in net tangible book deficit per share			$

Dilution is determined by subtracting pro forma as adjusted net tangible book deficit per share after this offering from the initial public offering price per share of common stock.

The following table summarizes, as of September 30, 2017, the total number of shares of common stock owned by existing stockholders and to be owned by new investors, the total consideration paid, and the average price per share paid by our existing stockholders and to be paid by new investors in this offering at the assumed initial public offering price of $ per share, calculated before deduction of estimated underwriting discounts and commissions.


	Shares Purchased				Total Consideration				Average Price per Share
	Number	Percent			Amount	Percent			Average Price per Share
Existing stockholders				%	$			%	$
Investors in the offering				%				%
Total			100	%	$		100	%	$

To the extent the underwriters’ over-allotment option is exercised, there will be further dilution to new investors.

A $1.00 increase (decrease) in the assumed initial public offering price of $ would increase (decrease) total consideration paid by new investors, total consideration paid by all stockholders and average price per share of the midpoint of the range (as set forth on the cover page of this prospectus) by $ million, $ million and $ per share, respectively, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and without deducting underwriting discounts and commissions and estimated expenses payable by us.

If the underwriters were to fully exercise their over-allotment option, the percentage of common stock held by existing investors would be %, and the percentage of shares of common stock held by new investors would be %.

Except as otherwise indicated, all of the information in this prospectus assumes:

•

an initial public offering price of $ per share of common stock, the midpoint of the price range set forth on the cover page of this prospectus;

•

no exercise of the underwriters’ over-allotment option to purchase up to additional shares of common stock in this offering; and

•

does not reflect 2,848,419 shares of common stock that may be issued upon the exercise of options outstanding as of the consummation of this offering issued under our 2016 Equity Incentive Plan. See “Shares Eligible for Future Sales”. No further issuances of securities shall take place under the Equity Incentive Plan. The following table sets forth the outstanding stock options under the Equity Incentive Plan as of December 19, 2017;


	Number of Options ⁽¹⁾		Weighted-Average Exercise Price Per Share
Vested stock options (service-based vesting)		176,944	$	11.07

Unvested stock options (service-based vesting)		1,236,293	$	11.46

Unvested stock options (performance-based vesting)		1,435,182	$	11.41

(1)

Upon a holder’s exercise of one option, the Company shall issue to such holder one share of common stock.

•

does not reflect unvested shares of common stock and shares of common stock that may be issued upon exercise of stock options issued under the ADT Inc. 2018 Omnibus Incentive Plan in connection with the redemption of Class B Units of Ultimate Parent in connection with this offering. See “Executive Compensation—Looking Ahead—Post-IPO Compensation—Redemption of Class B Units.” The table below sets forth the number of shares of vested and unvested common stock (subject to certain transfer restrictions), in the aggregate, that would be distributed in connection with redemption of Class B Units of Ultimate Parent, and the number of stock options, in the aggregate, that would be granted in connection with redemption of Class B Units of Ultimate Parent in connection with this offering, assuming, in each case an initial public offering price of $ per share of common stock, the midpoint of the price range set forth on the cover page of this prospectus.


	Number of Shares or Options ⁽³⁾	Weighted-Average Exercise Price Per Share
Vested distributed shares of common stock ⁽¹⁾ (service-based vesting)			n/a
Unvested distributed shares of common stock ⁽¹⁾ (service-based vesting)			n/a
Unvested distributed shares of common stock ⁽¹⁾ (performance-based vesting)			n/a
Vested stock options ⁽²⁾ (service-based vesting)		$

Unvested stock options ⁽²⁾ (service-based vesting)		$

Unvested stock options ⁽²⁾ (performance-based vesting)		$

(1)

Distributed shares of common stock (whether vested or unvested) are subject to certain transfer restrictions set forth in our Amended and Restated Management Investor Rights Agreement.

(2)

Upon a holder’s exercise of one option, the Company will issue to such holder one share of common stock.

(3)

The calculations below assume an initial public offering price of $ per share of common stock, the midpoint of the price range set forth on the cover page of this prospectus. A $1.00 increase in the assumed initial public offering price would (a) increase the number of shares of common stock that would be distributed to our employees in connection with the redemption of the Class B Units by shares of common stock and (b) decrease the stock options granted to certain employees by stock options. A $1.00 decrease in the assumed initial public offering price would (a) decrease the number of shares of common stock that would be distributed to certain employees by shares of common stock and (b) increase the stock options granted to our employees by stock options. The distributed shares (whether vested or unvested) reflect an in-kind distribution of the common stock held by Ultimate Parent, while the granted options preserve the intended percentage of the future appreciation of Ultimate Parent that the Class B Units would have been allocated had such Class B Units not been redeemed in connection with this offering. As a result, and as indicated above, a change in the initial public offering price creates an opposite effect on the number of common stock and the number of stock options to be distributed.

We may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of such securities could result in further dilution to our stockholders.

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

The selected financial data presented in the table below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus. The selected historical consolidated statements of operations data for the nine months ended September 30, 2017 and September 30, 2016 has been derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus and which, in the opinion of management, contain all normal recurring adjustments necessary for a fair statement of the results for the unaudited interim periods and have been prepared on the same basis as the Successor audited consolidated financial statements. The selected historical consolidated balance sheet data as of December 31, 2016 and December 31, 2015 (Successor) and the selected historical consolidated statements of operations data for the year ended December 31, 2016, for the periods from May 15, 2015 through December 31, 2015 (Successor) and January 1, 2015 through June 30, 2015 (Predecessor), and for the year ended December 31, 2014 (Predecessor), have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The selected historical consolidated balance sheet data as of December 31, 2014, December 31, 2013, and December 31, 2012 and the selected historical consolidated statements of operations data for the years ended December 31, 2013, and December 31, 2012, have been derived from our audited consolidated financial statements not included in this prospectus. The selected historical consolidated balance sheet data as of September 30, 2016 has been derived from our unaudited condensed consolidated financial statements not included in this prospectus.

Prior to the Formation Transactions on July 1, 2015, ADT Inc. was a holding company with no assets or liabilities, and Protection One is the predecessor of ADT Inc. for accounting purposes. Our historical financial data through June 30, 2015 consists solely of Protection One’s historical financial data. From July 1, 2015, which was also the date of the ASG Acquisition, our selected financial data includes ASG’s financial data in addition to the financial data of Protection One. Additionally, on May 2, 2016, we acquired The ADT Corporation. Our selected financial data beginning May 2, 2016 also includes The ADT Corporation’s selected financial data.

You should read the following information together with “Risk Factors,” “Use of Proceeds,” “Capitalization,” “Unaudited Pro Forma Condensed Combined Financial Information,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our historical consolidated financial statements and related notes included elsewhere in this prospectus. Historical results are not necessarily indicative of the results to be expected in the future, and interim financial results are not necessarily indicative of results that may be expected for the full fiscal year.


	Successor												Predecessor
	Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016 ^(a)			Year Ended December 31, 2016 ^(a)			From Inception through December 31, 2015 ^(a)			Period from January 1, 2015 through June 30, 2015			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012
	(in thousands, except per share data)
Statement of Operations Data:
Total revenue	$	3,209,970		$	1,898,614		$	2,949,766		$	311,567		$	237,709		$	466,557		$	429,277		$	373,283
Operating income (loss)		187,412			(304,329	)		(229,315	)		(39,774	)		11,232			42,302			26,138			61,302
Net loss		(295,561	)		(451,642	)		(536,587	)		(54,253	)		(18,591	)		(18,488	)		(38,585	)		(12,175	)
Net loss per share:
Basic and diluted	$	(0.78	)	$	(1.18	)	$	(1.41	)	$	(0.14	)	$	(185,910	)	$	(184,880	)	$	(385,850	)	$	(121,750	)
Weighted average shares used to compute net loss per share		381,357			381,156			381,157			381,156			0.1			0.1			0.1			0.1
Cash dividends per share	$	1.97			—			—			—			—			—			—			—
Balance Sheet Data (at period end):
Cash and cash equivalents	$	170,657		$	163,027		$	75,891		$	15,759					$	89,834		$	3,365		$	5,634
Total assets ^(b)		17,086,997			17,333,976			17,176,481			2,319,515						1,099,531			1,011,930			969,500
Total debt ^(b)		10,174,465			9,489,221			9,509,970			1,346,958						872,904			775,910			722,353
Mandatorily redeemable preferred securities ^(c)		658,402			633,277			633,691			—						—			—			—
Total liabilities ^(b)		14,290,295			13,455,292			13,371,505			1,616,618						1,057,639			955,882			877,887
Total stockholders’ equity ^(c)(d)		2,796,702			3,878,684			3,804,976			702,897						41,892			56,048			91,613

(a)

During the third quarter of 2015 and second quarter of 2016, we completed the Formation Transactions and the ADT Acquisition, respectively. The impact of these transactions on our operating results has been included from the dates of these acquisitions. See the notes to the consolidated financial statements included elsewhere in this prospectus for details of these acquisitions.

(b)	Total assets and total liabilities for 2015, 2014, 2013, and 2012 were adjusted to reflect the impact of the accounting standards adopted in 2016 related to the presentation of debt issuance costs and income tax. Total debt for these years

was also adjusted to reflect the impact from the accounting standard adoption related to the presentation of debt issuance costs.

(c)

(d)

During the nine months ended September 30, 2017, we paid $750 million of dividends to certain investors of the Company and Ultimate Parent, which primarily includes distributions to our Sponsor. Such dividends are presented on the condensed consolidated statement of stockholders’ equity for the nine months ended September 30, 2017.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined financial information and explanatory notes, which have been prepared pursuant to Article 11 of Regulation S-X, give effect to the following transactions:

•

the ADT Acquisition, which we completed on May 2, 2016; and

•

the completion of this offering (assuming the issuance and sale by the Company of shares of common stock at an offering price of $ per share, which represents the midpoint of the price range set forth on the cover page of this prospectus, generating estimated net proceeds of $ million after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us), and the use of the proceeds from this offering as described in the section entitled “Use of Proceeds.”

The historical condensed consolidated financial information of the Company as of and for the nine months ended September 30, 2017 has been derived from our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus. The historical consolidated financial information of the Company for the year ended December 31, 2016 has been derived from our audited consolidated financial statements included elsewhere in this prospectus. The ADT Corporation’s historical consolidated statement of operations data for the period from January 1, 2016 through May 1, 2016 has been derived from (a) The ADT Corporation’s historical unaudited consolidated statement of operations for the three months ended March 31, 2016 included elsewhere in this prospectus, and (b) The ADT Corporation’s historical unaudited consolidated statement of operations for the period April 1, 2016 to May 1, 2016 not included in the prospectus. The table in Note 1 to the “Notes to the Unaudited Pro Forma Financial Information” illustrates this derivation. The historical financial information of the Company and The ADT Corporation is presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) with all amounts stated in United States dollars. The impact of the ADT Acquisition has been fully reflected in the Company’s historical condensed consolidated financial statements as of and for the nine-month period ended September 30, 2017.

The unaudited pro forma condensed combined balance sheet gives effect to the transactions described above as if they had occurred on September 30, 2017 to the extent they have not been fully reflected in the historical consolidated financial statements. The unaudited pro forma statements of operations for the nine months ended September 30, 2017 and for the year ended December 31, 2016 give effect to the transactions described above as if they occurred on January 1, 2016.

The unaudited condensed combined pro forma financial information set forth below is based upon available information and assumptions that we believe are reasonable. The historical financial information has been adjusted to give effect to pro forma events that are (1) directly attributable to the transactions, (2) factually supportable, and (3) with respect to the statements of operations, expected to have a continuing impact on the combined results. The unaudited pro forma condensed combined financial information is for illustrative and informational purposes only and is not intended to represent or be indicative of what our financial condition or results of operations would have been had the above transactions occurred on the dates indicated. The unaudited pro forma condensed combined financial information also should not be considered representative of our future financial condition or results of operations. The unaudited pro forma statements of operations do not reflect projected realization of revenue synergies and cost savings.

In addition, the pro forma condensed consolidated financial information should be read in conjunction with:

•

the accompanying notes, referred to herein as the notes to the unaudited condensed combined pro forma financial information;

•

the Company’s historical audited and unaudited consolidated financial statements and the related notes included elsewhere in this prospectus;

•

The ADT Corporation’s unaudited consolidated financial statements and the related notes included in this prospectus; and

•

the sections of this prospectus titled “Prospectus Summary—Summary Historical and Pro Forma Financial Information,” “Selected Historical Consolidated Financial and Other Data,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

ADT Inc.

Unaudited Pro Forma Condensed Combined Balance Sheet

As of September 30, 2017

(in thousands, except for share and per share data)


	ADT Inc. Historical			Offering Adjustments (Note 3)			Pro Forma (ADT Acquisition and Completion of Offering)
Assets
Current Assets:
Cash and cash equivalents	$	170,657			3	(a)
Current portion of restricted cash and cash equivalents		3,881
Accounts receivable trade, less allowance for doubtful accounts		134,243
Inventories		86,311
Work-in-progress		23,796
Prepaid expenses and other current assets		73,855

Total current assets		492,743
Property and equipment, net		342,513
Subscriber system assets, net		2,891,939
Intangible assets, net		7,974,823
Goodwill		5,041,262
Deferred subscriber acquisition costs, net		258,192
Non-current restricted cash and cash equivalents		—			3	(c)
Other assets		85,525

Total Assets	$	17,086,997

Liabilities and Stockholders’ Equity
Current Liabilities:
Current maturities of long-term debt	$	44,456
Accounts payable		199,774
Deferred revenue		315,483
Accrued expenses and other current liabilities		398,750

Total current liabilities		958,463
Long-term debt		10,130,009			3	(b)
Mandatorily redeemable preferred securities—authorized 1,000,000 shares Series A of $0.01 par value; issued and outstanding 750,000 shares of $0.01 par value as of September 30, 2017		658,402
Deferred subscriber acquisition revenue		324,340
Deferred tax liabilities		2,077,656
Other liabilities		141,425

Total Liabilities		14,290,295

Stockholders’ Equity:
Common stock—authorized 406,155,769 shares of $0.01 par value; issued and outstanding shares—381,372,799 (historical); shares authorized, shares issued and outstanding (pro forma)		2			3	(d)
Additional paid-in capital		4,432,599			3	(d)
Accumulated deficit		(1,636,400	)		3	(e)
Accumulated other comprehensive income		501

Total Stockholders’ Equity		2,796,702

Total Liabilities and Stockholders’ Equity	$	17,086,997

(a)	In accordance with Article 11 of Regulation S-X, these pro forma financial statements give effect to the ADT Acquisition and the completion of this offering, including the issuance of common stock and the use of proceeds therefrom, as described under “Use of Proceeds.”

The accompanying notes are an integral part of this Unaudited Pro Forma Condensed Combined Balance

Sheet.

ADT Inc.

Unaudited Pro Forma Condensed Combined Statement of Operations

Nine Months Ended September 30, 2017

(in thousands, except per share data)


	ADT Inc. Historical			Offering Adjustments (Note 3)			Pro Forma (ADT Acquisition and Completion of Offering) ^(a)
Monitoring and related services	$	3,017,026
Installation and other		192,944

Total Revenue		3,209,970
Cost of revenue		658,095
Selling, general and administrative expenses		923,048			3	(f)
Depreciation and intangible asset amortization		1,387,245
Merger, restructuring, integration, and other costs		54,170

Operating income		187,412
Interest expense, net		(553,529	)		3	(g)
Other income		31,634

Loss before income taxes		(334,483	)
Income tax benefit		38,922			3	(h)

Net loss	$	(295,561	)

Loss per share:
Basic and diluted	$	(0.78	)					3	(i)
Weighted average shares:
Basic and diluted		381,357						3	(i)

(a)	In accordance with Article 11 of Regulation S-X, these pro forma financial statements give effect to the ADT Acquisition and the completion of this offering, including the issuance of common stock and the use of proceeds therefrom, as described under “Use of Proceeds.”

The accompanying notes are an integral part of this Unaudited Pro Forma Condensed Combined Statement of Operations.

ADT Inc.

Unaudited Pro Forma Condensed Combined Statement of Operations

Year Ended December 31, 2016

(in thousands, except per share data)


	ADT Inc. Historical			The ADT Corporation Historical (Note 1)			Acquisition Adjustments (Note 2)				Subtotal			Offering Adjustments (Note 3)		Pro Forma (ADT Acquisition and Completion of Offering) ^(a)
Monitoring and related services	$	2,748,222		$	1,143,357		$	62,845		2(a)	$	3,954,424
Installation and other		201,544			69,352			(58,404	)	2(a)		212,492

Total Revenue	$	2,949,766		$	1,212,709		$	4,441		2(a)	$	4,166,916
Cost of revenue		693,430			176,259			—				869,689
Selling, general and administrative expenses		858,896			425,315			(45,288	)	2(b)		1,238,923			3(f)
Depreciation and intangible asset amortization		1,232,967			394,827			61,370		2(c)		1,689,164
Merger, restructuring, integration, and other costs		393,788			46,595			(354,197	)	2(d)		86,186

Operating (loss) income		(229,315	)		169,713			342,556				282,954
Interest expense, net		(521,491	)		(71,605	)		(157,174	)	2(e)		(750,270	)		3(g)
Other (expense) income		(51,932	)		244			—				(51,688	)

(Loss) income before income taxes		(802,738	)		98,352			185,382				(519,004	)
Income tax benefit (expense)		266,151			(31,869	)		(71,187	)	2(f)		163,095			3(h)

Net (loss) income	$	(536,587	)	$	66,483		$	114,195			$	(355,909	)

Loss per share:
Basic and diluted	$	(1.41	)														3	(i)
Weighted average shares:
Basic and diluted		381,157															3	(i)

(a)	In accordance with Article 11 of Regulation S-X, these pro forma financial statements give effect to the ADT Acquisition and the completion of this offering, including the issuance of common stock and the use of proceeds therefrom, as described under “Use of Proceeds.”

The accompanying notes are an integral part of this Unaudited Pro Forma Condensed Combined Statement of Operations.

NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION

1. The ADT Corporation Historical

The ADT Corporation Historical information presented in the table above presents The ADT Corporation Historical results for the period ended May 1, 2016, after Reclassification, as set forth below.

The ADT Corporation Acquisition

On May 2, 2016, the Company completed its acquisition of The ADT Corporation. Total consideration in connection with the ADT Acquisition was $12,114 million, which includes the assumption of The ADT Corporation’s outstanding debt (inclusive of capital lease obligations) at fair value of $3,551 million, and cash of $54 million on the acquisition date.

The Company funded the ADT Acquisition, as well as amounts due for merger costs, using the net proceeds from a combination of the following:

(i)

equity proceeds of $3,571 million, net of issuance costs, which resulted from equity issuances by the Company and Ultimate Parent to our Sponsor and certain other investors;

(ii)

incremental first lien term loan borrowings of $1,555 million and the issuance of $3,140 million of Prime Notes; and

(iii)

issuance by the Company of 750,000 shares of Series A preferred securities (the “Koch Preferred Securities”) and issuance by Ultimate Parent of the Warrants to the Koch Investor for an aggregate amount of $750 million. The Company allocated $659 million to the Koch Preferred Securities, which is reflected net of issuance costs of $27 million as a liability in the Company’s historical consolidated balance sheet. The Company allocated the remaining $91 million in proceeds to the Warrants, which proceeds were contributed by Ultimate Parent in the form of common equity to the Company, net of $4 million in issuance costs.

Accounting Policies

The Company reviewed the accounting policies of The ADT Corporation and is not aware of any accounting policy differences between the Company and The ADT Corporation that would have a material impact on the Company’s consolidated financial statements. The unaudited pro forma financial information, therefore, assumes there are no differences in accounting policies between the two companies.

The ADT Corporation Historical Presentation

The ADT Corporation’s historical condensed combined statement of operations data for the period January 1, 2016 to May 1, 2016 has been derived by adding the historical unaudited condensed consolidated statement of operations for the three months ended March 31, 2016 and the historical unaudited condensed consolidated statement of operations for the period April 1, 2016 to May 1, 2016, as illustrated in the table below:

The ADT Corporation

Condensed Combined Statements of Operations

(unaudited)

(in thousands)


	Three Months Ended March 31, 2016			Period from April 1, 2016 to May 1, 2016			The ADT Corporation Historical for the period ended May 1, 2016
Monitoring and related services	$	848,322		$	295,035		$	1,143,357
Installation and other		51,347			18,005			69,352

Total revenue	$	899,669		$	313,040		$	1,212,709
Cost of revenue		404,181			139,193			543,374
Selling, general and administrative expenses		325,682			140,529			466,211
Radio conversion costs		26,179			7,232			33,411

Operating income		143,627			26,086			169,713
Interest expense, net		(53,380	)		(18,225	)		(71,605	)
Other income		4			240			244

Income before income taxes		90,251			8,101			98,352
Income tax expense		(27,859	)		(4,010	)		(31,869	)

Net income	$	62,392		$	4,091		$	66,483

Reclassifications

The ADT Corporation’s historical presentation of certain expenses has been reclassified to conform to the Company’s presentation as follows:


	Before Reclassification		Reclassification			Note			After Reclassification
	(in thousands)
Cost of revenue	$	543,374	$	(367,115	)		(i	)	$	176,259
Selling, general and administrative expenses		466,211		(40,896	)		(i), (ii), (iii	)		425,315
Radio conversion costs		33,411		(33,411	)		(ii	)		—
Depreciation and intangible asset amortization		—		394,827			(i	)		394,827
Merger, restructuring, integration, and other costs		—		46,595			(iii	)		46,595

(i)

To reclassify amortization on dealer and customer intangible assets and depreciation on subscriber system assets historically recorded to cost of revenue, and depreciation on property and equipment and other intangible assets historically recorded to selling, general and administrative expenses, to conform to the Company’s presentation as depreciation and intangible asset amortization.

(ii)	To reclassify radio conversion costs to conform to the Company’s presentation as selling, general and administrative expenses.

(iii)

To reclassify certain merger, restructuring, integration, and other costs historically recorded to selling, general and administrative expenses, to conform to the Company’s presentation as merger, restructuring, integration and other costs.

2. Acquisition Adjustments

Pro Forma Adjustments

Unaudited Pro Forma Condensed Combined Statements of Operations—Year Ended December 31, 2016

(a)	Reflects the impact of:

(i)

the reversal of a purchase accounting adjustment related to the write-down to fair value of deferred revenue associated with services not yet rendered of $63 million that is directly related to the ADT Acquisition, but does not have a continuing impact on the Company; and

(ii)

the elimination of The ADT Corporation historical amortization of deferred installation revenue of $58 million as a result of the purchase price allocation for the ADT Acquisition as if the acquisition had occurred on January 1, 2016 because the application of this purchase accounting adjustment has a continuing impact on the Company.

(b)	Reflects the impact of:

(i)

the elimination of The ADT Corporation historical amortization of deferred subscriber acquisition costs of $52 million as a result of the purchase price allocation for the ADT Acquisition as if the acquisition had occurred on January 1, 2016 because the application of this purchase accounting adjustment has a continuing impact on the Company; and

(ii)

an increase in management fees of $7 million associated with the Management Consulting Agreement directly related to the ADT Acquisition as if the acquisition had occurred on January 1, 2016 because it has a continuing impact on the Company due to the term of the agreement (see “Certain Relationships and Related Party Transactions—Management Consulting Agreement”).

(c)	To record the following net increase in depreciation and intangible asset amortization as a result of the purchase price allocation associated with the ADT Acquisition:


	Year Ended December 31, 2016
	(in thousands)
Amortization of intangible assets(i)	$	281,133
Subscriber system assets and property and equipment depreciation(ii)		175,064
Elimination of historical The ADT Corporation depreciation and intangible asset amortization expense		(394,827	)

Net pro forma adjustment	$	61,370

(i)

Primarily consists of amortization of customer relationships and dealer relationships under the ADT Authorized Dealer Program (as defined herein). As of the date of the ADT Acquisition, customer relationships have a weighted average remaining useful life of approximately 6 years, and are amortized on an accelerated basis. The following table summarizes the amortization expense associated with the $4,676 million related to customer relationships acquired as part of the ADT Acquisition:


Pro forma amortization of customer relationships (in thousands):
Year 1	$	750,043
Year 2		750,043
Year 3		750,043
Year 4		726,621
Year 5		638,818

The Company maintains agreements with a network of third-party independent alarm dealers who sell alarm equipment and ADT Authorized Dealer-branded monitoring and interactive services to end users (the “ADT Authorized Dealer Program”). The dealers of this program generate new end user contracts with customers which

the Company has the right, but not the obligation, to purchase from the dealer. The Company may charge back the acquisition cost of any end user contract if the end user contract is cancelled during the charge-back period, generally twelve to fifteen months from acquisition by the Company. Dealer relationships have a remaining life of 19 years and are amortized on a straight-line basis.

(ii)

As of The ADT Corporation acquisition date, subscriber system assets have a weighted average remaining useful life of approximately 7 years, and are depreciated on an accelerated basis. Property and equipment has a remaining average life of 3 years and are depreciated on a straight-line basis.

(d)	To remove transaction costs associated with the ADT Acquisition of $354 million included in the historical results, as these costs will not have a continuing impact on the Company’s results.

(e)

To record incremental interest expense (including related amortization of debt issuance costs and discount) of $168 million associated with borrowings to fund the ADT Acquisition as a result of: (1) the incremental first lien term loan of $1,555 million; (2) the issuance of $3,140 million of Prime Notes; (3) the amortization of issuance costs and fees associated with the $255 million 2021 Revolving Credit Facility; (4) the Koch Preferred Securities, which have an aggregate stated value of $750 million (dividends for the Koch Preferred Securities are recorded as interest expense); and (5) the amortization of the fair value adjustment made to the ADT Notes assumed as a result of the acquisition. These increases are net of the removal of interest expense of $11 million on The ADT Corporation debt repaid (including related amortization of capitalized debt acquisition costs) in connection with the consummation of the acquisition.

A 1/8% increase or decrease in variable interest rates would result in a change in interest expense on our variable rate debt of approximately $1 million for the year ended December 31, 2016.

(f)	To record the income tax impact of the pro forma adjustments at the blended statutory rate of 38.4%. The ADT Corporation operated in multiple jurisdictions, and as such the statutory rate may not reflect the actual impact of the tax effects of the adjustments.

3. Offering Adjustments

Unaudited Pro Forma Condensed Combined Balance Sheet

(a)

Reflects the pro forma net adjustment of a $ million increase to cash and cash equivalents to reflect estimated net proceeds of approximately $ million from this offering, and the pro forma net adjustment of $ million decrease to cash and cash equivalents to reflect the use of proceeds from this offering for the redemption of $ million aggregate principal amount of Prime Notes and the payment of the related call premium, and the payment of related fees and expenses.

(b)

Reflects the pro forma net adjustment of $ million to long-term debt to reflect (i) the write-off of unamortized debt issuance costs associated with the repayment of indebtedness as described in note 3(a) above, and (ii) the pro forma net adjustment of $ million to long-term debt to reflect the redemption of $ million aggregate principal amount of Prime Notes and the payment of the related call premium, and the related fees and expenses.

(c)

Reflects the pro forma net adjustment of a $ million increase to restricted cash to reflect the establishment of the restricted cash balance relating to the redemption of the Koch Preferred Securities, which the Company is required to deposit into a separate account pursuant to the terms of the certificate of designation and the other definitive documents governing the Koch Preferred Securities. The cash amount in this account may only be used by the Company to redeem the Koch Preferred Securities and pay the related redemption premium and other related amounts. The pro forma effect of the redemption of the Koch Preferred Securities and the related reduction in interest expense (dividends on the Koch Preferred Securities are recorded as interest expense) are not presented in the unaudited pro forma condensed combined balance sheet and statement of operations, respectively, because the redemption is not factually supportable as the actual redemption date is currently unknown.

(d)	Reflects the pro forma net adjustments of $ million to common stock and $ million to additional paid-in capital (net of the estimated underwriting discounts and commissions, and estimated offering expenses) to reflect the issuance of shares of common stock in this offering.

(e)

Reflects the pro forma net adjustment of a $ million to accumulated deficit to reflect the write-off of issuance costs and extinguishment of debt resulting from the redemption of $ million aggregate principal amount of Prime Notes using the net proceeds of this offering, and to reflect the pro forma adjustment to income tax benefit attributable to pro forma adjustments using the Company’s blended statutory federal and state income tax rates in effect at September 30, 2017 of 38.4%. The Company expects its effective tax rate to vary from these estimated statutory tax rates in future years.

Any decrease in net proceeds from the amount set forth in 3(a) above would decrease the amount of cash and cash equivalents on the Company’s balance sheet. An increase in net proceeds from the amount set forth in 3(a) above would increase the amount of cash and cash equivalents on the Company’s balance sheet.

Unaudited Pro Forma Condensed Combined Statements of Operations

(f)	Reflects the pro forma adjustment to eliminate management fees to our Sponsor under the Management Consulting Agreement. This agreement will terminate in accordance with its terms upon the consummation of this offering.

(g)	Reflects the pro forma adjustment to eliminate interest expense associated with the repayment of the Prime Notes using the net proceeds from this offering.

(h)

Reflects the income tax expense impact of the pro forma adjustments at the blended statutory rate assumed to be in effect during this period of 38.4%. The Company operates in multiple jurisdictions, and as such the statutory rate may not reflect the actual impact of the tax effects of the adjustments.

(i)

Reflects the adjustment of the weighted average shares outstanding used to compute basic and diluted loss per share to give effect to the issuance of shares of common stock in this offering, based on an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of the prospectus.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes thereto included elsewhere in this prospectus, as well as the information presented under “Selected Historical Consolidated Financial Data” and “Unaudited Pro Forma Condensed Combined Financial Information.” The following discussion and analysis contains forward-looking statements about our business, operations and financial performance based on current plans and estimates that involve risks, uncertainties, and assumptions. Actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause such differences are discussed in the sections of this prospectus titled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.”

OVERVIEW

We are the leading provider of monitored security, interactive home and business automation and related monitoring services in the United States and Canada. We offer our residential, commercial, and multi-site customers a comprehensive set of burglary, video, access control, fire and smoke alarm, and medical alert solutions. Our core professional monitored security offering is complemented by a broad set of innovative products and services, including interactive home and business automation solutions that are designed to control access, react to movement, and sense carbon monoxide, flooding, and changes in temperature or other environmental conditions, as well as address personal emergencies, such as injuries, medical emergencies, or incapacitation. These products and services include interactive technologies to enhance our monitored solutions and to allow our customers to remotely manage their residential and commercial environments by adding increased automation through video, access control, and other smart building functionality. Through ADT Pulse, customers can use their smart phones, tablets, and laptops to arm and disarm their security systems, adjust lighting or thermostat levels, view real-time video of their premises, and program customizable schedules for the management of a range of smart home products. ADT Pulse customers can also arm their systems via Amazon Alexa-enabled devices, such as an Amazon Echo or Echo Dot.

In addition, we offer professional monitoring of third party devices through our ADT Canopy platform. ADT Canopy enables other companies to integrate solutions into our monitoring and billing platform and allows us to provide monitoring solutions to customers who do not currently have an ADT security system or interactive automation platform installed on premise.

As of September 30, 2017, we serve approximately 7.2 million customers, excluding contracts monitored but not owned. We believe we are approximately five times larger than the next residential competitor, with an approximate 30% market share in the residential monitored security industry in the United States and Canada. We are one of the largest full-service companies with a national footprint providing both residential and commercial monitored security. We deliver an integrated customer experience by maintaining the industry’s largest sales, installation, and service field force, as well as a 24/7 professional monitoring network, all supported by approximately 18,000 employees visiting approximately 10,000 homes and businesses daily.

BASIS OF PRESENTATION

On July 1, 2015, we acquired Protection One (the “Protection One Acquisition”). Additionally, on July 1, 2015, we acquired ASG (the “ASG Acquisition” and, together with the Protection One Acquisition, the “Formation Transactions”).

On May 2, 2016, we acquired The ADT Corporation (the “ADT Acquisition”). Prior to the ADT Acquisition, The ADT Corporation was a publicly traded corporation listed on The New York Stock Exchange.

Protection One is the predecessor of ADT Inc. for accounting purposes. The period presented prior to the Protection One Acquisition, on July 1, 2015, is comprised solely of Predecessor activity and is hereinafter

referred to as the “Predecessor.” The period presented after the Successor’s (as defined herein) inception on May 15, 2015 (“Inception”) is comprised of our activity which is, prior to the ADT Acquisition on May 2, 2016, the collective activity of Protection One and ASG, and after the ADT Acquisition on May 2, 2016, the collective activity of The ADT Corporation, Protection One and ASG and is hereinafter referred to as the “Successor.”

All financial information presented in this prospectus supplement have been prepared in U.S. dollars in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

We report financial and operating information in one segment. Our operating segment is also our reportable segment.

We have presented results of operations, including the related discussion and analysis, for the following periods:

•

nine months ended September 30, 2017 compared to nine months ended September 30, 2016;

•

year ended December 31, 2016 compared to the period from Inception through December 31, 2015 (Successor) and the period from January 1, 2015 through June 30, 2015 (Predecessor); and

•

the period from Inception through December 31, 2015 (Successor) and the period from January 1, 2015 through June 30, 2015 (Predecessor) compared to the year ended December 31, 2014 (Predecessor).

FACTORS AFFECTING OPERATING RESULTS

Our subscriber-based business requires significant upfront investment to generate new customers, which in turn provides predictable contractual recurring revenue generated from our monitoring fees and additional services. We focus on the following key drivers of our business with the intent of optimizing returns on new customer acquisition expenditures and cash flow generation: best-in-class customer service; disciplined, high-quality residential, commercial, and multi-site customer additions; efficient customer acquisition; reduced costs incurred to provide ongoing services to customers; and increased customer retention.

Our ability to add new subscribers depends on the overall demand for our products and solutions, which is driven by a number of external factors. The overall economic condition in the geographies in which we operate can impact our ability to attract new customers and grow our business in all customer channels. Growth in our residential customer base can be influenced by the overall state of the housing market. Growth in our commercial and multi-site customer base can be influenced by the rate at which new businesses begin operating or existing businesses grow. The demand for our products and solutions is also impacted by the perceived threat of crime as well as the quality of the service of our competitors.

The monthly fees that we generate from any individual customer depend primarily on the customer’s level of service. We offer a wide range of services at various price points, from basic burglar alarm monitoring to our full suite of interactive services. Our ability to increase monthly fees at the individual customer level depends on a number of factors, including our ability to effectively introduce and market additional features and services that increase the value of our offerings to customers, which we believe drives customers to purchase higher levels of service and supports our ability to make periodic adjustments to pricing.

Attrition has a direct impact on the number of customers we monitor and service, as well as our financial results, including revenues, operating income, and cash flows. A portion of our customer base can be expected to cancel its service every year. Customers may choose not to renew or may terminate their contracts for a variety of reasons including, but not limited to, relocation, cost, loss to competition, or service issues.

In the third quarter of 2017, there were three hurricanes impacting certain areas in which we operate that resulted in power outages and service disruptions to certain of our customers. The financial impact from these hurricanes to the third quarter 2017 results was not material. We are currently in the process of estimating the potential financial and business impacts these hurricanes may have on future periods.

SIGNIFICANT EVENTS

The comparability of our results of operations have been significantly impacted by the following:

On July 1, 2015, we consummated the Formation Transactions. The Formation Transactions were funded by a combination of equity invested by our Sponsor and the Predecessor’s management of $755 million, as well as borrowings under (i) the first lien credit facilities, which included a $1,095 million term loan facility and a $95 million revolving credit facility, and (ii) a $260 million second lien term loan facility.

On May 2, 2016, we consummated the ADT Acquisition which significantly increased our market share in the security industry, making us the largest monitored security company in the United States and Canada. Total consideration in connection with the ADT Acquisition was $12,114 million, which included the assumption, on the acquisition date, of The ADT Corporation’s outstanding debt (inclusive of capital lease obligations) at a fair value of $3,551 million and cash of approximately $54 million.

We funded the ADT Acquisition as well as related transaction costs, using the net proceeds from a combination of the following:

(i)

equity proceeds of $3,571 million, net of issuance costs, which resulted from equity issuances by the Company and Ultimate Parent to our Sponsor and certain other investors;

(ii)

incremental first lien term loan borrowings of $1,555 million and the issuance of $3,140 million of Prime Notes; and

(iii)

issuance by the Company of 750,000 shares of Series A preferred securities (the “Koch Preferred Securities”) and issuance by Ultimate Parent of the Warrants to the Koch Investor for an aggregate amount of $750 million. The Company allocated $659 million to the Koch Preferred Securities, which is reflected net of issuance costs of $27 million as a liability in the Company’s historical consolidated balance sheet. The Company allocated the remaining $91 million in proceeds to the Warrants, which was contributed by Ultimate Parent in the form of common equity to the Company, net of $4 million in issuance costs.

Refer to Notes to the consolidated financial statements included elsewhere in this prospectus for additional information regarding these acquisitions and our debt, respectively.

KEY PERFORMANCE INDICATORS

In evaluating our financial results, we review the following key performance indicators.

Recurring Monthly Revenue (“RMR”) . RMR is generated by contractual monthly recurring fees for monitoring and other recurring services provided to our customers, including contracts monitored but not owned. Our computation of RMR may not be comparable to other similarly titled measures reported by other companies. We believe the presentation of RMR is useful because it measures the volume of revenue under contract at a given point in time. Management monitors RMR, among other things, to evaluate our ongoing performance.

Gross Customer Revenue Attrition . Gross customer revenue attrition is defined as the recurring revenue lost as a result of customer attrition, net of dealer charge-backs and reinstated customers, excluding contracts monitored but not owned. Customer sites are considered canceled when all services are terminated. Dealer charge-backs represent customer cancellations charged back to the dealers because the customer canceled service during the charge-back period, generally twelve to fifteen months.

reinstatements, and the denominator of which is total annualized recurring revenue based on an average of recurring revenue under contract at the beginning of each month during the period. Recurring revenue is generated by contractual monthly recurring fees for monitoring and other recurring services provided to our customers.

Adjusted EBITDA . Adjusted EBITDA is a non-GAAP measure that we believe is useful to investors and lenders to measure the operational strength and performance of our business. Our definition of Adjusted EBITDA, a reconciliation of Adjusted EBITDA to net loss (the most comparable GAAP measure) and additional information, including a description of the limitations relating to the use of Adjusted EBITDA, are provided under “—Non-GAAP Measures.”

Free Cash Flow . Free Cash Flow is a non-GAAP measure that our management employs to measure cash that is available to repay debt, make other investments, and pay dividends. Our definition of Free Cash Flow, a reconciliation of Free Cash Flow to net cash provided by operating activities and additional information, including a description of the limitations relating to the use of Free Cash Flow, are provided under “—Non-GAAP Measures.”

RESULTS OF OPERATIONS

Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016

The following table sets forth our consolidated results of operations, summary cash flow data, and key performance indicators for the periods presented:


	For the Nine Months Ended
	September 30, 2017			September 30, 2016			Change			% Change
	(in thousands)
Results of Operations:
Monitoring and related services	$	3,017,026		$	1,757,923		$	1,259,103			72	%
Installation and other		192,944			140,691			52,253			37	%

Total revenue		3,209,970			1,898,614			1,311,356			69	%
Cost of revenue		658,095			465,357			192,738			41	%
Selling, general and administrative expenses		923,048			561,337			361,711			64	%
Depreciation and intangible asset amortization		1,387,245			805,389			581,856			72	%
Merger, restructuring, integration, and other costs		54,170			370,860			(316,690	)		(85	)%

Operating income (loss)		187,412			(304,329	)		491,741			(162	)%
Interest expense, net		(553,529	)		(337,441	)		(216,088	)		64	%
Other income (expense)		31,634			(39,567	)		71,201			(180	)%

Loss before income taxes		(334,483	)		(681,337	)		346,854			(51	)%
Income tax benefit		38,922			229,695			(190,773	)		(83	)%

Net loss	$	(295,561	)	$	(451,642	)	$	156,081			(35	)%

Summary Cash Flow Data:
Net cash provided by operating activities	$	1,262,340		$	381,813		$	880,527			231	%
Net cash used in investing activities	$	(1,038,049	)	$	(9,062,956	)	$	8,024,907			(89	)%
Net cash (used in) provided by financing activities	$	(129,586	)	$	8,829,270		$	(8,958,856	)		(101	)%

Key Performance Indicators: ⁽¹⁾
RMR	$	333,814		$	327,228		$	6,586			2	%
Gross customer revenue attrition (percent) ⁽²⁾		13.8	%		15.2	%		(1.4) % points			N/M
Adjusted EBITDA ⁽³⁾	$	1,754,383		$	979,758		$	774,625			79	%
Free Cash Flow ⁽³⁾	$	228,431		$	(249,511	)	$	477,942			(192	)%

N/M—Not meaningful

(1)	Refer to the “—Key Performance Indicators” section for the definitions of these key performance indicators.

(2)	Gross customer revenue attrition (percent) as of September 30, 2016 is presented on a supplemental pro forma basis for The ADT Corporation business.

(3)	Adjusted EBITDA and Free Cash Flow are non-GAAP measures. Refer to the “—Non-GAAP Measures” section for the definitions thereof and reconciliations to the most comparable GAAP measures.

Revenue

Monitoring and related services revenue increased by $1,259 million for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. This increase was largely attributable to incremental revenue of approximately $1,168 million for the nine months ended September 30, 2017 associated with The ADT Corporation business, which we acquired on May 2, 2016, and the amortization of deferred revenue as a result of the application of purchase accounting in connection with the ADT Acquisition that reduced revenue by $59 million during the nine months ended September 30, 2016.

The remainder of the increase in monitoring and related services revenue was primarily driven by an increase in contractual monthly recurring fees for monitoring and other recurring services, which was favorably impacted by an improvement in average pricing, partially offset by lower customer volume. The improvement in average pricing was driven by the addition of new customers at higher rates, largely due to an increase in ADT Pulse customers as compared to total customer additions as well as price escalations on our existing customer base. These factors also were the primary driver for an increase in RMR, which increased to $334 million as of September 30, 2017 from $327 million as of September 30, 2016. The decrease due to lower customer volume resulted from negative net customer additions, which was partially offset by improvements in gross customer revenue attrition of 1.4 percentage points. Both the negative net customer additions as well as the improvements in gross customer revenue attrition resulted from our enhanced focus on high quality customer additions through our disciplined customer selection process.

Installation and other revenue increased by $52 million for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. This increase primarily resulted from an increase of $27 million related to the amortization of deferred installation revenue, which includes $11 million of incremental deferred installation revenue associated with the operations of The ADT Corporation. Additionally, the increase in installation and other revenue resulted from $25 million related to revenue from security equipment sold outright to customers, which includes $10 million of incremental revenue associated with the operations of The ADT Corporation.

Cost of Revenue

Cost of revenue increased by $193 million for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. The increase in cost of revenue was primarily attributable to incremental expenses associated with The ADT Corporation business of approximately $178 million incurred during the nine months ended September 30, 2017. These costs primarily include expenses incurred associated with service calls for customers who have maintenance contracts, costs of monitoring, and costs associated with call center customer service.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $362 million for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. The increase in selling, general and administrative expenses was primarily attributable to incremental expenses associated with The ADT Corporation business of approximately $324 million. The remainder of the increase, excluding the impact from the incremental expenses associated with the operations of The ADT Corporation business, was primarily due to

$64 million of fees in connection with the Special Dividend, and fees incurred in connection with the February and June 2017 amendments and restatements to our First Lien Credit Facilities and the 2017 Incremental First Lien Term B-1 Loan, each as defined herein, partially offset by a decrease of $22 million in radio conversion costs.

Depreciation and Intangible Asset Amortization

Depreciation and intangible asset amortization expense increased by $582 million for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. This increase primarily related to depreciation and intangible asset amortization associated with assets acquired in the ADT Acquisition, which primarily includes amortization of definite-lived intangible assets and depreciation of subscriber system assets. Additionally, the increase in depreciation and intangible asset amortization was also attributable to amortization expense on new customer contracts acquired under the ADT Authorized Dealer Program of $78 million, an increase in amortization expense of $42 million primarily associated with the Protection One trade name, which we began amortizing in July 2016, and amortization of software license expenses of $28 million related to a newly-adopted cloud computing accounting standard.

Merger, Restructuring, Integration, and Other Costs

Merger, restructuring, integration, and other costs decreased by $317 million for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. This decrease was primarily due to merger costs of $309 million associated with the ADT Acquisition incurred during the nine months ended September 30, 2016 and a decrease in restructuring charges of $31 million for the nine months ended September 30, 2017, partially offset by an increase of $18 million in asset impairment charges associated with our cost method investments.

Interest Expense, Net

Net interest expense increased by $216 million for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. Net interest expense is primarily comprised of interest expense on our long-term debt and the dividend obligation for the Koch Preferred Securities. The increases in interest expense were primarily the result of the increase in borrowings to fund the ADT Acquisition.

Other Income (Expense)

Other income (expense) was attributable to net foreign currency gains of $27 million and (losses) of $16 million for the nine months ended September 30, 2017 and nine months ended September 30, 2016, respectively, related to the translation of monetary assets and liabilities that are denominated in Canadian dollars, primarily due to intercompany loans. Also included in other income (expense) are losses on extinguishment of debt for the nine months ended September 30, 2017 and nine months ended September 30, 2016 of $4 million and $16 million, respectively, primarily related to the amendments and restatements of our First Lien Credit Facilities. Other expense for the nine months ended September 30, 2016 further includes a net loss on the settlement of derivative contracts that were executed to hedge future cash flows associated with the ADT Acquisition.

Income Tax Benefit

Income tax benefit for the nine months ended September 30, 2017 was $39 million resulting in an effective tax rate for the period of 11.6%. The effective tax rate for the nine months ended September 30, 2017 reflects the impact of an increase in our unrecognized tax benefits related to income tax positions primarily associated with prior years, including pre-Separation tax years, the impact of legislative changes, and an increase in the Company’s valuation allowance for certain deferred tax assets.

Income tax benefit for the nine months ended September 30, 2016 was $230 million, resulting in an effective tax rate for the period of 33.7%. The effective tax rate for the nine months ended September 30, 2016 primarily reflects the impact of permanent items mainly related to non-deductible acquisition costs associated with the ADT Acquisition.

The effective tax rates for the nine months ended September 30, 2017 and September 30, 2016 reflect the tax impact of permanent items, state tax expense, changes in tax laws, and non-U.S. net earnings. The effective tax rate can vary from period to period due to permanent tax adjustments, discrete items such as the settlement of income tax audits and changes in tax laws, as well as recurring factors such as changes in the overall effective state tax rate.

Year Ended December 31, 2016 compared to the period from Inception through December 31, 2015 (Successor) and the period from January 1, 2015 through June 30, 2015 (Predecessor), and the period from Inception through December 31, 2015 (Successor) and the period from January 1, 2015 through June 30, 2015 (Predecessor) compared to the year ended December 31, 2014 (Predecessor)

The following table sets forth our consolidated results of operations, summary cash flow data, and key performance indicators for the periods presented.


	Successor						Predecessor
	Year Ended December 31, 2016			From Inception through December 31, 2015			Period from January 1, 2015 through June 30, 2015			Year Ended December 31, 2014
	(in thousands, except as otherwise indicated)
Results of Operations:
Monitoring and related services	$	2,748,222		$	238,257		$	189,028		$	358,439
Installation and other		201,544			73,310			48,681			108,118

Total revenue		2,949,766			311,567			237,709			466,557
Cost of revenue		693,430			148,521			100,591			200,054
Selling, general and administrative expenses		858,896			84,134			74,977			134,299
Depreciation and intangible asset amortization		1,232,967			83,650			41,548			79,650
Merger, restructuring, integration, and other costs		393,788			35,036			9,361			10,252

Operating (loss) income		(229,315	)		(39,774	)		11,232			42,302
Interest expense, net		(521,491	)		(45,169	)		(29,129	)		(59,329	)
Other (expense) income		(51,932	)		325			331			1,087

Loss before income taxes		(802,738	)		(84,618	)		(17,566	)		(15,940	)
Income tax benefit (expense)		266,151			30,365			(1,025	)		(2,548	)

Net loss	$	(536,587	)	$	(54,253	)	$	(18,591	)	$	(18,488	)

Summary Cash Flow Data:
Net cash provided by operating activities	$	617,523		$	1,754		$	34,556		$	60,825
Net cash used in investing activities		(9,384,869	)		(2,062,022	)		(39,638	)		(58,219	)
Net cash provided by (used in) financing activities		8,828,775			2,076,027			(6,212	)		83,863

Key Performance Indicators: ⁽¹⁾
RMR	$	327,948		$	40,142		$	30,598		$	29,722
Gross customer revenue attrition (percent) ⁽²⁾		14.8	%		15.9	%		N/A			16.0	%
Adjusted EBITDA ⁽³⁾	$	1,532,889		$	104,828		$	72,326		$	146,532
Free Cash Flow ⁽³⁾	$	(336,672	)	$	(32,292	)	$	3,934		$	2,913

N/A—Not

applicable

(1)	Refer to the “—Key Performance Indicators” section for the definitions of these key performance indicators.

(2)	Gross customer revenue attrition (percent) is presented on a pro forma basis for The ADT Corporation business and ASG, as applicable.

(3)	Adjusted EBITDA and Free Cash Flow are non-GAAP measures. Refer to the “—Non-GAAP Measures” section for the definitions of these terms and reconciliations to the most comparable GAAP measures.

Revenue

Successor 2016 compared to Successor and Predecessor 2015

Monitoring and related services revenue amounted to $2,748 million for the year ended December 31, 2016 as compared to $238 million and $189 million for the period from Inception through December 31, 2015 and January 1, 2015 through June 30, 2015, respectively. The increase was primarily attributable to incremental revenue of approximately $2,227 million and $65 million associated with The ADT Corporation business and ASG business, which we acquired on May 2, 2016 and July 1, 2015, respectively. The increase in monitoring and related services revenue was also attributable to the write down of deferred revenue by $17 million more in 2015 as compared to 2016.

Installation and other revenue amounted to $202 million for the year ended December 31, 2016 as compared to $73 million and $49 million for the period from Inception through December 31, 2015 and January 1, 2015 through June 30, 2015, respectively. The increase was attributable to greater revenue for security related equipment sold outright to customers, and includes incremental revenue of approximately $24 million and $15 million associated with The ADT Corporation business and ASG business, which we acquired on May 2, 2016 and July 1, 2015, respectively.

Successor and Predecessor 2015 compared to Predecessor 2014

Monitoring and related services revenue amounted to $238 million and $189 million for the period from Inception through December 31, 2015 and January 1, 2015 through June 30, 2015, respectively, compared to $358 million for the year ended December 31, 2014. The increase was attributable to incremental monitoring and service revenue of approximately $62 million associated with the ASG business. In addition, monitoring and related services revenue increased approximately $21 million primarily related to growth in our recurring revenue customer base. These increases were partially offset by amortization of deferred revenue associated with purchase accounting for the Formation Transactions, which reduced revenue by $19 million in 2015.

Installation and other revenue amounted to $73 million and $49 million for the period from Inception through December 31, 2015 and January 1, 2015 through June 30, 2015, respectively, compared to $108 million for the year ended December 31, 2014. The majority of this increase resulted from security related equipment sold outright to customers by the sales force acquired as part of the ASG Acquisition.

Cost of Revenue

Successor 2016 compared to Successor and Predecessor 2015

Cost of revenue amounted to $693 million for the year ended December 31, 2016 as compared to $149 million and $101 million for the period from Inception through December 31, 2015, and January 1, 2015 through June 30, 2015, respectively. The increase was attributable to approximately $370 million and $37 million of incremental costs associated with The ADT Corporation business and ASG business from the respective dates of the acquisitions. In addition, the remainder of the increase resulted from higher expenses of where security related equipment is sold outright to the customer.

Successor and Predecessor 2015 compared to Predecessor 2014

Cost of revenue amounted to $149 million and $101 million for the period from Inception through December 31, 2015 and January 1, 2015 through June 30, 2015, respectively, compared to $200 million for the year ended December 31, 2014. This increase was a result of incremental costs of approximately $33 million associated with the ASG business, and higher costs associated with growth in our recurring customer base.

Selling, General and Administrative Expenses

Successor 2016 compared to Successor and Predecessor 2015

Selling, general and administrative expenses amounted to $859 million for the year ended December 31, 2016 as compared to $84 million and $75 million for the period from Inception through December 31, 2015, and January 1, 2015 through June 30, 2015, respectively . This increase primarily relates to approximately $670 million and $13 million of incremental costs associated with the operations of The ADT Corporation business and ASG business from the dates of the acquisitions.

Successor and Predecessor 2015 compared to Predecessor 2014

Selling, general and administrative expenses amounted to $84 million and $75 million for the period from Inception through December 31, 2015, and January 1, 2015 through June 30, 2015, respectively, compared to $134 million for the year ended December 31, 2014. This increase was primarily related to greater general and administrative costs associated with the ASG Acquisition, as well as incremental selling costs attributable to the additional sales volume from ASG.

Depreciation and Intangible Asset Amortization

Successor 2016 compared to Successor and Predecessor 2015

Depreciation and intangible asset amortization expense amounted to $1,233 million for the year ended December 31, 2016 as compared to $84 million and $42 million for the period from Inception through December 31, 2015, and January 1, 2015 through June 30, 2015, respectively. This increase is primarily related to amortization of definite-lived intangible assets and depreciation of subscriber system assets acquired in the ADT Acquisition, as well as greater amortization of definite-lived intangible assets acquired in connection with the Formation Transactions.

Successor and Predecessor 2015 compared to Predecessor 2014

Depreciation and intangible asset amortization expense amounted to $84 million and $42 million for the period from Inception through December 31, 2015, and January 1, 2015 through June 30, 2015, respectively, compared to $80 million for the year ended December 31, 2014. This increase was attributable to greater amortization of definite-lived intangible assets acquired in connection with the Formation Transactions.

Merger, Restructuring, Integration, and Other Costs

Successor 2016 compared to Successor and Predecessor 2015

Merger, restructuring, integration, and other costs amounted to $394 million for the year ended December 31, 2016 as compared to $35 million and $9 million for the period from Inception through December 31, 2015 and January 1, 2015 through June 30, 2015, respectively. This increase primarily related to $311 million of merger related costs incurred in connection with the ADT Acquisition in 2016, as compared to $23 million of merger related costs incurred in the period from Inception through December 31, 2015 related to the Formation Transactions. The costs associated with the ADT Acquisition consisted of: (i) financing costs associated with unused bridge and backstop credit facilities; (ii) transaction fees paid to Apollo; (iii) incremental stock-based compensation expense as a result of the acceleration of vesting of all unvested stock options and restricted stock units in connection with the ADT Acquisition; and (iv) other merger related costs such as advisory fees, legal, accounting, and other professional costs. We also incurred restructuring charges of $54 million in 2016 primarily related to severance of certain former The ADT Corporation executives and employees in connection with the ADT Acquisition. Furthermore, included in other costs in 2016 are certain impairment charges.

Successor and Predecessor 2015 compared to Predecessor 2014

Merger, restructuring, integration, and other costs amounted to $35 million and $9 million for the period from Inception through December 31, 2015, and January 1, 2015 through June 30, 2015, respectively, compared to $10 million for the year ended December 31, 2014. This increase was primarily attributable to costs incurred in connection with the Formation Transactions, which primarily consisted of accounting, investment banking, legal, and other professional fees.

Interest Expense, Net

Successor 2016 compared to Successor and Predecessor 2015

Net interest expense amounted to $521 million for the year ended December 31, 2016 as compared to $45 million and $29 million for the period from Inception through December 31, 2015, and January 1, 2015 through June 30, 2015, respectively. Net interest expense is primarily comprised of interest expense on our long-term debt. The increase in interest expense is primarily the result of the increase in borrowings to fund the ADT Acquisition, which consisted of borrowings under the second lien notes, The ADT Corporation debt assumed as part of the acquisition, and an incremental first lien term loan facility, all as defined herein under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” In addition, included in interest expense are dividends associated with the Koch Preferred Securities that were issued in connection with the ADT Acquisition. Refer to the consolidated financial statements included elsewhere in this prospectus for further discussion regarding these borrowings and the Koch Preferred Securities.

Successor and Predecessor 2015 compared to Predecessor 2014

Net interest expense amounted to $45 million and $29 million for the period from Inception through December 31, 2015, and January 1, 2015 through June 30, 2015, respectively, compared to $59 million for the year ended December 31, 2014. Net interest expense is comprised primarily of interest on our long-term debt. The increase reflects an increase in borrowings in connection with the Formation Transactions.

Other (Expense) Income

Other expense for the year ended December 31, 2016 primarily included (i) net foreign currency transaction losses of $16 million from the translation of monetary assets and liabilities that are denominated in Canadian dollars, most of which relates to intercompany loans, and (ii) losses on extinguishment of debt of $28 million primarily relating to the write-off of debt discount and issuance costs associated with the voluntary paydown of $260 million of the second lien notes in July and October of 2016 and the amendments to the First Lien Credit Facilities as of June 23, 2016, and December 28, 2016.

Income Tax Benefit (Expense)

Successor 2016 compared to Successor and Predecessor 2015

Income tax benefit (expense) for the year ended December 31, 2016 was $266 million, compared with $30 million and $(1) million for the period from Inception through December 31, 2015, and January 1, 2015 through June 30, 2015, respectively, resulting in effective tax rates of 33.2%, 35.9%, and (5.8)% for those periods, respectively. The change in the effective tax rate and income tax benefit primarily reflects the impact of permanent items mainly related to non-deductible acquisition costs associated with the ADT Acquisition.

Successor and Predecessor 2015 compared to Predecessor 2014

Income tax benefit (expense) for the period from Inception through December 31, 2015, and January 1, 2015 through June 30, 2015 was $30 million and $(1) million, respectively, compared with $(3) million of

income tax expense for the year ended December 31, 2014, resulting in effective tax rates of 35.9%, (5.8)%, and (16.0)% for those periods, respectively. The change in the effective tax rate reflects the release in the valuation allowance for deferred tax items due to our assessment of sources of future taxable income, and the likelihood of the realization of the deferred tax items as a result of the revaluation of our definite-lived intangible assets in connection with the Formation Transactions.

The effective tax rate can vary from period to period due to permanent tax adjustments, discrete items such as the settlement of income tax audits and changes in tax laws, as well as recurring factors such as changes in the overall effective state tax rate. Refer to Note 7 to the audited consolidated financial statements included elsewhere in this prospectus for more information on income taxes.

NON-GAAP MEASURES

To provide investors with additional information in connection with our results as determined by GAAP, we also disclose Adjusted EBITDA, Free Cash Flow, and Covenant Adjusted EBITDA as non-GAAP measures which management believes provide useful information to investors. These measures are not financial measures calculated in accordance with GAAP and should not be considered as a substitute for net income, operating profit, or any other operating performance measure calculated in accordance with GAAP, and may not be comparable to a similarly titled measure reported by other companies. We use Adjusted EBITDA to measure the operational strength and performance of our business. We use Free Cash Flow as an additional measure of our ability to repay debt, make other investments, and pay dividends. We use Covenant Adjusted EBITDA as a supplemental measure of our performance and ability to service debt and incur additional debt. Our definition of Covenant Adjusted EBITDA, a reconciliation of Covenant Adjusted EBITDA to net loss (the most comparable GAAP measure) and additional information, including a description of the limitations relating to the use of Covenant Adjusted EBITDA, are provided under “—Covenant Adjusted EBITDA.”

Adjusted EBITDA

We define Adjusted EBITDA as net income or loss adjusted for (i) interest, (ii) taxes, (iii) depreciation and amortization, including depreciation of subscriber system assets and other fixed assets, amortization of dealer and other intangible assets, (iv) amortization of deferred costs and deferred revenue associated with subscriber acquisitions, (v) share-based compensation expense, (vi) purchase accounting adjustments related to fair value of deferred revenue under GAAP, (vii) merger, restructuring, integration, and other costs, (viii) financing and consent fees, (ix) foreign currency gains/losses, (x) loss on extinguishment of debt, (xi) radio conversion costs, (xii) management fees and other charges, and (xiii) other non-cash items.

There are material limitations to using Adjusted EBITDA. Adjusted EBITDA does not take into account certain significant items, including depreciation and amortization, interest expense, income tax expense, and other adjustments which directly affect our net income. These limitations are best addressed by considering the economic effects of the excluded items independently, and by considering Adjusted EBITDA in conjunction with net income as calculated in accordance with GAAP.

Free Cash Flow

We define Free Cash Flow as cash from operating activities less cash outlays related to capital expenditures. We define capital expenditures to include purchases of property, plant, and equipment; capitalized costs

100

associated with transactions in which we retain ownership of the security system; and accounts purchased through our network of authorized dealers or third parties outside of our authorized dealer network. These items are subtracted from cash from operating activities because they represent long-term investments that are required for normal business activities. As a result, subject to the limitations described below, Free Cash Flow is a useful measure of our cash available to repay debt, make other investments, and pay dividends.

Free Cash Flow adjusts for cash items that are ultimately within management’s discretion to direct, and therefore, may imply that there is less or more cash that is available than the most comparable GAAP measure. Free Cash Flow is not intended to represent residual cash flow for discretionary expenditures since debt repayment requirements and other non-discretionary expenditures are not deducted. These limitations are best addressed by using Free Cash Flow in combination with the GAAP cash flow numbers.

Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016

Adjusted EBITDA

The table below reconciles Adjusted EBITDA to net loss for the periods presented.


	Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
	(in thousands)
Net loss	$	(295,561	)	$	(451,642	)
Interest expense, net		553,529			337,441
Income tax benefit		(38,922	)		(229,695	)
Depreciation and intangible asset amortization		1,387,245			805,389
Merger, restructuring, integration, and other costs ⁽¹⁾		54,170			370,860
Financing and consent fees ⁽²⁾		63,593			2,878
Foreign currency (gains) / losses ⁽³⁾		(26,773	)		16,336
Loss on extinguishment of debt ⁽⁴⁾		4,331			16,051
Purchase accounting deferred revenue fair value adjustment ⁽⁵⁾		—			59,348
Other non-cash items ⁽⁶⁾		10,122			12,146
Radio conversion costs ⁽⁷⁾		9,597			26,668
Amortization of deferred subscriber acquisition costs and revenue, net ⁽⁸⁾		3,987			3,169
Share-based compensation expense ⁽⁹⁾		8,498			2,763
Management fees and other charges ⁽¹⁰⁾		20,567			8,046

Adjusted EBITDA	$	1,754,383		$	979,758

(1)

Represents direct and incremental costs resulting from acquisitions made by the Company, primarily associated with the ADT Acquisition, and certain related restructuring and integration efforts as a result of those acquisitions, as well as certain asset impairment charges related to cost method investments.

(2)	The nine months ended September 30, 2017 primarily includes fees incurred in connection with the Special Dividend, and fees incurred in connection with amendments and restatements to our First Lien Credit Facilities and the 2017 Incremental Term B-1 Loan.

(3)	Foreign currency (gains) / losses are related to the translation of monetary assets and liabilities that are denominated in Canadian dollars, primarily due to intercompany loans.

(4)	Loss on extinguishment of debt for the nine months ended September 30, 2016 primarily relates to the write-off of debt discount and issuance costs associated with the voluntary paydown of $260 million of the second lien notes.

(5)	Represents adjustment related to the fair value of deferred revenue under GAAP, primarily related to the ADT Acquisition.

(6)

Primarily represents non-cash asset write downs associated cost method investments during the nine months ended September 30, 2017, as well as a net loss on the settlement of derivative financial instruments that were executed to hedge future cash flows associated with the ADT Acquisition during the nine months ended September 30, 2016.

(7)	Represents costs associated with our program that began in 2015 to upgrade cellular technology used in many of our security systems.

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(8)	Represents non-cash amortization expense associated with deferred subscriber acquisition costs, net of non-cash amortization of deferred installation revenue.

(9)	Share-based compensation expense represents compensation expense associated with our equity compensation plans. Refer to Note 12 to the Company’s audited consolidated financial statements for additional information.

(10)	Primarily represents fees paid under the Management Consulting Agreement (as defined in the notes to the consolidated financial statements).

For the nine months ended September 30, 2017, Adjusted EBITDA increased by $775 million, compared to the nine months ended September 30, 2016. This increase was primarily due to incremental revenue, net of incremental costs associated with The ADT Corporation business. The remainder of this increase was attributable to revenue growth, excluding the impact of purchase accounting, and a decrease in selling, general and administrative expenses, excluding radio conversion costs, fees associated with the amendments and restatements to our First Lien Credit Facilities, and other non-cash items that are excluded under our definition of Adjusted EBITDA, partially offset by increase in cost of revenue.

For further details on the drivers of these changes, refer to the discussions above under “—Results of Operations.”

Free Cash Flow

The table below reconciles Free Cash Flow to net cash provided by operating activities for the periods presented.


	Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
	(in thousands)
Net cash provided by operating activities	$	1,262,340		$	381,813
Dealer generated customer accounts and bulk account purchases		(486,037	)		(259,330	)
Subscriber system assets and deferred subscriber installation costs		(445,201	)		(320,906	)
Capital expenditures		(102,671	)		(51,088	)

Free Cash Flow	$	228,431		$	(249,511	)

Net cash provided by operating activities for the nine months ended September 30, 2017 resulted from $1,141 million of net income, exclusive of depreciation and intangible assets amortization and other non-cash items, and reflects (i) cash interest paid of $433 million, (ii) cash paid of $64 million for fees associated with the Special Dividend and fees in connection with the amendments and restatements to the First Lien Credit Facilities and Incremental First Lien Term B-1 Loan, (iii) restructuring and integration payments of $35 million primarily associated with the ADT Acquisition, (iv) cash paid for fees under the Management Consulting Agreement of $15 million, (v) cash paid for radio conversion costs of $11 million, and (vi) other cash payments of $8 million that are excluded items under our definition of Adjusted EBITDA. The remainder relates to changes in assets and liabilities due to timing of other operating cash receipts and payments.

Net cash provided by operating activities for nine months ended September 30, 2016 resulted from net income of $265 million, exclusive of depreciation and intangible assets amortization and other non-cash items, and reflects (i) cash interest paid of $174 million; (ii) transaction costs of $347 million associated with the ADT Acquisition; (iii) cash paid of $26 million for fees associated with amendment and restatements to the First Lien Credit Facilities; (iv) cash paid for radio conversion costs of $33 million; (v) restructuring and integration payments of $46 million primarily associated with the ADT Acquisition; and (vi) other cash payments of $10 million that are excluded items under our definition of Adjusted EBITDA. The remainder relates to changes in assets and liabilities due to timing of other operating cash receipts and payments.

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Refer to the discussions above under “—Results of Operations” for further details.

For the nine months ended September 30, 2017 and September 30, 2016, cash paid for dealer generated customer accounts and bulk account purchases was $486 million and $259 million, respectively, which relates primarily to dealer account purchases under the ADT Authorized Dealer Program. The increase in purchases under this program is generated by the larger combined company activity subsequent to the ADT Acquisition.

For the nine months ended September 30, 2017 and September 30, 2016, cash paid for subscriber system assets and deferred subscriber installation costs was $445 million and $321 million, respectively, and cash paid for capital expenditures was $103 million and $51 million, respectively. The increases in these amounts are primarily due to larger combined company activity subsequent to the ADT Acquisition. In addition, capital expenditures includes cash payments for integration related capital expenditures of $21 million and $7 million for nine months ended September 30, 2017 and nine months ended September 30, 2016, respectively.

Adjusted EBITDA

The table below reconciles Adjusted EBITDA to net loss for the periods presented.


	Successor						Predecessor			Predecessor
	Year Ended December 31, 2016			From Inception through December 31, 2015			Period from January 1, 2015 through June 30, 2015			Year Ended December 31, 2014
	(in thousands)
Net loss	$	(536,587	)	$	(54,253	)	$	(18,591	)	$	(18,488	)
Interest expense, net		521,491			45,169			29,129			59,329
Income tax (benefit) expense		(266,151	)		(30,365	)		1,025			2,548
Depreciation and intangible asset amortization		1,232,967			83,650			41,548			79,650
Merger, restructuring, integration, and other costs ⁽¹⁾		393,788			35,036			9,361			10,252
Financing and consent fees ⁽²⁾		5,302			—			—			—
Foreign currency losses ⁽³⁾		16,042			—			—			—
Loss on extinguishment of debt ⁽⁴⁾		28,293			—			—			377
Purchase accounting deferred revenue fair value adjustment ⁽⁵⁾		62,845			18,574			—			—
Other non-cash items ⁽⁶⁾		16,276			—			—			209
Radio conversion costs ⁽⁷⁾		34,405			4,312			1,014			—
Amortization of deferred subscriber acquisition costs and revenue, net ⁽⁸⁾		6,052			770			7,578			10,656
Share-based compensation expense ⁽⁹⁾		4,625			2,259			781			1,913
Management fees and other charges ⁽¹⁰⁾		13,541			(324	)		481			86

Adjusted EBITDA	$	1,532,889		$	104,828		$	72,326		$	146,532

(1)

Includes certain direct and incremental costs resulting from acquisitions and certain related integration efforts as a result of acquisitions, as well as costs related to our restructuring efforts. For 2016, these costs are primarily related to restructuring charges incurred in connection with the ADT Acquisition.

(2)	Financing and consent fees represents fees associated with amendments and restatements to our First Lien Credit Facilities.

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(3)	Foreign currency losses relate to the translation of monetary assets and liabilities that are denominated in Canadian dollars, primarily due to intercompany loans.

(4)

Loss on extinguishment of debt of $28 million for the year ended December 31, 2016 primarily relates to the write-off of debt discount and issuance costs associated with the voluntary paydown of $260 million of the second lien term loans in July and October of 2016 and the amendments and restatements to the First Lien Credit Facilities as of June 23, 2016 and December 28, 2016.

(5)	Represents adjustment related to the fair value of deferred revenue under GAAP, primarily related to the ADT Acquisition in 2016, and the Formation Transactions in 2015.

(6)	Other non-cash items for the year ended December 31, 2016 primarily include a net loss on the settlement of derivative contracts that were executed to hedge future cash flows associated with the ADT Acquisition, as well as other non-cash items including certain asset write-downs.

(7)	Represents costs associated with our program that began in 2015 to upgrade cellular technology used in many of our security systems.

(8)	Represents non-cash amortization expense associated with deferred subscriber acquisition costs, net of non-cash amortization of revenue associated with deferred installation revenue

(9)	Share-based compensation expense represents compensation expense associated with our equity compensation plans. Refer to Note 12 to the Company’s audited consolidated financial statements for additional information.

(10)	Management fees and other charges primarily include $13 million of management fees to our Sponsor for certain management consulting and advisory services for the year ended December 31, 2016.

Successor 2016 compared to Successor and Predecessor 2015

Adjusted EBITDA amounted to $1,533 million for the year ended December 31, 2016 as compared to $105 million and $72 million for the period from Inception through December 31, 2015, and January 1, 2015 through June 30, 2015, respectively. This increase was primarily driven by the operations of The ADT Corporation business and the ASG business from the date of the acquisitions.

Successor and Predecessor 2015 compared to Predecessor 2014

Adjusted EBITDA amounted to $105 million and $72 million for the period from Inception through December 31, 2015, and January 1, 2015 through June 30, 2015 as compared to $147 million for the year ended December 31, 2014. This increase was primarily driven by the operations of ASG.

For further details on the drivers of these changes, refer to the discussions above under “—Results of Operations.”

Free Cash Flow

The table below reconciles Free Cash Flow to net cash provided by operating activities for the periods presented.


	Successor						Predecessor
	Year Ended December 31, 2016			From Inception through December 31, 2015			Period from January 1, 2015 through June 30, 2015			Year Ended December 31, 2014
	(in thousands)
Net cash provided by operating activities	$	617,523		$	1,754		$	34,556		$	60,825
Dealer generated customer accounts and bulk account purchases		(407,102	)		—			—			—
Subscriber system assets and deferred subscriber installation costs		(468,594	)		(29,556	)		(24,527	)		(48,996	)
Capital expenditures		(78,499	)		(4,490	)		(6,095	)		(8,916	)

Free Cash Flow	$	(336,672	)	$	(32,292	)	$	3,934		$	2,913

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Net cash provided by operating activities for the year ended December 31, 2016 resulted from $620 million of net income, exclusive of depreciation and intangible assets amortization and other non-cash items, and reflects: (i) cash interest paid of $431 million; (ii) transaction costs of $347 million associated with the ADT Acquisition; (iii) cash paid of $29 million for fees associated with amendment and restatements to the First Lien Credit Facilities; (iv) cash paid for radio conversion costs of $43 million; (v) restructuring payments of $52 million primarily associated with the ADT Acquisition; and (vi) other cash payments of $28 million that are excluded items under our definition of Adjusted EBITDA. The remainder relates to changes in assets and liabilities due to timing of other operating cash receipts and payments.

Net cash provided by operating activities for the periods from Inception through December 31, 2015, and January 1, 2015 through June 30, 2015 resulted from $26 million and $36 million, respectively, of net loss exclusive of depreciation and intangible asset amortization and other non-cash items, including cash interest paid of $42 million and $27 million, respectively. In addition, operating activities was impacted by transaction costs associated with the ADT Acquisition and changes in assets and liabilities due to timing of other operating cash receipts and payments.

Net cash provided by operating activities for the year ended December 31, 2014 resulted from $86 million of net income, exclusive of depreciation and intangible assets amortization and other non-cash items, including cash interest paid of $54 million. The remainder relates to changes in assets and liabilities due to timing of other operating cash receipts and payments.

Refer to the discussions above under “—Results of Operations” for further details.

For the year ended December 31, 2016, cash paid for dealer generated customer accounts and bulk account purchases of $407 million relates primarily to dealer account purchases under the ADT Authorized Dealer Program.

Cash paid for subscriber system assets and deferred subscriber installation costs was $469 million for the year ended December 31, 2016, $30 million and $25 million for the periods from Inception through December 31, 2015, and January 1, 2015 through June 30, 2015, respectively, and $49 million for the year ended December 31, 2014. The increases in each of the periods are a result of customer accounts generated by the larger combined company activity subsequent to the ADT Acquisition, and in 2015 the ASG Acquisition.

Cash paid for capital expenditures was $78 million for the year ended December 31, 2016, $4 million and $6 million, for the periods from Inception through December 31, 2015, and January 1, 2015 through June 30, 2015, respectively, and $9 million for the year ended December 31, 2014. The increases in each of the periods are a result of the larger combined company activity subsequent to the ADT Acquisition, and in 2015 the ASG Acquisition. In addition, capital expenditures include cash payments for integration related capital expenditures of $15 million for the year ended December 31, 2016.

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LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Our principal liquidity requirements are to finance current operations, investments in internally generated subscriber systems and dealer generated customer accounts, expenditures for property and equipment, debt service requirements, and for potential mergers and acquisitions. These liquidity requirements are primarily funded by our cash flows from operations which include cash received from monthly recurring revenue and upfront fees received from customers, less cash costs to provide services to our customers, including general and administrative costs, certain costs associated with acquiring new customers, and interest payments.

Following the closing of this offering, we expect our ongoing sources of liquidity to include cash generated from operations, borrowings under our Revolving Credit Facilities, and the issuance of additional equity and/or debt securities as appropriate given market conditions. Our future cash needs are expected to include cash for operating activities, working capital, capital expenditures, strategic investments, periodic principal and interest payments in relation to our debt, and potential dividend payments to our shareholders. We believe our cash position, amounts available under our Revolving Credit Facilities, and cash provided by operating activities are and will continue to be adequate to meet our operational and business needs in the next twelve months as well as our long term liquidity needs.

Our ability to meet our debt service obligations and other capital requirements, including capital expenditures, as well as make acquisitions, will depend on our future operating performance which, in turn, will be subject to general economic, financial, business, competitive, legislative, regulatory, and other conditions, many of which are beyond our control. See “Risk Factors–Risks Related to Our Business.” As a normal part of our business, depending on market conditions, we will from time to time consider opportunities to repay, redeem, repurchase, or refinance our indebtedness. Changes in our operating plans, material changes in anticipated sales, increased expenses, acquisitions, or other events may cause us to seek additional equity and/or debt financing in future periods. There can be no guarantee that financing will be available on acceptable terms or at all. Debt financing, if available, could impose additional cash payment obligations and additional covenants and operating restrictions. In addition, any of the items discussed in detail under the section titled “Risk Factors” may also significantly impact our liquidity.

We are a highly leveraged company with significant debt service requirements. As of September 30, 2017 and December 31, 2016, we had $171 million and $76 million in cash and cash equivalents, respectively, and $303 million and $157 million available under our Revolving Credit Facilities (as defined herein), respectively, after giving effect to $47 million and $53 million, respectively, in outstanding letters of credit. The carrying value of total debt outstanding (excluding the Koch Preferred Securities) as of September 30, 2017 and December 31, 2016, was $10,174 million and $9,510 million, respectively.

We expect to receive approximately $ million of net proceeds (based upon the assumed initial public offering price of $ per share, the midpoint of the range set forth on the cover page of this prospectus and assuming no exercise of the underwriters’ over-allotment option) from the sale of the common stock offered by us, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

We currently expect to use (i) approximately $ million of the proceeds from this offering to redeem $ million aggregate principal amount of Prime Notes and to pay the related call premium and (ii) approximately $ million of the proceeds from this offering to pay fees and expenses in connection with this offering, which include legal and accounting fees, SEC and FINRA registration fees, printing expenses, and other similar fees and expenses. In accordance with definitive documents governing the Koch Preferred Securities, following the consummation of this offering, the Company is required to maintain cash in a separate account in an amount equal to at least $750 million until the Koch Preferred Securities have been redeemed in full. The Company expects to fund this separate account amount with the proceeds of this offering. Amounts held in this separate account will be used to redeem the Koch Preferred Securities following the consummation of this

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offering. The Company is required to increase the amounts held in the separate account in certain circumstances, such as the completion of a public equity offering. Redemption of the Koch Preferred Securities prior to maturity will result in a material impact on our consolidated financial statements. The funds deposited in this separate account will be restricted cash on our balance sheet. See “Use of Proceeds” and “Description of the Koch Preferred Securities.” Following this offering, we expect our total indebtedness, including the Koch Preferred Securities, to be reduced by at least $ million and our annual interest expense (dividends on the Koch Preferred Securities are recorded as interest expense) to be reduced by approximately $ million and $ million per year to reflect the redemption of the Prime Notes and the Koch Preferred Securities, respectively, assuming with respect to the Koch Preferred Securities, that the applicable redemption date was July 1, 2018 and the five year Treasury Rate was .

Long-Term Debt

Prior to May 2, 2016, the Company’s indebtedness under its first and second lien credit agreements (the “First Lien Credit Agreement” and “Second Lien Credit Agreement,” respectively) consisted of the following:

•

a first lien term loan facility with an initial aggregate principal amount of $1,095 million maturing on July 1, 2021 (the “First Lien Term B Loan”). Interest rate on the First Lien Term B Loan was originally calculated as a margin of 4.00% over the greater of three-month London Interbank Offered Rate (“LIBOR”) or a floor of 1.00%, and was payable on each interest payment date, at least quarterly, in arrears;

•

a first lien revolving credit facility maturing on July 1, 2020, with an aggregate commitment of up to $95 million, (the “2020 Revolving Credit Facility”); and

•

a second lien term loan facility with an initial aggregate principal amount of $260 million maturing on July 1, 2022 (the “Second Lien Term B Loan”). Interest rate on the Second Lien Term B Loan was originally calculated as a margin of 8.75% over the greater of three-month LIBOR or a floor of 1.00% and was payable on each interest payment date, at least quarterly, in arrears.

The ADT Corporation Acquisition

The ADT Acquisition was completed on May 2, 2016. The consideration for the ADT Acquisition was funded from $3,571 million of equity contributions, net of equity issuance costs, from Apollo and certain other investors, as well as proceeds received from debt financing arrangements, as further detailed below:

•

We successfully completed the offering of $3,140 million aggregate principal amount of Prime Notes and received net cash proceeds totaling $3,096 million. Interest on the Prime Notes accrues at 9.250% per annum and will be paid semi-annually, in arrears, on May 15 and November 15 of each year.

•

We entered into an incremental first lien term loan facility, in an aggregate principal amount of $1,555 million, maturing on May 2, 2022 (the “First Lien Term B-1 Loan”) and received net cash proceeds totaling $1,516 million. The interest rate for the First Lien Term B-1 Loan was originally calculated as a margin of 4.50% (subsequently reduced following amendments and restatements of the First Lien Credit Agreement on June 23, 2016 and December 28, 2016 as described below) over the greater of LIBOR or a floor of 1.00%, and is payable on each interest payment date, at least quarterly, in arrears.

•

We entered into an incremental first lien revolving facility, with an aggregate commitment of up to $255 million, maturing on May 2, 2021 (the “2021 Revolving Credit Facility,” collectively with the 2020 Revolving Credit Facility, the “Revolving Credit Facilities”). The interest rate for the 2021 Revolving Credit Facility is calculated as a margin of 4.50% over LIBOR, subject to adjustment to 4.25% pursuant to a leverage-based pricing grid, and is payable on each interest payment date, at least quarterly, in arrears.

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•

As a result of the ADT Acquisition, we recorded incremental debt (excluding capital lease obligations and other) at a fair value of $3,519 million, which was originally issued by The ADT Corporation. Interest rates on this debt range from 3.50% to 6.50%, and is payable semi-annually on dates based on each respective original issuance.

•

We amended and restated the First Lien Credit Agreement as of May 2, 2016 to include, among other matters, an increase to the applicable margins utilized for the First Lien Term B Loan and the 2020 Revolving Credit Facility from 4.00% to 4.50%.

•

We issued 750,000 shares of the Koch Preferred Securities and Ultimate Parent issued the Warrants to the Koch Investor for an aggregate amount of $750 million. We allocated $659 million to the Koch Preferred Securities, which is reflected net of issuance costs of $27 million as a liability in the historical consolidated balance sheet. We allocated the remaining $91 million in proceeds to the Warrants, which was contributed to us by Ultimate Parent in the form of common equity, net of $4 million in issuance costs. Subsequent to September 30, 2017, we amended and restated the certificate of designation and investors rights agreement governing the Koch Preferred Securities to provide for certain redemption provisions and to remove certain covenants following an initial public offering. Refer to “Description of the Koch Preferred Securities” for additional information.

Amendment and Restatements of First Lien Credit Agreement

2016 First Lien Credit Agreement Amendments

On June 23, 2016, we amended and restated our First Lien Credit Agreement. Significant terms consist of the following:

•

We entered into an incremental first lien term loan facility, in an aggregate principal amount of $125 million, maturing on May 2, 2022 (the “Incremental First Lien Term B-1 Loan”) and received net cash proceeds totaling $108 million. The proceeds were used to pay down a portion of the outstanding principal balance on the Second Lien Term B Loan on July 1, 2016, as discussed further below. The interest rate for the Incremental First Lien Term B-1 Loan was originally calculated as a margin of 3.75% over the greater of LIBOR or a floor of 1.00%, and is payable on each interest payment date, at least quarterly, in arrears.

•

An aggregate principal amount of $172 million was re-allocated from the First Lien Term B Loan to the First Lien Term B-1 Loan.

•

The applicable margin utilized in the calculation of interest for all term borrowings under the First Lien Credit Agreement was decreased from 4.50% to 3.75%, and the applicable margin with respect to borrowings under the Revolving Credit Facilities remained at 4.50%, subject to adjustment to 4.25% pursuant to a leverage-based pricing grid.

We refer to, collectively, the First Lien Term B Loan, the First Lien Term B-1 Loan, and the Incremental First Lien Term B-1 Loan, as the “First Lien Term Loan Facility.” We refer to, collectively, the First Lien Term Loan Facility and the Revolving Credit Facilities, as the “First Lien Credit Facilities.”

On December 28, 2016, we amended and restated our First Lien Credit Agreement. Significant terms consist of the following:

•

We re-allocated the remaining outstanding principal amount of $916 million from the First Lien Term B Loan to the First Lien Term B-1 Loan.

•

The applicable margin utilized in the calculation of interest for all term borrowings under the First Lien Credit Agreement was decreased from 3.75% to 3.25%, and the applicable margin with respect to term borrowings under the Revolving Credit Facilities remained at 4.50%, subject to adjustment to 4.25% pursuant to a leverage-based pricing grid.

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We refer to all the above amendments collectively as the “2016 First Lien Credit Agreement Amendments.” As a result of the 2016 First Lien Credit Agreement Amendments, we incurred third party modification fees of $22 million, a significant portion of which is included in merger, restructuring, integration, and other costs in the consolidated statement of operations for the year ended December 31, 2016. We also recorded a loss on extinguishment of debt of $14 million, which is included in other (expense) income in the consolidated statement of operations for the year ended December 31, 2016.

2017 First Lien Credit Agreement Amendments

On February 13, 2017, we amended and restated our First Lien Credit Agreement. As a result of this amendment and restatement, we entered into an incremental first lien term loan facility in an aggregate principal amount of $800 million under the First Lien Credit Agreement (the “2017 Incremental First Lien Term B-1 Loan”). The 2017 Incremental First Lien Term B-1 Loan has the same terms as the existing term loans under the First Lien Credit Agreement. Additionally, this amendment and restatement added an exception to the covenant under the First Lien Credit Agreement governing restricted payments to permit us to fund one or more distributions to our equity holders in an aggregate amount not to exceed $795 million (collectively, the “Special Dividend”).

On June 29, 2017, we further amended and restated our First Lien Credit Agreement. Under the June 29, 2017 amendment and restatement, the applicable margin utilized in the calculation of interest for all term borrowings under the First Lien Credit Agreement decreased from 3.25% to 2.75%, and the applicable margin with respect to borrowing under the Revolving Credit Facilities remained at 4.50%, subject to adjustment to 4.25% pursuant to a leverage-based pricing grid.

As a result of the Special Dividend and the February and June 2017 amendments and restatements to the First Lien Credit Agreement and the Incremental First Lien Term B-1 Loan, we incurred fees of $64 million during the nine months ended September 30, 2017, which are included in selling, general and administrative expenses in the condensed consolidated statements of operations. We also recorded an immaterial loss on extinguishment of debt for the nine months ended September 30, 2017.

We refer to all the above amendments collectively as the “2017 First Lien Credit Agreement Amendments.”

Second Lien Term B Loan

As discussed above, in July 2016, we used the proceeds received from the Incremental First Lien Term B-1 Loan to voluntarily prepay $125 million of the Second Lien Term B Loan. In October 2016, we voluntarily prepaid the remaining outstanding balance of $135 million of the Second Lien Term B Loan using proceeds from operations, and terminated the Second Lien Credit Agreement. In connection with these prepayments, we recorded a loss on extinguishment of debt of $14 million primarily related to the write-off of deferred financing costs and discount, which is included in other (expense) income in the consolidated statement of operations for the year ended December 31, 2016.

Revolving Credit Facilities

During the year ended December 31, 2016, we borrowed $210 million and repaid $70 million under the 2021 Revolving Credit Facility. We also repaid the remaining outstanding balance of $22 million under the 2020 Revolving Credit Facility during the year ended December 31, 2016. As of December 31, 2016, we had $140 million of outstanding borrowings under our Revolving Credit Facilities, which we repaid in its entirety during the nine months ended September 30, 2017.

Debt Covenants

The credit agreement and indentures associated with our existing borrowings and the borrowings above contain certain covenants and restrictions that limit our ability to, among other things, incur additional debt or

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issue certain preferred equity interests; create liens on certain assets; make certain loans or investments (including acquisitions); pay dividends on or make distributions in respect of our capital stock or make other restricted payments; consolidate, merge, sell, or otherwise dispose of all or substantially all of our assets; sell assets; enter into certain transactions with our affiliates; enter into sale-leaseback transactions; restrict dividends from our subsidiaries or restrict liens; change our fiscal year; and modify the terms of certain debt or organizational agreements.

We are also subject to a springing financial maintenance covenant under the Revolving Credit Facilities, which requires us to maintain a net first lien senior secured leverage ratio of no greater than 3.30 to 1.00 at the end of each fiscal quarter. The covenant is tested if the outstanding loans under the Revolving Credit Facilities, subject to certain exceptions, exceed 30% of the total commitments under the Revolving Credit Facilities at the testing date (i.e., the last day of any fiscal quarter).

At December 31, 2016 and September 30, 2017, we were in compliance with the financial covenant and other maintenance tests for all our debt obligations.

Refer to Note 4 and Note 5 of the unaudited and audited consolidated financial statements, respectively, included elsewhere in this prospectus for further information regarding our indebtedness.

Dividends

During the first half of 2017, the net proceeds from the 2017 Incremental First Lien Term B-1 Loan, together with cash on hand, were used to fund distributions of $750 million of the Special Dividend to certain investors of the Company and Ultimate Parent, which primarily includes distributions to our Sponsor, and to pay related fees and expenses. Such dividends are presented in the condensed consolidated statement of stockholders’ equity for the nine months ended September 30, 2017.

We paid cash of $41 million and $53 million to meet our dividend obligation associated with the Koch Preferred Securities issued to Koch Investor during the nine months ended September 30, 2017 and the year ended December 31, 2016, respectively. In addition, in the third quarter of 2017, we elected to satisfy the dividend obligation to the holders of the Koch Preferred Securities through a payment-in-kind, which increased mandatorily redeemable preferred securities on our consolidated balance sheet by approximately $22 million as of September 30, 2017. Dividends on the Koch Preferred Securities are recorded in interest expense in the condensed consolidated statement of operations.

Cash Flow Analysis

Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016

The following table is a summary of our cash flow activity for the periods presented:


	For the Nine Months Ended
	September 30, 2017			September 30, 2016
	(in thousands)
Net cash provided by operating activities	$	1,262,340		$	381,813
Net cash used in investing activities	$	(1,038,049	)	$	(9,062,956	)
Net cash (used in) provided by financing activities	$	(129,586	)	$	8,829,270

Cash Flows from Operating Activities

For the nine months ended September 30, 2017 and September 30, 2016, net cash provided by operating activities was $1,262 million and $382 million, respectively. See discussion of net cash provided by operating activities included in Free Cash Flow under “—Non-GAAP Measures.”

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Cash Flows from Investing Activities

We make certain investments in our business, which are intended to grow our customer base, enhance the overall customer experience, improve the productivity of our field workforce, and support greater efficiency of our back office systems and our customer care centers. For the nine months ended September 30, 2017 and September 30, 2016, our investing activities consisted of subscriber system asset and deferred subscriber installation cost additions of $445 million and $321 million, respectively. Additionally, we paid $486 million and $259 million during the nine months ended September 30, 2017 and September 30, 2016, respectively, for customer contracts for electronic security services purchased under the ADT Authorized Dealer Program and bulk account purchases. We also paid $103 million and $51 million for capital expenditures during nine months ended September 30, 2017 and September 30, 2016, respectively. In addition to the items described above, the net cash used in investing activities during the nine months ended September 30, 2017 and nine months ended September 30, 2016 was attributable to cash paid for acquisitions of businesses of $32 million and the ADT Acquisition, net of cash acquired, in the amount of $8,502 million, respectively. Furthermore, net cash received for other investing activities during the nine months ended September 30, 2017 of $28 million primarily relates to proceeds received from the sale of a cost basis investment. Net cash received for other investing activities during the nine months ended September 30, 2016 includes net proceeds received of $42 million from the termination of derivative financial instruments related to the ADT Acquisition and proceeds of $28 million related to the release of restricted cash associated with the Protection One and ASG Acquisitions.

Cash Flows from Financing Activities

For the nine months ended September 30, 2017, the net cash used in financing activities was primarily attributable to dividend payments of $750 million to certain investors of the Company and Ultimate Parent, which primarily includes distributions to our Sponsor. Cash flows from financing activities also include net proceeds from long-term borrowings of $631 million, including $800 million in 2017 Incremental First Lien Term B-1 Loan, offset by repayments of $140 million outstanding under our Revolving Credit Facilities and principal paydowns of $18 million under our first lien term loan.

For the nine months ended September 30, 2016, the net cash provided by financing activities was primarily attributable to proceeds from borrowings, equity capital contributions, as well as proceeds from the issuance of the Koch Preferred Securities to fund the ADT Acquisition. The remaining net proceeds from financing activities were primarily attributable to the amendments and restatements to our First Lien Credit Agreement that occurred on May 2, 2016 and June 23, 2016, which was partially offset by a $22 million paydown under our Revolving Credit Facilities, and $105 million in deferred financing costs primarily associated with the long-term borrowings and the issuance of the Koch Preferred Securities discussed above.

Refer to notes to the unaudited consolidated financial statements included elsewhere in this prospectus for further information regarding our dividends and debt.

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The following table is a summary of our cash flow activity for the periods presented:


	Successor						Predecessor
(in thousands)	Year Ended December 31, 2016			From Inception through December 31, 2015			Period from January 1, 2015 through June 30, 2015			Year Ended December 31, 2014
Net cash provided by operating activities	$	617,523		$	1,754		$	34,556		$	60,825
Net cash used in investing activities	$	(9,384,869	)	$	(2,062,022	)	$	(39,638	)	$	(58,219	)
Net cash provided by (used in) financing activities	$	8,828,775		$	2,076,027		$	(6,212	)	$	83,863

Cash Flows from Operating Activities

For the year ended December 31, 2016, for the period from Inception through December 31, 2015 and January 1, 2015 through June 30, 2015, and for the year ended December 31, 2014, net cash provided by (used in) operating activities was $618 million, $2 million, $35 million and $61 million, respectively. See discussion of net cash provided by (used in) operating activities included in Free Cash Flow under “—Non-GAAP Measures.”

Cash Flows from Investing Activities

For the year ended December 31, 2016, the net cash used in investing activities was primarily attributable to cash paid for the ADT Acquisition, net of cash acquired, in the amount of $8,502 million. We also make certain investments in our business which are intended to grow our customer base, enhance the overall customer experience, improve the productivity of our field workforce, and support greater efficiency of our back office systems and our customer care centers. For the year ended December 31, 2016, our investing activities consisted of subscriber system asset additions and deferred subscriber installation costs of $469 million and cash paid for customer contracts for electronic security services generated under the ADT authorized dealer program and bulk account purchases of $407 million. We also paid $78 million for capital expenditures.

In addition, in 2016, we received net proceeds of $42 million from the termination of derivative financial instruments transactions related to the ADT Acquisition. Furthermore, proceeds received from other investing activities of $29 million is primarily related to the release of restricted cash associated with the Protection One and ASG Acquisitions.

For the period from Inception through December 31, 2015 and January 1, 2015 through June 30, 2015, the net cash used in investing activities was primarily attributable to cash paid for the Protection One Acquisition and the ASG Acquisition, net of cash acquired, of $1,988 million and other acquisitions of businesses of $9 million, respectively. Also included in investing activities for each of these periods were deferred subscriber installation costs of $30 million and $25 million associated with the installation of Company-owned security systems. Furthermore, other investing activities included $39 million of payments primarily related to restricted cash associated with the Formation Transactions.

For the year ended December 31, 2014, the net cash used in investing activities primarily included cash paid for deferred subscriber installation costs of $49 million associated with the installation of Company-owned security systems. Additionally, we paid $9 million for capital expenditures.

Cash Flows from Financing Activities

For the year ended December 31, 2016, the net cash provided by financing activities was primarily attributable to proceeds from borrowings, and equity capital contributions, as well as proceeds from the issuance

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of the Koch Preferred Securities to fund the ADT Acquisition. The proceeds, as well as repayments from long-term borrowings, was also primarily attributable to the amendments to the First Lien Credit Facilities that occurred on May 2, 2016, June 23, 2016, and December 28, 2016. Additionally, repayments from long-term borrowings includes $260 million of voluntary prepayments of the outstanding principal balance on the Second Lien Term B Loan, as well as a $22 million pay down of the outstanding balance on the 2020 Revolving Credit Facility. We also incurred approximately $104 million in deferred financing costs associated with the long-term borrowings and the issuance of the Koch Preferred Securities discussed above, and paid other financing activities of $35 million primarily associated with escrow payments to former ASG and Protection One shareholders in connection with the Formation Transactions.

For the period from Inception through December 31, 2015 and January 1, 2015 through June 30, 2015, the net cash provided by financing activities was primarily attributable to the proceeds from borrowings and equity contributions to finance the Formation Transactions and the associated debt issuance costs.

For the year ended December 31, 2014, the net cash provided by financing activities primarily consisted of proceeds received from new borrowings of $98 million, which was partially offset by principal payments on our long-term debt and capital lease payments of $11 million.

COMMITMENTS AND CONTRACTUAL OBLIGATIONS

The following table provides a summary of our commitments and contractual obligations for debt, minimum lease payment obligations under non-cancelable leases, and other obligations as of December 31, 2016.


	2017		2018		2019		2020		2021		Thereafter		Total
	(in thousands)
Debt principal ⁽¹⁾	$	27,626	$	27,626	$	27,626	$	327,626	$	1,167,626	$	8,214,471	$	9,792,601
Interest payments ⁽²⁾		605,105		619,418		629,232		625,607		611,601		954,102		4,045,065
Preferred securities including dividends ⁽³⁾		83,607		86,553		87,763		88,781		89,119		1,501,711		1,937,534
Operating leases		63,051		57,677		47,701		36,841		20,792		28,609		254,671
Capital leases ⁽⁴⁾		14,945		12,657		10,052		7,759		5,081		2,435		52,929
Purchase obligations ⁽⁵⁾		184,926		4,765		1,054		—		—		—		190,745

Total contractual cash obligations ⁽⁶⁾	$	979,260	$	808,696	$	803,428	$	1,086,614	$	1,894,219	$	10,701,328	$	16,273,545

(1)

Debt principal consists of short-term and long-term debt obligations, and excludes capital lease obligations and other, debt discounts, deferred financing costs, and interest. Future obligations related to debt assumed in the ADT Acquisition are based on principal balances due at maturity, and exclude amounts related to the purchase accounting fair value adjustments.

(2)

Interest payments represent estimated interest payments on our outstanding debt balance as of December 31, 2016. The interest payments assume the outstanding borrowings under our Revolving Credit Facilities were $140 million for all periods presented above. Interest payments are calculated based on a Forward 3-Month LIBOR curve (or floor, whichever is higher) plus the applicable margin in effect at December 31, 2016. The actual interest rates on the variable indebtedness incurred and the amount of our indebtedness could vary from those used to compute the above interest payments.

(3)

Represents our dividend obligation associated with the Koch Preferred Securities. The table above includes estimated dividend payments, and assumed payment of the aggregate stated value amount of $750 million in full at May 2, 2030, which is the date of the mandatory redemption. Dividend payments are calculated based on a rate of the five year U.S. Treasury yield in effect at December 31, 2016 plus 9.00% per annum, with a floor of 1.25%. Dividends paid on the Koch Preferred Securities are presented as interest expense.

(4)	Capital leases reflect the principal amount of capital lease obligations, including related interest.

(5)	Purchase obligations consist of commitments related to agreements for purchases of goods and services, including purchase orders, entered into in the ordinary course of business. The purchase obligations in the table above primarily

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relate to an existing supply and purchasing agreement, as amended, between The ADT Corporation and one of its suppliers for the purchase of certain security system equipment and components. The agreement provides that The ADT Corporation meet minimum purchase requirements, which are subject to adjustments based on certain performance conditions. The agreement expires on December 31, 2017.

(6)

Total contractual cash obligations in the table above exclude income taxes as we are unable to make a reasonably reliable estimate of the timing for the remaining payments in future years. As of December 31, 2016, we had unrecognized tax benefits of $102 million. Accrued interest and penalties related to the unrecognized tax benefits were not material. Refer to Note 8 to the Company’s audited consolidated financial statements included elsewhere in this prospectus for further information.

As of December 31, 2016, standby letters of credit primarily relating to our insurance programs were $53 million.

We may also be required to make mandatory prepayments on outstanding term loan borrowings with our excess cash flow, as defined in the First Lien Credit Agreement, if it exceeds certain specified thresholds beginning in 2018.

As of September 30, 2017, there have been no material changes to the commitments and contractual obligations table above outside the ordinary course of business, except as noted below.

Debt Principal and Interest Payments

Our debt principal and interest payments have changed as a result of the activity related to our debt as discussed in Note 4 to the Company’s audited consolidated financial statements included elsewhere in this prospectus.

Purchase Obligations

In May 2017, we entered into an agreement with one of our suppliers for the purchase of certain security system equipment and components. Based on certain milestones in the agreement, the Company could potentially be required to make purchases in aggregate of up to $150 million over a multi-year period. As of September 30, 2017, the Company does not have any purchase obligation under this agreement.

OFF-BALANCE SHEET ARRANGEMENTS

There were no material off-balance sheet arrangements as of December 31, 2016 or September 30, 2017.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of the consolidated financial statements in conformity with GAAP requires management to use judgment in making estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of revenue and expenses. The following accounting policies are based on, among other things, judgments and assumptions made by management that include inherent risks and uncertainties. Management’s estimates are based on the relevant information available at the end of each period. Actual results could differ materially from these estimates under different assumptions or market conditions.

Revenue Recognition

Substantially all of our revenue is generated by contractual monthly recurring fees received for monitoring services provided to customers. Revenue from monitoring services is recognized as those services are provided to customers. Customer billings for services not yet rendered are deferred and recognized as revenue as the services are rendered. The balance of deferred revenue is included in current liabilities or long-term liabilities, as appropriate.

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For transactions in which we retain ownership of the security system, non-refundable fees (referred to as deferred subscriber acquisition revenue) received in connection with the initiation of a monitoring contract are deferred and amortized over the estimated life of the customer relationship.

Early termination of the contract by the customer results in a termination charge in accordance with the customer contract, which is recognized when collectability is reasonably assured.

Subscriber System Assets and Deferred Subscriber Acquisition Costs

We capitalize certain costs associated with transactions in which we retain ownership of the security system. These costs include equipment, installation costs, and other direct and incremental costs. Subscriber system assets represent capitalized equipment and installation costs incurred in connection with transactions where we retain ownership of the security system. Upon customer termination, we may retrieve such assets. Deferred subscriber acquisition costs primarily represent direct and incremental selling expenses (i.e., commissions) related to acquiring the customer. Commissions paid in connection with the establishment of the monitoring contract generally do not exceed deferred subscriber acquisition revenue.

Subscriber system assets and any related deferred subscriber acquisition costs and deferred subscriber acquisition revenue resulting from the customer acquisition are accounted for using pools based on the month and year of acquisition. We amortize our pooled subscriber system assets and related deferred costs and deferred revenue using an accelerated method over the expected life of the customer relationship, which is 15 years. In cases where deferred subscriber acquisition costs are in excess of deferred customer acquisition revenues, we amortize such costs over the initial term of the contract on a straight-line basis. We periodically perform lifing studies to estimate the expected life of the customer relationship and the attrition pattern of our customers. The lifing studies are based on historical customer terminations and are used to establish the amortization rates of our customer account pools in order to reflect the pattern of future benefit. The results of the lifing studies indicate that we can expect attrition to be the greatest in the initial years of asset life; therefore, an accelerated method best matches the future amortization cost with the estimated revenue stream from these customer pools.

Definite-Lived Intangible Assets

Definite-lived intangible assets primarily include customer and dealer relationships that originated from the Formation Transactions and the ADT Acquisition. The amortizable life and method of amortization of our customer relationship intangible assets are based on the estimated timing of expected future revenue from customer accounts, and average customer account life. The amortizable life and method of amortization of our dealer relationship intangible assets are based on the estimated longevity of the underlying dealer network and the attrition of those respective dealers that existed as of the Formation Transactions and the ADT Acquisition, respectively.

Certain contracts and related customer relationships are generated from an external network of independent dealers who operate under the ADT authorized dealer program. These contracts and related customer relationships are recorded at their contractually determined purchase price. During the charge-back period, generally twelve to fifteen months, any cancellation of monitoring service, including those that result from customer payment delinquencies, results in a charge-back by the Company to the dealer for the full amount of the contract purchase price. We record the amount charged back to the dealer as a reduction of the intangible assets.

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Definite-lived intangible assets arising from the ADT authorized dealer program, as described above, are accounted for using pools based on the month and year of acquisition. We amortize our pooled dealer intangible assets using an accelerated method over the expected life of the pool of customer relationships, which is 15 years.

Long-Lived Assets

We review long-lived assets held and used by us, including property and equipment, definite-lived intangible assets, and deferred subscriber acquisition costs, for impairment whenever events or changes in business circumstances indicate that the carrying amount of an asset or asset group may not be fully recoverable. If an impairment is determined to exist, we calculate any related impairment loss based on the difference between the fair value and carrying values of the respective assets or asset groups.

Impairments on long-lived assets to be disposed of are determined based upon the fair value less the cost to sell the applicable assets. The calculation of the fair value of long-lived assets is based on assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates, reflecting varying degrees of perceived risk. There were no material long-lived asset impairments recorded in the consolidated financial statements.

Goodwill

We assess goodwill for impairment annually or more frequently if events or changes in business circumstances indicate that it is more likely than not that the carrying value of a reporting unit exceeds its fair value. In performing these assessments, management relies on various factors, including operating results, business plans, economic projections, anticipated future cash flows, and other market data. There are inherent uncertainties related to these factors and judgment is required in applying them to the goodwill impairment test. Historically, our annual goodwill impairment test was performed on the first day of our third quarter. Subsequent to the completion of the third quarter 2016 annual goodwill impairment test, we changed our annual impairment test date to the first day of our fourth quarter of each year in order to align the annual impairment test dates for our goodwill and indefinite-lived intangible assets across all of our reporting units with our budgeting and forecasting cycle.

Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of the annual goodwill impairment test will prove to be accurate predictions of the future. Examples of events or circumstances that could reasonably be expected to negatively affect the underlying key assumptions and ultimately impact the estimated fair value of the business may include such items as: a prolonged downturn in the business environment; changes in economic conditions that significantly differ from our assumptions in timing or degree; volatility in equity and debt markets resulting in higher discount rates; and unexpected regulatory changes.

As discussed in Note 4 to the audited consolidated financial statements, and as part of our 2016 goodwill impairment tests, we performed a quantitative goodwill impairment test for all of our reporting units. A quantitative test was performed over the Retail and Wholesale reporting units on July 1, 2016, and a quantitative test was performed over the ADT United States and ADT Canada reporting units on October 1, 2016. The fair value for each reporting unit was determined using a discounted cash flow method. Key assumptions for computing fair value included discount rates, long term growth rates, foreign currency exchange rate, and cash flow projections for each of our reporting units. Based on the results of our step one testing, the fair values of each of our reporting units exceeded their carrying values. Therefore, step two of the goodwill impairment test was not required and no goodwill impairment was recognized for 2016.

In connection with our annual impairment test date change, we also qualitatively tested the goodwill associated with the Retail and Wholesale reporting units for impairment as of October 1, 2016, and concluded

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that it was not more likely than not that the fair value of the Retail and Wholesale reporting units were less than their respective carrying values.

In connection with the change in our reporting units during the second quarter of 2017, as discussed in Note 1 to the unaudited and audited consolidated financial statements, we tested goodwill for the historical Retail, Wholesale, and ADT United States reporting units prior to and immediately after this change. The fair values of the reporting units tested were determined under a discounted cash flow approach which utilized forecasted cash flows that were then discounted using an estimated weighted-average cost of capital of market participants. In determining fair value, management relies on and considers a number of factors, including operating results, business plans, economic projections, anticipated future cash flows, and other market data. There are inherent uncertainties related to these factors which require judgment in applying them during these impairment tests. As a result of the impairment tests, the fair values of the historical Retail, Wholesale, and ADT United States reporting units each substantially exceeded its respective carrying value, resulting in no impairment.

While our goodwill impairment tests resulted in fair values of goodwill in excess of carrying values, if our assumptions are not realized, or if there are changes in any of the assumptions in the future due to a change in economic conditions, it is possible that in the future an impairment charge may need to be recorded. We will continue to monitor the recoverability of our goodwill.

Business Combinations and Asset Acquisitions

We account for business combinations using the acquisition method of accounting. Under the acquisition method of accounting, our consolidated financial statements reflect the operations of an acquired business starting from the completion of the acquisition. In addition, the assets acquired and liabilities assumed are recorded at the date of acquisition at their estimated fair values, with any excess of the purchase price over the estimated fair values of the net assets acquired recorded as goodwill.

Significant judgment is required in estimating the fair value of intangible assets and in assigning their respective useful lives. Accordingly, we may engage third-party valuation specialists to assist us in these determinations. The fair value estimates are based on available historical information and on future expectations and assumptions deemed reasonable by management, but are inherently uncertain.

Additionally, as noted above, we purchase customer accounts from an external network of independent dealers who operate under the ADT authorized dealer program. Purchases of new accounts are considered asset acquisitions and are recorded at their contractually determined purchase price. During the charge-back period, generally twelve to fifteen months, any cancellation of monitoring service, including those that result from customer payment delinquencies, results in a charge-back by the Company to the dealer for the full amount of the contract purchase price. We record the amount charged back to the dealer as a reduction of the intangible assets.

Loss Contingencies

We record accruals for various contingencies including legal proceedings and other claims that arise in the normal course of business. The accruals are based on judgment, the probability of losses, and where applicable, the consideration of opinions of internal and/or external legal counsel and actuarially determined estimates. We record an accrual when a loss is deemed probable to occur and is reasonably estimable. Additionally, we record insurance recovery receivables from third-party insurers when recovery has been determined to be probable.

Income Taxes

For purposes of our consolidated financial statements, income tax expense, deferred tax balances, and tax carryforwards are recorded on a consolidated return basis for U.S. entities, and following the ADT Acquisition, on a standalone basis for Canadian entities.

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In determining taxable income for our consolidated financial statements, we must make certain estimates and judgments. These estimates and judgments affect the calculation of certain tax liabilities and the determination of the recoverability of certain of the deferred tax assets, which arise from temporary differences between the tax and financial statement recognition of revenue and expense.

In evaluating our ability to recover our deferred tax assets, we consider all available positive and negative evidence including our past operating results, the existence of cumulative losses in the most recent years, and our forecast of future taxable income. In estimating future taxable income, we develop assumptions including the amount of future pre-tax operating income, adjustments to temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates we are using to manage our underlying businesses.

We do not have any significant valuation allowances against our net deferred tax assets.

Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. We record the effect of a tax rate or law change on our deferred tax assets and liabilities in the period of enactment. Future tax rate or law changes could have a material effect on our results of operations, financial condition, or cash flows.

In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations in the United States and Canada. We recognize potential liabilities and record tax liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on estimates of whether, and the extent to which, additional taxes will be due in accordance with the authoritative guidance regarding the accounting for uncertain tax positions. These tax liabilities are reflected net of related tax loss carryforwards. We adjust these reserves in light of changing facts and circumstances; however, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities. If our estimate of tax liabilities proves to be less than the ultimate assessment, an additional charge to expense would result. If payment of these amounts ultimately proves to be less than the recorded amounts, the reversal of the liabilities would result in tax benefits being recognized in the period when we determine the liabilities are no longer necessary.

ACCOUNTING PRONOUNCEMENTS

See the consolidated financial statements included in this prospectus for information about recent accounting pronouncements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Our operations include activities in the U.S. and Canada. These operations expose us to a variety of market risks, including the effects of changes in interest rates and foreign currency exchange rates. We monitor and manage these financial exposures as an integral part of our overall risk management program. Our policies allow for the use of specified financial instruments for hedging purposes only. Use of derivatives for speculation purposes is prohibited.

Interest Rate Risk

Our debt includes fixed-rate, variable-rate debt, and Revolving Credit Facilities that bear interest based on LIBOR. As a result, we are exposed to fluctuations in interest rates on our long-term debt. The carrying value of our long-term debt, excluding capital lease and other long term obligations, was $9,464 million and $1,332 million as of December 31, 2016 and December 31, 2015, respectively. The fair value of our long-term debt, excluding capital lease and other long term obligations, was $10,014 million and $1,351 million as of

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December 31, 2016 and December 31, 2015, respectively. As of December 31, 2016, a hypothetical 10% increase or decrease in interest rates would change the fair value of our fixed-rate debt by approximately $282 million. As of December 31, 2016, the exposure associated with our variable-rate borrowings to a hypothetical 10% increase or decrease in interest rates would not be material to earnings, fair values, or cash flows. As of September 30, 2017, our exposure to fluctuations in interest rates did not materially change subsequent to December 31, 2016.

To help manage borrowing costs, we may from time to time enter into interest rate swap transactions with financial institutions acting as principal counterparties. As of December 31, 2016, we did not have any interest rate swap contracts outstanding. In April 2017, we entered into interest rate swap contracts with notional amounts aggregating $1,000 million, to hedge a portion of our variable rate debt under our First Lien Credit Facilities. Refer to Note 7 to the unaudited consolidated financial statements included elsewhere in this prospectus for more information about our derivatives.

Foreign Currency Risk

We have exposure to the effects of foreign currency exchange rate fluctuations on the results of our Canadian operations. Our Canadian operations use the Canadian dollar to conduct business, but our results are reported in U.S. dollars.

We are exposed to the foreign currency exchange rate fluctuations to the extent that we enter into transactions denominated in currencies other than our subsidiaries’ respective functional currencies. We may from time to time use financial derivatives, which may include forward foreign currency exchange contracts and foreign currency options, to hedge this risk. We generally do not hedge investments in foreign subsidiaries if such investments are long-term in nature. We hedge our exposure to fluctuations in foreign currency exchange rates through the use of forward foreign currency exchange contracts.

Our largest exposure to foreign exchange rates relates to the Canadian dollar against the U.S. dollar. The Company recognized net foreign currency gains of $27 million and losses of $16 million for the nine months ended September 30, 2017 and year ended December 31, 2016, respectively, related to the translation of monetary assets and liabilities that are denominated in currencies other than the underlying functional currency of the applicable entity, and primarily relate to intercompany loans. Such amounts are included in other income (expense) in the consolidated statements of operations.

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COVENANT ADJUSTED EBITDA

We present the non-GAAP measure Covenant Adjusted EBITDA, which is defined in the indenture governing the Prime Notes and the First Lien Credit Facilities as “EBITDA,” as a supplemental measure of our performance and ability to service debt and incur additional debt. For instance, the indenture governing the Prime Notes contains limitations on the incurrence or guarantee of additional indebtedness, subject to certain exceptions, including, but not limited to, the ability to incur additional indebtedness if on the date of such incurrence, after giving effect to such incurrence Prime Borrower’s ratio of Covenant Adjusted EBITDA to fixed charges for the most recently ended four full fiscal quarters would have been at least 2.00 to 1.00. Covenant Adjusted EBITDA is also important in measuring certain other restrictions imposed on Prime Borrower and its subsidiaries under the Prime Notes and the Credit Facility, such as their ability to make investments, distribute dividends, and pledge some or all of their assets. Additionally, the Revolving Credit Facilities include a springing financial maintenance covenant that requires Prime Borrower’s ratio of consolidated net debt secured by first-priority liens on the collateral to last twelve month’s Covenant Adjusted EBITDA not to exceed 3.30 to 1.00. The covenant will be tested quarterly when the Revolving Credit Facilities are more than 30.0% drawn (excluding outstanding cash collateralized letters of credit), and will be a condition to drawings under the Revolving Credit Facilities that would result in more than 30.0% drawn thereunder.

For the twelve months ended September 30, 2017, Covenant Adjusted EBITDA was $2,662 million, and Prime Borrower’s net first lien senior secured leverage ratio was 2.7x to 1.00, excluding the impact of the Koch Preferred Securities. As of September 30, 2017, the borrowings under the Revolving Credit Facilities were less than 30.0% of the outstanding commitments; therefore, the springing financial maintenance covenant under the Revolving Credit Facilities was not in effect.

Under the indenture governing the Prime Notes and the First Lien Credit Agreement governing the First Lien Credit Facilities, Prime Borrower is allowed to add back certain non-cash and non-recurring charges or gains that are deducted in calculating net income. All such expenses are set forth in the table below. The Prime Notes and the First Lien Credit Facilities require the calculation of Covenant Adjusted EBITDA to be based on the financial statements of Prime Borrower, our main operating entity, which is the issuer of the Prime Notes and the borrower under the First Lien Credit Facilities. The financial statements of Prime Borrower are not included in this prospectus. The financial statements of Prime Borrower are different from the financial statements of the Company only in so far that they do not account for the Koch Preferred Securities. As a result, Covenant Adjusted EBITDA is the same for both Prime Borrower and the Company.

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Our calculation of Covenant Adjusted EBITDA is presented below and is based on the financial statements of ADT Inc. and is in the same Covenant Adjusted EBITDA as Prime Borrower:


	Twelve Months Ended September 30, 2017
	(in thousands)
Net loss	$	(380,506	)
Interest expense, net		737,579
Income tax benefit		(75,378	)
Depreciation and intangible asset amortization		1,814,823
Merger, restructuring, integration, and other costs ⁽¹⁾		77,098
Financing and consent fees ⁽²⁾		66,017
Foreign currency gains ⁽³⁾		(27,067	)
Loss on extinguishment of debt ⁽⁴⁾		16,573
Purchase accounting deferred revenue fair value adjustment ⁽⁵⁾		3,497
Other non-cash items ⁽⁶⁾		14,252
Radio conversion costs ⁽⁷⁾		17,334
Amortization of deferred subscriber acquisition costs and revenue, net ⁽⁸⁾		6,870
Share-based compensation expense ⁽⁹⁾		10,360
Management fees and other charges ⁽¹⁰⁾		26,062

Adjusted EBITDA		2,307,514
Gross subscriber acquisition cost expenses, net ⁽¹¹⁾		354,649

Covenant Adjusted EBITDA	$	2,662,163

(1)

Represents direct and incremental costs resulting from acquisitions made by the Company, primarily associated with the ADT Acquisition, which occurred on May 2, 2016 and certain related restructuring and integration efforts as a result of those acquisitions, as well as certain other impairment charges associated with cost method investments.

(2)	Represents fees associated with amendments and restatements to our First Lien Credit Agreement. Nine months ended September 30, 2017, also includes fees paid related to the Special Dividend and fees incurred related to the 2017 Incremental Term B-1 Loan.

(3)	Relates to the translation of monetary assets and liabilities that are denominated in Canadian dollars, primarily due to intercompany loans.

(4)	Represents the write-off of debt discount and issuance costs associated with certain repayments of our outstanding debt, as well as amendments and restatements to our First Lien Credit Agreement.

(5)	Includes purchase accounting adjustments related to fair value of deferred revenue under GAAP.

(6)	Primarily represents certain asset write downs associated with cost method investments.

(7)	Represents costs associated with our program that began in 2015 to upgrade cellular technology used in many of our security systems.

(8)	Represents non-cash amortization expense associated with deferred subscriber acquisition costs, net of non-cash amortization deferred installation revenue.

(9)	Share-based compensation expense represents compensation expense associated with our equity compensation plans. Refer to Note 12 to the Company’s audited consolidated financial statements for additional information.

(10)	Primarily represents fees paid under the Management Consulting Agreement (see “Certain Relationships and Related Party Transactions—Management Consulting Agreement”).

(11)	Represents costs in our statement of operations associated with the acquisition of customers, net of revenue associated with the sale of equipment.

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Our presentation of Covenant Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by the adjustments included above. Covenant Adjusted EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of our liquidity. Covenant Adjusted EBITDA has limitations as an analytical tool and should not be viewed in isolation or as a substitute for GAAP measures of earnings. See “Use of Non-GAAP Financial Information.”

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SUPPLEMENTAL MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We believe this section provides additional information to investors about our financial performance in a manner consistent with how management views our performance. The presentation of supplemental pro forma results is for informational purposes only and is prepared on a basis consistent with Article 11 of Regulation S-X, however, it does not constitute Article 11 pro forma financial information since it reflects the ADT Acquisition and the Formation Transactions as if they had occurred on January 1, 2015.

The unaudited supplemental pro forma nine months ended September 30, 2016, supplemental pro forma year ended December 31, 2016, and supplemental pro forma year ended December 31, 2015 presented herein reflect the ADT Acquisition and the Formation Transactions as if they had occurred on January 1, 2015, to the extent they have not been fully reflected in our historical consolidated financial statements included elsewhere in this prospectus. These unaudited supplemental pro forma results of operations disclosures are not impacted by, nor adjusted for, the impact from the completion of this offering, the issuance of common stock, and the use of the proceeds from this offering as described in the section entitled “Use of Proceeds.”

We have presented below the financial information and operating results for the following:

•

nine months ended September 30, 2017, on a historical basis compared to the nine months ended September 30, 2016 on a supplemental pro forma basis; and

•

year ended December 31, 2016 compared to the year ended December 31, 2015, in each case on supplemental pro forma basis.

Additionally, we have presented notes to our unaudited supplemental pro forma financial information which describe all supplemental pro forma adjustments and their underlying assumptions.

The unaudited supplemental pro forma financial information set forth below is based upon available information and assumptions that we believe are reasonable. The historical financial information has been adjusted to give effect to supplemental pro forma events that are: (1) directly attributable to the ADT Acquisition and the Formation Transactions; (2) factually supportable; and (3) with respect to the statements of operations, expected to have a continuing impact on the combined results. The unaudited supplemental pro forma financial information is for illustrative and informational purposes only and is not intended to represent or be indicative of our financial condition or results of operations had the above transactions occurred on the date indicated. The unaudited supplemental pro forma financial information also should not be considered representative of our future financial condition or results of operations.

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Nine Months Ended September 30, 2017 Compared with Unaudited Supplemental Pro Forma Nine Months Ended September 30, 2016


	Nine Months Ended September 30, 2017			Supplemental Pro Forma Nine Months Ended September 30, 2016 ⁽¹⁾			Change			% Change
	(in thousands, except as otherwise indicated)
Results of Operations:
Monitoring and related services	$	3,017,026		$	2,960,628		$	56,398			2	%
Installation and other		192,944			151,639			41,305			27	%

Total revenue		3,209,970			3,112,267			97,703			3	%
Cost of revenue		658,095			641,616			16,479			3	%
Selling, general and administrative expenses		923,048			941,364			(18,316	)		(2	)%
Depreciation and intangible asset amortization		1,387,245			1,155,145			232,100			20	%
Merger, restructuring, integration, and other costs		54,170			65,403			(11,233	)		(17	)%

Operating income		187,412			308,739			(121,327	)		(39	)%
Interest expense, net		(553,529	)		(565,956	)		12,427			(2	)%
Other income (expense)		31,634			(39,323	)		70,957			(180	)%

Loss before income taxes		(334,483	)		(296,540	)		(37,943	)		13	%
Income tax benefit		38,922			87,830			(48,908	)		(56	)%

Net loss	$	(295,561	)	$	(208,710	)	$	(86,851	)		42	%

Key Performance Indicators: ⁽²⁾
RMR	$	333,814		$	327,228		$	6,586			2	%
Gross customer revenue attrition (percent) ⁽³⁾		13.8	%		15.2	%		(1.4)% points			N/M
Adjusted EBITDA ⁽⁴⁾	$	1,754,383		$	1,623,812		$	130,571			8	%

N/M—Not meaningful

(1)	Refer to Note 1 to Notes to the Unaudited Supplemental Pro Forma Financial Information presented in the Supplemental Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(2)	Refer to the “—Key Performance Indicators” section for the definitions of these key performance indicators.

(3)	Gross customer revenue attrition (percent) as of September 30, 2016 is presented on a pro forma basis for The ADT Corporation business.

(4)

Adjusted EBITDA and Supplemental Pro Forma Adjusted EBITDA are non-GAAP measures. Refer to the “—Non-GAAP Measures” section for the definition thereof and below for a reconciliation to net loss, the most comparable GAAP measure. This table presents our Adjusted EBITDA for the nine months ended September 30, 2017 and our Supplemental Pro Forma Adjusted EBITDA for the nine months ended September 30, 2016.

Revenue

Total revenue increased $98 million for the nine months ended September 30, 2017 as compared to the supplemental pro forma nine months ended September 30, 2016. This increase was a result of an increase in monitoring and related services of $56 million and an increase in installation and other revenue of $41 million.

The increase in monitoring and related services was primarily driven by a change in contractual monthly recurring fees for monitoring and other recurring services, which were favorably impacted by an improvement in average pricing, partially offset by lower customer volume. The improvement in average pricing was driven by price escalations on our existing customer base, as well as the addition of new customers at higher rates, largely due to an increase in ADT Pulse customers as compared to total customer additions. These factors also were the primary driver for an increase in RMR, which increased from $327 million as of September 30, 2016 to $334 million as of September 30, 2017. The decrease due to lower customer volume resulted from negative net customer additions,

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which was partially offset by improvements in gross customer revenue attrition of 1.4 percentage points, both of which resulted from our enhanced focus on high quality customer additions through our disciplined customer selection process.

The increase in installation and other revenue was primarily due to $27 million of additional revenue from the amortization of deferred installation revenue during the nine months ended September 30, 2017 as compared to the supplemental pro forma nine months ended September 30, 2016.

Cost of Revenue

Cost of revenue increased $16 million for the nine months ended September 30, 2017 as compared to the supplemental pro forma nine months ended September 30, 2016. The increase in cost of revenue was attributable to increased costs of approximately $22 million in maintenance and field service expenses incurred to lower customer backlog, partially offset by decreased customer service expenses of approximately $16 million, which consisted of reduced software license expenses related to a newly adopted cloud computing accounting standard, partially offset by an increase in customer service associated with enhanced customer revenue attrition improvement initiatives.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased $18 million for the nine months ended September 30, 2017 as compared to the supplemental pro forma nine months ended September 30, 2016. Primarily included in selling, general and administrative expenses for the nine months ended September 30, 2017 were costs of approximately $64 million related to financing and consent fees paid in connection with the Koch Preferred Securities and amendments and restatements to the First Lien Credit Facilities and increased costs of approximately $28 million related to the amortization of deferred subscriber acquisition costs associated with direct and incremental costs incurred to acquire new customers. Such costs were offset by decreased radio conversion costs of $50 million, related to a program that began in 2015 to upgrade cellular technology used in many of our security systems, and decreased costs of approximately $37 million in selling and marketing costs and general and administrative expenses, as well as $29 million in advertising costs, primarily related to reductions in costs as a result of the integration of The ADT Corporation business.

Depreciation and Intangible Asset Amortization

Depreciation and intangible asset amortization increased $232 million for the nine months ended September 30, 2017, as compared to the supplemental pro forma nine months ended September 30, 2016. This increase was primarily attributable to increased depreciation expense of approximately $78 million related to subscriber system assets acquired in the ADT Acquisition, increased amortization of approximately $78 million related to new customer contracts acquired as a result of the ADT Authorized Dealer Program, increased amortization expense of $42 million associated with the Protection One trade name, which we began amortizing in July 2016, and increased software license expenses of $28 million related to a newly adopted cloud computing standard.

Merger, Restructuring, Integration, and Other Costs

Merger, restructuring, integration, and other costs decreased $11 million for the nine months ended September 30, 2017, as compared to the supplemental pro forma nine months ended September 30, 2016. Included in merger, restructuring, integration, and other costs during the nine months ended September 30, 2017 were certain impairment charges associated with cost method investments of $18 million, which was more than offset by a decrease of $28 million in restructuring and integration costs primarily associated with severance of certain former The ADT Corporation executives and employees in connection with the ADT Acquisition included in the supplemental pro forma nine months ended September 30, 2016 which did not recur in 2017.

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Interest Expense, Net

Net interest expense decreased $12 million for the nine months ended September 30, 2017 as compared to the supplemental pro forma nine months ended September 30, 2016. Net interest expense is primarily comprised of interest expense on our long-term debt. The decrease in interest expense is primarily related to the voluntary paydown of our $260 million of Second Lien Term B Loan in July and October of 2016.

Other Income (Expense)

Other income (expense) is attributable to net foreign currency gains of $27 million for the nine months ended September 30, 2017, and losses of $16 million for the supplemental pro forma nine months ended September 30, 2016, related to the translation of monetary assets and liabilities that are denominated in Canadian dollars, primarily due to intercompany loans. Also included in other income (expense) are losses on extinguishment of debt for the nine months ended September 30, 2017, and supplemental pro forma nine months ended September 30, 2016 of $4 million and $16 million, respectively, related to the amendments and restatements of our First Lien Credit Facilities. Other expense for the supplemental pro forma nine months ended September 30, 2016 further includes a net loss on the settlement of derivative contracts that were executed to hedge future cash flows associated with the ADT Acquisition.

Income Tax Benefit

Income tax benefit for the nine months ended September 30, 2017 was $39 million as compared to $88 million for the supplemental pro forma nine months ended September 30, 2016, resulting in an effective tax rate of 11.6% as compared to an effective tax rate of 29.6% for the respective periods. The effective tax rate for the nine months ended September 30, 2017 primarily reflects the unfavorable impact from additional tax expense associated with an increase in our unrecognized tax benefits related to deductions claimed in The ADT Corporation’s pre-Separation from Tyco tax returns, as well as permanent non-deductible expenses.

Adjusted EBITDA and Supplemental Pro Forma Adjusted EBITDA

The following table presents a reconciliation of net loss to Adjusted EBITDA and Supplemental Pro Forma Adjusted EBITDA for the nine months ended September 30, 2017 and supplemental pro forma nine months ended September 30, 2016, respectively.


	Nine Months Ended September 30, 2017			Supplemental Pro Forma Nine Months Ended September 30, 2016
	(in thousands)
Net loss	$	(295,561	)	$	(208,710	)
Interest expense, net		553,529			565,956
Income tax benefit		(38,922	)		(87,830	)
Depreciation and intangible asset amortization		1,387,245			1,155,145
Merger, restructuring, integration, and other costs ⁽¹⁾		54,170			65,403
Financing and consent fees ⁽²⁾		63,593			2,878
Foreign currency (gains) / losses ⁽³⁾		(26,773	)		16,336
Loss on extinguishment of debt ⁽⁴⁾		4,331			16,051
Other non-cash items ⁽⁵⁾		10,122			12,146
Radio conversion costs ⁽⁶⁾		9,597			60,079
Amortization of deferred subscriber acquisition costs and revenue, net ⁽⁷⁾		3,987			3,169
Share-based compensation expense ⁽⁸⁾		8,498			8,246
Management fees and other charges ⁽⁹⁾		20,567			14,943

Adjusted EBITDA	$	1,754,383			N/A
Supplemental Pro Forma Adjusted EBITDA		N/A		$	1,623,812

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(1)	Represents post-acquisition restructuring and integration charges associated with various acquisitions and other asset impairments.

(2)	Financing and consent fees represents fees associated with (i) the Special Dividend, (ii) amendments and restatements to our First Lien Credit Facilities, and (iii) the 2017 Incremental First Lien Term B-1 Loan.

(3)	Foreign currency (gains) / losses relates to the translation of monetary assets and liabilities that are denominated in Canadian dollars, primarily due to intercompany loans.

(4)	Loss on extinguishment of debt for the nine months ended September 30, 2017 and supplemental pro forma nine months ended September 30, 2016 primarily relate to the write-off of debt discount and issuance costs associated with amendments and restatements to the First Lien Credit Facilities.

(5)	Represents other non-cash items such as certain asset write-downs, as well as a net loss on the settlement of derivative contracts that were executed to hedge future cash flows associated with the ADT Acquisition during the supplemental pro forma nine months ended September 30, 2016.

(6)	Represents costs associated with our program that began in 2015 to upgrade cellular technology used in many of our security systems.

(7)	Represents non-cash amortization expense associated with deferred subscriber acquisition costs, net of non-cash amortization of revenue associated with deferred installation revenue.

(8)	Share-based compensation expense represents compensation expense associated with our equity compensation plans. Refer to Note 12 to the Company’s audited consolidated financial statements.

(9)	The nine months ended September 30, 2017 and supplemental pro forma nine months ended September 30, 2016 includes $15 million of management fees to our Sponsor for certain management consulting and advisory services.

Adjusted EBITDA increased $131 million for the nine months ended September 30, 2017, as compared to the supplemental pro forma nine months ended September 30, 2016. This increase is primarily due to revenue growth. For further details on the drivers of this change, refer to the discussions above.

Unaudited Supplemental Pro Forma Year Ended December 31, 2016 Compared with Unaudited Supplemental Pro Forma Year Ended December 31, 2015


	Supplemental Pro Forma December 31, 2016 ⁽¹⁾			Supplemental Pro Forma December 31, 2015 ⁽²⁾			Change			% Change
	(in thousands, except as otherwise indicated)
Results of Operations:
Monitoring and related services	$	3,954,424		$	3,897,107		$	57,317			1	%
Installation and other		212,492			160,135			52,357			33	%

Total revenue		4,166,916			4,057,242			109,674			3	%
Cost of revenue		869,689			807,536			62,153			8	%
Selling, general and administrative expenses		1,238,923			1,331,326			(92,403	)		(7	)%
Depreciation and intangible asset amortization		1,574,219			1,591,410			(17,191	)		(1	)%
Merger, restructuring, integration, and other costs		86,186			33,224			52,962			159	%

Operating income		397,899			293,746			104,153			35	%
Interest expense, net		(750,006	)		(768,789	)		18,783			(2	)%
Other (expense) income		(51,688	)		4,422			(56,110	)		N/M

Loss before income taxes		(403,795	)		(470,621	)		66,826			(14	)%
Income tax benefit		118,854			189,251			(70,397	)		(37	)%

Net loss	$	(284,941	)	$	(281,370	)	$	(3,571	)		1	%

Key Performance Indicators: ⁽³⁾
RMR	$	327,948		$	322,106		$	5,842			2	%
Gross customer revenue attrition (percent)		14.8	%		15.9	%		(1.1)% points			N/M
Supplemental Pro Forma Adjusted EBITDA ⁽⁴⁾	$	2,176,943		$	2,031,281		$	145,662			7	%

N/M—Not meaningful

(1)	Refer to Note 2 to Notes to the Unaudited Supplemental Pro Forma Financial Information Presented in the Supplemental Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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(2)	Refer to Note 3 to Notes to the Unaudited Supplemental Pro Forma Financial Information Presented in the Supplemental Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(3)	Refer to the “Management’s Discussion and Analysis of Financial Conditions and Results of Operations—Key Performance Indicators” section for the definitions of these key performance indicators.

(4)	Supplemental Pro Forma Adjusted EBITDA is a non-GAAP measure. Refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Measures” section for the definition thereof and below for a reconciliation to net loss, the most comparable GAAP measure.

Revenue

Total revenue increased $110 million for the supplemental pro forma year ended December 31, 2016 as compared to the supplemental pro forma year ended December 31, 2015. This increase was a result of an increase in monitoring and related services of $57 million and an increase in installation and other revenue of $52 million.

The increase in monitoring and related services revenue was primarily driven by a change in contractual monthly recurring fees for monitoring and other recurring services, which were favorably impacted by an improvement in average pricing, partially offset by lower customer volume. The improvement in average pricing was driven by price escalations on our existing customer base, as well as the addition of new customers at higher rates, largely due to an increase in ADT Pulse customers as compared to total customer additions. These factors also were the primary driver for an increase in RMR, which increased from $322 million as of December 31, 2015 to $328 million as of December 31, 2016. The decrease due to lower customer volume resulted from a decrease in net customer additions, which was partially offset by improvements in gross customer revenue attrition of 1.1 percentage points from 15.9% for the year ended December 31, 2015 to 14.8% as of December 31, 2016, both of which resulted from our enhanced focus on high quality customer additions through our disciplined customer selection process.

The increase in installation and other revenue was primarily due to greater revenue of approximately $42 million for security related equipment sold outright to our customers for the supplemental pro forma year ended December 31, 2016, as compared to the supplemental pro forma year ended December 31, 2015.

Cost of Revenue

Cost of revenue increased $62 million for the supplemental pro forma year ended December 31, 2016, as compared to the supplemental pro forma year ended December 31, 2015. The increase in cost of revenue was attributable to (i) a $23 million increase in installation costs associated with the higher volume of sales where security related equipment is sold outright to the customer; and (ii) enhanced customer revenue attrition improvement initiatives, which resulted in an increase in customer service expenses of approximately $22 million and an increase maintenance expenses of approximately $18 million to lower customer backlog.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased $92 million for the supplemental pro forma year ended December 31, 2016, as compared to the supplemental pro forma year ended December 31, 2015 . This decrease primarily relates to a reduction in advertising costs of approximately $46 million, and a decrease in general and administrative expenses of approximately $39 million that were a result of synergies associated with the ADT Acquisition.

Depreciation and Intangible Asset Amortization

Depreciation and intangible asset amortization decreased $17 million for the supplemental pro forma year ended December 31, 2016, as compared to the supplemental pro forma year ended December 31, 2015. This decrease is primarily related to a decrease of approximately $99 million in amortization of definite-lived

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intangible assets and depreciation of subscriber system assets acquired in the ADT Acquisition and the Formation Transactions that were recognized on an accelerated basis. This decrease is partially offset by approximately $41 million of an increase in amortization expense primarily associated with the Protection One trade name, which we began amortizing in July 2016, and approximately $26 million of an increase in amortization expense on new customer contracts acquired under the ADT Authorized Dealer Program.

Merger, Restructuring, Integration, and Other Costs

Merger, restructuring, integration, and other costs increased by $53 million for the supplemental pro forma year ended December 31, 2016 as compared to the supplemental pro forma year ended December 31, 2015. Included in merger, restructuring, integration, and other costs were increased restructuring costs of $47 million primarily associated with severance of certain former The ADT Corporation executives and employees in connection with the ADT Acquisition, increased integration costs of $9 million primarily related to the integration of The ADT Corporation businesses, and other impairments of $13 million during the year ended December 31, 2016. These were offset by decreased acquisition costs of $16 million.

Interest Expense, Net

Net interest expense decreased $19 million for the supplemental pro forma year ended December 31, 2016 as compared to the supplemental pro forma year ended December 31, 2015. Net interest expense is primarily comprised of interest expense on our long-term debt. The decrease in interest expense is primarily related to the voluntary paydown of our $260 million of second lien notes in July and October 2016.

Other (Expense) Income

Other expense increased $56 million for the supplemental pro forma year ended December 31, 2016 as compared to the supplemental pro forma year ended December 31, 2015. Other expense for the supplemental pro forma year ended December 31, 2016 primarily includes (i) net foreign currency losses of $16 million from the translation of monetary assets and liabilities that are denominated in Canadian dollars, most of which relates to intercompany loans, and (ii) losses on extinguishment of debt of $28 million primarily relating to the write-off of debt discount and issuance costs associated with the voluntary paydown of $260 million of the second lien notes in July and October of 2016 and the amendments to the First Lien Credit Facilities as of June 23, 2016 and December 28, 2016.

Income Tax Benefit (Expense)

Income tax benefit for the supplemental pro forma year ended December 31, 2016 was $119 million, compared with $189 million for the supplemental pro forma year ended December 31, 2015, resulting in an effective tax rate of 29.4% compared with an effective tax rate of 40.2% for the same periods. The change in the effective tax rate and income tax benefit primarily reflects the impact of permanent items mainly related to non-deductible acquisition costs associated with the ADT Acquisition.

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Supplemental Pro Forma Adjusted EBITDA

The following table presents a reconciliation of net loss to Supplemental Pro Forma Adjusted EBITDA for the supplemental pro forma year ended December 31, 2016 and December 31, 2015.


	Supplemental Pro Forma December 31, 2016			Supplemental Pro Forma December 31, 2015
	(in thousands)
Net loss	$	(284,941	)	$	(281,370	)
Interest expense, net		750,006			768,789
Income tax benefit		(118,854	)		(189,251	)
Depreciation and intangible asset amortization		1,574,219			1,591,410
Merger, restructuring, integration, and other costs ⁽¹⁾		86,186			33,224
Financing and consent fees ⁽²⁾		5,302			—
Foreign currency losses ⁽³⁾		16,042			—
Loss on extinguishment of debt ⁽⁴⁾		28,293			—
Other non-cash items ⁽⁵⁾		16,276			—
Radio conversion costs ⁽⁶⁾		67,816			60,410
Amortization of deferred subscriber acquisition costs and revenue, net ⁽⁷⁾		6,052			1,063
Share-based compensation expense ⁽⁸⁾		10,108			28,103
Management fees and other charges ⁽⁹⁾		20,438			18,903

Supplemental Pro Forma Adjusted EBITDA	$	2,176,943		$	2,031,281

(1)	Represents post-acquisition restructuring and integration charges associated with various acquisitions and other asset impairments.

(2)	Represents fees associated with our First Lien Credit Facilities.

(3)	Foreign currency losses relate to the translation of monetary assets and liabilities that are denominated in Canadian dollars, primarily due to intercompany loans.

(4)

Loss on extinguishment of debt of $28 million for the supplemental pro forma year ended December 31, 2016 primarily relates to the write-off of debt discount and issuance costs associated with the voluntary paydown of $260 million of the second lien term loans in July and October of 2016 and the amendments and restatements to the First Lien Credit Facilities as of June 23, 2016 and December 28, 2016.

(5)

Other non-cash items for the supplemental pro forma year ended December 31, 2016 primarily include a net loss on the settlement of derivative contracts that were executed to hedge future cash flows associated with the ADT Acquisition, as well as other non-cash items including certain asset write-downs.

(6)	Represents costs associated with our program that began in 2015 to upgrade cellular technology used in many of our security systems.

(7)	Represents non-cash amortization expense associated with deferred subscriber acquisition costs, net of non-cash amortization of revenue associated with deferred installation revenue.

(8)	Share-based compensation expense represents compensation expense associated with our equity compensation plans. Refer to Note 12 to the Company’s audited consolidated financial statements.

(9)	Includes $20 million of management fees to our Sponsor for certain management consulting and advisory services for the supplemental pro forma year ended December 31, 2016 and supplemental pro forma year ended December 31, 2015.

Adjusted EBITDA increased $146 million for the supplemental pro forma year ended December 31, 2016 as compared to the supplemental pro forma year ended December 31, 2015. This increase was driven by an increase in revenue as well as a reduction in selling, general and administrative expenses, which were partially offset by an increase in cost of revenue and foreign currency losses from the translation of monetary assets and liabilities that are denominated in Canadian dollars, most of which relates to intercompany loans.

For further details on the drivers of these changes, refer to the discussions above.

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NOTES TO THE UNAUDITED SUPPLEMENTAL PRO FORMA FINANCIAL INFORMATION PRESENTED IN THE SUPPLEMENTAL MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

1. Unaudited Supplemental Pro Forma Statement of Operations for the Nine Months Ended September 30, 2016


	ADT Inc. Historical			The ADT Corporation Historical 1(a)			Acquisition Adjustments					Supplemental Pro Forma Nine Months Ended September 30, 2016
	(in thousands)
Monitoring and related services	$	1,757,923		$	1,143,357		$	59,348		1	(b)	$	2,960,628
Installation and other		140,691			69,352			(58,404	)	1	(b)		151,639

Total revenue		1,898,614			1,212,709			944		1	(b)		3,112,267
Cost of revenue		465,357			176,259			—					641,616
Selling, general and administrative expenses		561,337			425,315			(45,288	)	1	(c)		941,364
Depreciation and intangible asset amortization		805,389			394,827			(45,071	)	1	(d)		1,155,145
Merger, restructuring, integration, and other costs		370,860			46,595			(352,052	)	1	(e)		65,403

Operating (loss) income		(304,329	)		169,713			443,355					308,739
Interest expense, net		(337,441	)		(71,605	)		(156,910	)	1	(f)		(565,956	)
Other (expense) income		(39,567	)		244			—					(39,323	)

(Loss) income before income taxes		(681,337	)		98,352			286,445					(296,540	)
Income tax benefit (expense)		229,695			(31,869	)		(109,996	)	1	(g)		87,830

Net (loss) income	$	(451,642	)	$	66,483		$	176,449				$	(208,710	)

1(a)	Refer to Note 1 to the “Unaudited Pro Forma Condensed Combined Financial Information” included elsewhere in this prospectus for a discussion on the presentation of The ADT Corporation’s historical statement of operations through May 1, 2016, the day prior to the completion of the ADT Acquisition.

1(b)	Reflects the impact of:

(i)

the reversal of a purchase accounting adjustment related to the write-down to fair value of deferred revenue associated with services not yet rendered of $59 million that is directly related to the ADT Acquisition, but does not have a continuing impact on the Company; and

(ii)

the elimination of The ADT Corporation historical amortization of deferred installation revenue of $58 million as a result of the purchase price allocation for the ADT Acquisition as if the acquisition had occurred on January 1, 2015 because the application of this purchase accounting adjustment has a continuing impact on the Company.

1(c)	Reflects the impact of:

(i)

the elimination of The ADT Corporation historical amortization of deferred subscriber acquisition costs of $52 million as a result of the purchase price allocation for the ADT Acquisition as if the acquisition had occurred on January 1, 2015 because the application of this purchase accounting adjustment has a continuing impact on the Company; and

(ii)

an increase in management fees of $7 million associated with the Management Consulting Agreement directly related to the ADT Acquisition as if the acquisition had occurred on January 1, 2015 because it has a continuing impact on the Company due to the term of the agreement (see “Certain Relationships and Related Party Transactions—Management Consulting Agreement”).

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1(d)	To record the following net decrease in depreciation and intangible asset amortization as a result of the purchase price allocation associated with the ADT Acquisition:


	Nine Months Ended September 30, 2016
(in thousands)
Amortization of intangible assets ⁽ⁱ⁾	$	221,197
Subscriber system asset and property and equipment depreciation ⁽ ⁱⁱ⁾		128,559
Elimination of historical The ADT Corporation depreciation and amortization expense		(394,827	)

Net supplemental pro forma adjustment	$	(45,071	)

(i)

Primarily consists of amortization of customer relationships and dealer relationships under the ADT Authorized Dealer Program. As of the acquisition date, customer relationships have a weighted average remaining useful life of approximately 6 years, and are amortized on an accelerated basis.

(ii)

As of the acquisition date, subscriber system asset have a weighted average remaining useful life of approximately 7 years, and are depreciated on an accelerated basis. Property and equipment depreciation have a remaining average life of 3 years and are depreciated on a straight-line basis.

1(e)	To remove transaction costs associated with the ADT Acquisition, as these costs will not have a continuing impact on the Company’s results.

1(f)

To record incremental interest expense (including related amortization of debt issuance costs and discount) of $168 million associated with borrowings to fund the ADT Acquisition as a result of (1) the incremental first lien term loan facility of $1,555 million, (2) the issuance of $3,140 million of Prime Notes, (3) the amortization of issuance costs and fees associated with the $255 million 2021 Revolving Credit Facility, (4) the Koch Preferred Securities, which have an aggregate stated value of $750 million (dividends for the Koch Preferred Securities are recorded as interest expense), and (5) the amortization of the fair value adjustment made to the ADT Notes assumed as a result of the acquisition. These increases are net of the removal of interest expense of $11 million on the portion of The ADT Corporation debt repaid (including related amortization of capitalized debt acquisition costs) in connection with the consummation of the acquisition.

1(g)	To record the income tax expense impact of the supplemental pro forma adjustments at the blended statutory rate of 38.4%. The Company operates in multiple jurisdictions, and as such the statutory rate may not be reflective of the actual impact of the tax effects of the adjustments.

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2. Unaudited Supplemental Pro Forma Statement of Operations for the Year Ended December 31, 2016


	ADT Inc. Historical			The ADT Corporation Historical 2(a)			Acquisition Adjustments					Supplemental Pro Forma Year Ended December 31, 2016
	(in thousands)
Monitoring and related services	$	2,748,222		$	1,143,357		$	62,845		2	(b)	$	3,954,424
Installation and other		201,544			69,352			(58,404	)	2	(b)		212,492

Total revenue		2,949,766			1,212,709			4,441		2	(b)	$	4,166,916
Cost of revenue		693,430			176,259			—					869,689
Selling, general and administrative expenses		858,896			425,315			(45,288	)	2	(c)		1,238,923
Depreciation and intangible asset amortization		1,232,967			394,827			(53,575	)	2	(d)		1,574,219
Merger, restructuring, integration, and other costs		393,788			46,595			(354,197	)	2	(e)		86,186

Operating (loss) income		(229,315	)		169,713			457,501					397,899
Interest expense, net		(521,491	)		(71,605	)		(156,910	)	2	(f)		(750,006	)
Other (expense) income		(51,932	)		244			—					(51,688	)

(Loss) income before income taxes		(802,738	)		98,352			300,591					(403,795	)
Income tax benefit (expense)		266,151			(31,869	)		(115,428	)	2	(g)		118,854

Net (loss) income	$	(536,587	)	$	66,483		$	185,163				$	(284,941	)

2(a)	Refer to Note 1 to the “Unaudited Pro Forma Condensed Combined Financial Information” included elsewhere in this prospectus for a discussion on the presentation of The ADT Corporation’s historical statement of operations through May 1, 2016, the day prior to the completion of the ADT Acquisition.

2(b)	Reflects the impact of:

(i) the reversal of a purchase accounting adjustment related to the write-down to fair value of deferred revenue associated with services not yet rendered of $63 million that is directly related to the ADT acquisition but does not have a continuing impact on the Company; and

(ii) the elimination of The ADT Corporation historical amortization of deferred installation revenue of $58 million as a result of the purchase price allocation for the ADT Acquisition as if the acquisition had occurred on January 1, 2015 because the application of this purchase accounting adjustment has a continuing impact on the Company.

2(c)	Reflects the impact of:

(i) the elimination of The ADT Corporation historical amortization of deferred subscriber acquisition costs of $52 million as a result of the purchase price allocation for the ADT Acquisition as if the acquisition had occurred on January 1, 2015 because the application of this purchase accounting adjustment has a continuing impact on the Company; and

(ii) an increase in management fees of $7 million associated with the Management Consulting Agreement directly related to the ADT Acquisition as if the acquisition had occurred on January 1, 2015 because it has a continuing impact on the Company due to the term of the agreement (see “Certain Relationships and Related Party Transactions—Management Consulting Agreement”).

133

2(d)	To record the following net decrease in depreciation and intangible asset amortization as a result of the purchase price allocation associated with the ADT Acquisition:


	Year Ended December 31, 2016
	(in thousands)
Amortization of intangible assets ⁽ⁱ⁾	$	234,284
Subscriber system asset and property and equipment depreciation ⁽ⁱⁱ⁾		106,968
Elimination of historical The ADT Corporation depreciation and amortization expense		(394,827	)

Net supplemental pro forma adjustment	$	(53,575	)

(i)

(ii)

As of the acquisition date, subscriber system assets have a weighted average remaining useful life of approximately 7 years, and are depreciated on an accelerated basis. Property and equipment depreciation has a remaining average life of 3 years and are depreciated on a straight-line basis.

2(e)	To remove transaction costs associated with the ADT Acquisition, as these costs will not have a continuing impact on the Company’s results.

2(f)

To record incremental interest expense (including related amortization of debt issuance costs and discount) of $168 million associated with borrowings to fund the ADT Acquisition as a result of: (1) the incremental first lien term loan facility of $1,555 million; (2) the issuance of $3,140 million of Prime Notes; (3) the amortization of issuance costs and fees associated with the $255 million 2021 Revolving Credit Facility; (4) the Koch Preferred Securities, which have an aggregate stated value of $750 million (dividends for the Koch Preferred Securities are recorded as interest expense); and (5) the amortization of the fair value adjustment made to the ADT Notes assumed as a result of the acquisition. These increases are net of the removal of interest expense of $11 million on The ADT Corporation debt repaid (including related amortization of capitalized debt acquisition costs) in connection with the consummation of the acquisition.

134

2(g)	To record the income tax expense impact of the supplemental pro forma adjustments at the blended statutory rate of 38.4%.

3. Unaudited Supplemental Pro Forma Statement of Operations for the Year Ended December 31, 2015


	Predecessor			Successor
	Period from January 1, 2015 through June 30, 2015			From Inception through December 31, 2015			ASG Six Months Ended June 30, 2015 After Reclassifications-1(a)			Formation Transaction Adjustments (See Note 1 to this Note 3)					Subtotal			The ADT Corporation Twelve Months Ended December 31, 2015 After Reclassifications (See Note 2 to this Note 3)			ADT Acquisition Adjustments (See Note 3 to this Note 3)					Supplemental Pro Forma Year Ended December 31, 2015
				(in thousands)
Monitoring and related services	$	189,028		$	238,257		$	59,697		$	18,573		1	(b)	$	505,555		$	3,391,552		$	—		3	(a)	$	3,897,107
Installation and other		48,681			73,310			12,064			(2,936	)	1	(b)		131,119			195,293			(166,277	)	3	(a)		160,135

Total revenue		237,709			311,567			71,761			15,637		1	(b)		636,674			3,586,845			(166,277	)	3	(a)		4,057,242
Cost of revenue		100,591			148,521			31,672			1,228		1	(c)		282,012			525,524			—					807,536
Selling, general and administrative expenses		74,977			84,134			24,354			(12,656	)	1	(d)		170,809			1,285,356			(124,839	)	3	(b)		1,331,326
Depreciation and intangible asset amortization		41,548			83,650			26,038			8,295		1	(e)		159,531			1,139,166			292,713		3	(c)		1,591,410
Merger, restructuring, integration, and other costs		9,361			35,036			925			(23,951	)	1	(f)		21,371			11,853			—					33,224

Operating income (loss)		11,232			(39,774	)		(11,228	)		42,721					2,951			624,946			(334,151	)				293,746
Interest expense, net		(29,129	)		(45,169	)		(10,844	)		(5,706	)	1	(g)		(90,848	)		(207,257	)		(470,684	)	3	(d)		(768,789	)
Other income		331			325			—			—					656			3,766			—					4,422

(Loss) income before income taxes		(17,566	)		(84,618	)		(22,072	)		37,015					(87,241	)		421,455			(804,835	)				(470,621	)
Income tax (expense) benefit		(1,025	)		30,365			(584	)		(14,214	)	1	(h)		14,542			(134,348	)		309,057		3	(e)		189,251

Net (loss) income	$	(18,591	)	$	(54,253	)	$	(22,656	)	$	22,801					$(72,699)		$	287,107		$	(495,778	)			$	(281,370	)

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Note 1 to Note 3 . ASG Reclassifications and Formation Transactions Adjustments:

1(a)	ASG’s historical presentation of its revenues and certain expenses contained within its historical Consolidated Statement of Operations for the six months ended June 30, 2015 have been reclassified to conform with our presentation as follows:


	Before Reclassification			Reclassification			Note		After Reclassification
	(in thousands)
Monitoring and service	$	59,697		$	—				$	59,697
Installation		12,064			—					12,064

Total revenues		71,761			—					71,761
Cost of revenue		—			31,672			(i)		31,672
Cost of services		37,714			(37,714	)		(i), (iii)		—
Selling, general and administrative expenses		—			24,354			(ii)		24,354
Selling expenses		13,488			(13,488	)		(ii)		—
General and administrative		13,485			(13,485	)		(ii), (iv)		—
Depreciation and intangible asset amortization		—			26,038			(iii)		26,038
Depreciation and amortization		20,351			(20,351	)		(iii), (v)		—
Change in equity compensation plan expense		(1,694	)		1,694			(ii)		—
Merger, restructuring, integration, and other costs		—			925			(iv)		925

Operating loss		(11,583	)		355					(11,228	)
Interest expense		(10,489	)		(355	)		(v)		(10,844	)

Loss before income taxes		(22,072	)		—					(22,072	)
Income tax expense		(584	)		—					(584	)

Net loss	$	(22,656	)	$	—				$	(22,656	)

(i)

To reclassify cost of services to conform to our presentation as cost of revenue.

(ii)

To reclassify certain selling expenses, general and administrative, and change in equity compensation plan expense to conform to our presentation as selling, general and administrative expenses.

(iii)

To reclassify depreciation and amortization, and amortization of deferred customer installation costs (included in cost of services) to conform to our presentation as depreciation and intangible asset amortization.

(iv)

To reclassify transaction costs included in general and administrative to conform to our presentation as merger, restructuring, integration, and other costs.

(v)

To reclassify debt issuance amortization expense of $355 thousand included in depreciation and amortization to conform to our presentation as interest expense.

1(b)

To record an increase to revenue consisting of: (i) the reversal of a purchase accounting adjustment related to the write-down to fair value of deferred revenue associated with services not yet rendered of $19 million that is directly related to the Formation Transactions, but does not have a continuing impact on the Company; (ii) the elimination of historical amortization of deferred installation revenue of $7 million as a result of the purchase price allocation for the Formation Transactions as if they had occurred on January 1, 2015 because the application of the purchase accounting adjustment has a continuing impact on the Company; and (iii) an accounting policy adjustment increasing revenue by $4 million to conform ASG’s revenue accounting policy to the Company’s policy. For certain types of sales, ASG used the percentage-of-completion method to recognize revenue and cost. In contrast, the Company recognized all revenue and costs for the same types of sales upon project completion (“completed contract method”). In addition to revenue, the accounting policy adjustment impacts both the cost of revenue and selling, general and administrative expenses line items as noted below.

1(c)	To record an increase to cost of revenue for an accounting policy adjustment to conform ASG’s revenue accounting policy to the Company’s policy, as noted above in note 1(b).

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1(d)	To record a decrease in selling, general and administrative expenses as follows:


	Year Ended December 31, 2015
	(in thousands)
Protection One and ASG historical amortization of deferred subscriber acquisition costs ⁽ⁱ⁾	$	(14,127	)
ADT Inc.’s share based award expenses ⁽ⁱⁱ⁾		1,490
ASG equity compensation plan expenses ⁽ⁱ ⁱⁱ⁾		1,694
Accounting policy adjustment ^(iv)		(992	)
Management fees ^(v)		(721	)

Net supplemental pro forma adjustment	$	(12,656	)

(i)

To eliminate Protection One and ASG historical amortization of deferred subscriber acquisition costs as a result of purchase accounting associated with the Formation Transactions.

(ii)

ADT Inc.’s share based award expenses reflects the incremental expense related to the new executive compensation plan entered into as a result of ADT Inc.’s acquisition of Protection One, Inc.

(iii)

ASG equity compensation plan expenses reflect the elimination of the historical benefit that was recorded by ASG as presented in the statement of operations of the consolidated financial statements of ASG for the six months ended June 30, 2015. Final payout was made in conjunction with ADT Inc.’s acquisition of ASG as of July 1, 2015.

(iv)

The accounting policy adjustment conforms ASG’s revenue accounting policy to the Company’s accounting policy, as noted above in footnote (b).

(v)

Management fees reflects the elimination of the historical fees paid to affiliates of GTCR Golder Rauner II, L.L.C. and PCap L.P., respectively, by Protection One, Inc. and ASG. Subsequent to the Formation Transactions (and prior to the ADT Acquisition), there were no management fees in place with respect to Protection One, Inc. and ASG payable to our Sponsor.

1(e)	To record the following net increase in depreciation and intangible asset amortization as a result of the purchase price allocation associated with the Formation Transactions:


	Year Ended December 31, 2015
	(in thousands)
Amortization of intangible assets ⁽ⁱ⁾	$	145,243
Property and equipment depreciation ⁽ⁱ⁾		14,288
Elimination of historical Protection One and ASG depreciation and amortization expense		(151,236	)

Net supplemental pro forma adjustment	$	8,295

(i)

Reflects amortization and depreciation as a result of the purchase price allocation associated with the Formation Transactions.

1(f)	Transaction fees reflect the elimination of historical acquisition-related transaction costs that were non-recurring, expensed as incurred and are directly attributable to the Formation Transactions.

1(g)	To record the incremental interest expense (including amortization of discount and debt issuance costs) due to the new debt acquired to finance the Formation Transactions.

1(h)	To record the income tax expense impact of the supplemental pro forma adjustments at the statutory rate of 38.4%. The Company operates in multiple jurisdictions, and as such the statutory rate may not be reflective of the actual impact of the tax effects of the adjustments.

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Note 2 to Note 3. The ADT Corporation Twelve Months Ended December 31, 2015 and Reclassifications

The ADT Corporation’s historical consolidated statement of operations data for the twelve months ended December 31, 2015 has been derived by deducting the historical unaudited consolidated statement of operations for the three months ended December 26, 2014 from the historical audited statement of operations for the fiscal year ended September 25, 2015, and then adding thereto the historical unaudited consolidated statement of operations data from the three months ended December 31, 2015, as illustrated in the table below:


	The ADT Corporation-Consolidated Statements of Operations
	Fiscal Year Ended September 25, 2015			Less:			Add:			Twelve Months Ended December 31, 2015
	Fiscal Year Ended September 25, 2015			Three Months Ended December 26, 2014			Three Months Ended December 31, 2015			Twelve Months Ended December 31, 2015
	(in thousands)
Monitoring and related services	$	3,382,670		$	839,449		$	848,331		$	3,391,552
Installation and other		191,326			47,334			51,301			195,293

Total revenue		3,573,996			886,783			899,632			3,586,845
Cost of revenue ⁽ⁱ⁾		1,575,454			387,678			400,804			1,588,580
Selling, general and administrative ⁽ⁱ⁾		1,305,470			317,961			330,726			1,318,235
Radio conversion costs ⁽ⁱ⁾		54,560			22,879			23,403			55,084

Operating income		638,512			158,265			144,699			624,946
Interest expense, net		(204,947	)		(50,249	)		(52,559	)		(207,257	)
Other income (loss)		3,636			(65	)		65			3,766

Income before income taxes		437,201			107,951			92,205			421,455
Income tax expense		(141,435	)		(35,474	)		(28,387	)		(134,348	)

Net income	$	295,766		$	72,477		$	63,818		$	287,107

(i)	These costs have been reclassified in the reclassification section below to conform to the presentation of the Company’s statement of operations.

Reclassifications

The ADT Corporation’s historical presentation of certain expenses has been reclassified to conform to the Company’s presentation as follows:


	Before Reclassification		Reclassification			Note	After Reclassification
	(in thousands)
Cost of revenue		1,588,580		(1,063,056	)	(i)		525,524
Selling, general and administrative expenses		1,318,235		(32,879	)	(i), (ii), (iii)		1,285,356
Radio conversion costs		55,084		(55,084	)	(ii)		—
Depreciation and intangible asset amortization		—		1,139,166		(i)		1,139,166
Merger, restructuring, integration, and other costs		—		11,853		(iii)		11,853

(i)	To reclassify intangible asset amortization on dealer and customer intangibles and depreciation on subscriber system assets historically recorded to cost of revenue, to conform to our presentation as intangible asset amortization and depreciation, respectively.

(ii)	To reclassify radio conversion costs to conform to our presentation as selling, general and administrative expenses.

(iii)

To reclassify certain merger, restructuring, integration and other costs historically recorded to selling, general and administrative expenses, to conform to our presentation.

138

Note 3 to Note 3. ADT Acquisition Adjustments:

3(a)

Reflects the impact of the elimination of The ADT Corporation historical amortization of deferred installation revenue of $166 million as a result of the purchase price allocation for the ADT Acquisition as if the acquisition had occurred on January 1, 2015 because the application of this purchase accounting adjustment has a continuing impact on the Company.

3(b)	Reflects the impact of:

(i)

the elimination of The ADT Corporation historical amortization of deferred subscriber acquisition costs of $145 million as a result of the purchase price allocation for the ADT Acquisition as if the acquisition had occurred on January 1, 2015 because the application of this purchase accounting adjustment has a continuing impact on the Company; and

(ii)

an increase in management fees of $20 million associated with the Management Consulting Agreement directly related to the ADT Acquisition as if the acquisition had occurred on January 1, 2015 because it has a continuing impact on the Company due to the term of the agreement (see “Certain Relationships and Related Party Transactions—Management Consulting Agreement”).

3(c)	To record the following net increase in depreciation and intangible asset amortization as a result of the purchase price allocation associated with the ADT Acquisition:


	Year Ended December 31, 2015
	(in thousands)
Amortization of intangible assets ⁽ⁱ⁾	$	881,929
Subscriber system asset and property and equipment depreciation ⁽ ⁱⁱ⁾		549,950
Elimination of historical The ADT Corporation depreciation and amortization expense		(1,139,166	)

Net supplemental pro forma adjustment	$	292,713

(i)

(ii)

As of the acquisition date, subscriber system asset have a weighted average remaining useful life of approximately 7 years, and are amortized on an accelerated basis. Property and equipment have a remaining average life of 3 years and are depreciated on a straight-line basis.

3(d)

To record incremental interest expense (including related amortization of debt issuance costs and discount) of $518 million associated with borrowings to fund the ADT Acquisition as a result of: (1) the incremental first lien term loan facility of $1,555 million; (2) the issuance of $3,140 million second priority senior secured notes; (3) the amortization of issuance costs and fees associated with the $255 million 2021 Revolving Credit Facility; (4) the Koch Preferred Securities, which have an aggregate stated value of $750 million (dividends for the Koch Preferred Securities are recorded as interest expense); and (5) the amortization of the fair value adjustment made to the ADT Notes assumed as a result of the acquisition. These increases are net of the removal of interest expense of $47 million on The ADT Corporation debt repaid (including related amortization of capitalized debt acquisition costs) in connection with the consummation of the acquisition.

3(e)	To record the income tax expense impact of the supplemental pro forma adjustments at the blended statutory rate of 38.4%. The Company operates in multiple jurisdictions, and as such the statutory rate may not be reflective of the actual impact of the tax effects of the adjustments.

Components of Supplemental Pro Forma Adjusted EBITDA

The following tables present a reconciliation of Supplemental Pro Forma Adjusted EBITDA to net loss for the periods presented as well as details of the components of Adjusted EBITDA for each period.

Supplemental pro forma nine months ended September 30, 2016

The supplemental pro forma nine months ended September 30, 2016 has been derived from (i) the Company’s historical condensed consolidated financial information for the nine months ended September 30, 2016 included in this prospectus, (ii) The ADT

139

Corporation’s historical condensed consolidated financial information for the three months ended March 31, 2016 included in this prospectus, and (iii) The ADT Corporation’s historical condensed consolidated financial information for the period April 1, 2016 to May 1, 2016 not included in the prospectus, as illustrated in the table below:


				The ADT Corporation Historical
	ADT, Inc. Historical Nine Months Ended September 30, 2016			Three Months Ended March 31, 2016			Period from April 1, 2016 to May 1, 2016			Pro Forma Adjustments			Supplemental Pro Forma Nine Months Ended September 30, 2016
	(in thousands)
(Net loss)/income	$	(451,642	)	$	62,392		$	4,091		$	176,449		$	(208,710	)
Interest expense, net		337,441			53,380			18,225			156,910			565,956
Income tax (benefit) / expense		(229,695	)		27,859			4,010			109,996			(87,830	)
Depreciation and intangible asset amortization		805,389			292,823			102,004			(45,071	)		1,155,145
Merger, restructuring, integration, and other costs		370,860			10,299			36,296			(352,052	)		65,403
Financing and consent fees		2,878			—			—			—			2,878
Foreign currency losses		16,336			—			—			—			16,336
Loss on extinguishment of debt		16,051			—			—			—			16,051
Purchase accounting deferred revenue fair value adjustment		59,348			—			—			(59,348	)		—
Other non-cash items		12,146			—			—			—			12,146
Radio conversion costs		26,668			26,179			7,232			—			60,079
Amortization of deferred subscriber acquisition costs and revenue, net		3,169			(4,739	)		(1,656	)		6,395			3,169
Share-based compensation expense		2,763			6,298			(815	)		—			8,246
Management fees and other charges		8,046			416			(240	)		6,721			14,943

Supplemental Pro Forma Adjusted EBITDA	$	979,758		$	474,907		$	169,147		$	—		$	1,623,812

Supplemental pro forma year ended December 31, 2016

The supplemental pro forma year ended December 31, 2016 has been derived from (i) the Company’s historical consolidated financial information for the year ended December 31, 2016 included in this prospectus, (ii) The ADT Corporation’s historical condensed consolidated financial information for the three months ended March 31, 2016 included in this prospectus, and (iii) The ADT Corporation’s historical condensed consolidated financial information for the period April 1, 2016 to May 1, 2016 not included in the prospectus, as illustrated in the table below:


				The ADT Corporation Historical
	ADT, Inc. Historical Year Ended December 31, 2016			Three Months Ended March 31, 2016			Period from April 1, 2016 to May 1, 2016			Pro Forma Adjustments			Supplemental Pro Forma December 31, 2016
	(in thousands)
(Net loss)/income	$	(536,587	)	$	62,392		$	4,091		$	185,163		$	(284,941	)
Interest expense, net		521,491			53,380			18,225			156,910			750,006
Income tax (benefit) / expense		(266,151	)		27,859			4,010			115,428			(118,854	)
Depreciation and intangible asset amortization		1,232,967			292,823			102,004			(53,575	)		1,574,219
Merger, restructuring, integration, and other costs		393,788			10,299			36,296			(354,197	)		86,186
Financing and consent fees		5,302			—			—			—			5,302
Foreign currency losses		16,042			—			—			—			16,042
Loss on extinguishment of debt		28,293			—			—			—			28,293
Purchase accounting deferred revenue fair value adjustment		62,845			—			—			(62,845	)		—
Other non-cash items		16,276			—			—			—			16,276
Radio conversion costs		34,405			26,179			7,232			—			67,816
Amortization of deferred subscriber acquisition costs and revenue, net		6,052			(4,739	)		(1,656	)		6,395			6,052
Share-based compensation expense		4,625			6,298			(815	)		—			10,108
Management fees and other charges		13,541			416			(240	)		6,721			20,438

Supplemental Pro Forma Adjusted EBITDA	$	1,532,889		$	474,907		$	169,147		$	—		$	2,176,943

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Supplemental pro forma year ended December 31, 2015

The supplemental pro forma year ended December 31, 2015 has been derived from (i) the historical consolidated financial information for the Successor period from Inception through December 31, 2015 and the Predecessor period from January 1, 2015 through June 30, 2015 included in this prospectus, (ii) The ADT Corporation’s historical condensed combined consolidated financial information for the twelve months ended December 31, 2015 not included in this prospectus, and (iii) ASG’s historical consolidated financial information for the six months ended June 30, 2015 included in this prospectus, as illustrated in the table below:


	Predecessor			Successor
	Period from January 1, 2015 through June 30, 2015			From Inception through December 31, 2015			ASG Six Months Historical Ended June 30, 2015			Other Pro Forma Adjustments			Subtotal			The ADT Corporation Twelve Months Ended December 31, 2015 ^(a)			ADT Acquisition Adjustments			Supplemental Pro Forma Year Ended December 31, 2015
				(in thousands)
(Net loss)/income	$	(18,591	)	$	(54,253	)	$	(22,656	)	$	22,801		$	(72,699	)	$	287,107		$	(495,778	)	$	(281,370	)
Interest expense, net		29,129			45,169			10,844			5,706			90,848			207,257			470,684			768,789
Income tax (benefit)/expense		1,025			(30,365	)		584			14,214			(14,542	)		134,348			(309,057	)		(189,251	)
Depreciation and intangible asset amortization		41,548			83,650			26,038			8,295			159,531			1,139,166			292,713			1,591,410
Merger, restructuring, integration, and other costs		9,361			35,036			925			(23,951	)		21,371			11,853			—			33,224
Purchase accounting deferred revenue fair value adjustment		—			18,574			—			(18,574	)		—			—			—			—
Radio conversion costs		1,014			4,312			—			—			5,326			55,084			—			60,410
Amortization of deferred subscriber acquisition costs and revenue, net		7,578			770			(571	)		(6,714	)		1,063			(21,438	)		21,438			1,063
Share-based compensation expense		781			2,259			(1,694	)		3,184			4,530			23,573			—			28,103
Management fees and other charges		481			(324	)		221			(720	)		(342	)		(755	)		20,000			18,903

Adjusted EBITDA	$	72,326		$	104,828		$	13,691		$	4,241		$	195,086		$	1,836,195		$	—		$	2,031,281

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(a)

The ADT Corporation’s historical consolidated financial information for the twelve months ended December 31, 2015 has been derived by deducting the historical consolidated financial information for the three months ended December 26, 2014 from the historical consolidated financial information for the fiscal year ended September 25, 2015, and then adding thereto the historical consolidated financial information for the three months ended December 31, 2015, as illustrated in the table below:


	The ADT Corporation
	For the twelve months ended December 31, 2015

				Less:			Add:
	Fiscal Year Ended September 25, 2015			Three Months Ended December 26, 2014			Three Months Ended December 31, 2015			The ADT Corporation Twelve Months Ended December 31, 2015
	(in thousands)
Net income	$	295,766		$	72,477		$	63,818		$	287,107
Interest expense, net		204,947			50,249			52,559			207,257
Income tax expense		141,435			35,474			28,387			134,348
Depreciation and intangible asset amortization		1,123,871			274,717			290,012			1,139,166
Merger, restructuring, integration, and other costs		10,215			2,503			4,141			11,853
Radio conversion costs		54,560			22,879			23,403			55,084
Amortization of deferred subscriber acquisition costs and revenue, net		(22,344	)		(5,845	)		(4,939	)		(21,438	)
Share-based compensation expense		22,915			5,496			6,154			23,573
Management fees and other charges		(622	)		279			146			(755	)

Adjusted EBITDA	$	1,830,743		$	458,229		$	463,681		$	1,836,195

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INDUSTRY

Overview of U.S. Monitored Security Market

According to Barnes Associates, the U.S. monitored security market is a $55 billion industry as of 2016 and includes all companies that design, sell, install, monitor, and service alarm systems for residential, commercial, and multi-site customers. Monitoring and service revenue, estimated at $27 billion in 2016, has grown every year for the past 15 years, and we believe is well-positioned to benefit from additional growth generated by value-added services and additional market penetration. The recurring revenue portion of the industry is highly predictable and economically resilient, as evidenced by its continued growth during the recent economic downturn. From 2000 to 2016, monitoring and service revenue increased every year from $8 billion to $27 billion, representing a CAGR of approximately 7.7%. We believe that the historical rates of growth will continue going forward, with potential upside from the evolution and advancement of industry products and services which could grow the total addressable market and may result in increases in penetration.

Historical Industry Monitoring and Service Revenue

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Source: Barnes Associates, Security Alarm Industry Overview, February 2017.

Residential Market

Professionally monitored home security alarm systems have been proven to be very effective at not only preventing intruders from entering homes, but also reducing the amount of loss. According to a study by the UNC Charlotte Department of Criminal Justice and Criminology, approximately 83% of burglars said they would try to determine if an alarm were present before attempting a burglary, and approximately 60% said they would seek an alternative target if there was an alarm on-site. Among those who discovered the presence of an alarm while attempting a burglary, half reported they would discontinue the attempt. Additionally, the Rutgers University School of Criminal Justice conducted a four-year study of the relationship between break-ins and the presence of home security systems in New Jersey. It found that a security system not only deters burglars from breaking into a home, but also acts as a protection for nearby homes, indicating the presence of several homes with security systems in the same neighborhood deterred burglars from the entire area. Moreover, according to the Alarm Industry Research and Educational Foundation, average losses on homes without an alarm are over 60% higher than homes equipped with alarms. We believe the effectiveness of professionally monitored alarms will continue to be recognized by the market. In addition, we believe many of our customers purchase monitored

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security and automation services as a result of their insurance carriers, who may offer lower insurance premium rates if a security system is installed or may require that a system be installed as a condition of coverage.

The residential security and smart home industry has the following key characteristics:

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Commercial and Multi-Site Market

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BUSINESS

Company Overview

Largest Security Monitoring Companies by Monitoring and Related Services Revenue ($ amounts in millions) ⁽¹⁾

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Information for companies other than ADT, Stanley, Comcast, and AT&T is based on monthly recurring monitoring and related services revenue as of December 31, 2016 published in SDM Magazine’s 2017 rankings, a publicly available report, which we annualized for the twelve-month period ended December 31, 2016. Information for Stanley is based on Stanley’s monthly recurring monitoring and related services revenue published in Stanley’s investor day presentation, dated May 16, 2017. Information for ADT is monitoring and related service revenue for the supplemental pro forma year ended December 31, 2016. We present monitoring and related services revenue as of the twelve-month period ended on December 31, 2016 because that is the latest period for which we have access to reliable information for other large security monitoring companies. We believe that ADT continues to have comparably larger monitoring and related services revenue than other security monitoring companies for the periods following December 31, 2016.

(2)	Information for Comcast and AT&T is not available for the twelve-month period ended December 31, 2016. We have estimated the above figures assuming that Comcast and AT&T have 1,000,000 and 400,000 customers, respectively,

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which numbers are derived from public reports. Additionally, we have assumed revenues of $40 per month per customer for each company, which is the cost of the most affordable plan they offer.

Significant and Stable Operating Cash Flow Generatio n. More than 90% of our revenue is recurring from contractually-committed monthly payments under customer contract terms that are generally three to five years in length and where the average customer tenure exceeds the initial contract term. The stability of our revenues is further driven by our industry’s resilience to economic recessions, as demonstrated by the positive market growth in every year through the 2008-2010 economic crisis. As a result of our approximately $3.5 billion net operating loss position, we do not expect to be a material cash taxpayer until approximately 2022 to 2024. This estimate could be impacted by several factors as outlined in “Risk Factors—Risks Related to Our Business—We have significant deferred tax assets, and any impairments of or valuation allowances against these deferred tax assets in the future could materially adversely affect our results of operations, financial condition, and cash flows.” Additionally, we have limited working capital needs and are able to reduce capitalized and expensed subscriber acquisition costs as attrition continues to decrease. As a result of our high margins, we are able to generate significant cash flow from operating activities.

Highly Attractive Rate of Return on Customer Acquisition Expenditures. We generate attractive returns on new customer acquisition expenditures and believe we will be able to further increase these returns through several key initiatives, including our focus on improving attrition and reducing subscriber acquisition costs. The expansion of our offerings through new channels to market such as DIY and retail, along with growth in commercial markets, where subscriber acquisition costs are lower, will also drive improvement in our internal rates of return.

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application, which provides family location technology, 24/7 crash detection, and roadside assistance with professional panic response monitoring via ADT. In addition, we offer professional monitoring of third party devices through our ADT Canopy platform. ADT Canopy enables other companies to integrate solutions into our monitoring and billing platform and allows us to provide monitoring solutions to customers who do not currently have an ADT security system or interactive automation platform installed on premise. The ADT platform easily integrates third-party hubs, DIY solutions, and IoT devices to our professional monitoring network on a contracted or per-month billing basis.

We report financial and operating information in one segment. Our operating segment is also our reportable segment. For the results of our operations outside of the United States, which consist of our operations in Canada, refer to the information provided in Note 15 to the audited consolidated financial statements.

Competitive Strengths

We believe the following competitive strengths position us to remain the leader in the markets we serve and to capture growth opportunities with complementary products and services:

Highest Brand Recognition

Clear Market Leader with Five Times the Market Share of the Next Largest Competitor

Nationwide Presence with the Most Diverse Distribution and Support Network

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As of September 30, 2017, our customers were supported by more than 200 customer sales and service offices and a team of approximately 18,000 employees across the United States and Canada. Our team represents the industry’s largest sales, installation, and service field force, and includes over 2,800 field sales professionals, approximately 450 sales phone agents, a dedicated health sales team, an exclusive network of approximately 300 authorized dealer partners across the United States and Canada, and approximately 4,600 installation and service technicians. We also maintain the industry’s largest 24/7, professional monitoring network of 12 U.L.-listed monitoring centers in the United States and Canada. Combined with our leading brand and scale, we believe our national footprint makes us the “partner of choice” for major technology companies, which has enabled us to leverage our service and monitoring expertise to expand our addressable market to include a wide range of technology-driven monitoring and service solutions.

Comprehensive, Innovative Security Platform with Extensions Beyond the Home and Business

We have complemented and extended these security and interactive automation solutions with a number of innovative offerings delivered through our ADT platforms. Our ADT platform enables our customers to integrate compatible devices and services into existing security systems to permit remote management and professional monitoring. ADT provides remote management and professional monitoring, as well as professional monitoring to owners and users of DIY solutions, IoT devices, and artificial intelligence hubs who do not currently have an installed ADT security system.

Customer-First Culture Delivering an Exceptional Customer Experience

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target of under 60 seconds wait time for all calls,

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minimize call abandonment rate,

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live call answer with no or limited auto-attendant,

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minimize field service backlog with a pledge to provide same day or next day service, and

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low employee turnover.

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Attractive Financial Profile with Strong Rates of Return and Cash Flow Generation

Significant Growth Opportunities in Commercial and Multi-Site Customer Channels

Highly Experienced, Expert Management Team with Successful Track Record of Delivering Results

Strengthened Operating Discipline

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Business Strategies

We believe the following core business strategies will continue to position our Company as the leader in the markets we serve:

Optimize Key Business Drivers that Drive Returns and Cash Flow Generation

Maintain Our Commitment to Best-in-Class Customer Service

We are focused on instilling a culture aimed at driving industry-leading customer service to our broad customer base. We believe our commitment to best-in-class customer service will drive increased customer retention, and as a result, greater cash flow generation. We serve our customer base from more than 200 locations throughout the United States and Canada, including 12 U.L.-listed monitoring centers. From these locations, our teams provide monitored security and interactive residential and commercial automation solutions including installation, field service and repair, and ongoing monitoring and customer support. Our installation and service technicians and customer service representatives deliver a high-quality customer service experience that enhances our brand, improves customer satisfaction, increases customer retention, and accelerates the adoption of additional interactive automation solutions, and therefore drives returns on new customer acquisition expenditures and greater cash flow generation. In the past year, we believe we have revitalized the customer service culture at ADT—our daily call abandonment rates are almost always less than 1% and more than 99% of our customer calls are answered within sixty seconds, and we pride ourselves on being responsive to our customers and providing same or next day service for the majority of our customers.

Maintain Our High-Quality Customer Base

Partner with Leading Third Parties to Extend and Enhance Our Product Offering and Customer Base

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network security and location analytics capabilities for retailers, such as foot traffic, heat mapping, dwell time, and new versus repeat customer visit analysis, using Cisco Meraki Access Points (AP). In August 2017, we also launched the ADT Panic Response service with the Samsung Gear S2 and S3 smartwatches, which are the first wearable devices to include this new level of personal protection. Together with Samsung, in October 2017, we introduced the Samsung SmartThings ADT home security system, which is a safe, easy, and flexible DIY security and smart home solution that gives consumers the ability to create a safe and secure home and grow their connected home ecosystem as their needs evolve. We expect a growing opportunity to expand from our core business to drive growth in adjacent markets, capitalizing on our core expertise and monitoring and service capabilities—along with our brand strength and high degree of customer trust—to expand our addressable market. We intend to pursue additional opportunities in adjacent markets, including through potential selective acquisitions.

Disciplined Expansion of Our Commercial and Multi-Site Account Customer Base

We intend to continue building the industry’s leading nationwide platform that leverages the complementary characteristics of each of our three key customer channels: residential, commercial, and multi-site customers. By leveraging ADT’s scale and leading brand recognition and Protection One’s leading customer care, service expertise, and existing commercial and multi-site customer base and platform, we will continue to seek disciplined growth in our commercial and multi-site channels. While the economics of our residential channels remain attractive, we believe disciplined growth in the commercial and multi-site customer channels will provide further opportunity to optimize our key business drivers that focus on, and yield, strong cash flow generation. We believe returns on new customer acquisition expenditures in these channels are attractive relative to our residential channels, as they have traditionally produced higher average revenues per customer and have lower customer acquisition costs as a multiple of recurring revenues. In fact, many multi-site customers often seek customized solutions with little-to-no upfront net customer acquisition costs. Commercial and multi-site customers also generally have stronger retention rates than residential customers as a result of higher vendor switching costs, longer contract terms, and a more limited set of competitors in the commercial market.

Our History and Transformation

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Our transformation has been led by our Chief Executive Officer Tim Whall, an industry veteran and former Protection One Chief Executive Officer with more than 35 years industry of experience, and a senior team comprised of both industry veterans and executives with deep functional expertise hired from outside the industry. This leadership team has coalesced to drive a culture centered on the customer, and one where all of our employees are fully aligned to the importance of our mission of helping our customers protect and connect to what matters most—their families, homes, and businesses. In addition to customer centricity, our internal cultural markers are characterized by a bias to act with urgency, high levels of teamwork and collaboration, individual accountability, and discretionary effort.

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Improved Operational and Financial Metrics . Comparing pre-acquisition Legacy ADT for its fiscal year ended September 25, 2015 to post-acquisition Legacy ADT in the trailing twelve-month period ended September 30, 2017, we reduced gross customer revenue attrition from 16.5% to 13.9%. In addition, in comparing pre-acquisition Legacy ADT for its fiscal year ended September 25, 2015 to the post-acquisition Company in the trailing twelve-month period ended September 30, 2017, we increased Adjusted EBITDA margins as a percentage of monitoring and related services revenues from 54.1% to 57.6%, and we reduced the customer revenue payback period from 2.7 years to 2.5 years. We also reduced total net capital expenditures as a percentage of Adjusted EBITDA and improved our cash flow.

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comparisons as the operations of pre-acquisition Legacy ADT comprise a significant portion of the combined Company. We use the non-GAAP measure Adjusted EBITDA to measure our operating performance. Adjusted EBITDA is reconciled to net loss in the section titled “Summary—Summary Historical and Pro Forma Financial Information.” Customer revenue payback period measures the approximate time in years required to recover our initial investment through contractual monthly recurring fees.

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Improved Customer Experience. Since the ADT Acquisition, we have made substantial progress in improving the experience of our customers through better processes, employee training, and the implementation of key initiatives at our call centers, across our sales teams, and at our local branch operations. We believe these improvements are demonstrated by some of the following key performance metrics: substantially reduced longest and average call wait times at our call centers, resulting in a significantly improved experience for customers calling for service on their accounts; reduced service backlog, enabling us to dispatch installation and service technicians to a customer’s premises far more quickly than before; lower call abandonment rates resulting from new processes at our call centers; and lower call center employee turnover. We believe these improvements create a virtuous cycle of more satisfied customers, leading to more engaged employees who, in turn, continue to improve service to our customers.

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The ADT Corporation Trailing Twelve Month Gross Customer Revenue Attrition ⁽¹⁾

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Note: Post-close and pre-close refer to the periods before and after the closing of the ADT Acquisition.

(1)

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Brands and Services

Our key brands are ADT and ADT Pulse, as well as the Protection One brand, which is being maintained in select channels. We believe these brands are among the most respected, trusted, and well-known brands in the monitored security industry. The strength of our brands is built upon a long-standing record of providing high-quality and reliable monitored security services and commitment to best-in-class customer care and service expertise. Due to the importance that customers place on reputation and trust when purchasing monitored security, we believe the strength of our brands is a key competitive advantage and contributor to our success.

Our monitored security and automation offerings involve the installation and monitoring of residential and business security and premises automation systems designed to detect intrusion, control access, and react to movement, smoke, carbon monoxide, flooding, temperature, and other environmental conditions and hazards, as well as to address personal emergencies such as injuries, medical emergencies, or incapacitation. Upon the occurrence of a triggering event, our monitored security systems connect to one of our U.L. listed monitoring centers. Depending upon the type of service contract and recorded customer preferences, our monitoring center personnel respond to alarms by relaying appropriate information to local police or fire departments and notifying the customer or others on the customer’s emergency contact list. Additional action may be taken by our monitoring center personnel as needed, depending on the specific situation and recorded customer preferences. The breadth of our solutions allows us to meet a wide variety of customer needs.

Additionally, through the use of our interactive technologies, primarily ADT Pulse, our customers are able to remotely monitor and manage their residential and commercial environments by adding automation capabilities to our monitored security systems. This is done in a way that maintains the separate network integrity and redundancy of a customer’s life safety and security signals. Depending on the service plan purchased and the type and level of product installation, customers are able to remotely access information regarding the security of their residential or commercial environment, arm and disarm their security system, adjust lighting or thermostat levels, or view real-time video from cameras covering different areas of their premises, all via secure access from web-enabled devices (such as smart phones, laptops, and tablet computers) and a customized web portal. Additionally, our interactive automation solutions enable customers to create customized schedules or automation for managing lights, thermostats, appliances, and garage doors. The system can also be programmed to perform additional functions, such as recording and viewing live video and sending text messages based on triggering events.

Customers’ increasingly mobile and active lifestyles have created new opportunities for us in the fast-growing market for self-monitored, or do-it-yourself, products and services. With technology such as ADT Canopy, a platform that provides customers the ability to access our professional monitoring services via various connected and wearable devices, we can continue to service our customers whether they are home or on-the-go.

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Many of our residential customers are driven to purchase monitored security and automation services as a result of a perceived or actual increase in crime, life safety concerns in their neighborhood, or other significant life events. In addition, we believe many of our customers purchase monitored security and automation services as a result of their insurance carriers, who may offer lower insurance premium rates if a security system is installed or may require that a system be installed as a condition of coverage.

Reasons for purchasing monitored security and automation systems vary for our commercial customers. Most commercial customers require a basic security system for insurance purposes. However, as IP video solutions have become more affordable and interactive, businesses view these solutions for applications beyond just security, and leverage them for operational purposes as well, including employee safety, theft prevention, and inventory management.

Some of our customers use traditional land-line telephone service as the primary communication method for alarm signals from their sites. As the use of land-line telephone service has decreased, the ability to provide alternative communication methods from a customer’s control panel to our central monitoring centers has become increasingly important. We currently offer, and recommend, a variety of alternate and back-up alarm transmission methods including cellular and broadband Internet.

Additionally, we offer personal emergency response system products and services to our customers, which are supported by monitoring centers, and leverage our security monitoring infrastructure to provide customers with solutions that help sustain independent living, encourage better self-care activities, and improve communication of critical health information.

In addition to monitoring services, we provide other services such as routine maintenance and the installation of upgraded or additional equipment. A majority of our customer base is enrolled in a service plan, which provides additional value to the customer and generates incremental recurring monthly revenue. Purchasers of our monitored security and interactive solutions typically contract for both monitoring and maintenance services at the time of initial equipment installation.

Most of the monitoring services, and a large portion of the maintenance services, we provide to our customers, are governed by multi-year contracts with automatic renewal provisions that provide us with contractually committed recurring monthly revenue. Under our typical customer contract (three-year initial term for residential and five years or longer initial term for commercial and national accounts), the customer pays an upfront fee and is then obligated to make monthly payments for the remainder of the initial contract term. In the residential channel, the standard contract term is three years (two years in California), with automatic renewals for successive 30-day periods, unless cancelled by either party. If a customer cancels or is otherwise in default under the contract prior to the end of the initial contract term, we have the right under the contract to receive a termination payment from the customer in an amount equal to a designated percentage of all remaining monthly payments. Monitoring services are generally billed monthly or quarterly in advance. More than 70% of our residential customers pay us through automated payment methods, with a significantly higher percentage of new residential customers opting for these payment methods. We periodically adjust the standard monthly monitoring rate charged to new and existing customers.

Our Markets

We operate in the following three markets: Residential, Commercial, and Growth Markets.

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Residential: Residential customers are typically owners of single-family homes who have purchased monitored security and automation services as a result of having moved to a new residence, in response to changes in the perceived threat of crime or life safety concerns in their neighborhood, or in conjunction with other significant life events, such as the birth of a child. We believe that the residential security market is meaningfully underpenetrated, with approximately 20% of U.S. homes using security systems.

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Commercial: Commercial customers generally include small and large retail businesses, food and beverage service providers, medical offices, financial institutions, service businesses, and multi-site customers with sites around the country. The market is characterized by higher penetration rates, which are driven by insurance requirements and regulations, and by a higher degree of complexity with respect to system installations. As internet protocol (“IP”) video solutions have become more affordable and interactive, businesses increasingly view these solutions for applications beyond just security, and leverage them for operational purposes as well, including employee safety, theft prevention, and inventory management.

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Growth Markets: New customer types and new offerings present opportunities for us to leverage our brand name, our core focus on security, and our high degree of trust among our customer base to pursue complementary markets such as smart home technologies, network and cyber security, and mobile security. We also leverage our security monitoring infrastructure to provide customers with solutions that help sustain independent living, encourage better self-care activities, and improve communications of critical health information.

We believe the U.S. monitored security market is large, underpenetrated, growing, and economically resilient. The residential market is highly fragmented with several thousand security monitoring companies, the vast majority of which operate in a single regional market, while only a few possess nationwide platforms. The business model is characterized primarily by contractual, subscription-based recurring revenue, which is predictable and resilient, as evidenced by continued growth in the industry during the recent 2008-2010 economic downturn. Industry monitoring and service revenue has grown every year for the past 15 years, and we believe such revenue is well-positioned to benefit from additional growth generated by value-added interactive residential and commercial automation services and additional market penetration. According to Barnes Associates, from 2000 to 2016, monitoring and service revenue increased every year from $8 billion to $27 billion, representing a CAGR of approximately 7.7%. Currently, approximately 20% of households in the United States have home security services, and according to industry observers, market penetration rates are expected to continue to increase to upwards of 40%, as awareness continues to increase and drive demand for advanced solutions, new technologies, and home automation.

Customers and Marketing

We serve approximately 7.2 million customers (excluding contracts monitored but not owned) throughout the United States and Canada. Our residential customers are typically owners of single-family homes, while our business customers include retail businesses, food and beverage service providers, medical offices and clinics, mechanical and auto-body shops, professional service providers, and commercial facilities, among others. Our commercial customers range from smaller businesses to multi-site, national companies.

We manage our existing customer base to maximize customer lifetime value, which includes continually evaluating our product offerings, pricing, and service strategies, managing our costs to provide service to customers, upgrading existing customers to ADT Pulse, IP video solutions for businesses, or other upgraded solutions, and achieving long customer tenure. Our ability to increase our average selling prices for individual customers is dependent on a number of factors including, the quality of our service as well as our continued introduction of additional features and services that increase the value of our offerings to customers and the competitive environment in which we operate.

To support the growth of our customer base and to improve awareness of our brands, we market our monitored security and automation systems and services through national television and radio advertisements, as well as through Internet advertising, including national search engine marketing, email, online video, local search, direct mail, and social media. We continually work to optimize our marketing spend through a lead modeling process, whereby we flex and shift our spending based on lead flow and measured marketing channel effectiveness. In addition to traditional and digital marketing, we have several affinity partnerships with organizations whereby they promote our services to their customer bases.

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We continually consider and evaluate new customer lead methods and channels in an effort to increase our customer base and drive greater market penetration without sacrificing customer quality. We also explore opportunities to expand our market presence by providing branded solutions through various third parties, including telecommunications companies, broadband and cable companies, retailers, public and private utilities, and software service providers.

Sales and Distribution Channels

We utilize a network of complementary distribution channels that includes a mix of direct and indirect. In 2016, we generated approximately 60% of our new customers through our internal sales force, including our phone and field teams, supported by our direct response marketing efforts. We generated our remaining new customers in 2016 mainly through our ADT Authorized Dealer Program, and to a smaller extent, through agreements with leading homebuilders and related partners. As opportunities arise, we may also engage in selective bulk account purchases, which typically involve the purchase of a set of customer accounts from other security service providers.

New customers typically require us to make an upfront investment, consisting primarily of installation costs including direct materials and labor, direct and indirect sales costs, marketing costs, and administrative costs related to the installation activities. While the economics of our installation business can vary depending on the customer acquisition channel, we operate our business with the goal of retaining customers for long periods of time in order to recoup our initial investment in new customers, generally achieving revenue break-even in approximately three years.

Direct Channel

Our national sales call centers (inbound and outbound) close sales from prospective customers generated through national marketing efforts and lead generation channel partners. Our telephone sales associates work to understand customer needs and then direct customers to the most suitable sales approach. We close a sale over the phone, if appropriate, while balancing the opportunity for up-sales and customer education that occurs when a sales representative works with the customer in their home or business to fully understand their individual needs. When the sale is best handled in the customer’s home or business, the sales center associate can schedule a field sales consultant appointment in real-time.

The approximately 2,800 sales consultants that make up our field sales force generate sales from customers through company-generated leads, as well as customer referrals and other lead methods. Our field sales consultants undergo an in-depth screening process prior to hire. Each field sales consultant completes comprehensive centralized training prior to conducting customer sales presentations and participates in ongoing training in support of new offerings and the use of our structured model sales call. We utilize a highly structured sales approach, which includes, in addition to the structured model sales call, daily monitoring of sales activity and effectiveness metrics and regular coaching by our sales management teams.

Indirect Channel

Our authorized dealer network, which we acquired in May 2016 in connection with the ADT Acquisition, consists of approximately 300 authorized dealers operating across the United States and Canada, and extends our reach by aligning us with select independent security sales and installation companies. These authorized dealers generally have exclusivity arrangements with us for security related services. We monitor each authorized dealer to help ensure the dealer’s financial stability, use of sound and ethical business practices, and delivery of reliable and consistent high-quality sales and installation methods. Authorized dealers are required to adhere to the same high-quality standards for sales and installation as our own field offices.

Typically, our authorized dealers are contractually obligated to offer exclusively to us all qualified security services accounts they generate, but we are not obligated to accept these accounts. We pay our authorized dealers

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for the services they provide in generating qualified monitored accounts. In certain instances in which we reject an account, we generally still indirectly provide monitoring services for that account through a monitoring services agreement with the authorized dealer. Like our direct sales contracts, dealer generated customer contracts typically have an initial term of three years (two years in California) with automatic renewals for successive 30-day periods, unless canceled by either party. If an accepted security services account is canceled during the charge-back period, which is generally twelve to fifteen months, the dealer is required to provide an account with equivalent economic characteristics or to refund our payment for their services for generating the account.

Field Operations

We serve our customer base from approximately 200 sales and service offices located throughout the United States and Canada. From these locations, our staff of approximately 4,600 installation and service technicians provides monitored security and automation system installations and field service and repair. We staff our field offices to efficiently and effectively make sales calls, install systems, and provide service support based on customer needs and our evaluation of growth opportunities in each market. We utilize third-party subcontract labor when appropriate to assist with these efforts. We maintain the relevant and necessary licenses related to the provision of installation of security and related services in the jurisdictions in which we operate. Our objective is to provide a differentiated service experience by providing same-day service.

Monitoring Centers and Support Services

We operate 12 monitoring centers that are listed by U.L. across the United States and Canada. We employ approximately 4,000 customer care professionals who are required to complete extensive initial training, as well as receive ongoing training and coaching. To obtain and maintain a U.L. listing, a security system monitoring center must be located in a building meeting U.L.’s structural requirements, have back-up computer and power systems, and meet U.L. specifications for staffing and standard operating procedures. Many jurisdictions have laws requiring that security systems for certain buildings be monitored by U.L. listed centers. In addition, a U.L. listing is required by insurers of certain customers as a condition of insurance coverage. In the event of an emergency at one of our monitoring centers (e.g., fire, tornado, major interruption in telephone or computer service, or any other event affecting the functionality of the center), all monitoring operations can be automatically transferred to another monitoring center. All of our monitoring centers operate 24 hours a day on a year-round basis.

We serve our largest multi-site customers from our call center in Irving, Texas. Our multi-site customers may call one location to resolve all customer support issues, including billing, installations, service calls, upgrades, or other service-related assistance. This concept is unique in our industry and is a strong selling point for National Accounts choosing us for their security needs.

Newark, Delaware is home to our Network Operations Center (“NOC”). The NOC houses a group of highly experienced certified engineers capable of designing and provisioning broadband networks for our customers. These employees are Cisco Certified and Meraki Certified, and our NOC earned the Cisco Cloud and Managed Services Express Partner Certification, which makes us one of the few security companies in the industry with this designation.

Three of our monitoring centers provide monitoring under the CMS brand, which is a wholesale monitoring company providing services to independent alarm companies.

Customer Care

We believe that the fastest and most profitable way to grow our company is by keeping the customers we already have. To maintain our high standard of customer service, we provide ongoing high-quality training to call

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center and field employees and to dealer personnel. We also continually measure and monitor key performance metrics that drive a high-value customer experience, including customer satisfaction oriented metrics across each customer touch point.

Our call center operations provide support 24 hours a day on a year-round basis. Customer care specialists answer non-emergency inquiries regarding service, billing, and alarm testing and support, while our monitoring centers primarily handle inbound alarms and dispatch of alarms. To ensure that technical service requests are handled promptly and professionally, all requests are routed through our customer contact centers. Customer care specialists help customers resolve minor service and operating issues; and in many cases, the specialists are able to remotely resolve customer concerns. We continue to implement new customer self-service tools via interactive voice response systems and the Internet, thereby providing customers additional choices in managing their services.

Suppliers

We purchase equipment and components of our products from a limited number of suppliers and distributors. Inventory is held in our regional distribution center at levels we believe are sufficient to meet current and anticipated customer needs. We also maintain inventory of equipment and components at each field office and in technicians’ vehicles. Generally, our third-party distributors maintain a safety stock of certain key items to cover any minor supply chain disruptions. We also utilize dual sourcing methods to minimize the risk of a disruption from a single supplier. We do not anticipate any major interruptions in our supply chain.

Competition

Technology trends are creating significant change in our industry. Innovation has lowered the barriers to entry in the interactive services and automation market, and new business models and competitors have emerged. We believe that a combination of increasing customer interest in lifestyle and business productivity and technology advancements will support the increasing penetration of the interactive services and automation industry. We are focused on extending our leadership position in the monitored security industry while also growing our share of the fast-growing interactive automation industry. The security systems market in the United States and Canada remains highly competitive and fragmented, with a number of major firms and thousands of smaller regional and local companies. The high fragmentation of the industry is primarily the result of relatively low barriers to entering the business in local geographies and the availability of wholesale monitoring (whereby smaller companies outsource their monitoring to operations that provide monitoring services but do not maintain the customer relationship). We believe that our principal competitors within the security systems market are Johnson Controls International plc., Vivint, Inc., Stanley Security Solutions, a subsidiary of Stanley Black and Decker, MONI, a subsidiary of Ascent Capital Group, Inc. and Comcast Corporation.

Success in acquiring new customers is dependent on a variety of factors, including brand and reputation, market visibility, service and product capabilities, quality, price, and the ability to identify and sell to prospective customers. Competition is often based primarily on price in relation to the value of the solutions and service. Rather than compete purely on price, we emphasize the quality of our services, which we believe is distinguished by superior-class customer service, the reputation of our industry-leading brands, and our knowledge of customer needs, which we believe collectively enable us to deliver an outstanding experience. In addition, we are increasingly offering added features and functionality, such as those in our ADT Pulse interactive services offering, which provide new services and capabilities that serve to further differentiate our offering and support a pricing premium.

We believe our focus on safety and security, coupled with our field sales force, and including our nationwide team of in-home sales consultants, our solid reputation for and expertise in providing reliable security and monitoring services through our in-house network of redundant monitoring centers, our reliable product solutions, and our highly skilled installation and service organization, position us well to compete with traditional and new competitors.

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Seasonality

Our business experiences a certain level of seasonality. Since more household moves take place during the second and third calendar quarters of each year, our disconnect rate and new customer additions are typically higher in those quarters than in the first and fourth calendar quarters. There is also a slight seasonal effect on our new customer installation volume and related cash expenses incurred in investments in new customers; however, other factors such as the level of marketing expense and relevant promotional offers can mitigate the effects of seasonality. In addition, we may see increased servicing costs related to higher alarm signals and customer service requests as a result of customer power outages and other issues due to weather-related incidents.

Intellectual Property

Patents, trademarks, copyrights, and other proprietary rights are important to our business, thus we continuously refine our intellectual property strategy to maintain and improve our competitive position. We register new intellectual property to protect our ongoing technological innovations and strengthen our brand, and we take appropriate action against infringements or misappropriations of our intellectual property rights by others. We review third-party intellectual property rights to help avoid infringement and to identify strategic opportunities. We typically enter into confidentiality agreements to further protect our intellectual property.

We own a portfolio of patents and patent applications that relate to a variety of monitored security and automation technologies utilized in our business, including security panels and sensors as well as video and information management solutions. We also own a portfolio of trademarks and trademark applications in the United States and Canada, including but not limited to, ADT, ADT Pulse, Canopy, ADT Always There, Protection One, in Canada only, Creating Customers for Life, and, in the United States only, ASG Security, and are a licensee of various intellectual property, including from our third-party suppliers and technology partners. Due to the importance that customers place on reputation and trust when making a decision on a security provider, our brand is critical to our business. Patents for individual products extend for varying periods according to the date of patent filing or grant and the legal term of patents in the various countries where patent protection is obtained. Trademark rights may potentially extend for longer periods of time and are dependent upon national laws and use of the marks.

In particular, certain trademarks associated with the ADT brand, including “ADT” and the blue octagon, are owned in all territories outside of the United States and Canada by Johnson Controls International plc, which recently acquired and merged with and into Johnson Controls. In certain instances, such trademarks are licensed in certain territories outside the United States and Canada by Johnson Controls to third parties. Pursuant to the Tyco Trademark Agreement entered into between The ADT Corporation and Tyco in connection with the separation of The ADT Corporation from Tyco in 2012, the Company is prohibited from ever registering, attempting to register or using such trademarks outside the United States (including Puerto Rico and the US Virgin Islands) and Canada. As a result, in the event that the Company chooses to sell products or services or otherwise do business outside the United States and Canada, it will have to do so using a brand other than “ADT” and may not use the blue octagon to promote its products and services. See “Risk Factors—Risks Related to Our Business—Third parties hold rights to certain key brand names outside of the United States and Canada.”

Government Regulation and Other Regulatory Matters

Our operations are subject to numerous federal, state, provincial, and local laws and regulations in the United States and Canada in areas such as consumer protection, occupational licensing, environmental protection, labor and employment, tax, permitting, and other laws and regulations. Most states and provinces in which we operate have licensing laws directed specifically toward the monitored security industry. In certain jurisdictions, we must obtain licenses or permits in order to comply with standards governing employee selection, training, and business conduct.

We also currently rely extensively upon the use of both wireline and wireless telecommunications to communicate signals, and wireline and wireless telephone companies in the United States and Canada are

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regulated by federal, state, provincial, and local governments. The operation and use of wireless telephone and radio frequencies is regulated in the United States by the Federal Communications Commission (“FCC”) and state public utilities commissions and in Canada by the Canada Radio-television and Telecommunications Commission (“CRTC”). Although the use of wireline phone service has been decreasing, we believe we are well positioned to respond to these trends with alternate transmission methods that we already employ, including cellular and broadband Internet technologies. Our advertising and sales practices are regulated by the U.S. Federal Trade Commission (“FTC”), the Canadian Competition Bureau, the CRTC, and state and provincial consumer protection laws. In addition, we are subject to certain administrative requirements and laws of the jurisdictions in which we operate. These laws and regulations may include restrictions on the manner in which we promote the sale of our security services and require us to provide most purchasers of our services with three-day or longer rescission rights. We must also comply with applicable laws governing telemarketing and email marketing in both the United Stated and Canada. See “Risk Factors—Risks Related to Our Business—Increasing government regulation of telemarketing, email marketing, door-to-door sales and other marketing methods may increase our costs and restrict the operation and growth of our business.”

Some local government authorities have adopted or are considering various measures aimed at reducing false alarms. Such measures include requiring permits for individual alarm systems, revoking such permits following a specified number of false alarms, imposing fines on customers or alarm monitoring companies for false alarms, limiting the number of times police will respond to alarms at a particular location after a specified number of false alarms, requiring additional verification of an alarm signal before the police respond, or providing no response to residential system alarms. See “Risk Factors—Risks Related to Our Business—We could be assessed penalties for false alarms” and “Risk Factors—Risks Related to Our Business—Police departments could refuse to respond to calls from monitored security service companies” for further discussion.

The monitored security industry is also subject to requirements, codes, and standards imposed by various insurance, approval and listing, and standards organizations. Depending upon the type of customer, security service provided, and requirements of the applicable local governmental jurisdiction, adherence to the requirements, codes, and standards of such organizations is mandatory in some instances and voluntary in others.

Changes in laws and regulations can affect our operations, both positively and negatively, and impact the manner in which we conduct our business. See “Risk Factors—Risks Related to Our Business—Our business operates in a regulated industry.”

Employees

As of September 30, 2017, we employed approximately 18,000 people. Approximately 10% of our employees are covered by collective bargaining agreements. We believe that our relations with our employees and labor unions have generally been good.

Properties

We currently operate through a network of over 200 sales and service offices, 12 U.L. listed monitoring centers, seven customer and field support locations, two national sales call centers and two regional distribution centers, located throughout the United States and Canada, the majority of which are leased.

We lease approximately 2.4 million square feet of space in the United States, including 150,000 square feet of office space for our corporate headquarters located in Boca Raton, Florida. We lease this property under a long-term operating lease with a third party. We also own approximately 450,000 square feet of space throughout the United States.

We lease approximately 250,000 square feet of space in Canada in support of our Canadian operations.

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We believe our properties are adequate and suitable for our business as presently conducted and are adequately maintained.

Legal Proceedings

We are subject to various claims and lawsuits in the ordinary course of business, including from time to time, contractual disputes, employment matters, product and general liability claims, claims that the Company has infringed on the intellectual property rights of others, claims related to alleged security system failures, and consumer and employment class actions. In the ordinary course of business, we are also subject to regulatory and governmental examinations, information requests and subpoenas, inquiries, investigations, and threatened legal actions and proceedings. In connection with such formal and informal inquiries, we receive numerous requests, subpoenas, and orders for documents, testimony, and information in connection with various aspects of our activities. We have recorded accruals for losses that we believe are probable to occur and are reasonably estimable. For a description of certain on-going matters, refer to Note 8 the Company’s unaudited consolidated financial statements.

Corporate Information

Our principal executive offices are located at 1501 Yamato Road, Boca Raton, FL 33431. Our telephone number is (561) 988-3600. Our website is located at https://investor.adt.com. The information contained in, or accessible through, our website is not part of, and is not incorporated into, this prospectus, and investors should not rely on any such information in deciding whether to invest in our common stock.

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MANAGEMENT

The following table sets forth the name, age and position of each of our executive officers and directors as of the date of this prospectus.


Name	Age	Position
Timothy J. Whall	56	Chief Executive Officer; Director
James D. DeVries	54	President
Daniel M. Bresingham	45	Executive Vice President, Chief Administrative Officer and Treasurer
P. Gray Finney	59	Senior Vice President, Chief Legal Officer and Secretary
Jeffrey Likosar	47	Executive Vice President and Chief Financial Officer
Jamie E. Haenggi	47	Senior Vice President and Chief Sales and Marketing Officer
Donald Young	53	Senior Vice President and Chief Information Officer
Andrew D. Africk	51	Director
Marc E. Becker	45	Director (Chairman)
Matthew H. Nord	37	Director
Reed B. Rayman	31	Director
Eric L. Press	51	Director
Lee J. Solomon	45	Director
Stephanie Drescher	44	Director
Brett Watson	37	Director
David Ryan	47	Director

The following are brief biographies describing the backgrounds of the executive officers and directors of the Company.

Timothy J. Whall is our Chief Executive Officer and a member of our board of directors. Mr. Whall has served as Chief Executive Officer and President of Prime Borrower since July 2015. Previously, Mr. Whall served as the President, Chief Executive Officer, and a member of the board of directors of Protection One, Inc. from June 2010 to March 2017. Mr. Whall joined SecurityLink in 1990 as a Service Manager. He served as a General Manager before joining the senior management team in various capacities and ultimately becoming President and Chief Operating Officer. After SecurityLink was acquired by GTCR in 2000, Mr. Whall continued to serve as President and Chief Operating Officer. Following SecurityLink’s sale to Tyco in 2001, Mr. Whall was ADT’s Senior Vice President of Business Operations from 2001 to 2004. In 2004, Mr. Whall partnered with GTCR to acquire Honeywell’s Security Monitoring division (“HSM”). At HSM he served as President and Chief Operating Officer. Following the sale of HSM to Stanley Black & Decker, Mr. Whall served as Chief Operating Officer of StanleyWorks’ Convergent Security Solutions division for one year. In 2008, he left Stanley to pursue opportunities with GTCR. That partnership led to GTCR’s acquisition of the Protection One business in June 2010.

James D. DeVries is our President. From May 2, 2016 to September 2017, Mr. DeVries served as The ADT Corporation’s Executive Vice President and Chief Operating Officer. From December 2014 to May 2016, Mr. DeVries served as Executive Vice President of Brand Operations at Allstate Insurance Company, the second largest personal lines insurer in the United States. During his tenure at Allstate, Mr. DeVries led the operations organization, comprising approximately 7,000 employees in the United States, Northern Ireland, and India, and was responsible for, among other things, customer care centers, outbound and inbound phone sales, procurement, technical support, life underwriting and claims, real estate and administration, and fleet management. From March 2008 to December 2014, Mr. DeVries served as Executive Vice President and Chief Administrative Officer of Allstate, where has was accountable for, among other things, real estate and administration, human resources, and procurement. Prior to joining Allstate in 2008, Mr. DeVries served in various executive and management roles at Principal Financial Group, Ameritech, Quaker Oats Company, and Andrew Corporation. Mr. DeVries is a board member of Amsted Industries Inc., a diversified global manufacturer of industrial

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components serving primarily the railroad, vehicular and construction and building markets, and a past board member of the Human Resources Management Association of Chicago, the Chicago Public Library Foundation, and the Boys & Girls Clubs of Central Iowa. Mr. DeVries received a Bachelor’s degree from Trinity College, which is now known as Trinity International University, a master’s degree from Loyola University, and a Master of Business Administration from the Kellogg School of Management at Northwestern University.

Daniel M. Bresingham is our Executive Vice President, Chief Administrative Officer and Treasurer. He also serves as Executive Vice President, Treasurer, and Chief of Staff of Prime Borrower, and has served in this position since October 2016. Previously, Mr. Bresingham served as our Chief Financial Officer of Prime Borrower from July 2015 to October 2016. From April 2010 to June 2015, Mr. Bresingham served as the Chief Financial Officer of Protection One, Inc. Prior to joining the Company, Mr. Bresingham served as Chief Financial Officer of Stanley Convergent Security Solutions from January 2007 through April 2010. Prior to then, Mr. Bresingham served as Controller of HSM Electronic Protection Services from November 2004 to January 2007. Mr. Bresingham also has senior management experience in the telecommunications industry and public accounting experience from his time at Arthur Andersen and PricewaterhouseCoopers. Mr. Bresingham successfully completed the examinations required to become a Certified Public Accountant and a Certified Internal Auditor. Mr. Bresingham holds a Bachelor’s degree in Accounting from the University of Illinois at Urbana-Champaign and a MBA from the University of Chicago.

P. Gray Finney is our Senior Vice President, Chief Legal Officer and Secretary. He is also Prime Borrower’s Senior Vice President, General Counsel and Secretary. Previously, Mr. Finney served as Senior Vice President, General Counsel and Secretary of Protection One, Inc. from August 2010 to March 2017. From 2005 to 2010, Mr. Finney was the managing member of Finney Law Firm LLC, a law firm focusing primarily on the electronic security industry and telecommunications. From 1997 to 2003, Mr. Finney served as Senior Vice President, General Counsel and Secretary of ADT Security Services, Inc. From 1988 to 1996, Mr. Finney was a senior lawyer at Ryder System, Inc., and from 1982 to 1985, he was a Senior Tax Specialist at KPMG LLP. Mr. Finney is licensed to practice law in Alabama, Florida, Mississippi and Texas, and is also licensed to practice public accountancy in both Alabama and Florida. Mr. Finney holds a B.S. in Accounting and Finance from Florida State University and a J.D. from the University of Miami.

Jeffrey Likosar is our Executive Vice President and Chief Financial Officer. He is also Prime Borrower’s Executive Vice President and Chief Financial Officer and has served in this role since October 2016. From February 2014 to September 2016, Mr. Likosar served as CFO of Gardner Denver, a leading global provider of high quality industrial equipment, technologies, and services to a broad and diverse customer base through a family of highly recognized brands. Mr. Likosar was responsible for all aspects of the financial function in this role. From November 2008 to February 2014, Mr. Likosar served in various capacities at Dell Inc., a privately owned multinational computer technology company, including as Chief Financial Officer, End User Computing and Operations and Vice President of Financial Planning and Analysis and Acquisition Integration. Prior to joining Dell, Mr. Likosar spent most of his career at GE across the Appliances, Plastics, and Aviation Divisions. His roles included Chief Financial Officer of Resins (in GE’s Plastics Division) and Chief Financial Officer of Military Systems in GE’s Aviation Division, in addition to various other roles in the Plastics and Appliances Divisions. Mr. Likosar began his career at GE Appliances as an analyst in the Financial Management Program and holds a Bachelor’s degree in business administration from the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill.

Jamie E. Haenggi is our Senior Vice President and Chief Sales and Marketing Officer. She is also Prime Borrower’s Senior Vice President and Chief Marketing and Customer Experience Officer and has served in this role since July 2015. Previously, Ms. Haenggi was the Chief Revenue Officer of Protection One from June 2010 to June 2015. Ms. Haenggi has spent over 20 years in the security industry in a wide range of sales, marketing and operational positions. Prior to working at Protection One, Ms. Haenggi served as Chief Marketing Officer at Vonage. She has also held leadership positions at National Guardian, Holmes Protection, and ADT Security Services, Inc. At ADT Security Services, Inc., she served as Vice President, Marketing and later as Vice

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President of Worldwide Marketing. Ms. Haenggi received her Bachelor’s degree in International Relations and Japanese from the University of Minnesota.

Donald Young is our Senior Vice President and Chief Information Officer. He is also Prime Borrower’s Chief Information Officer and has served in this role since July 2015. Mr. Young served as the Chief Operating Officer and Chief Information Officer of Prime Borrower from July 2015 to May 2016 and for Protection One, Inc. from June 2010 to July 2015. Mr. Young joined the alarm industry in 1988 after serving four years in the United States Air Force as a Computer Programmer Analyst. In 1988, Mr. Young first joined SecurityLink as Operations Manager. In 2001, Mr. Young became SecurityLink’s Chief Information Officer. Following the sale of SecurityLink, he was the Vice President of Information Technology at ADT Security Services, Inc. Mr. Young became Chief Information Officer at HSM in 2004. After the January 2007 sale of HSM to StanleyWorks, he was retained as Chief Information Officer of Stanley Convergent Solutions through May 2010.

Andrew D. Africk is a member of our board of directors. Mr. Africk has also served as a manager of Prime Borrower since its formation in May 2015. Mr. Africk is the founder of Searay Capital LLC, a private investment company. Mr. Africk established Searay Capital in July 2013 after 21 years leading private equity and capital markets investments for Apollo. As a Senior Partner at Apollo, Mr. Africk was responsible for investments in technology and communications and has over 25 years of experience financing, analyzing and investing in public and private companies. Mr. Africk also currently serves as a director of Suncoke Energy Inc. and RPX Corporation. In the last five years, Mr. Africk has served on the boards of directors for various public companies including Alliqua Biomedical, Hughes Telematics, Inc., and STR Holdings, Inc. Additionally, Mr. Africk serves on the Board of Overseers of the University of Pennsylvania School of Engineering and Applied Science, serves on the UCLA Science Board and is a trustee of the Trinity School in New York City. Mr. Africk graduated Summa Cum Laude, Phi Beta Kappa from UCLA with a B.A. in Economics, Magna Cum Laude from the University of Pennsylvania Law School with a J.D., and with Distinction from the University of Pennsylvania’s Wharton School of Business with an MBA.

Marc E. Becker is the chairman of our board of directors and a designee of Apollo. Mr. Becker has also served as a manager of Prime Borrower since its formation in May 2015. Mr. Becker is a Senior Partner of Apollo. He joined Apollo in 1996. Prior to that time, Mr. Becker was employed by Smith Barney Inc. within its Investment Banking division. Mr. Becker also serves on the board of directors of Pinnacle Agriculture Holdings, LLC. During the past five years, Mr. Becker also served as a director of Affinion Group Holdings, Inc., Apollo Residential Mortgage, Inc., CEVA Holdings, LLC, Evertec Group, LLC, Novitex Holdings, Inc., Quality Distribution, Inc., Realogy Holdings Corp., and SourceHOV Holdings Inc. Mr. Becker is actively involved in a number of non-profit organizations and serves as the chairman of the board of the TEAK Fellowship and as Treasurer of the Park Avenue Synagogue. Mr. Becker graduated cum laude with a B.S. in Economics from the University of Pennsylvania’s Wharton School of Business.

Matthew H. Nord is a member of our board of directors and a designee of Apollo. Mr. Nord has also served as a manager of Prime Borrower since its formation in May 2015. Mr. Nord is a Senior Partner of Apollo. He joined Apollo in 2003. From 2001 to 2003, Mr. Nord was a member of the Investment Banking division of Salomon Smith Barney Inc. Mr. Nord serves on the boards of directors of Elexa Technologies, Inc., Presidio Holdings, Inc., RegionalCare Hospital Partners Holdings, Inc., and West Corporation. Mr. Nord also serves on the Board of Trustees of Montefiore Health System and on the Board of Overseers of the University of Pennsylvania’s School of Design. During the past five years, Mr. Nord also served as a director of Affinion Group Inc., Constellium N.V., Evertec, Inc., Novitex Parent, L.P., MidCap Financial Holdings, Inc., Noranda Aluminum Holding Corporation, and SOURCEHOV Holdings, Inc. Mr. Nord graduated summa cum laude with a B.S. in Economics from the University of Pennsylvania’s Wharton School of Business.

Reed B. Rayman is a member of our board of directors and a designee of Apollo. Mr. Rayman has also been a manager of Prime Borrower since its formation in May 2015. He is a Principal of Apollo, where he has worked since 2010. Mr. Rayman previously was employed by Goldman, Sachs & Co. in both its Industrials Investment

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Banking and Principal Strategies groups from 2008 to 2010. Mr. Rayman holds a B.A. cum laude in Economics from Harvard University. Mr. Rayman currently serves on the board of directors of Coinstar, Redbox, CareerBuilder, Mood Media, and ecoATM. He previously served on the board of directors of Verso Corporation.

Eric L. Press is a member of our board of directors and a designee of Apollo. Mr. Press has also been a manager of Prime Borrower since May 2016. Mr. Press is a Senior Partner at Apollo. In his 18 years with Apollo, he has been involved in many of the firm’s investments in basic industrials, metals, lodging/gaming/leisure and financial services. Prior to joining Apollo in 1998, Mr. Press was associated with the law firm of Wachtell, Lipton, Rosen & Katz, specializing in mergers, acquisitions, restructurings, and related financing transactions. From 1987 to 1989, Mr. Press was a consultant with The Boston Consulting Group, a management consulting firm focused on corporate strategy. Mr. Press currently serves on the boards of directors of Apollo Commercial Real Estate Finance, Inc., Princimar Chemical Holdings, RegionalCare Hospital Partners, and Constellis Holdings. In the last five years, Mr. Press has served on the boards of directors for Verso Paper Corp., Affinion Group Holdings, Inc., Noranda Aluminum Holding Corporation, Athene Holding Ltd., and Metals USA Holdings Corp. Mr. Press graduated magna cum laude from Harvard College with an AB in Economics and Yale Law School, where he was a Senior Editor of the Yale Law Journal.

Lee J. Solomon is a member of our board of directors and a designee of Apollo. Mr. Solomon has also been a manager of Prime Borrower since May 2016. Mr. Solomon is a Partner at Apollo Private Equity having joined in 2009. Prior to that time, Mr. Solomon was the Chief Operating Officer of The Weinstein Company. Prior thereto, he served as a Principal at Grosvenor Park, which was a joint venture with Fortress Investment Group. Prior to that, he was the Executive Vice President of Business Affairs for Helkon Media. Mr. Solomon serves on the board of directors of Endemol Shine Group, Redbox Automated Retail LLC, Coinstar LLC, ecoATM and Mood Media Corporation. He received his MBA from The Stern School of Business at New York University and graduated from the University of Rochester with a BA in Economics and Political Science.

Stephanie Drescher is a member of our board of directors and a designee of Apollo. Ms. Drescher has also been a manager of Prime Borrower since December 2017. Ms. Drescher is a Senior Partner at Apollo, having joined in 2004, and is a member of the firm’s Management Committee. Prior to joining Apollo, Ms. Drescher was employed by JP Morgan for ten years, primarily in its Alternative Investment group. Ms. Drescher has served on the board of directors of the JP Morgan Venture Capital Funds I and II, JP Morgan Corporate Finance Funds I and II, JP Morgan Private Investments Inc., and Allied Waste. Ms. Drescher is currently on the board of directors of The Young Woman’s Leadership Network, and the Allen Stevenson School. Ms. Drescher graduated summa cum laude, Phi Beta Kappa from Barnard College of Columbia University and earned her MBA from Columbia Business School.

Brett Watson is a member of our board of directors and a designee of the Koch Investor. Mr. Watson has also been a manager of Prime Borrower since May 2016. Mr. Watson is a Senior Managing Director with Koch Equity Development LLC. Mr. Watson also serves on the boards of directors of the parent companies of Infor, Flint Group and Transaction Network Services. Mr. Watson holds a B.S. and M.B.A. from Binghamton University. We anticipate that Mr. Watson will resign from our board of directors after we redeem in full the outstanding Koch Preferred Securities and pay the related redemption premium and other related amounts. See “Description of Capital Stock—Composition of Board of Directors; Election and Removal of Directors.”

David Ryan is a member of our board of directors and a Co-Investor Designee. Mr. Ryan has also been a manager of Prime Borrower since May 2016. Mr. Ryan has been an Adviser to Birchtree Fund Investments Private Limited (together with its affiliates, “Temasek”) since August 2016. Mr. Ryan retired from his position as President of Goldman Sachs Asia Pacific ex-Japan in December 2013, a position he held since the beginning of 2011. Mr. Ryan has over 22 years of experience in various senior roles at Goldman Sachs. Mr. Ryan also serves on the board of directors of Mapletree Investments Pte Ltd.

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Controlled Company

We intend to apply to list the shares of our common stock offered in this offering on the NYSE. As Apollo will continue to control more than 50% of our combined voting power upon the completion of this offering, we will be considered a “controlled company” for the purposes of that exchange’s rules and corporate governance standards. As a “controlled company,” we will be permitted to, and we intend to, elect not to comply with certain corporate governance requirements, including (1) those that would otherwise require our board of directors to have a majority of independent directors, (2) those that would require that we establish a compensation committee composed entirely of independent directors and with a written charter addressing the committee’s purpose and responsibilities and (3) those that would require we have a nominating and corporate governance committee comprised entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities, or otherwise ensure that the nominees for directors are determined or recommended to our board of directors by the independent members of our board of directors pursuant to a formal resolution addressing the nominations process and such related matters as may be required under the federal securities laws. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of these corporate governance requirements. In the event that we cease to be a “controlled company” and our shares continue to be listed on the NYSE, we will be required to comply with these provisions within the applicable transition periods.

Director Independence

As allowed under the applicable rules and regulations of the SEC and the NYSE, we intend to phase in compliance with the heightened independence requirements prior to the end of the one-year transition period. Upon consummation of this offering, we expect our independent director, as such term is defined by the applicable rules and regulations of the NYSE, will be Mr. Africk.

Board Composition

Our board of directors will consist of ten members upon completion of this offering. Each director is to hold office until his or her successor is duly elected and qualified or until his or her earlier death, resignation or removal. The authorized number of each class of directors may be increased or decreased by our board of directors in accordance with our amended and restated certificate of incorporation. At any meeting of the board of directors, except as otherwise required by law, a majority of the total number of directors then in office will constitute a quorum for all purposes.

Board Committees

Following the completion of this offering, the board committees will include an executive committee, an audit committee, a compensation committee and a nominating and corporate governance committee. In addition, we intend to avail ourselves of the “controlled company” exception under the NYSE rules which exempts us from certain requirements, including the requirements that we have a majority of independent directors on our board of directors and that we have compensation and nominating and corporate governance committees composed entirely of independent directors. We will, however, remain subject to the requirement that we have an audit committee composed entirely of independent members by the end of the transition period for companies listing in connection with an initial public offering.

If at any time we cease to be a “controlled company” under the NYSE rules, the board of directors will take all action necessary to comply with the applicable NYSE rules, including appointing a majority of independent directors to the board of directors and establishing certain committees composed entirely of independent directors, subject to a permitted “phase-in” period.

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Executive Committee

Following the consummation of this offering, our Executive Committee will consist of Messrs. Becker (Chair), Rayman and Whall. Subject to certain exceptions, the Executive Committee generally may exercise all of the powers of the Board of Directors when the Board of Directors is not in session. The executive committee serves at the pleasure of our Board of Directors. This committee and any of its members may continue or be changed once our Sponsor no longer owns a controlling interest in us.

Audit Committee

Following the consummation of this offering, our Audit Committee will consist of Messrs. Africk, Rayman (Chair), and Press. Our board of directors has determined that Mr. Africk qualifies as an “audit committee financial expert” as such term is defined in Item 407(d)(5) of Regulation S-K and that Mr. Africk is independent as independence is defined in Rule 10A-3 of the Exchange Act and under the NYSE listing standards. The principal duties and responsibilities of our Audit Committee will be as follows:

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to prepare the annual Audit Committee report to be included in our annual proxy statement;

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to oversee and monitor our financial reporting process;

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to oversee and monitor the integrity of our financial statements and internal control system;

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to oversee and monitor the independence, retention, performance and compensation of our independent auditor;

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to oversee and monitor the performance, appointment and retention of our senior internal audit staff person;

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to discuss, oversee and monitor policies with respect to risk assessment and risk management;

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to oversee and monitor our compliance with legal and regulatory matters; and

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to provide regular reports to the board.

The Audit Committee will also have the authority to retain counsel and advisors to fulfill its responsibilities and duties and to form and delegate authority to subcommittees.

Compensation Committee

Following the consummation of this offering, our Compensation Committee will consist of Messrs. Becker (Chair), Rayman, and Whall. The principal duties and responsibilities of the Compensation Committee will be as follows:

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to review, evaluate and make recommendations to the full board of directors regarding our compensation policies and programs;

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to review and approve the compensation of our chief executive officer, other officers and key employees, including all material benefits, option or stock award grants and perquisites and all material employment agreements, confidentiality and non-competition agreements;

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to review and recommend to the board of directors a succession plan for the chief executive officer and development plans for other key corporate positions as shall be deemed necessary from time to time;

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to review and make recommendations to the board of directors with respect to our incentive compensation plans and equity-based compensation plans;

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to administer incentive compensation and equity-related plans;

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to review and make recommendations to the board of directors with respect to the financial and other performance targets that must be met;

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to set and review the compensation of members of the board of directors; and

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to prepare an annual compensation committee report and take such other actions as are necessary and consistent with the governing law and our organizational documents.

We intend to avail ourselves of the “controlled company” exception under the NYSE rules which exempts us from the requirement that we have a Compensation Committee composed entirely of independent directors.

Nominating and Corporate Governance Committee

Prior to consummation of this offering, our board of directors will establish a Nominating and Corporate Governance Committee. Following the consummation of this offering, our Nominating and Corporate Governance Committee will consist of Messrs. Becker (Chair), Press, and Whall. The principal duties and responsibilities of the Nominating and Corporate Governance Committee will be as follows:

•

to identify candidates qualified to become directors of the Company, consistent with criteria approved by our board of directors;

•

to recommend to our board of directors nominees for election as directors at the next annual meeting of stockholders or a special meeting of stockholders at which directors are to be elected, as well as to recommend directors to serve on the other committees of the board;

•

to recommend to our board of directors candidates to fill vacancies and newly created directorships on the board of directors;

•

to identify best practices and recommend corporate governance principles, including giving proper attention and making effective responses to stockholder concerns regarding corporate governance;

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to develop and recommend to our board of directors guidelines setting forth corporate governance principles applicable to the Company; and

•

to oversee the evaluation of our board of directors and senior management.

We intend to avail ourselves of the “controlled company” exception under the NYSE rules which exempts us from the requirement that we have a Nominating and Corporate Governance Committee composed entirely of independent directors.

Code of Business Conduct and Ethics

Upon consummation of this offering, our board of directors will adopt a code of business conduct and ethics that will apply to all of our directors, officers and employees and is intended to comply with the relevant listing requirements for a code of conduct as well as qualify as a “code of ethics” as defined by the rules of the SEC. The code of business conduct and ethics will contain general guidelines for conducting our business consistent with the highest standards of business ethics. We intend to disclose future amendments to certain provisions of our code of business conduct and ethics, or waivers of such provisions applicable to any principal executive officer, principal financial officer, principal accounting officer and controller, or persons performing similar functions, and our directors, on our website at https://investor.adt.com/. Following the consummation of this offering, the code of business conduct and ethics will be available on our website.

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Board Leadership Structure and Board’s Role in Risk Oversight

The board of directors has an oversight role, as a whole and also at the committee level, in overseeing management of its risks. The board of directors regularly reviews information regarding our credit, liquidity and operations, as well as the risks associated with each. Following the completion of this offering, the compensation committee of the board of directors will be responsible for overseeing the management of risks relating to employee compensation plans and arrangements and the audit committee of the board of directors will oversee the management of financial risks. While each committee will be responsible for evaluating certain risks and overseeing the management of such risks, the entire board of directors will be regularly informed through committee reports about such risks.

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EXECUTIVE COMPENSATION

This Executive Compensation section describes in detail the Company’s executive compensation philosophy and programs. This Compensation Discussion and Analysis focuses on the compensation of our Named Executive Officers (the “NEOs”) who, for fiscal year 2016, are listed below.


Name		Title
Timothy J. Whall		President and Chief Executive Officer (“CEO”) (until September 2017) and, since September 2017, CEO
Daniel M. Bresingham		Executive Vice President, Treasurer, and Chief of Staff (until August 2017), former Chief Financial Officer (until February 2017), and since September 2017, Executive Vice President, Treasurer, and Chief Administrative Officer
James D. DeVries		Executive Vice President and Chief Operating Officer (until September 2017) and, since September 2017, President
Jeffrey Likosar		Executive Vice President and, since February 2017, Chief Financial Officer
Donald Young		Chief Information Officer

Our executive compensation programs have historically been determined by the Executive Committee of Ultimate Parent. This Compensation Discussion and Analysis addresses the compensation philosophy and programs with respect to fiscal year 2016, and the decisions made by the Executive Committee with respect to our executive compensation programs. In connection with the offering, we are forming a Compensation Committee, which will be responsible for making decisions with respect to executive compensation following the offering.

Executive Compensation Philosophy

The Company’s executive compensation programs are guided by the following principles, which make up our executive compensation philosophy:

•

Pay for Performance . Compensation opportunities are designed to align executives’ pay with the Company’s performance and are focused on producing sustainable long-term growth.

•

Attract, Promote, and Retain Talented Management Team . We compete for talent with other companies of similar size in our market. In order to attract and retain executives with the experience necessary to achieve our business goals, compensation must be competitive and appropriately balanced between fixed compensation and at-risk compensation.

•

Align Interests with Interests of Shareholders . We believe that management should have a significant financial stake in the Company to align their interests with those of the shareholders and to encourage the creation of long-term value. Therefore, equity awards make up a substantial component of executive compensation.

Our executive compensation program has three key elements, which have been designed according to these principles: base salary, annual cash incentive compensation, and long-term equity compensation. We also provide limited perquisites and retirement benefits to our NEOs.

Prior to the offering, we have balanced our executive compensation program towards equity compensation that promoted direct ownership in the business, alignment of the interests of management with our Sponsor, and a focus on long-term success. Each NEO has made a direct investment in Ultimate Parent and also holds profits interests under the Ultimate Parent’s operating agreement (the “LP Agreement”), 50% of which vest based on performance factors and the remaining 50% of which vest based solely on service. We have also ensured that the base salary and target annual incentive level of each NEO is competitive in order to appropriately retain and reward the NEOs for their ongoing service and achievements.

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We believe that the design of our executive compensation program and our compensation practices support our compensation philosophy. We expect that, following the offering, our Compensation Committee will evaluate our compensation philosophy to determine whether it should be adjusted to take into account our status as a publicly traded company, as well as each of the elements of our compensation program, and may make changes as it deems appropriate.

Process for Determining Executive Compensation

Role of Executive Committee

Historically, the Executive Committee has made all determinations regarding the compensation of our NEOs, including their base salaries, target bonus percentages, actual bonus payouts, and long-term equity-based incentives. The Executive Committee makes compensation decisions based on the expertise and knowledge of its members with respect to compensation in the general market for talent, as well as the individual executive’s role with the company, duties and responsibilities, and experience. The Executive Committee does not, however, specifically benchmark NEO compensation to the compensation of executives in similar positions at companies in a peer group. During 2016, the Executive Committee did not engage a compensation consultant in connection with the determination or recommendations of compensation for our NEOs.

Role of Management

In making determinations with respect to executive compensation for executive officers, the Executive Committee considers input from the CEO, who is a member of the Executive Committee. The CEO provides insight to the Executive Committee on specific decisions and recommendations related to the compensation of the executive officers other than the CEO. The Executive Committee believes that the input of the CEO with respect to the assessment of individual performance, succession planning and retention is a key component of the process.

Role of Compensation Consultant

In connection with the offering, we engaged ClearBridge Compensation Group (“ClearBridge”) to perform an analysis of our executive compensation programs and to provide recommendations with respect to any changes that should be made to our executive compensation programs following the offering. ClearBridge was engaged by the Company and not by our Executive Committee or the Board of Ultimate Parent. ClearBridge does not provide any services to the Company other than those it has been engaged to provide in connection with the offering.

Process for Determining Executive Compensation After Completion of the Offering

In connection with the offering, we are forming a Compensation Committee of our Board of Directors (the “Compensation Committee”), which will be responsible for making all determinations with respect to our executive compensation programs and the compensation of our NEOs (with decisions regarding compensation of our CEO approved by our Board of Directors). Our CEO will not be a member of the Compensation Committee, but will remain involved with compensation decisions after the completion of the offering by providing insight to the Compensation Committee and recommendations regarding compensation for the other NEOs. Our CEO will not be directly involved with the decisions on executive compensation made by the Compensation Committee.

The Compensation Committee will have the authority to retain, compensate, and terminate an independent compensation consultant and any other advisors necessary to assist in its evaluation of executive compensation. In December 2017, the Board retained Pearl Meyer & Partners, LLC, the compensation consulting firm, as its independent external advisor to assist it in its evaluation of non-management director, CEO and other senior executive compensation and to provide guidance with respect to developing and implementing our compensation philosophy and programs as a public company.

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Elements of Executive Compensation

The Company’s total direct compensation program consists of three main elements: base salary, annual cash incentives, and equity-based long-term incentives. A significant majority of our NEOs’ total direct compensation is performance-based and at risk. The Company also provides various benefit and retirement programs, as well as an annual executive physical for our NEOs (and executive officers). The table below provides an overview of the elements of the Company’s executive compensation program, a brief description of each compensation element, and the reason for inclusion in the executive compensation program.


Compensation Element	Brief Description	Objectives
*Base Salary*	Fixed compensation	• To attract and retain top talent with the experience, skills, and abilities critical to the long-term success of the Company • To reward sustained success in meeting or exceeding key corporate or business objectives through merit increases

*Annual Cash Incentive Bonuses*	Variable, performance-based cash compensation	• To drive Company performance against key strategic goals that are aligned with the interests of stockholders, including our Sponsor • To recognize individuals based upon their performance against goals and objectives aligned to the delivery of key strategic priorities • Performance-based and not guaranteed

*Long-Term Incentives—Equity Based*	Variable, equity-based compensation (based in the equity of Ultimate Parent) to promote achievement of longer-term performance objectives	• To directly align the interests of executives with the interests of stockholders, including our Sponsor • To support focus on long-term, sustainable Company performance, and to drive retention of key talent

*Investment Requirement*	Ability to make a direct investment in Ultimate Parent alongside our Sponsor	• To align executives’ and our Sponsor’s interests and to encourage executives to have “skin in the game” through direct ownership

*Employee Benefits and Perquisites*	Includes medical, dental, and disability plans, as well as relocation programs and limited perquisites	• To promote health, wellness, and well-being of executives

*Retirement Programs*	Includes both retirement savings plan and deferred compensation plan, as applicable	• To provide for basic retirement for our executives

Our executive compensation program also provides for retention bonuses where appropriate, cash severance payments and benefits tied to provisions within each NEO’s employment agreement, and accelerated vesting of

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equity awards in the event of certain terminations of employment following a change in ownership of our business.

Base Salary

Each NEO is party to an employment agreement that provides for a fixed base salary, subject to annual review by the Executive Committee (or, after the completion of the offering, by our Compensation Committee). The initial base salary level for each NEO was negotiated in connection with the Protection One Acquisition or with the executive upon joining the Company. Base salaries may be increased, but, under the terms of the employment agreements, may not be decreased. The Executive Committee (or, after the completion of the offering, the Compensation Committee) reviews base salary levels on an annual basis to determine whether the base salary level is appropriate given the NEO’s job responsibilities, experience, value to the Company, and market level. Base salary levels are determined taking into consideration all elements of compensation as a whole, and based on individual position, experience and competitive market base salaries for similar positions, but we do not specifically target or “bench mark” base salaries against any particular company or peer group.

The Executive Committee reviewed and adjusted the base salary for each NEO (except for Messrs. Likosar and DeVries) in fiscal year 2016 in connection with the ADT Acquisition in order to account for (a) higher base salaries in the general marketplace for executives managing a larger post-ADT Acquisition organization, (b) individual impact on and contributions to the business performance and Company goals, and (c) increases in responsibility. Effective November 7, 2016, for Mr. Whall, and effective May 2, 2016, for each of Mr. Bresingham and Mr. Young, the base salary increases approved by the Executive Committee were as follows:

2016 Base Salary


Name	January 1, 2016 Base Salary		New Base Salary		Increase %
Timothy J. Whall	$	550,000	$	700,000		27.3	%
Daniel M. Bresingham	$	340,000	$	500,000		47.1	%
James D. DeVries	$	—	$	500,000		—
Jeffrey Likosar	$	—	$	500,000		—
Donald Young	$	370,000	$	500,000		35.1	%

Note: Mr. Likosar was hired in October 2016. Mr. DeVries was hired in May 2016.

2017 Base Salary

In April 2017, the Executive Committee reviewed base salaries of our NEOs and, based on individual performance and an assessment of market factors, determined that the base salaries should be adjusted upward. The new base salaries for each of our NEOs, effective April 30, 2017, are as follows:

2017 Base Salary


Name	2016 Base Salary		2017 Base Salary (Effective 04/30/2017)		Increase %
Timothy J. Whall	$	700,000	$	707,000		1.0	%
Daniel M. Bresingham	$	500,000	$	510,000		2.0	%
James D. DeVries	$	500,000	$	520,000		4.0	%
Jeffrey Likosar	$	500,000	$	504,548		0.9	%
Donald Young	$	500,000	$	510,000		2.0	%

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Annual Incentive Compensation

The second component of executive officer compensation is an annual cash incentive based on both company and individual performance. Tying a portion of total compensation to annual company performance permits us to adjust the performance metrics each year to reflect changing objectives and those that may be of special importance for a particular year. Through the annual incentive program, we seek to provide an appropriate amount of short-term cash compensation that is at risk and tied to the achievement of certain short-term performance goals. The target annual incentive as a percentage of base salary was initially specified in each NEO’s employment agreement, which were negotiated in connection with the Protection One Acquisition or with the executive upon joining the Company, as applicable.

The Executive Committee reviewed and adjusted the target annual incentive as a percentage of base salary for each Named Executive Officer in 2016 in connection with the ADT Acquisition (other than for Messrs. Likosar and DeVries, who joined the Company after the ADT Acquisition) to account for (a) higher target bonuses in the general marketplace for executives managing a larger post-ADT Acquisition organization, (b) individual impact on and contributions to the business performance and Company goals, and (c) increases in responsibility. Effective November 7, 2016, for Mr. Whall, and effective May 2, 2016, for each of Mr. Bresingham and Mr. Young, the increases to the target bonus as a percentage of base salary approved by the Executive Committee are as follows:

Annual Bonus Targets


Name	January 1, 2016 Target Bonus %			New Target Bonus %
Timothy J. Whall		75	%		125	%
Daniel M. Bresingham		75	%		100	%
James D. DeVries		—			100	%
Jeffrey Likosar		—			100	%
Donald Young		75	%		100	%

Note: Mr. Likosar was hired in October 2016. Mr. DeVries was hired in May 2016.

2016 Annual Bonus Program

For the 2016 fiscal year, the Executive Committee determined that annual bonus payouts would be based on the Executive Committee’s qualitative assessment of the overall performance of the Company rather than on a quantitative assessment with respect to specific performance metrics. The Executive Committee determined that a qualitative assessment would be more appropriate given the substantial changes to the Company during 2016 due to the closing of the ADT Acquisition in mid-2016—the ADT Acquisition significantly increased the size of the Company and, therefore, it would be difficult to establish quantitative performance goals at the beginning of the performance period that would be meaningful through the year. As described below, the Executive Committee adopted objective performance metrics with respect to the 2017 annual incentive program.

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In the first quarter of 2017, the Executive Committee reviewed the performance of the Company and our NEOs for 2016 with respect to the overall business results of the Company. The Executive Committee determined that our NEOs had achieved 98% of their targeted annual bonuses. Mr. Whall’s 2016 bonus payout was calculated by applying his new target bonus percentage of 125% of base salary for the entire year. For Messrs. Bresingham and Young, the 2016 bonus payout was prorated—four months at a target bonus of 75% of base salary and eight months at a target bonus of 100% of base salary. The actual payouts of the annual bonuses for our NEOs are set forth below.


Name	2016 Bonus Payout
Timothy J. Whall	$	857,500
Daniel M. Bresingham	$	411,633
James D. DeVries	$	298,552
Jeffrey Likosar	$	101,749
Donald Young	$	419,130

Note: The annual bonuses for Mr. Likosar and Mr. DeVries were prorated based on their dates of hire in 2016.

2017 Annual Bonus Program

For the 2017 fiscal year, the Executive Committee approved an annual incentive plan (the “AIP”) with a design that reflects the Company’s focus as a subscriber-based business with significant recurring monthly revenues. The metrics utilized in the AIP have been selected to drive results in those categories that have the most significant impact on the success of our business. The metrics utilized for the 2017 fiscal year, as well as the respective weightings for each metric, are set forth below.


Metric		Weighting
Covenant Adjusted EBITDA ^(a)		25%
Gross Attrition		25%
Revenue Payback Period		25%
New Recurring Monthly Revenue		25%

(a)

Our definition of Covenant Adjusted EBITDA, a reconciliation of Covenant Adjusted EBITDA to net loss (the most comparable GAAP measure) and additional information, including a description of the limitations relating to the use of Covenant Adjusted EBITDA, are provided under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Measures.”

Long-Term Equity Compensation

The Company’s long-term incentive compensation program is designed to provide a significant portion of our executives’ compensation opportunity in equity-based instruments. We believe that long-term equity compensation is important to assure that the interests of our executives are aligned with those of our stockholders, thus promoting value-creation for our executives and our stockholders. Following this offering, the annual equity award grant process will occur in conjunction with our annual assessment of individual performance and potential, and will take into account the competitive compensation landscape. In addition to annual grants, the Company may make equity grants in certain other circumstances, such as for new hires or promotions or to recognize an individual’s extraordinary contributions to the Company.

Class B Units in Ultimate Parent . Each of our NEOs was granted profits interests ( i.e. , Class B Units in Ultimate Parent (“Class B Units”)) under the LP Agreement. Class B Units allow the NEOs to share in the future appreciation of Ultimate Parent, subject to certain vesting conditions including both service-based vesting (based on continued employment) and performance-based vesting (based on the return achieved by our Sponsor), as

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described in more detail below. These Class B Units are designed to foster a long-term commitment to us by our NEOs, provide a balance to the short-term cash components of our compensation program, align a portion of our executives’ compensation to the interests of our Sponsor, promote retention, and reinforce our pay-for-performance structure.

The Class B Units were issued pursuant to the terms of a Class B Unit award agreement between Ultimate Parent and each NEO. Class B Units represent an ownership interest in Ultimate Parent providing the holder with the opportunity to receive, upon a “Realization Event” (defined below), a return based on the appreciation of Ultimate Parent’s equity value from the date of grant. These Class B Units were issued as an upfront grant designed to provide a long-term incentive for five years following the grant date. The awards were structured so that if Ultimate Parent’s equity value were to appreciate, the executive would share in the growth in value from the date of grant solely with respect to the vested portion of the executive’s Class B Units. If Ultimate Parent’s equity were to not appreciate in value or to decrease in value in the future, then the Class B Units would have no value. Grantees were not required to make any capital contribution in exchange for their Class B Units, which were awarded as compensation. Class B Units have no voting rights, and Ultimate Parent may from time to time distribute its available cash to holders of Class B Units along with its other equity holders.

These equity awards also function as a retention device because 50% of the Class B Units subject to each award are scheduled to vest ratably over a five-year period (20% per year), subject to the NEO’s continued employment on each annual vesting date (the “Service Tranche”). The unvested portion of the Service Tranche will also vest on the earlier of (i) the six month anniversary of a change in control (which includes an initial public offering of the Company) or (ii) the NEO’s termination without cause or for good reason within six months following a change in control, whichever event occurs first.

To reinforce the pay-for-performance structure and alignment with interests of our stockholders, 50% of the Class B Units subject to each award are scheduled to vest only upon satisfaction of certain performance thresholds (the “Performance Tranche”). 50% of the Performance Tranche is scheduled to vest only if as of any measurement date ( i.e. , any date on which our Sponsor receives cash distributions and/or cash proceeds in respect of Class A Units in Ultimate Parent (“Class A Units”)) our Sponsor has achieved a multiple of invested capital (“MOIC”) of 1.75, and the remaining 50% of the Performance Tranche is scheduled to vest only if as of any measurement date, our Sponsor has achieved a MOIC of 2.0, provided, however, that in the event that a Realization Event occurs on or prior to July 1, 2018, 50% of the Performance Tranche will vest if our Sponsor has achieved, on or prior to July 1, 2018, an internal rate of return (“IRR”) of at least 17.5% and 100% of the Performance Tranche will vest if our Sponsor has achieved, on or prior to July 1, 2018, an IRR of at least 25%.

For purposes of the Class B Unit award agreements, a “Realization Event” means the first occurrence of any of the following: (i) a liquidation of Ultimate Parent and its subsidiaries; (ii) a transfer of all or substantially all of the assets of Ultimate Parent and its subsidiaries to a person or group other than our Sponsor or its affiliates; (iii) a sale or other disposition by our Sponsor, to a person or group other than our Sponsor and its affiliates, in either case, of fifty percent (50%) or more of the Class A Units held by our Sponsor, respectively, as of May 2, 2016; or (iv) a qualified initial public offering of Ultimate Parent (as defined in the LP Agreement).

See the “Grants of Plan-Based Awards” table and the “Outstanding Equity Awards at 2016 Fiscal Year-End” table below for more information regarding the Class B Units held by our NEOs.

Investment Requirement . We believe that it is important for key members of our senior management team and directors to build and maintain a long-term ownership position in our company, to further align their financial interests with those of our Sponsor and to encourage the creation of long-term value. In order to achieve such goals and to assure that management owns a meaningful level of equity in Ultimate Parent, each of our NEOs was required to make a direct investment in Ultimate Parent alongside our Sponsor through the purchase of Class A-2 Units of Ultimate Parent (“Class A-2 Units”). We believe that this investment requirement has provided our management team with a desirable level of direct ownership in the business and a sufficient level of

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capital at risk, thereby reinforcing our goal of aligning the interests of management with the interests of our Sponsor.

Sign-On Retention Bonus . As part of a sign-on compensation package, pursuant to the terms of their respective employment agreements with ADT LLC, Messrs. Likosar and DeVries were each granted a retention bonus opportunity, which is designed to increase their equity ownership in the business through the purchase of Class A-2 Units with the after-tax proceeds of a cash bonus. Further details of Mr. Likosar’s and Mr. DeVries’ respective retention bonuses are described below under “—Employment Agreements” and “—Potential Payments upon Termination or Change in Control.”

Looking Ahead – Post-IPO Compensation

Following this offering, we expect that our Compensation Committee will review with its independent compensation consultant our compensation levels, our compensation mix, and our incentive compensation programs to determine whether any changes are warranted and to ensure that our programs are based on appropriate measures, goals and targets for the security industry and our business objectives and to ensure that the overall level of total compensation for our executive officers is reasonable in relation to, and competitive with, the compensation paid by similarly situated peer leaders in the security industry, subject to variation for factors such as the individual’s experience, performance, duties, scope of responsibility, prior contributions and future potential contributions to our business.

Redemption of Class B Units

Simultaneously with this offering, each holder of Class B Units (including the NEOs holding any such units) will have his or her entire Class B interest in Ultimate Parent redeemed in full for the number of shares of our common stock that would have been distributed to such holder under the terms of the LP Agreement if Ultimate Parent were to distribute to its partners in-kind all of the shares of our common stock that it holds, valuing such shares at the offering price, in a hypothetical liquidation on the date of this offering (such shares, the “Distributed Shares”). The redemption of Class B Units for Distributed Shares will not result in any accelerated vesting of such Class B Units; the Distributed Shares distributed in redemption of vested Class B Units shall be fully vested upon such distribution, and the Distributed Shares distributed in redemption of unvested Class B Units will be unvested upon such distribution, and will remain eligible to vest following the offering pursuant to the same vesting schedule as the unvested Class B Units in respect of which they are distributed (i.e., 50% of the Distributed Shares will be subject to vesting based on our Sponsor’s realizing specified multiples of invested capital, and the remainder of the Distributed Shares that are not already vested will generally remain subject to service-based vesting over the remainder of the vesting period (including, for the avoidance of doubt, accelerated vesting on the six-month anniversary of the offering or earlier upon a qualifying termination following the offering) applicable to the corresponding Class B Units). See “Elements of Compensation—Long-Term Equity Compensation” above for a more detailed description of the vesting schedule. In addition to the vesting terms, each individual who receives Distributed Shares in redemption of his or her Class B Units in connection with this offering will be required to execute a joinder to the Company’s Amended and Restated Management Investor Rights Agreement (the “MIRA”). Under the MIRA, the Distributed Shares will generally be subject to transfer restrictions, repurchase rights, and piggy-back registration rights in connection with certain offerings of our common stock.

In addition, each individual who receives Distributed Shares in the above-described redemption of his or her Class B Units will also receive a grant of stock options under the ADT Inc. 2018 Omnibus Incentive Plan. The intended purpose of coupling these stock option grants with the distribution of Distributed Shares is to preserve the intended percentage of the future appreciation of Ultimate Parent that the Class B Units would have been allocated had they not been redeemed in connection with the offering. Such stock options will have an exercise price equal to the public offering price per share of common stock in this offering and a term of ten years. Such stock options shall be partially vested and partially unvested at grant, in the same proportion as the Class B Units

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held by the recipient immediately prior to the above-described redemption. The unvested portion of such stock options shall be eligible to vest pursuant to the same vesting schedule as the unvested Distributed Shares held by the recipient of such stock options. Any shares of our common stock acquired upon exercise of such stock options will be subject to the terms of the MIRA.

The table below sets forth an estimate, assuming an initial public offering price of $ per share of common stock at the midpoint of the price range set forth on the cover page of this prospectus, of the number of Distributed Shares that would be distributed in redemption of Class B Units, and the number of stock options that would be granted to each of our NEOs in connection with the redemption described above:

Name

Distributed Shares

Stock Options

Vested

Unvested

Vested

Unvested

Exercise
Price Per
Share of
Common
Stock

Timothy J. Whall

Daniel M. Bresingham

James D. DeVries

Jeffrey Likosar

Donald Young

The calculations set forth rely on an assumed initial public offering price of $ per share (the midpoint of the price range set forth on the cover page of this prospectus). A $1.00 increase in the assumed initial public offering price would (a) increase the number of shares of common stock that would be distributed to our employees in redemption of the Class B Units by shares of common stock and (b) decrease the stock options granted in our employees by stock options. A $1.00 decrease in the assumed initial public offering price would (a) decrease the number of shares of common stock that would be distributed to our employees in redemption of the Class B Units by shares of common stock and (b) increase the stock options granted to our employees by stock options.

2018 NEO Compensation

Although our Compensation Committee may make changes to the compensation arrangements for our NEOs, we expect that, at least initially, the elements of our executive compensation program will be similar to the elements in our current program. The following summarizes the principal elements of compensation that we expect to provide to each of our named executive officers following the consummation of this offering.

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Fiscal Year 2018 Named Executive Officer Target Compensation Levels

The table below summarizes the target compensation levels for each of our NEOs by element for fiscal year 2018. Subject to approval by our Compensation Committee and the completion of the offering, adjustments to base salaries and the target bonus opportunities for our NEOs (as applicable) will be effective as of January 1, 2018.


Timothy J. Whall
Base Salary	$	1,000,000
Target Bonus	$	1,250,000
Target Long-Term Incentives	$	4,500,000

Total	$	6,750,000


Daniel M. Bresingham
Base Salary	$	510,000
Target Bonus	$	510,000
Target Long-Term Incentives	$	600,000

Total	$	1,620,000


Jeffrey Likosar
Base Salary	$	520,000
Target Bonus	$	520,000
Target Long-Term Incentives	$	1,000,000

Total	$	2,040,000


James D. DeVries
Base Salary	$	675,000
Target Bonus	$	675,000
Target Long-Term Incentives	$	2,200,000

Total	$	3,550,000


Donald Young
Base Salary	$	510,000
Target Bonus	$	510,000
Target Long-Term Incentives	$	600,000

Total	$	1,620,000

2018 Annual Bonus Program Design

For fiscal 2018, we expect that the Company’s AIP design will continue to reflect the Company’s focus as a subscriber-based business with significant recurring monthly revenues, and the metrics utilized have been selected to drive results in those categories that have the most significant impact on the success of our business.


Metric	Weighting
Adjusted EBITDA ^(a)		40	%
Net Recurring Monthly Revenue		40	%
Revenue Payback Period		20	%

(a)

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revenue associated with subscriber acquisitions, (v) share-based compensation expense, (vi) purchase accounting adjustments related to fair value of deferred revenue under GAAP, (vii) merger, restructuring, integration, and other costs, (viii) financing and consent fees, (ix) foreign currency gains/losses, (x) loss on extinguishment of debt, (xi) radio conversion costs, (xii) management fees and other charges, and (xiii) other non-cash items.

Initial Public Offering Equity Awards

In connection with this offering, we intend to adopt the Omnibus Incentive Plan, which is designed to align the interests of our management team with our new public investors. We also intend to grant equity awards to our NEOs under the Omnibus Incentive Plan in connection with the offering. Such awards will be delivered utilizing a mix of stock options and restricted stock units. The target value of such awards will be weighted as follows:


Grant Type	Weighting
Stock Options		50	%
Restricted Stock Units		50	%

Stock options granted to our employees, including our NEOs, in connection with the IPO will have an exercise price equal to the initial public offering price and a term of ten years, and, generally, will cliff vest on the third anniversary of the date of grant, subject to (i) satisfaction of the “IPO Condition” and (ii) the recipient’s continued employment with the Company through such date. Restricted stock units granted in connection with the IPO will cliff vest on the third anniversary of the date of grant, subject to (i) satisfaction of the IPO Condition and (ii) the recipient’s continued employment with the Company through such date. The “IPO Condition” shall be deemed satisfied upon the consummation of this offering.

Long-Term Equity Compensation After Completion of the Offering

Following the offering, we anticipate that we will continue to grant equity awards to employees, including our NEOs, which may be in the form of stock options, restricted stock units, or other such instruments as permitted under the Omnibus Incentive Plan.

2018 Omnibus Incentive Plan

Our board of directors plans to adopt, and our current stockholders plan to approve, the 2018 Omnibus Incentive Plan (the “Omnibus Incentive Plan”) to become effective upon the consummation of this offering. Upon adoption of the Omnibus Incentive Plan, we do not expect to issue additional options under the Equity Incentive Plan. This summary is qualified in its entirety by reference to the Omnibus Incentive Plan that is ultimately adopted by our board of directors.

Administration. The compensation committee of our board of directors (or subcommittee thereof, if necessary for Section 162(m) of the Code) (the “Compensation Committee”) will administer the Omnibus Incentive Plan. The Compensation Committee will have the authority to determine the terms and conditions of any agreements evidencing any awards granted under the Omnibus Incentive Plan and to adopt, alter and repeal rules, guidelines and practices relating to the Omnibus Incentive Plan. The Compensation Committee will have full discretion to administer and interpret the Omnibus Incentive Plan and to adopt such rules, regulations and procedures as it deems necessary or advisable and to determine, among other things, the time or times at which the awards may be exercised and whether and under what circumstances an award may be exercised.

Eligibility. Any current or prospective employees, directors, officers, consultants or advisors of the Company or its affiliates who are selected by the Compensation Committee will be eligible for awards under the Omnibus Incentive Plan. The Compensation Committee will have the sole and complete authority to determine who will be granted an award under the Omnibus Incentive Plan.

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Number of Shares Authorized . The Omnibus Incentive Plan will provide for an aggregate of shares of our common stock. No more than shares of our common stock may be issued with respect to incentive stock options under the Omnibus Incentive Plan. No participant may be granted awards of options and stock appreciation rights with respect to more than shares of our common stock in any 12-month period. No more than shares of our common stock may be granted under the Omnibus Incentive Plan with respect to any performance compensation awards to any participant during a performance period (or with respect to each single fiscal year if the performance period extends beyond a single fiscal year). The maximum amount payable to any participant under the Omnibus Incentive Plan for any single fiscal year during a performance period (or with respect to each single fiscal year in the event a performance period extends beyond a single fiscal year) for a cash denominated award that is intended to qualify as performance-based compensation under Section 162(m) of the Code is $ . The maximum grant date fair value of cash and equity awards that may be awarded to a non-employee director under the Omnibus Incentive Plan during any one fiscal year will be $ . If any award granted under the Omnibus Incentive Plan expires, terminates, or is canceled or forfeited without being settled or exercised, or if a stock appreciation right is settled in cash or otherwise without the issuance of shares, shares of our common stock subject to such award will again be made available for future grants. If any shares are surrendered or tendered to pay the exercise price of an award or to satisfy withholding taxes owed, such shares will not again be available for grants under the Omnibus Incentive Plan.

Change in Capitalization. If there is a change in our capitalization in the event of a stock or extraordinary cash dividend, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, split-off, spin-off, combination, repurchase or exchange of shares of our common stock or other relevant change in capitalization or applicable law or circumstances, such that the Compensation Committee determines that an adjustment to the terms of the Omnibus Incentive Plan (or awards thereunder) is necessary or appropriate, then the Compensation Committee shall make adjustments in a manner that it deems equitable. Such adjustments may be to the number of shares reserved for issuance under the Omnibus Incentive Plan, the number of shares covered by awards then outstanding under the Omnibus Incentive Plan, the limitations on awards under the Omnibus Incentive Plan, or the exercise price of outstanding options, or such other equitable substitution or adjustments as it may determine appropriate.

Awards Available for Grant. The Compensation Committee may grant awards of non-qualified stock options, incentive (qualified) stock options, stock appreciation rights (“SARs”), restricted stock awards, restricted stock units, other stock-based awards, performance compensation awards (including cash bonus awards), other cash-based awards or any combination of the foregoing. Awards may be granted under the Omnibus Incentive Plan in assumption of, or in substitution for, outstanding awards previously granted by an entity acquired by the Company or with which the Company combines, which are referred to herein as “Substitute Awards.”

Stock Options. The Compensation Committee will be authorized to grant options to purchase shares of our common stock that are either “qualified,” meaning they are intended to satisfy the requirements of Section 422 of the Code for incentive stock options, or “non-qualified,” meaning they are not intended to satisfy the requirements of Section 422 of the Code. All options granted under the Omnibus Incentive Plan shall be non-qualified unless the applicable award agreement expressly states that the option is intended to be an “incentive stock option.” Options granted under the Omnibus Incentive Plan will be subject to the terms and conditions established by the Compensation Committee. Under the terms of the Omnibus Incentive Plan, the exercise price of the options will not be less than the fair market value of our common stock at the time of grant (except with respect to Substitute Awards). Options granted under the Omnibus Incentive Plan will be subject to such terms, including the exercise price and the conditions and timing of exercise, as may be determined by the Compensation Committee and specified in the applicable award agreement. The maximum term of an option granted under the Omnibus Incentive Plan will be ten years from the date of grant (or five years in the case of a qualified option granted to a 10% stockholder), provided that if the term of a non-qualified option would expire at a time when trading in the shares of our common stock is prohibited by the Company’s insider trading policy, the option’s term shall be extended automatically until the 30th day following the expiration of such prohibition

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(as long as such extension shall not violate Section 409A of the Code). Payment in respect of the exercise of an option may be made in cash, by check, by cash equivalent and/or by delivery of shares of our common stock valued at the fair market value at the time the option is exercised, provided that such shares are not subject to any pledge or other security interest, or by such other method as the Compensation Committee may permit in its sole discretion, including (i) by delivery of other property having a fair market value equal to the exercise price and all applicable required withholding taxes, (ii) if there is a public market for the shares of our common stock at such time, by means of a broker-assisted cashless exercise mechanism or (iii) by means of a “net exercise” procedure effected by withholding the minimum number of shares otherwise deliverable in respect of an option that are needed to pay the exercise price and all applicable required withholding taxes. Any fractional shares of common stock will be settled in cash.

Stock Appreciation Rights. The Compensation Committee will be authorized to award SARs under the Omnibus Incentive Plan. SARs will be subject to the terms and conditions established by the Compensation Committee. A SAR is a contractual right that allows a participant to receive, in the form of either cash, shares or any combination of cash and shares, the appreciation, if any, in the value of a share over a certain period of time. An option granted under the Omnibus Incentive Plan may include SARs, and SARs may also be awarded to a participant independent of the grant of an option. SARs granted in connection with an option shall be subject to terms similar to the option corresponding to such SARs, including with respect to vesting and expiration. Except as otherwise provided by the Compensation Committee (in the case of Substitute Awards or SARs granted in tandem with previously granted options), the strike price per share of our common stock underlying each SAR shall not be less than 100% of the fair market value of such share, determined as of the date of grant and the maximum term of a SAR granted under the Omnibus Incentive Plan will be ten years from the date of grant. The remaining terms of each grant of SARs shall be established by the Compensation Committee and reflected in the award agreement.

Restricted Stock. The Compensation Committee will be authorized to grant restricted stock under the Omnibus Incentive Plan, which will be subject to the terms and conditions established by the Compensation Committee. Restricted stock is common stock that is generally non-transferable and is subject to other restrictions determined by the Compensation Committee for a specified period. Any accumulated dividends will be payable at the same time that the underlying restricted stock vests.

Restricted Stock Unit Awards. The Compensation Committee will be authorized to grant restricted stock unit awards, which will be subject to the terms and conditions established by the Compensation Committee. A restricted stock unit award, once vested, may be settled in a number of shares of our common stock equal to the number of units earned, or in cash equal to the fair market value of the number of shares of our common stock, earned in respect of such restricted stock unit award of units earned, at the election of the Compensation Committee. Restricted stock units may be settled at the expiration of the period over which the units are to be earned or at a later date selected by the Compensation Committee. To the extent provided in an award agreement, the holder of outstanding restricted stock units shall be entitled to be credited with dividend equivalent payments upon the payment by us of dividends on shares of our common stock, either in cash or, at the sole discretion of the Compensation Committee, in shares of our common stock having a fair market value equal to the amount of such dividends, and interest may, at the sole discretion of the Compensation Committee, be credited on the amount of cash dividend equivalents at a rate and subject to such terms as determined by the Compensation Committee, which accumulated dividend equivalents (and interest thereon, if applicable) shall be payable at the same time that the underlying restricted stock units are settled.

Other Stock-Based Awards. The Compensation Committee will be authorized to grant awards of unrestricted shares of our common stock, rights to receive grants of awards at a future date or other awards denominated in shares of our common stock under such terms and conditions as the Compensation Committee may determine and as set forth in the applicable award agreement.

Performance Compensation Awards. The Compensation Committee may grant any award under the Omnibus Incentive Plan in the form of a “Performance Compensation Award” (including cash bonuses) intended

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to qualify as performance-based compensation for purposes of Section 162(m) of the Code by conditioning the number of shares earned or vested, or any payout, under the award on the satisfaction of certain “Performance Goals.” The Compensation Committee may establish these Performance Goals with reference to one or more of the following:

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net earnings or net income (before or after taxes);

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basic or diluted earnings per share (before or after taxes);

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net revenue or net revenue growth;

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gross revenue or gross revenue growth, gross profit or gross profit growth;

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net operating profit (before or after taxes);

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return measures (including, but not limited to, return on investment, assets, net assets, capital, gross revenue or gross revenue growth, invested capital, equity or sales);

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cash flow measures (including, but not limited to, operating cash flow, free cash flow and cash flow return on capital), which may but are not required to be measured on a per-share basis;

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earnings before or after taxes, interest, depreciation, and amortization (including EBIT and EBITDA);

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gross or net operating margins;

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productivity ratios;

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share price (including, but not limited to, growth measures and total shareholder return);

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expense targets or cost reduction goals, general and administrative expense savings;

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operating efficiency;

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objective measures of customer satisfaction;

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working capital targets;

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measures of economic value added or other “value creation” metrics;

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enterprise value;

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stockholder return;

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client or customer retention;

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competitive market metrics;

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employee retention;

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objective measures of personal targets, goals or completion of projects (including but not limited to succession and hiring projects, completion of specific acquisitions, reorganizations or other corporate transactions or capital-raising transactions, expansions of specific business operations and meeting divisional or project budgets);

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system-wide revenues;

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cost of capital, debt leverage year-end cash position or book value;

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strategic objectives, development of new product lines and related revenue, sales and margin targets, or international operations; or

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any combination of the foregoing.

Any Performance Goal elements can be stated as a percentage of another Performance Goal or used on an absolute, relative or adjusted basis to measure the performance of the Company and/or its affiliates or any

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divisions, operations or business units, product lines, asset classes, brands, or administrative departments or any combination thereof, as the Compensation Committee deems appropriate. Performance Goals may be compared to the performance of a group of comparator companies or a published or special index that the Compensation Committee deems appropriate or stock market indices. The Compensation Committee may provide for accelerated vesting of any award based on the achievement of Performance Goals. Any award that is intended to qualify as “performance-based compensation” under Section 162(m) of the Code will be granted, and Performance Goals for such an award will be established, by the Compensation Committee in writing not later than 90 days after the commencement of the performance period to which the Performance Goals relate, or such other period required under Section 162(m) of the Code. Before any payment is made in connection with any award intended to qualify as performance-based compensation under Section 162(m) of the Code, the Compensation Committee must certify in writing that the Performance Goals established with respect to such award have been achieved. In determining the actual amount of an individual participant’s Performance Compensation Award for a performance period, the Compensation Committee may reduce or eliminate the amount of the Performance Compensation Award earned consistent with Section 162(m) of the Code.

The Compensation Committee may also specify adjustments or modifications (to the extent that it would not result in adverse consequences under Section 162(m) of the Code) to be made to the calculation of a Performance Goal for such performance period, based on and in order to appropriately reflect any of the following events: (i) asset write-downs; (ii) litigation or claim judgments or settlements; (iii) the effect of changes in tax laws, accounting principles, or other laws or regulatory rules affecting reported results; (iv) any reorganization and restructuring programs; (v) extraordinary nonrecurring items and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders for the applicable year; (vi) acquisitions or divestitures; (vii) any other specific, unusual or nonrecurring events; (viii) foreign exchange gains and losses; (ix) discontinued operations and nonrecurring charges; and (x) a change in our fiscal year.

Unless otherwise provided in the applicable award agreement, a participant shall be eligible to receive payment in respect of a Performance Compensation Award only to the extent that (i) the Performance Goals for such period are achieved and certified by the Compensation Committee; and (ii) all or some of the portion of such participant’s Performance Compensation Award has been earned for the performance period based on the application of the “Performance Formula” (as defined in the Omnibus Incentive Plan) to such Performance Goals.

As a new public company, we expect to be eligible for transition relief from the deduction limitations imposed under Section 162(m) of the Code until our first stockholders meeting at which directors are elected that occurs in 2022. As a result, awards under the Omnibus Incentive Plan (whether in the form of equity or cash bonuses) need not be designed to qualify as performance-based compensation for purposes of Section 162(m) of the Code during this transition period, and the Compensation Committee may take this into account in determining terms and conditions of awards granted under the Omnibus Incentive Plan.

Effect of a Change in Control. Unless otherwise provided in an award agreement, or any applicable employment, consulting, change in control, severance or other agreement between us and a participant, in the event of a change in control, if a participant’s employment or service is terminated by us other than for cause (and other than due to death or disability) within the 12-month period following a change in control, then the Compensation Committee may provide that (i) all then-outstanding options and SARs will become immediately exercisable as of such participant’s date of termination with respect to all of the shares subject to such option or SAR; and/or (ii) the restricted period shall expire as of such participant’s date of termination with respect to all of the then-outstanding shares of restricted stock or restricted stock units (including without limitation a waiver of any applicable Performance Goals); provided that any award whose vesting or exercisability is otherwise subject to the achievement of performance conditions, the portion of such award that shall become fully vested and immediately exercisable shall be based on the assumed achievement of actual or target performance as determined by the Compensation Committee and, unless otherwise determined by the Compensation Committee,

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prorated for the number of days elapsed from the grant date of such award through the date of termination. In addition, the Compensation Committee may in its discretion and upon at least ten days’ notice to the affected persons, cancel any outstanding award and pay the holders, in cash, securities or other property (including of the acquiring or successor company), or any combination thereof, the value of such awards based upon the price per share of the Company’s common stock received or to be received by other shareholders of the Company in connection with the transaction (it being understood that any option or SAR having a per-share exercise price or strike price equal to, or in excess of, the fair market value (as of the date specified by the Compensation Committee) of a share of the Company’s common stock subject thereto may be canceled and terminated without payment or consideration therefor). Notwithstanding the above, the Compensation Committee shall exercise such discretion over the timing of settlement of any award subject to Section 409A of the Code at the time such award is granted.

Nontransferability. Each award may be exercised during the participant’s lifetime by the participant or, if permissible under applicable law, by the participant’s guardian or legal representative. No award may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a participant other than by will or by the laws of descent and distribution unless the Compensation Committee permits the award to be transferred to a permitted transferee (as defined in the Omnibus Incentive Plan).

Amendment. The Omnibus Incentive Plan will have a term of ten years. The board of directors may amend, suspend or terminate the Omnibus Incentive Plan at any time, subject to stockholder approval if necessary to comply with any tax, exchange rules, or other applicable regulatory requirement. No amendment, suspension or termination will materially and adversely affect the rights of any participant or recipient of any award without the consent of the participant or recipient.

The Compensation Committee may, to the extent consistent with the terms of any applicable award agreement, waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any award theretofore granted or the associated award agreement, prospectively or retroactively; provided that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely affect the rights of any participant or any holder or beneficiary of any option theretofore granted will not to that extent be effective without the consent of the affected participant, holder or beneficiary; and provided further that, without stockholder approval, (i) no amendment or modification may reduce the option price of any option or the strike price of any SAR, (ii) the Compensation Committee may not cancel any outstanding option and replace it with a new option (with a lower exercise price) or cancel any SAR and replace it with a new SAR (with a lower strike price) or other award or cash in a manner that would be treated as a repricing (for compensation disclosure or accounting purposes) and (iii) the Compensation Committee may not take any other action considered a repricing for purposes of the stockholder approval rules of the applicable securities exchange on which our common shares are listed. However, stockholder approval is not required with respect to clauses (i), (ii), and (iii) above with respect to certain adjustments on changes in capitalization. In addition, none of the requirements described in the preceding clauses (i), (ii), and (iii) can be amended without the approval of our stockholders.

U.S. Federal Income Tax Consequences

The following is a general summary of the material U.S. federal income tax consequences of the grant, exercise and vesting of awards under the Omnibus Incentive Plan and the disposition of shares acquired pursuant to the exercise or settlement of such awards and is intended to reflect the current provisions of the Code and the regulations thereunder. This summary is not intended to be a complete statement of applicable law, nor does it address foreign, state, local or payroll tax considerations. This summary assumes that all awards described in the summary are exempt from, or comply with, the requirement of Section 409A of the Code. Moreover, the U.S. federal income tax consequences to any particular participant may differ from those described herein by reason of, among other things, the particular circumstances of such participant.

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Stock Options. Holders of incentive stock options will generally incur no federal income tax liability at the time of grant or upon vesting or exercise of those options. However, the spread at exercise will be an “item of tax preference,” which may give rise to “alternative minimum tax” liability for the taxable year in which the exercise occurs. If the holder does not dispose of the shares before the later of two years following the date of grant and one year following the date of exercise, the difference between the exercise price and the amount realized upon disposition of the shares will constitute long-term capital gain or loss, as the case may be. Assuming the holding period is satisfied, no deduction will be allowed to us for federal income tax purposes in connection with the grant or exercise of the incentive stock option. If, within two years following the date of grant or within one year following the date of exercise, the holder of shares acquired through the exercise of an incentive stock option disposes of those shares, the participant will generally realize taxable compensation at the time of such disposition equal to the difference between the exercise price and the lesser of the fair market value of the share on the date of exercise or the amount realized on the subsequent disposition of the shares, and that amount will generally be deductible by us for federal income tax purposes, subject to the possible limitations on deductibility under Sections 280G and 162(m) of the Code for compensation paid to executives designated in those Sections. Finally, if an incentive stock option becomes first exercisable in any one year for shares having an aggregate value in excess of $100,000 (based on the grant date value), the portion of the incentive stock option in respect of those excess shares will be treated as a non-qualified stock option for federal income tax purposes.

No income will be realized by a participant upon grant or vesting of an option that does not qualify as an incentive stock option (“a non-qualified stock option”). Upon the exercise of a non-qualified stock option, the participant will recognize ordinary compensation income in an amount equal to the excess, if any, of the fair market value of the underlying exercised shares over the option exercise price paid at the time of exercise, and the participant’s tax basis will equal the sum of the compensation income recognized and the exercise price. We will be able to deduct this same excess amount for U.S. federal income tax purposes, but such deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections. In the event of a sale of shares received upon the exercise of a non-qualified stock option, any appreciation or depreciation after the exercise date generally will be taxed as capital gain or loss and will be long-term gain or loss if the holding period for such shares is more than one year.

SARs. No income will be realized by a participant upon grant or vesting of a SAR. Upon the exercise of a SAR, the participant will recognize ordinary compensation income in an amount equal to the fair market value of the payment received in respect of the SAR. We will be able to deduct this same amount for U.S. federal income tax purposes, but such deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections.

Restricted Stock. A participant will not be subject to tax upon the grant of an award of restricted stock unless the participant otherwise elects to be taxed at the time of grant pursuant to Section 83(b) of the Code. On the date an award of restricted stock becomes transferable or is no longer subject to a substantial risk of forfeiture (i.e., the vesting date), the participant will have taxable compensation equal to the difference between the fair market value of the shares on that date over the amount the participant paid for such shares, if any, unless the participant made an election under Section 83(b) of the Code to be taxed at the time of grant. If the participant made an election under Section 83(b), the participant will have taxable compensation at the time of grant equal to the difference between the fair market value of the shares on the date of grant over the amount the participant paid for such shares, if any. If the election is made, the participant will not be allowed a deduction for amounts subsequently required to be returned to us. (Special rules apply to the receipt and disposition of restricted shares received by officers and directors who are subject to Section 16(b) of the Exchange Act). We will be able to deduct, at the same time as it is recognized by the participant, the amount of taxable compensation to the participant for U.S. federal income tax purposes, but such deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections.

Restricted Stock Units. A participant will not be subject to tax upon the grant or vesting of a restricted stock unit award. Rather, upon the delivery of shares or cash pursuant to a restricted stock unit award, the participant

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will have taxable compensation equal to the fair market value of the number of shares (or the amount of cash) the participant actually receives with respect to the award. We will be able to deduct the amount of taxable compensation to the participant for U.S. federal income tax purposes, but the deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections.

Section 162(m). In general, Section 162(m) of the Code denies a publicly held corporation a deduction for U.S. federal income tax purposes for compensation in excess of $1,000,000 per year per person to its chief executive officer and the three other officers whose compensation is required to be disclosed in its proxy statement (excluding the chief financial officer), subject to certain exceptions. The Omnibus Incentive Plan is intended to satisfy an exception with respect to grants of options and SARs to covered employees. In addition, the Omnibus Incentive Plan is designed to permit certain awards of restricted stock, restricted stock units and other awards (including cash bonus awards) to be awarded as Performance Compensation Awards intended to qualify under the “performance-based compensation” exception to Section 162(m) of the Code. As discussed above, as a new public company, we expect to be eligible for transition relief from the deduction limitations imposed under Section 162(m) of the Code until our first stockholders meeting at which directors are elected that occurs in 2022. In addition, we reserve the right to award compensation as to which a deduction may be limited under Section 162(m) where we believe it is appropriate to do so.

Executive Benefits and Perquisites

The Company’s Executive Officers, including the NEOs, are eligible to participate in the benefit plans that are available to substantially all of the Company’s employees, including defined contribution savings plans (e.g., the RSIP), medical, dental and life insurance plans and long-term disability plans. Additionally, the Company provides relocation benefits when a move is required, as well as certain limited perquisites to the NEOs. None of the NEOs participate in a defined benefit pension plan.

Prior to January 1, 2017, each of Prime and ADT LLC maintained benefit plans for their respective legacy employees. Each of our NEOs, other than Messrs. Likosar and DeVries, was eligible to participate in the benefit plans maintained by Prime, while Messrs. Likosar and DeVries were eligible to participate in the benefit plans maintained by ADT LLC. Subsequent to January 1, 2017, benefit plans were harmonized into a single set of plan offerings covering substantially all of the Company’s employees. Each of the NEOs is eligible to participate in these benefit plans.

Employment Agreements

Each of our NEOs is party to an employment agreement with one of our operating subsidiaries, which specifies the terms of the executive’s employment including certain compensation levels, and is intended to assure us of the executive’s continued employment and to provide stability in our senior management team.

Each of Messrs. Whall, Bresingham, and Young entered into an employment agreement with Protection Holdings II, Inc., one of our subsidiaries that has since been merged with and into ADT Corporation, prior to the ADT Acquisition and each of Messrs. Likosar and Mr. DeVries entered into an employment agreement with ADT LLC in connection with their commencement of employment with us. In addition to the terms of these agreements described under “ —Employment Agreements” below, the employment agreements provide for certain severance payments and benefits following a termination of employment under certain circumstances. For details on the severance payment and benefits under each NEO’s respective employment agreement and Class B Unit award agreement, see “—Potential Payments Upon Termination or Change-In-Control.”

In connection with this offering, each NEO’s employment agreement was amended and restated to reflect such executive’s current title, base salary, and annual target bonus opportunity, as applicable, and certain other clerical updates.

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Supplemental Savings and Retirement Plan

Prior to January 1, 2017, only Messrs. Likosar and DeVries were eligible to participate in the ADT Supplemental Savings and Retirement Plan (the “SSRP”), a deferred compensation plan that permits the elective deferral of base salary and annual performance-based bonus for executives in certain career bands. In 2017, our other NEOs became eligible to participate in the SSRP. The SSRP provides eligible employees the opportunity to:

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contribute retirement savings in addition to amounts permitted under the ADT Retirement Savings and Investment Plan (the “RSIP”);

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defer compensation on a tax-deferred basis and receive tax-deferred market-based growth; and

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receive any Company contributions that were reduced under the RSIP due to IRS compensation limits.

Perquisites

We provide limited perquisites to our NEOs, including a monthly auto allowance for Messrs. Whall, Bresingham and Young, and an annual executive physical for all of our NEOs.

Other Compensation Policies and Practices

In connection with the offering, we expect that the Board of Directors will develop certain policies and practices, including an insider trading and equity transaction pre-approval policy, an anti-hedging policy, and a pay recoupment policy, to ensure that our compensation programs appropriately align the interests of our executives with the interests of our stockholders. Our Compensation Committee may also evaluate the share ownership of our NEOs and directors to determine whether stock ownership guidelines should be adopted in order to encourage share ownership and to ensure that the interests of our NEOs and directors are aligned with the interests of our shareholders.

Tax and Accounting Considerations

Section 162(m) of the Code

Section 162(m) of the Code disallows a tax deduction to any publicly held corporation for any individual remuneration in excess of $1 million paid in any taxable year to its chief executive officer and each of its other NEOs, other than its chief financial officer. However, remuneration in excess of $1 million may be deducted if it qualifies as “performance-based compensation” within the meaning of the Code. For a certain period following the offering, we may be eligible to rely on an exemption from the deductibility limitations of Section 162(m) under the transition period applicable to the Company as a new publicly traded company. We expect that, following the offering, our Compensation Committee will consider the potential effects of Section 162(m) on the deductibility of compensation paid to our NEOs.

Section 280G of the Code

Section 280G of the Code disallows a tax deduction with respect to certain payments to executives of companies that undergo a change in control, and Section 4999 of the Code imposes a 20% penalty on the individual receiving “excess parachute payments.” Generally, parachute payments are compensation that is linked to or triggered by a change in control and may include, but are not limited to, bonus payments, severance payments, certain fringe benefits, and payments and acceleration of vesting from long-term incentive plans, including stock options and other equity-based compensation. Excess parachute payments are parachute payments that exceed a threshold determined under Section 280G based on the executive’s prior compensation.

The employment agreements with our NEOs provide that, to the extent an NEO would be subject to Section 280G or 4999 of the Code, the NEO’s parachute payments would be reduced to the extent that no portion

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of the payment shall be subject to the excise tax, but only if the NEO’s net after-tax benefit would exceed what the net after-tax benefit would have been if such reduction were not made and the NEO paid the applicable excise tax. We do not provide for excise tax gross-ups to our NEOs.

Risk Mitigation in Compensation Program Design

Our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. Our annual incentive programs and long-term equity incentives provide an effective and appropriate balance of short-term and long-term incentives to ensure that our executive compensation program is aligned with the Company’s strategic goals without encouraging or rewarding excessive risk.

FISCAL YEAR 2016 NEO COMPENSATION

Summary Compensation Table

The information set forth in the following table reflects compensation paid or earned by the NEOs for fiscal year 2016.


Name and Principal Position	Year		Salary ($)		Bonus ⁽⁴⁾ ($)		Stock Awards ⁽⁵⁾ ($)		All Other Compensation ⁽⁶⁾ ($)		Total ($)
Timothy J. Whall		2016		572,727		857,500		3,523,855		15,748		4,969,830
President and Chief Executive Officer

Daniel M. Bresingham ⁽¹⁾		2016		446,667		411,633		2,321,599		15,748		3,195,647
Executive Vice President, Treasurer, and Chief of Staff, and former Chief Financial Officer

James D. DeVries ⁽²⁾		2016		303,387		298,552		4,959,885		521		5,562,345
Executive Vice President and Chief Operating Officer

Jeffrey Likosar ⁽³⁾		2016		102,865		101,749		5,082,107		71,037		5,357,758
Executive Vice President and Chief Financial Officer

Donald Young		2016		456,667		419,130		2,321,599		15,748		3,213,144
Chief Information Officer

(1)

Mr. Bresingham was Chief Financial Officer of the Company until February 16, 2017, and is currently the Executive Vice President, Treasurer and Chief of Staff of the Company.

(2)

Mr. DeVries was hired on May 23, 2016, and was appointed Chief Operating Officer of Prime Security Services Borrower, LLC, a subsidiary of the Company, on November 4, 2016.

(3)

Mr. Likosar was hired on October 17, 2016, and was appointed Chief Financial Officer of the Company on February 16, 2017.

(4)

The amounts reported in this column for each NEO reflect annual cash bonus payouts for fiscal year 2016. Annual bonus payouts for fiscal year 2016 are discussed in further detail above under the heading “2016 Annual Bonus Program.”

(5)

The values in the “Stock Awards” column reflect the aggregate grant date fair value of the Class B Units in Ultimate Parent, profits interests unit awards, in the year they were granted, computed in accordance with the Financial Accounting Standards Board Accounting Standards Codification Topic 718, “Stock Compensation,” or FASB ASC Topic 718, excluding the effect of estimated forfeitures. For a discussion of the valuation assumptions and methodologies used to calculate the amounts referred to above, please see the discussion of the Class B Unit awards contained in Note 12 to our audited consolidated financial statements for the year ended December 31, 2016, included elsewhere in this prospectus. Achievement of the performance conditions for the performance-based vesting Class B Units was not deemed probable on the date of grant, and, accordingly, pursuant to the SEC’s disclosure rules, no value is included in this table

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for those portions of the awards. The fair value at the grant date of the performance-based vesting Class B Units granted in 2016 assuming achievement of the performance-based vesting conditions was as follows: Mr. Whall $2,923,398; Mr. Bresingham $1,926,003; Mr. DeVries $4,018,634; Mr. Likosar $4,117,662; and Mr. Young $1,926,003.

(6)

Details with respect to the amounts in this column are set forth, in the All Other Compensation table below.

Summary Compensation Table—All Other Compensation

The components of the “All Other Compensation” column in the Summary Compensation Table for each NEO are shown in the following table.


Named Executive	Fiscal Year		Retirement Plan Contributions ($) ^(a)		Miscellaneous ($) ^(b)		Total All Other Compensation ($)
Timothy J. Whall		2016		7,950		7,798		15,748
Daniel M. Bresingham		2016		7,950		7,798		15,748
James D. DeVries		2016		521		—		521
Jeffrey Likosar		2016		—		71,037		71,037
Donald Young		2016		7,950		7,798		15,748

(a)

The amounts shown in this column represent matching contributions made by the Company on behalf of each NEO to its tax-qualified retirement plans and, for Mr. DeVries, to its non-qualified SSRP.

(b)

Miscellaneous compensation in fiscal year 2016 includes both a monthly auto allowance and the value of Company-paid contributions related to supplemental long-term disability insurance benefits for Messrs. Whall, Bresingham and Young, and relocation benefits valued at $40,000 for Mr. Likosar.

Grants of Plan-Based Awards in Fiscal 2016 Table

The following table summarizes the Class B Units granted to the NEOs during 2016, as well as the grant date fair value of these awards. All numbers have been rounded to the nearest whole dollar or unit.


					Estimated Future Payouts Under Equity Incentive Plan Awards ⁽¹⁾					All Other Stock Awards: Number of Shares of Stock or Units ⁽²⁾ (f)		Grant Date Fair Value of Stock Awards ⁽³⁾ (g)
Name (a)	Award Type		Grant Date (b)		Threshold (c)	Target (d)		Maximum (e)				Grant Date Fair Value of Stock Awards ⁽³⁾ (g)
Timothy J. Whall		Class B Units		08/11/2016			438,290		876,581		876,581	$	3,523,855
Daniel M. Bresingham		Class B Units		08/11/2016			288,756		577,512		577,512	$	2,321,599
James D. DeVries		Class B Units		11/21/2016			563,623		1,127,246		1,127,246	$	4,959,885
Jeffrey Likosar		Class B Units		11/21/2016			577,512		1,155,024		1,155,024	$	5,082,107
Donald Young		Class B Units		08/11/2016			288,756		577,512		577,512	$	2,321,599

(1)

Amounts reported in columns (c) through (e) represent the number of Class B Units granted in 2016 that are subject to performance-based vesting conditions (i.e., the Performance Tranche). The target amounts shown above reflect the number of Class B Units which would be delivered assuming that target attainment was met for the performance metrics. The maximum amounts shown assume maximum attainment against performance metrics. The Class B Units do not include a threshold performance level.

(2)

The amounts in this column represent the number of Class B Units granted in 2016 that are subject to service-based vesting conditions (i.e., the Service Tranche).

(3)

Amounts reported in column (g) reflect the aggregate grant date fair value of the Class B Units granted in 2016, computed in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures. For a discussion of the valuation assumptions and methodologies used to calculate the amounts referred to above, please see the discussion of the Class B Unit awards contained in Note 12 to our audited consolidated financial statements for the year ended December 31, 2016, included elsewhere in this prospectus. For a discussion of the assumptions and methodologies used to calculate the amounts reflected in the table above, please see footnote 5 to the “Summary Compensation Table.”

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Employment Agreements

Timothy J. Whall

Mr. Whall is party to an employment agreement with The ADT Corporation, pursuant to which he serves as the Chairman and Chief Executive Officer of The ADT Corporation and its subsidiaries and affiliates for a term beginning on July 1, 2015, through July 1, 2020, which will automatically extend for successive one-year periods, unless either party provides written notice of non-renewal to the other party at least 90 days prior to the expiration of the then-applicable term. Mr. Whall’s employment agreement was subsequently amended on May 2, 2016, to reflect his role as Chief Executive Officer of Prime Borrower, and again on November 7, 2016, to reflect adjustments to his annual base salary and target bonus opportunity. Under his employment agreement, Mr. Whall’s annual base salary is $700,000 (increased as of November 7, 2016, from $550,000), which is subject to annual review and possible increase (but not decrease). In addition, he is eligible to receive an annual cash bonus based on the attainment of objective financial and/or other subjective or objective criteria. For calendar years beginning in 2016, Mr. Whall’s target annual bonus is 125% of base salary (increased as of November 7, 2016, from 75% of base salary). Mr. Whall participates in our long-term incentive plan, and is eligible to participate in the employee benefit plans, programs, and arrangements of the Company in effect from time to time, in accordance with their terms, including without limitation, retirement, medical and welfare benefits. On December 19, 2017, Mr. Whall and The ADT Corporation entered into an amended and restated employment agreement, which included certain clerical updates to reflect the successor entity name change and updates to his current title and annual base salary.

Mr. Whall’s employment agreement provides for certain severance benefits to be paid in the event of employment termination in certain circumstances, as well as post-termination restrictive covenant provisions, which are described below under “—Potential Payments upon Termination or Change in Control—Severance Payments and Benefits under Employment Agreements.”

Daniel M. Bresingham

Mr. Bresingham is party to an employment agreement with The ADT Corporation, pursuant to which he serves as Executive Vice President and Chief Financial Officer of The ADT Corporation and its subsidiaries and affiliates for a term beginning on July 1, 2015, through July 1, 2020, which will automatically extend for successive one-year periods, unless either party provides written notice of non-renewal to the other party at least 90 days prior to the expiration of the then-applicable term. Mr. Bresingham’s employment agreement was subsequently amended on November 7, 2016, to provide that he shall no longer serve as Chief Financial Officer. Mr. Bresingham was appointed to serve as our Executive Vice President, Treasurer and Chief of Staff as of February 16, 2017. Under his employment agreement, Mr. Bresingham’s annual base salary is $500,000 (increased as of May 2, 2016, from $340,000), which is subject to annual review and possible increase (but not decrease). In addition, he is eligible to receive an annual cash bonus based on the attainment of objective financial and/or other subjective or objective criteria. For calendar years beginning in 2016, Mr. Bresingham’s target annual bonus is 100% of base salary (increased as of May 2, 2016, from 75% of base salary). Mr. Bresingham participates in our long-term incentive plan, and is eligible to participate in the employee benefit plans, programs, and arrangements of the Company in effect from time to time, in accordance with their terms, including, without limitation, retirement, medical and welfare benefits. On December 19, 2017, Mr. Bresingham and The ADT Corporation entered into an amended and restated employment agreement, which included certain clerical updates to reflect the successor entity name change and updates to his current title, annual base salary and annual target bonus opportunity.

Mr. Bresingham’s employment agreement provides for certain severance benefits to be paid in the event of employment termination in certain circumstances, as well as post-termination restrictive covenant provisions, which are described below under “—Potential Payments upon Termination or Change in Control—Severance Payments and Benefits under Employment Agreements.”

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James D. DeVries

Mr. DeVries is party to an employment agreement with ADT LLC, pursuant to which he serves as Chief Operating Officer of Prime Borrower for a term beginning on May 23, 2016, through May 23, 2021, which will automatically extend for successive one-year periods, unless either party provides written notice of non-renewal to the other party at least 90 days prior to the expiration of the then-applicable term. Under his employment agreement, Mr. DeVries’ annual base salary is $500,000, which is subject to annual review and possible increase (but not decrease). In addition, he is eligible to receive an annual cash bonus based on the attainment of objective financial and/or other subjective or objective criteria. Mr. DeVries target annual bonus is 100% of base salary. Mr. DeVries participates in our long-term incentive plan, and is eligible to participate in the employee benefit plans, programs, and arrangements of the Company in effect from time to time, in accordance with their terms, including, without limitation, retirement, medical and welfare benefits. On December 19, 2017, Mr. DeVries and ADT LLC entered into an amended and restated employment agreement, which included certain clerical updates to reflect his current primary work location, title and annual base salary.

As part of his sign-on compensation package, pursuant to the terms of his employment agreement with ADT LLC, Mr. DeVries was granted a retention bonus opportunity. On the first five anniversaries of May 2, 2016 (each, a “Bonus Date”), subject to his continued employment through each such Bonus Date, ADT LLC will pay Mr. DeVries a cash bonus in an amount equal to the fair market value (as determined in accordance with the LP Agreement) on such Bonus Date of 33,333.334 Class A-2 Units, less applicable withholding taxes (each such bonus, a “Retention Bonus”). The after-tax proceeds from each Retention Bonus payment are then automatically applied by ADT LLC on Mr. DeVries’ behalf to purchase Class A-2 Units at the applicable Bonus Date FMV. In 2017, it was determined that Mr. DeVries would also receive a cash payment on each Bonus Date that is equal to the value of distributions with respect to a Class A-2 Unit made prior to such Bonus Date multiplied by the number of Class A-2 Units in respect of the bonus tranche that vests on such Bonus Date.

Mr. DeVries’ employment agreement provides for certain severance benefits to be paid in the event of employment termination in certain circumstances, as well as post-termination restrictive covenant provisions, which are described below under “—Potential Payments upon Termination or Change in Control—Severance Payments and Benefits under Employment Agreements.”

Jeffrey Likosar

Mr. Likosar is party to an employment agreement with ADT LLC, pursuant to which he serves as Chief Financial Officer of Prime Borrower for a term beginning on October 17, 2016, through October 17, 2021, which is automatically extended for successive one-year periods, unless either party provides written notice of non-renewal to the other party at least 90 days prior to the expiration of the then-applicable term. Mr. Likosar was appointed to serve as our Chief Financial Officer as of February 16, 2017. Under his employment agreement, Mr. Likosar’s annual base salary is $500,000, which is subject to annual review and possible increase (but not decrease). In addition, he is eligible to receive an annual cash bonus based on the attainment of objective financial and/or other subjective or objective criteria. Mr. Likosar’s target annual bonus is 100% of base salary. Mr. Likosar participates in our long-term incentive plan, and is eligible to participate in the employee benefit plans, programs, and arrangements of the Company in effect from time to time, in accordance with their terms, including, without limitation, retirement, medical and welfare benefits. On December 19, 2017, Mr. Likosar and ADT LLC entered into an amended and restated employment agreement, which included certain clerical updates to reflect his current title and annual base salary.

Pursuant to the terms of his employment agreement, Mr. Likosar agreed to relocate his principal residence to Boca Raton, Florida and was provided with relocation benefits in accordance with the terms and conditions of ADT LLC’s relocation program and its standard relocation expense reimbursement agreement.

As part of his sign-on compensation package, pursuant to the terms of his employment agreement with ADT LLC, Mr. Likosar was granted a retention bonus opportunity. On the first five anniversaries of October 17, 2016

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(each, a “Bonus Date”), subject to his continued employment through each such Bonus Date, ADT LLC will pay Mr. Likosar a cash bonus in an amount equal to the fair market value (as determined in accordance with the LP Agreement) on such Bonus Date (as applicable, the “Bonus Date FMV”) of 16,666.67 Class A-2 Units, less applicable withholding taxes (each such bonus, a “Retention Bonus”). The after-tax proceeds from each Retention Bonus payment are then automatically applied by ADT LLC on Mr. Likosar’s behalf to purchase Class A-2 Units at the applicable Bonus Date FMV. In 2017, it was determined that Mr. Likosar would also receive a cash payment on each Bonus Date that is equal to the value of distributions with respect to a Class A-2 Unit made prior to such Bonus Date multiplied by the number of Class A-2 Units in respect of the bonus tranche that vests on such Bonus Date.

Mr. Likosar’s employment agreement provides for certain severance benefits to be paid in the event of employment termination in certain circumstances, as well as post-termination restrictive covenant provisions, which are described below under “—Potential Payments upon Termination or Change in Control—Severance Payments and Benefits under Employment Agreements.”

Donald Young

Mr. Young is party to an employment agreement with The ADT Corporation, pursuant to which he serves as Chief Information Officer of The ADT Corporation and its subsidiaries and affiliates for a term beginning on July 1, 2015, through July 1, 2020, which will automatically extend for successive one-year periods, unless either party provides written notice of non-renewal to the other party at least 90 days prior to the expiration of the then-applicable term. Under his employment agreement, Mr. Young’s annual base salary is $500,000 (increased as of May 2, 2016, from $370,000), which is subject to annual review and possible increase (but not decrease). In addition, he is eligible to receive an annual cash bonus based on the attainment of objective financial and/or other subjective or objective criteria. For calendar years beginning in 2016, Mr. Young’s target annual bonus is 100% of base salary (increased as of May 2, 2016, from 75% of base salary). Mr. Young participates in our long-term incentive plan, and is eligible to participate in our long-term incentive plan, and is eligible to participate in the employee benefit plans, programs, and arrangements of the Company in effect from time to time, in accordance with their terms, including, without limitation, retirement, medical and welfare benefits. On December 19, 2017, Mr. Young and The ADT Corporation entered into an amended and restated employment agreement, which included certain clerical updates to reflect the successor entity name change and updates to his current title, annual base salary and annual target bonus opportunity.

Mr. Young’s employment agreement provides for certain severance benefits to be paid in the event of employment termination in certain circumstances, as well as post-termination restrictive covenant provisions, which are described below under “—Potential Payments upon Termination or Change in Control—Severance Payments and Benefits under Employment Agreements.”

Class B Unit Awards

Each of our NEOs was granted Class B Units in August 2016 (except for Messrs. Likosar and DeVries, who were granted Class B Units in November 2016), which are subject to the same service-based and performance-based vesting conditions as described above under “ Elements of Compensation — Long-Term Equity Compensation .” These Class B Units were granted in connection with the ADT Acquisition in order to compensate Messrs. Whall, Bresingham, and Young for their additional duties and responsibilities with the larger combined company and to prevent the dilution of the Class B Units that they held in Ultimate Parent prior to the transaction. For Messrs. Likosar and DeVries, these Class B Units were granted in connection with their hiring.

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Outstanding Equity Awards at Fiscal 2016 Year-End Table

The following table shows outstanding Class B Units outstanding as of December 31, 2016, for each of the NEOs. All numbers have been rounded to the nearest whole dollar or unit.


	Stock Awards
Name	Grant Date		Number of Shares or Units of Stock That Have Not Vested (#) ⁽¹⁾⁽⁴⁾		Market Value of Shares or Units of Stock that Have Not Vested ($) ⁽²⁾		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have not Vested (#) ⁽³⁾		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) ⁽²⁾
Timothy J. Whall		08/11/2016		876,581		1,525,251		876,581		1,525,251
		07/01/2015		701,265		2,622,731		876,581		3,278,413

Daniel M. Bresingham		08/11/2016		577,512		1,004,871		577,512		1,004,871
		07/01/2015		462,010		1,727,917		577,512		2,159,895

James D. DeVries		11/21/2016		1,127,247		1,961,410		1,127,247		1,961,410

Jeffrey Likosar		11/21/2016		1,155,024		2,009,742		1,155,024		2,009,742

Donald Young		08/11/2016		577,512		1,004,871		577,512		1,004,871
		07/01/2015		462,010		1,727,917		577,512		2,159,895

(1)

Represents unvested Class B Units subject to service-based vesting requirements (i.e., the Service Tranche). See footnote 4 for Service Tranche vesting dates.

(2)

The Class B Units represent profit interests in Ultimate Parent, which will have value only if the value of Ultimate Parent increases following the date on which the awards of such Class B Units are granted and only after the aggregate amount of capital contributions in respect of all Class A Units have been repaid to the holders of the Class A Units. There is no public market for the Class B Units, accordingly, the market or payout value of the unvested B Units represents the value of each such B Unit based on the value of the business at the end of fiscal 2016 (i.e. $13.74 per Class A Unit, which was the fair market value of a Class A Unit on December 30, 2016, as determined by the Executive Committee of Ultimate Parent).

(3)

Represents unvested Class B Units subject to performance-based vesting requirements (i.e., the Performance Tranche). These performance-based Class B Units will vest upon a “Realization Event if, and to the extent that, our Sponsor receives specified levels of its invested capital in the Company in connection with the Realization Event. See “Elements of Compensation—Long-Term Equity Compensation” above for a discussion of the Performance Tranche vesting criteria.

(4)

The vesting schedules of the Class B Units designated as the Service Tranche are as follows (subject to the NEO’s continued employment through each applicable vesting date):


Name	Grant Date	Vesting Schedule
Timothy J. Whall	08/11/2016	Vests 20% per year over 5 years. Approximately 175,316 Class B Units are scheduled to vest on each of May 2, 2017, 2018, 2019, 2020, and 2021.
	07/01/2015	Vests 20% per year over 5 years. Approximately 175,316 Class B Units are scheduled to vest on each of July 1, 2017, 2018, 2019, and 2020.
Daniel M. Bresingham	08/11/2016	Vests 20% per year over 5 years. Approximately 115,502 Class B Units are scheduled to vest on each of May 2, 2017, 2018, 2019, 2020, and 2021.
	07/01/2015	Vests 20% per year over 5 years. Approximately 115,502 Class B Units are scheduled to vest on each of July 1, 2017, 2018, 2019, and 2020.
James D. DeVries	11/21/2016	Vests 20% per year over 5 years. Approximately 225,449 Class B Units are scheduled to vest on each of May 2, 2017, 2018, 2019, 2020, and 2021.
Jeffrey Likosar	11/21/2016	Vests 20% per year over 5 years. Approximately 231,004 Class B Units are scheduled to vest on each of May 2, 2017, 2018, 2019, 2020, and 2021.
Donald Young	08/11/2016	Vests 20% per year over 5 years. Approximately 115,502 Class B Units are scheduled to vest on each of May 2, 2017, 2018, 2019, 2020, and 2021.
	07/01/2015	Vests 20% per year over 5 years. Approximately 115,502 Class B Units are scheduled to vest on each of July 1, 2017, 2018, 2019, and 2020.

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Stock Vested in Fiscal 2016 Table

The following table sets forth information regarding Class B Units that vested during fiscal year 2016 for the NEOs. All numbers have been rounded to the nearest whole dollar or unit, where applicable.


	Stock Awards
Name	Number of Shares Acquired on Vesting (#) ⁽¹⁾		Value Realized on Vesting ($) ⁽²⁾
Timothy J. Whall		175,316		350,632
Daniel M. Bresingham		115,502		231,004
James D. DeVries		—		—
Jeffrey Likosar		—		—
Donald Young		115,502		231,004

(1)

Awards of Class B Units (i.e., the Service Tranche), which generally vest in five annual installments of 20% each. See footnote 4 to the “Outstanding Equity Awards at Fiscal 2016 Year-End Table and Elements of Compensation—Long-Term Equity Compensation” for additional vesting details.

(2)

The Class B Units represent profit interests in Ultimate Parent, which will have value only if the value of Ultimate Parent increases following the date on which the awards of such Class B Units are granted and only after the aggregate amount of capital contributions in respect of all Class A Units have been repaid to the holders of the Class A Units. There is no public market for the Class B Units, accordingly, the market or payout value of the unvested B Units represents the value of each such B Unit based on the value of the business as of the vesting date (i.e. $12.00 per Class A Unit, which was the fair market value of a Class A Unit on July 1, 2016, as determined by the Executive Committee of Ultimate Parent).

Nonqualified Deferred Compensation for Fiscal 2016

The following table sets forth information related to the non-qualified deferred compensation accounts of our NEOs as of December 31, 2016.

Name

Executive
Contributions
in Last FY ⁽¹⁾
($)

Registrant
Contributions
in Last FY ⁽¹⁾
($)

Aggregate
Earnings in
Last FY ⁽²⁾
($)

Aggregate
Withdrawals/
Distributions
($)

Aggregate
Balance at
Last FYE
($)

(a)

(b)

(c)

(d)

(e)

(f)

James D. DeVries

10,417

521

—

10,943

(1)

The amounts shown in columns (b) and (c) reflect employee and Company contributions, respectively, under the SSRP, the Company’s non-qualified retirement savings plan. All of the amounts in column (b) and (c) are included in the Summary Compensation Table under the column heading “Salary” and “All Other Compensation,” respectively. Under the terms of the SSRP, an eligible executive may elect to defer up to 50% of his base salary and up to 100% of his performance bonus.

(2)

The amounts shown in this column include earnings (or losses) on the NEO’s notional account in the SSRP.

The SSRP is a nonqualified deferred compensation plan that operates in conjunction with our RSIP. A participant must designate the portion of the credits to his or her account that shall be allocated among the various measurement funds. In default of such designation, credits to a participant’s account are allocated to one or more measurement funds as determined by the SSRP’s plan administrator. Participant notional account balances are credited daily with the rate of return earned by the applicable measurement fund. The measurement funds for the SSRP are consistent with those funds available under the Company’s RSIP.

Mr. DeVries was the only NEO with an account balance in the SSRP during 2016. Mr. DeVries made pre-tax contributions to equal to 5% of his base salary. The Company made matching contributions equal to 100% of the first 5% of eligible pay contributed by Mr. DeVries.

A participant is always fully vested in the participant’s own contributions and vests in the Company contributions over three years from the date of hire (subject to full vesting upon death, disability, retirement (e.g.,

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(i) age 55 and (ii) a combination of age and years of service at separation totaling at least 60), or a change in control). Distributions are made in either a lump sum or in annual installments (up to 15 years) in accordance with a participant’s election. In the event a separation from service is due to a participant’s death or disability a distribution is made in in a lump sum within 90 days of such event.

Potential Payments Upon Termination or Change in Control

Severance Payments and Benefits under Employment Agreements

All of our NEOs are entitled to certain severance payments and benefits following termination of employment under his employment agreement. All severance payments and benefits are conditioned upon the execution by each NEO of a general release of claims in favor of the Company and the NEO’s continued compliance with the restrictive covenants contained in the NEO’s employment agreement. All of the NEOs’ employment agreements prohibit the NEO from disclosing confidential information of the Company at any time. In addition, the NEOs may not make disparaging statements about the Company, its products or practices, or any of its directors, officers, agents, representatives, stockholders, or the Company’s affiliates at any time. All of our NEOs are required during employment and for the twenty-four (24) month period thereafter (except that Mr. Young’s restricted period is reduced to six (6) months if his employment is terminated following a Realization Event) not to compete with the Company and are required not to solicit the employees, customers, subscribers, or suppliers of the Company. References to the “Company” in this paragraph and in this section mean Ultimate Parent and any direct or indirect subsidiaries thereof and any successors thereto.

If an NEO’s employment is terminated by the Company without Cause (defined below), by the Company in the event the Company elects not to renew the term of his employment, or by the NEO for Good Reason (defined below) (each, a “Qualifying Termination”), the NEO will be entitled to: (i) continued payment of his annual base salary beginning on the date of the Qualifying Termination (the “Qualifying Termination Date”) and ending on the earlier of (x) the twenty-four (24) month anniversary of the Qualifying Termination Date (or, in the case of Mr. Young, if such Qualifying Termination Date occurs following a Realization Event, the six (6) month anniversary of the Qualifying Termination Date) and (y) the first date that the NEO violates any restrictive covenants in his employment agreement (the “Severance Period”), (ii) continued coverage during the Severance Period for the NEO and any eligible dependents under the health and welfare plans in which the NEO and any such dependents participated immediately prior to the Qualifying Termination Date, subject to any active-employee cost-sharing or similar provision in effect for the executive as of immediately prior to the Qualifying Termination Date, and (iii) a prorated portion of the annual bonus payable with respect to the year of such Qualifying Termination, based solely on the actual level of achievement of the applicable performance goals for such year, and payable if and when annual bonuses are paid to other senior executives of the Company with respect to such year.

With respect to Mr. DeVries’ retention bonus, if (i) his employment is terminated by the Company without Cause, due to his death, or on account of his disability, or if Mr. DeVries terminates his employment for Good Reason prior to May 23, 2021, or (ii) a Change in Control occurs, then, upon the earlier of (i) and (ii), the Company will pay Mr. DeVries a cash bonus equal to the fair market value (as determined in accordance with the LP Agreement) on such date (the “Relevant Date FMV”) in respect of the unpaid Retention Bonus installments. The after-tax proceeds from such payment will then be automatically applied by ADT LLC on Mr. DeVries’ behalf to purchase Class A-2 at the applicable Relevant Date FMV. In addition, Mr. DeVries will receive a cash payment that is equal to the value of distributions with respect to a Class A-2 Unit made prior to such date multiplied by the number of Class A-2 Units in respect of the bonus tranche(s) that vest on such date.

With respect to Mr. Likosar’s retention bonus, in the event that his employment is terminated by the Company without Cause, due to his death, or on account of his disability, or if Mr. Likosar terminates his employment for Good Reason prior to October 17, 2021, then the Company will pay Mr. Likosar a cash bonus equal to the fair market value (as determined in accordance with the LP Agreement) on such date (the

198

“Termination Date FMV”) in respect of the unpaid Retention Bonus installments. The after-tax proceeds from such payment will then be automatically applied by ADT LLC on Mr. Likosar’s behalf to purchase Class A-2 Units at the applicable Termination Date FMV. In addition, Mr. Likosar will receive a cash payment that is equal to the value of distributions with respect to a Class A-2 Unit made prior to such date multiplied by the number of Class A-2 Units in respect of the bonus tranche(s) that vest on such date.

The Company does not reimburse its NEOs with respect to any excise tax triggered by Section 4999 of the Code, but any parachute payments (i.e., payments made in connection with a change in control as defined in Section 280G of the Code and the regulations thereunder) will be capped at three times the NEO’s “base amount” under Section 280G of the Code and the regulations thereunder if the cap results in a greater after-tax payment to the NEO than if the payments were not capped.

Applicable Definitions

For purposes of the employment agreements with our NEOs:

A termination is for “Cause” if the NEO:

•

Is convicted of, or pleads nolo contendere to, a crime that constitutes a felony or involves fraud or a breach of the executive’s duty of loyalty with respect to the Company, or any of its customers or suppliers that results in material injury to the Company,

•

Repeatedly fails to perform reasonably assigned duties which remains uncured for ten (10) days after receiving written notice,

•

Commits an act of fraud, misappropriation, embezzlement, or materially misuses funds or property belonging to the Company,

•

Commits a willful violation of the Company’s written policies, or other willful misconduct that results in material injury to the Company, which remains uncured for ten (10) days after receiving written notice,

•

Materially breaches his employment agreement resulting in material injury to the Company, which remains uncured for ten (10) days after receiving written notice, or

•

Violates the terms of his confidentiality, non-disparagement, non-competition and non-solicitation provisions.

The NEOs may terminate their employment for “Good Reason” if any of the following events occur without the NEO’s prior express written consent:

•

The executive’s annual base salary or target bonus are decreased,

•

The Company (for purposes of this definition, means the ADT Corporation or ADT LLC) fails to pay any material compensation due and payable to the executive in connection with his employment or employment agreement,

•

The executive’s duties, responsibilities, authority, positions, or titles are materially diminished,

•

The Company requires the executive to be relocated more than thirty (30) miles from a specified location (the Romeoville, Illinois, area for Messrs. Whall and Bresingham, the Longwood, Florida, area for Mr. Young, and the Boca Raton, Florida, area for Messrs. DeVries and Likosar), or

•

The Company breaches its obligations under the executive’s employment agreement.

The NEO must provide written notice to the Company describing the events that constitute Good Reason within forty-five (45) days following the first occurrence of such events and the Company has a thirty (30) day cure period following receipt of such notice, before an NEO may terminate his employment for Good Reason.

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Equity Awards. In addition, the Class B Unit award agreements for the outstanding equity awards held by our NEOs provide for special treatment upon certain terminations of employment, including a Qualifying Termination following a “change in control” (defined below) or in connection with a change in control.

•

Termination of Employment. Pursuant to the terms for the Class B Unit award agreements, other than in the case of a change in control, if an NEO experiences a Qualifying Termination before the Service Tranche is fully vested, an additional 20% of the Service Tranche will immediately vest on the Qualifying Termination Date (the cumulative vested percentage of the Service Tranche after giving effect to such additional vesting is referred to as the “Vested Percentage at Termination”) and the unvested Class B Units attributed to the Service Tranche will be forfeited immediately. If an NEO experiences a Qualifying Termination and during the one (1) year period following the Qualifying Termination Date all or any portion of the Performance Tranche would have vested had the NEO’s employment not been terminated, then the NEO will also be deemed vested in a percentage of the Performance Trance equal to the product of (i) the percentage of the Performance Tranche (e.g., 50% or 100%) that would have vested had the NEO’s employment not been terminated multiplied by (ii) the Vested Percentage at Termination.

•

In the event the NEO’s employment is terminated for Cause all Class B Units (whether vested or unvested) then held by the NEO are immediately forfeited. Other than as described in the immediately preceding paragraph and the following paragraph, in the event that the NEO experiences a termination of employment, all unvested Class B Units then held by the NEO are immediately forfeited.

•

Change in Control. Pursuant to the terms for the Class B Unit award agreements, the Service Tranche will vest in full on the earlier of (i) the six (6) month anniversary of a change in control and (ii) a Qualifying Termination of the NEO following a change in control. The proceeds from any transaction resulting in a change in control that related to the unvested portion of the Service Tranche will be held in escrow for the NEO’s benefit from the date of the change in control through the date on which the NEO either vests in or forfeits the unvested portion of the Service Tranche

For purposes of the Class B Unit award agreements and Mr. DeVries’ Retention Bonus, a “change in control” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events: (i) (A) our Sponsor ceases to be the beneficial owner, directly or indirectly, of a majority of the combined voting power of Ultimate Parent’s outstanding securities; and (B) a person or group other than our Sponsor becomes the direct or indirect beneficial owner of a percentage of the combined voting power of Ultimate Parent’s outstanding securities that is greater than the percentage of the combined voting power of Ultimate Parent’s outstanding securities beneficially owned directly or indirectly by our Sponsor; (ii) sale of all or substantially all of the assets of Ultimate Parent to a person or group other than our Sponsor; (iii) a liquidation or dissolution of Ultimate Parent and its subsidiaries; or (iv) an initial public offering of Ultimate Parent or one of its subsidiaries.

SSRP Accelerated Vesting of Company Contributions . To the extent that a participant in the SSRP is not fully vested in the Company contributions made to his or her notional account balance, the participant will fully vest in such amounts upon a termination of employment due to his or her death, disability, retirement (e.g., (i) age 55 and (ii) a combination of age and years of service at separation totaling at least 60), or upon a change in control (regardless of whether or not the participant’s employment terminates).

The following table summarizes the severance benefits that would have been payable to each of the NEOs upon termination of employment or upon a qualifying termination in connection with a change in control (including, a Realization Event), assuming that the triggering event or events occurred on December 30, 2016, which was the last business day of 2016.

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	Change in Control				Termination of Employment
Name/Form of Compensation	Without Qualified Termination ($) ⁽¹⁾		With Qualified Termination ($) ⁽¹⁾		With Cause ($)		With Qualified Termination ($)		Retirement ($)		Death or Disability ($)
Timothy J. Whall
Salary Continuation		—		1,400,000		—		1,400,000		—		—
Pro-Rata Bonus		—		875,000		—		875,000		—		—
Benefit Continuation		—		15,772		—		15,772		—		—
Accelerated Vesting of Class B Unit Awards		4,147,981		4,147,981		—		960,733		—		—
Total		4,147,981		6,438,753		—		3,251,505		—		—

Daniel M. Bresingham
Salary Continuation		—		1,000,000		—		1,000,000		—		—
Pro-Rata Bonus		—		500,000		—		500,000		—		—
Benefit Continuation		—		22,577		—		22,577		—		—
Accelerated Vesting of Class B Unit Awards		2,732,788		2,732,788		—		632,953		—		—
Total		2,732,788		4,255,365		—		2,155,530		—		—

James D. DeVries
Salary Continuation		—		1,000,000		—		1,000,000		—		—
Pro-Rata Bonus		—		500,000		—		500,000		—		—
Benefit Continuation		—		—		—		—		—		—
Accelerated Vesting of Class B Unit Awards		1,961,409		1,961,409		—		392,282		—		—
Accelerated Vesting of Retention Bonus		2,290,000		2,290,000		—		2,290,000		—		2,290,000
Accelerated Vesting of SSRP Account		521		521		—		—		521		521
Total		4,251,930		5,751,930		—		4,182,282		521		2,290,521

Jeffrey Likosar
Salary Continuation		—		1,000,000		—		1,000,000		—		—
Pro-Rata Bonus		—		500,000		—		500,000		—		—
Benefit Continuation		—		—		—		—		—		—
Accelerated Vesting of Class B Unit Awards		2,009,742		2,009,742		—		401,948		—		—
Accelerated Vesting of Retention Bonus		—		1,145,000		—		1,145,000		—		1,145,000
Total		2,009,742		4,654,742		—		3,046,948		—		1,145,000

Donald Young
Salary Continuation ⁽²⁾		—		1,000,000		—		1,000,000		—		—
Pro-Rata Bonus		—		500,000		—		500,000		—		—
Benefit Continuation		—		22,577		—		22,577		—		—
Accelerated Vesting of Class B Unit Awards		2,732,788		2,732,788		—		632,953		—		—
Total		2,732,788		4,255,365		—		2,155,530		—		—

(1)

As previously noted in this prospectus, Class B Units represent profit interests in Ultimate Parent, which will have value only if the value of Ultimate Parent increases following the date on which the awards of such Class B Units are granted and only after the aggregate amount of capital contributions in respect of all Class A Units have been repaid to the holders of the Class A Units. In accordance with the terms of the Class B Unit award agreements, the vesting of the Service Tranche would have accelerated and become vested in connection with a change in control, as described in this section under the heading “—Equity Awards.” Based on the value of the business at the end of fiscal 2016, the value attributed to the Accelerated Vesting of Class B Unit Awards with respect to the Service Tranche is reflected in the table above, even though such Class B Units will not actually vest until the earlier of (i) the six-month anniversary of a change in control and (ii) the NEO’s termination without cause or for good reason within six months following a change in

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control, whichever event occurs first. The return to our Sponsor in connection with any such change in control (assuming it was also a Realization Event) would have been minimal and insufficient to trigger any vesting of the Performance Tranche which would have been ben forfeited without any consideration payable, therefore there is no value with respect to the Performance Tranche.

(2)

If Mr. Young’s employment is terminated following a change in control that also qualifies as a Realization Event, then Mr. Young’s salary continuation will be decreased to $250,000.

COMPENSATION OF NON-MANAGEMENT DIRECTORS

In respect of 2016, each of our non-employee directors was appointed by our Sponsor (or their affiliates) and, with the exception of Mr. Africk, none of them received any compensation for services as a director or is party to any contract with us.

Pursuant to the agreement entered into on November 30, 2015, between Prime Borrower and Mr. Africk, Mr. Africk receives an annual cash retainer equal to $50,000 for his service as a member of the board of managers of Prime Borrower, which is paid quarterly in arrears retroactive to July 1, 2015. In addition to his cash retainer, Mr. Africk receives an annual grant on July 1 of each year of Class A-2 Units in with an aggregate fair market value on the date of grant equal to $50,000. Each annual grant of Class A-2 Units vest in three substantially equal annual installments over the three years immediately following the year of issuance, in each case subject to Mr. Africk’s continued service on the board of managers of Prime Borrower through the applicable vesting date. In connection with this offering, Mr. Africk’s agreement with Prime Borrower will be terminated, subject to and contingent upon the consummation of the offering.

Director Compensation

The following table summarizes the compensation earned by, or awarded or paid to Mr. Africk for the year ended December 31, 2016.


Name	Fees Earned or Paid in Cash ($)	Stock Awards ⁽¹⁾ ($)	Total ($)
Andrew D. Africk	50,000	50,000	100,000

(1)

On August 11, 2016, Mr. Africk received a grant of 4,166.67 Class A-2 Units. One third of these Class A-2 Units shall vest subject to his continued service, on each of the first three anniversaries of August 11, 2016. The amount reported in this column reflects the aggregate grant date fair value calculated in accordance with FASB ASC Topic 718, excluding estimated forfeitures. The fair value of Class A-2 Units is computed by multiplying the total number of Class A-2 Units subject to the award by the fair market value of a Class A Unit, as determined by the Executive Committee of Ultimate Parent, on the date of grant. Mr. Africk was previously granted 10,000 Class A-2 Units on November 30, 2015, which shall vest, subject to his continued service, as to one third of these Class A-2 Units vest on July 1 following each of the first three anniversaries from issuance.

Looking Ahead—2018 Director Compensation

In connection with this offering, our Board of Directors will approve and implement the following director compensation program, which will include the following for each of our non-employee directors (other than those that were appointed by our Sponsor).

Compensation for our non-employee directors, including Mr. Africk, will consist of an annual cash retainer in the amount of $100,000, paid quarterly in arrears, and an annual equity award of restricted stock units with a grant date fair value of approximately $100,000. Annual restricted stock unit awards to our non-employee directors will vest on the first anniversary of the date of grant, subject to such director’s continued service through such date. The chairs of the Audit, Compensation and Nominating and Governance Committees will receive an additional annual cash retainer in the amount of $25,000, $20,000, and $15,000 per year, respectively, each of will be paid quarterly in arrears.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Other than compensation arrangements for our named executive officers and directors (see “Executive Compensation”), there were no transactions, to which we were a party or will be a party, in which:

•

the amounts involved exceeded or will exceed $120,000; and

•

any of our directors, executive officers or holders of more than 5% of our capital stock, or any member of the immediate family of the foregoing persons, had or will have a direct or indirect material interest.

Policies and Procedures for Related Party Transactions

Upon the consummation of this offering, we will adopt a written Related Person Transaction Policy (the “policy”), which will set forth our policy with respect to the review, approval, ratification and disclosure of all related person transactions by our audit committee. In accordance with the policy, our audit committee will have overall responsibility for implementation of and compliance with the policy.

For purposes of the policy, a “related person transaction” is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which we were, are or will be a participant and the amount involved exceeded, exceeds or will exceed $120,000 and in which any related person (as defined in the policy) had, has or will have a direct or indirect material interest. A “related person transaction” does not include any employment relationship or transaction involving an executive officer and any related compensation resulting solely from that employment relationship that has been reviewed and approved by our board of directors or audit committee.

The policy will require that notice of a proposed related person transaction be provided to our legal department prior to entry into such transaction. If our legal department determines that such transaction is a related person transaction, the proposed transaction will be submitted to our audit committee for consideration. Under the policy, our audit committee may approve only those related person transactions that are in, or not inconsistent with, our best interests and the best interests of our stockholders. In the event that we become aware of a related person transaction that has not been previously reviewed, approved or ratified under the policy and that is ongoing or is completed, the transaction will be submitted to the audit committee so that it may determine whether to ratify, rescind or terminate the related person transaction.

The policy will also provide that the audit committee review certain previously approved or ratified related person transactions that are ongoing to determine whether the related person transaction remains in our best interests and the best interests of our stockholders. Additionally, we will make periodic inquiries of directors and executive officers with respect to any potential related person transaction of which they may be a party or of which they may be aware.

Limited Partnership Agreement of Ultimate Parent

On November 7, 2016, Parent GP, as the general partner of Ultimate Parent, certain members of management (the “Management Partners”) and the Koch Investor, as warrant holders, entered into the LP Agreement.

Pursuant to the LP Agreement, in exchange for contributing capital to Ultimate Parent, our Sponsor was issued Class A-1 Units in Ultimate Parent, the Management Partners were issued Class A-2 Units in Ultimate Parent, and the Koch Investor was issued the Warrants.

Additionally, the Management Partners and certain other members of management have received awards from an incentive pool in the form of options in the Company and profits interests in our Ultimate Parent.

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The LP Agreement provides for customary drag-along rights for our Sponsor, customary tag-along rights for Class A-2 limited partners and holders of profits interests, and customary preemptive rights for Class A-1 and Class A-2 limited partners.

Our Sponsor, the Management Partners and the members of management of the Company holding profits interests will receive distributions from the Ultimate Parent on the Class A-1 Units and Class A-2 Units, as applicable, in accordance with the waterfall provisions in the LP Agreement, which provide for distributions in respect of the Class A-1 Units until contributed capital is returned and thereafter, distributions to be ratably shared between the Class A-1 Units and one or more tranches of Class A-2 Units, subject to certain return hurdles being achieved by the business.

As of the date of this prospectus, the business and affairs of Ultimate Parent are managed by Parent GP which is in turn managed by a board of managers that is controlled by affiliates of our Sponsor.

Transaction Fee Agreement

Apollo Global Securities, LLC, an affiliate of our Sponsor (the “Service Provider”) entered into a transaction fee agreement with Prime Borrower (the “Transaction Fee Agreement”), relating to the provision of certain structuring, financial, investment banking, and other similar advisory services by the Service Provider to Prime Borrower, in connection with the ADT Acquisition. During the second quarter of 2016, Prime Borrower paid the Service Provider a one-time transaction fee of $65 million in the aggregate in exchange for services rendered in connection with structuring, arranging the financing, and performing other services in connection with the ADT Acquisition. This transaction fee is reflected in merger, restructuring, integration, and other costs in our consolidated statements of operations for the year ended December 31, 2016 included elsewhere in this prospectus. Following the payment of the transaction fee, the Transaction Fee Agreement terminated in accordance with its terms.

Management Consulting Agreement

In connection with the ADT Acquisition, Apollo Management Holdings, L.P., an affiliate of our Sponsor (the “Management Service Provider”) entered into a management consulting agreement with Prime Borrower (the “Management Consulting Agreement”) relating to the provision of certain management consulting and advisory services to Prime Borrower following the ADT Acquisition. In exchange for the provision of such services, Prime Borrower is required to pay the Management Service Provider $5 million each quarter. Fees under the Management Consulting Agreement of $13 million and $15 million are included in the selling, general and administrative expenses in our consolidated statements of operations for the year ended December 31, 2016 and the nine months ended September 30, 2017, respectively, both of which are included elsewhere in this prospectus. The Management Consulting Agreement will terminate in accordance with its terms upon the consummation of this offering.

Koch Preferred Securities

In connection with the ADT Acquisition, we issued the Koch Preferred Securities, and Ultimate Parent issued the Warrants, to the Koch Investor for an aggregate amount of $750 million. Of this amount, $659 million, net of issuance costs of $27 million, was allocated to the Koch Preferred Securities and reflected as a liability in our consolidated balance sheet. The remaining $91 million in proceeds was allocated to the Warrants and was contributed by Ultimate Parent in the form of common equity to us, net of $4 million in issuance costs. Refer to Note 6 to our audited consolidated financial statements for additional information. See also “Description of the Koch Preferred Securities.”

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In connection with the Special Dividend, we paid $45 million in structuring fees to the Koch Investor. See “Certain Relationships and Related Party Transactions.”

Participation of our Sponsor in the Issuance of the Prime Notes

An affiliate of our Sponsor purchased $4 million of the Prime Notes upon their issuance on May 2, 2016. All of such Prime Notes have been sold by such affiliate.

Other Transactions

During the second quarter of 2016, we paid various structuring fees associated with the ADT Acquisition to affiliates of our Sponsor in the amount of $9 million.

During the first half of 2017, we paid $750 million in dividends to equity holders of the Company and Ultimate Parent, which includes distributions to our Sponsor. Such dividends are included in the condensed consolidated statement of stockholders’ equity for the nine months ended September 30, 2017 included elsewhere in this prospectus.

In addition, we paid $425,000 and $180,000 to affiliates of our Sponsor in connection with the 2016 First Lien Credit Agreement Amendments and the 2017 First Lien Credit Agreement Amendments. We paid $800,000 in structuring fees to affiliates of our Sponsor in connection with the 2017 Incremental First Lien Term B-1 Loan.

We have an ongoing agreement to pay $14,000 per month to Professional Resources International (“PRI”) for staff recruiting services. We paid approximately $168,000 and $126,000 to PRI in 2016 and for the nine months ended September 30, 2017, respectively. A brother of our Chief Executive Officer has an ownership interest in PRI.

An immediate family member of our Chief Executive Officer is a regular full-time employee of the Company in a managerial position and has target annual compensation, including base salary, bonus, and company-paid benefits, of approximately $136,000. The family member was also granted options to acquire 5,555.56 shares of common stock in ADT Inc. on June 29, 2017, valued at approximately $18,000.

Stockholders Agreement

Prior to the consummation of this offering, we intend to enter into a Stockholders Agreement with Ultimate Parent, one of the Co-Investors (as defined herein), and the Koch Investor. The Stockholders Agreement will give our Sponsor the right to nominate a majority of our directors after the consummation of this offering as long as our Sponsor beneficially owns 50% or more of our outstanding common stock and shall specify how the Sponsor’s nominations rights shall decrease as our Sponsor’s beneficial ownership of our common stock also decreases. See “Description of Capital Stock—Composition of Board of Directors; Election and Removal of Directors.” Additionally, the Stockholders Agreement specifies that one of our Co-Investors and the Koch Investor will each nominate one director to the board, subject to specified ownership thresholds. The Stockholders Agreement sets forth certain information rights granted to Ultimate Parent. It also specifies that we will not take certain significant actions specified therein without the prior consent our Ultimate Parent. Such specified actions include, but are not limited to:

•

amendments or modifications to our Company’s or our Company’s subsidiaries’ organizational documents in a manner that adversely affects Ultimate Parent or our Sponsor;

•

issuances of our Company’s or our Company’s subsidiaries’ equity other than pursuant to an equity compensation plan approved by the stockholders or a majority of the Apollo Designees (as defined below), or intra-company issuances among our Company and its wholly-owned subsidiaries;

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•

making any payment or declaration of any dividend or other distribution on any shares of our common stock;

•

merging or consolidating with or into any other entity, or transferring all or substantially all of our Company’s or our Company’s Subsidiaries’ assets, taken as a whole, to another entity, or undertaking any transaction that would constitute a “Change of Control” as defined in our Company’s or our Company’s subsidiaries’ credit facilities or note indentures;

•

incurring financial indebtedness in a single or a series of related transactions aggregating to more than $25 million;

•

hiring or terminating any Executive Officer of our Company or designating any new Executive Officer of the Company; and

•

changing the size of the board of directors.

Registration Rights Agreement

Prior to the consummation of this offering, we intend to enter into a Registration Rights Agreement with Ultimate Parent, pursuant to which Ultimate Parent will be entitled to demand the registration of the sale of certain or all of our common shares that it beneficially owns.

Management Investor Rights Agreement

Prior to the consummation of this offering, we intend to enter into an Amended and Restated Management Investor Rights Agreement. Each holder of our shares of common stock issued upon exercise of options that had been issued under the Equity Incentive Plan shall automatically become a party to the MIRA. Additionally, each individual who receives Distributed Shares in redemption of his or her Class B Units in connection with this offering will be required to execute a joinder to the MIRA. See “Executive Compensation— Looking Ahead—Post-IPO Compensation—Redemption of Class B Units.” The MIRA will provide that all shares of our common stock governed thereunder will generally be subject to transfer restrictions, repurchase rights, and piggy-back registration rights in connection with certain offerings of our common stock.

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PRINCIPAL STOCKHOLDERS

Our Common Stock

The following table sets forth the beneficial ownership of our common stock by:

•

each person, or group of affiliated persons, who we know to beneficially own more than 5% of our common stock;

•

each of our named executive officers;

•

each of our directors; and

•

all of our executive officers and directors as a group.

Beneficial ownership is determined in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to such securities. Except as otherwise indicated, all persons listed below have sole voting and investment power with respect to the shares beneficially owned by them, subject to applicable community property laws. Unless otherwise indicated, the address of each person or entity named in the table below is 1501 Yamato Road, Boca Raton, Florida 33431.


	Shares Beneficially Owned Before the Offering ⁽¹⁾					Shares Beneficially Owned After the Offering assuming underwriters’ option is not exercised		Shares Beneficially Owned After the Offering assuming underwriters’ option is exercised
	Number		Percent			Number	Percent	Number	Percent
5% Stockholders
Apollo Funds ⁽²⁾		381,391,178.38		100	%
Named Executive Officers and Directors ⁽³⁾
Timothy J. Whall		—		0	%
Daniel M. Bresingham		—		0	%
James D. DeVries		—		0	%
Jeffrey Likosar		—		0	%
Donald Young		—		0	%
Andrew D. Africk		—		0	%
Marc E. Becker		—		0	%
Matthew H. Nord		—		0	%
Reed B. Rayman		—		0	%
Eric L. Press		—		0	%
Lee J. Solomon		—		0	%
Stephanie Drescher		—		0	%
Brett Watson		—		0	%
David Ryan		—		0	%
All current directors and executive officers as a group (14 persons)		—		0	%

(1)	Percentage of shares beneficially owned before this offering prior is calculated using 381,391,178.38 shares of common stock outstanding, which assumes no options are exercised by any holder in accordance with Rule 13d-3(d)(1)(i) of the Securities Exchange Act.

(2)

Represents shares of our common stock held of record by Prime Security Services TopCo Parent, L.P. (“Ultimate Parent”). Prime Security Services TopCo Parent GP, LLC (“Parent GP”) is the general partner of Ultimate Parent. AP VIII Prime Security Services Holdings, L.P. (“AP VIII Prime Security LP”) is the sole member of Parent GP and a limited partner of TopCo Parent. AP VIII Prime Security Services Management, LLC (“AP VIII Prime Security Management”) is the investment manager of AP VIII Prime Security LP. Apollo Management, L.P. (“Apollo Management”) is the sole member of AP VIII Prime Security Management, and Apollo Management GP, LLC

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(“Management GP”) is the general partner of Apollo Management. Apollo Management Holdings, L.P. (“Management Holdings”) is the sole member and manager of Management GP. Apollo Management Holdings GP, LLC (“Management Holdings GP”) is the general partner of Management Holdings. Leon Black, Joshua Harris and Marc Rowan are the managers, as well as executive officers, of Management Holdings GP, and as such may be deemed to have voting and dispositive control of the shares of common stock held of record by Ultimate Parent. The address of Ultimate Parent, Parent GP, and AP VIII Prime Security LP is One Manhattanville Road, Suite 201, Purchase, New York 10577. The address of each of AP VIII Prime Security Management, Apollo Management, Management GP, Management Holdings and Management Holdings GP, and Messrs. Black, Harris and Rowan, is 9 West 57th Street, 43rd Floor, New York, New York 10019.

(3)	None of our named executive officers and directors beneficially own shares of common stock issuable upon the exercise of options within 60 days.

Units of Ultimate Parent

The equity interests of Ultimate Parent consist of Class A-1 Units, Class A-2 Units and Class B Units. Our Sponsor beneficially owns 100% of the 371,416,666.67 issued and outstanding Class A-1 Units of Ultimate Parent and the Koch Investor beneficially owns detachable warrants for the purchase of 7,620,730 Class A-1 Units in Ultimate Parent. Following the redemption of Class B Units of Ultimate Parent in connection with this offering, there shall be no outstanding Class B Units. See “Executive Compensation—Looking Ahead—Post-IPO Compensation—Redemption of Class B Units.” There are 2,351,281.98 issued and outstanding Class A-2 Units. The following table sets forth the beneficial ownership of the Class A-2 Units of Ultimate Parent by:

•

each of our named executive officers;

•

each of our directors; and

•

all of our executive officers and directors as a group.

Beneficial ownership is determined in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to such securities. Except as otherwise indicated, all persons listed below have sole voting and investment power with respect to the Class A-2 Units beneficially owned by them, subject to applicable community property laws. Unless otherwise indicated, the address of each person or entity named in the table below is 1501 Yamato Road, Boca Raton, Florida 33431.


	Class A-2 Units Beneficially Owned ⁽¹⁾
	Number		Percent
Named Executive Officers and Directors ⁽²⁾
Timothy J. Whall		672,351.12		28.6	%
Daniel M. Bresingham		196,613.39		8.36	%
James D. DeVries		100,903.78		4.29	%
Jeffrey Likosar		88,795.45		3.78	%
Donald Young		436,427.72		18.56	%
Andrew D. Africk		17,937.41		0.7	%
Marc E. Becker		—		0	%
Matthew H. Nord		—		0	%
Reed B. Rayman		—		0	%
Eric L. Press		—		0	%
Lee J. Solomon		—		0	%
Stephanie Drescher		—		0	%
Brett Watson		—		0	%
David Ryan		—		0	%
All current directors and executive officers as a group (14 persons)		1,518,780.40		64.59	%

(1)

Percentage of shares beneficially owned is calculated using 2,351,281.98 Class A-2 Units outstanding.

(2)

None of our named executive officers and directors beneficially own Class A-2 Units issuable upon the exercise of options.

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DESCRIPTION OF CAPITAL STOCK

The following is a description of the material terms of our amended and restated certificate of incorporation and amended and restated bylaws and of specific provisions of Delaware law. The following description is intended as a summary only and is qualified in its entirety by reference to our amended and restated certificate of incorporation, our amended and restated bylaws and the DGCL.

General

Pursuant to our amended and restated certificate of incorporation, our capital stock consists of authorized shares, of which shares, par value $0.01 per share, are designated as “common stock” and shares, par value $0.01 per share, are designated as “preferred stock.” As of September 30, 2017, we had 381,372,799.31 shares of common stock and 750,000 shares of Series A Preferred Stock outstanding.

Common Stock

Voting Rights. The holders of our common stock are entitled to one vote per share on all matters submitted for action by the stockholders generally.

Dividend Rights . Subject to any preferential rights of any then outstanding preferred stock, all shares of our common stock are entitled to share equally in any dividends our board of directors may declare from legally available sources.

Liquidation Rights . Upon our liquidation, dissolution or winding up, whether voluntary or involuntary, after payment in full of the amounts required to be paid to holders of any the outstanding preferred stock, all shares of our common stock are entitled to share equally in the assets available for distribution to stockholders after payment of all of our prior obligations.

Other Matters . Holders of our common stock have no preemptive or conversion rights, and our common stock are not subject to further calls or assessments by us, except with respect to common stock issued in connection with the exercise of options, which is subject to a call right by our Sponsor.

Preferred Stock

Pursuant to our amended and restated certificate of incorporation, shares of preferred stock are issuable from time to time, in one or more series, with the designations, voting rights (full, limited or no voting rights), powers, preferences and relative, participating, optional or other special rights (if any), and any qualifications, limitations or restrictions thereof, of each series as our board of directors from time to time may adopt by resolution (and without further stockholder approval). Each series of preferred stock will consist of an authorized number of shares as will be stated and expressed in the certificate of designations providing for the creation of the series.

As of the date of this prospectus, we have issued the Koch Preferred Securities to the Koch Investor, which consists of 750,000 Series A Preferred Stock. In accordance with the definitive agreements governing the Koch Preferred Securities, following the consummation of this offering, the Company is required to maintain cash in a separate account in an amount equal to at least $750 million until the Koch Preferred Securities have been redeemed in full. The Company expects to fund this separate account amount with the proceeds of this offering. The Company expects that additional amounts necessary to redeem the Koch Preferred Securities in full, including the payment of the related redemption premium and other related amounts on a date to be determined following the consummation of this offering will be funded with cash on hand at the time of redemption. Amounts held in this separate account will be used to redeem the Koch Preferred Securities and pay the related redemption premium and other related amounts following the closing of this offering. The Company is required to increase the amounts held in the separate account in certain circumstances, such as the completion of a public equity offering of our common stock. See “Use of Proceeds” and “Description of the Koch Preferred Securities.”

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Composition of Board of Directors; Election and Removal of Directors

In accordance with our amended and restated certificate of incorporation and our amended and restated bylaws, the number of directors comprising our board of directors is determined from time to time exclusively by our board of directors; provided that the number of directors shall not exceed fifteen (15). Following the one year transition period for controlled companies following an initial public offering, we will be subject to the requirement that we have an audit committee composed entirely of independent members.

Currently, the total number of directors constituting the board of directors is 10. In connection with this offering, we will be amending and restating our certificate of incorporation to provide for a board of directors divided into three classes (each as nearly as equal as possible and with directors in each class serving staggered three-year terms), consisting of three directors in Class I (expected to be Messrs. Watson, Ryan, and Solomon), three directors in Class II (expected to be Messrs. Press, Nord, and Africk) and four directors in Class III (expected to be Messrs. Rayman, Becker, Whall, and Ms. Drescher). See “Description of Capital Stock—Certain Corporate Anti-takeover Provisions—Classified Board of Directors.” Under our Stockholders Agreement, Ultimate Parent has the right, but not the obligation, to nominate (a) a majority of our directors, as long as our Sponsor beneficially owns 50% or more of our outstanding common stock, (b) 50% of our directors, as long as our Sponsor beneficially owns 40% or more, but less than 50% of our outstanding common stock, (c) 40% of our directors, as long as our Sponsor beneficially owns 30% or more, but less than 40% of our outstanding common stock, (d) 30% of our directors, as long as our Sponsor beneficially owns 20% or more, but less than 30% of our outstanding common stock, (e) 20% of our directors, as long as our Sponsor beneficially owns 5% or more, but less than 20% of our outstanding common stock. See “Certain Relationships and Related Party Transactions—Stockholders Agreement.”

In connection with the ADT Acquisition in May 2016, funds affiliated with or managed by Apollo and certain other investors in our indirect parent entities (the “Co-Investors”) received certain rights, including the right of three Co-Investors to designate one person to serve as a director (such director, the “Co-Investor Designee”) as long as such Co-Investor’s ownership exceeds a specified threshold. Two such Co-Investor Designees resigned from our board of directors on November 14, 2017 and December 19, 2017, respectively, and their respective Co-Investors subsequently executed waiver letters whereby they each waive all rights to designate an individual to serve as a director. Currently, only one Co-Investor has the right to designate a Co-Investor Designee. Under the Stockholders Agreement, Ultimate Parent has the right, but not the obligation, to nominate the Co-Investor Designee, and the Koch Investor Designee to serve as members of our board of directors. Ultimate Parent’s right to nominate the Co-Investor Designee and the Koch Investor Designee is in addition to Ultimate Parent’s right to nominate a specified percentage of the directors based on the percentage of our outstanding common stock beneficially owned by the Sponsor, as described above. We refer to the directors nominated by Ultimate Parent at the direction of our Sponsor based on such percentage ownership as the “Apollo Designees” and we refer to the Co-Investor Designee and the Apollo Designees collectively as the “Sponsor Directors.”

Under a separate agreement entered into in connection with the ADT Acquisition in May 2016, the Koch Investor has the right, so long as the Koch Investor holds at least 25% of the Koch Preferred Securities, to (i) designate one director to our board (the “Koch Investor Designee”) and (ii) designate up to two observers to our board. Each of these rights will terminate and the Koch Investor Designee will resign from our board after we redeem in full the outstanding Koch Preferred Securities and pay the related redemption premium and other related amounts following the closing of this offering.

Each director is to hold office for a three year term and until the annual meeting of stockholders for the election of the class of directors to which such director has been elected and until his or her successor is duly elected and qualified or until his or her earlier death, resignation or removal. Any vacancy on our board of directors (other than in respect of a Sponsor Director) will be filled only by the affirmative vote of a majority of the remaining directors, although less than a quorum. Any vacancy on our board of directors in respect of an Apollo Designee will be filled only by a majority of the Apollo Designees then in office or, if there are no such directors then in office, our Sponsor. Any vacancy on our board of directors in respect of the Co-Investor Designee or the Koch Investor Designee

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will be filled only by a majority of the Sponsor Directors then in office or, if there are no such directors then in office, our Sponsor. Under our amended and restated certificate of incorporation, stockholders do not have the right to cumulative votes in the election of directors. At any meeting of our board of directors, except as otherwise required by law, a majority of the total number of directors then in office will constitute a quorum for all purposes, except that if funds affiliated with or managed by Apollo own any shares of our common stock and there is at least one member of our board of directors who is an Apollo representative, then that representative must be present for there to be a quorum unless each Apollo representative waives his or her right to be included in the quorum at such meeting.

Certain Corporate Anti-takeover Provisions

Certain provisions in our amended and restated certificate of incorporation and amended and restated bylaws summarized below may be deemed to have an anti-takeover effect and may delay, deter or prevent a tender offer or takeover attempt that a stockholder might consider to be in its best interests, including attempts that might result in a premium being paid over the market price for the shares held by stockholders.

Preferred Stock

Our amended and restated certificate of incorporation contains provisions that permit our board of directors to issue, without any further vote or action by stockholders, shares of preferred stock in one or more series and, with respect to each such series, to fix the number of shares constituting the series and the designation of the series, the voting rights (if any) of the shares of the series, and the powers, preference and relative, participation, optional and other special rights, if any, and any qualifications, limitations or restrictions, of the shares of such series.

Classified Board of Directors

Our amended and restated certificate of incorporation provides that our board of directors will be divided into three classes of directors, with the classes to be as nearly equal in number as possible, and with the directors in each class serving staggered three-year terms. As a result, approximately one-third of our board of directors will be elected each year. The classification of directors will have the effect of making it more difficult for stockholders to change the composition of our board of directors. Our amended and restated certificate of incorporation provides that, subject to any rights of holders of preferred stock to elect additional directors under specified circumstances, the number of directors will be fixed from time to time exclusively pursuant to a resolution adopted by our board of directors, as described above in “—Composition of Board of Directors; Election and Removal of Directors.”

Removal of Directors; Vacancies

Under the DGCL, unless otherwise provided in our amended and restated certificate of incorporation, directors serving on a classified board may be removed by the stockholders only for cause. Our amended and restated certificate of incorporation provides that directors may be removed with or without cause upon the affirmative vote of a majority in voting power of all outstanding shares of stock entitled to vote thereon, voting together as a single class; provided, however, that from and after the time Apollo and its affiliates cease to beneficially own, in the aggregate, at least 50.1% of our outstanding common stock, directors may only be removed for cause, and only by the affirmative vote of holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class. Any vacancy caused by the removal of an Apollo nominee shall only be filled by Apollo. Any vacancy on our board of directors (other than in respect of a Sponsor Director) will be filled only by the affirmative vote of a majority of the remaining directors, although less than a quorum. Any vacancy on our board of directors in respect of an Apollo Designee will be filled only by a majority of the Apollo Designees then in office or, if there are no such directors then in office, our Sponsor. Any vacancy on our board of directors in respect of a Co-Investor Designee will be filled only by a majority of the Sponsor Directors then in office or, if there are no such directors then in

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office, our Sponsor, as described above in “—Composition of Board of Directors; Election and Removal of Directors.”

No Cumulative Voting

Under our amended and restated certificate of incorporation, stockholders do not have the right to cumulative votes in the election of directors.

Special Meetings of Stockholders

Our amended and restated certificate of incorporation provides that if less than 50.1% of our outstanding common stock is beneficially owned by Apollo, special meetings of the stockholders may be called only by the chairman of the board of directors or by the secretary at the direction of a majority of the directors then in office. For so long as at least 50.1% of our outstanding common stock is beneficially owned by Apollo, special meetings may also be called by the secretary at the written request of the holders of a majority of the voting power of the then outstanding common stock. The business transacted at any special meeting will be limited to the proposal or proposals included in the notice of the meeting.

Stockholder Action by Written Consent

Subject to the rights of the holders of one or more series of our preferred stock then outstanding, any action required or permitted to be taken by stockholders must be effected at a duly called annual or special meeting of our stockholders; provided, that prior to the time at which Apollo ceases to beneficially own at least 50.1% of our outstanding common stock, any action required or permitted to be taken at any annual or special meeting of our stockholders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, is signed by or on behalf of the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and are delivered in accordance with applicable Delaware law.

Advance Notice Requirements for Stockholder Proposals and Director Nominations

Our amended and restated bylaws provide that stockholders who are not parties to the Stockholders Agreement and who are seeking to bring business before an annual meeting of stockholders, or to nominate candidates for election as directors at an annual meeting of stockholders, must provide timely notice thereof in writing. To be timely, a stockholder’s notice generally must be delivered to and received at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, that in the event that the date of such meeting is advanced more than 30 days prior to, or delayed by more than 60 days after, the anniversary of the preceding year’s annual meeting of our stockholders, a stockholder’s notice to be timely must be so delivered not earlier than the close of business on the 120th day prior to such meeting and not later than the close of business on the later of the 90th day prior to such meeting or, if the first public announcement of the date of such meeting is less than 100 days prior to the date of such annual meeting, the 10th day following the day on which public announcement of the date of such meeting is first made. Our amended and restated bylaws specify certain requirements as to the form and content of a stockholder’s notice. These provisions may preclude stockholders from bringing matters before an annual meeting of stockholders or from making nominations for directors at an annual meeting of stockholders.

All the foregoing provisions of our amended and restated certificate of incorporation and amended and restated bylaws could discourage potential acquisition proposals and could delay or prevent a change in control. These provisions are intended to enhance the likelihood of continuity and stability in the composition of the board of directors and in the policies formulated by the board of directors and to discourage certain types of transactions that may involve an actual or threatened change in control. These same provisions may delay, deter

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or prevent a tender offer or takeover attempt that a stockholder might consider to be in its best interest. In addition, such provisions could have the effect of discouraging others from making tender offers for our shares and, as a consequence, they also may inhibit fluctuations in the market price of our common stock that could result from actual or rumored takeover attempts. Such provisions also may have the effect of preventing changes in our management.

Delaware Takeover Statute

Our amended and restated certificate of incorporation provides that we are not governed by Section 203 of the DGCL which, in the absence of such provisions, would have imposed additional requirements regarding mergers and other business combinations.

However, our amended and restated certificate of incorporation, which will become effective on the consummation of this offering, will include a provision that restricts us from engaging in any business combination with an interested stockholder for three years following the date that person becomes an interested stockholder. Such restrictions shall not apply to any business combination between our Sponsor and any affiliate thereof or their direct and indirect transferees, on the one hand, and us, on the other.

Additionally, we would be able to enter into a business combination with an interested stockholder if:

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before that person became an interested stockholder, our board of directors approved the transaction in which the interested stockholder became an interested stockholder or approved the business combination;

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upon consummation of the transaction that resulted in the interested stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) stock held by directors who are also officers of our Company and by employee stock plans that do not provide employees with the right to determine confidentially whether shares held under the plan will be tendered in a tender or exchange offer; or

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following the transaction in which that person became an interested stockholder, the business combination is approved by our Board of Directors and authorized at a meeting of stockholders by the affirmative vote of the holders of at least 66 2/3% of our outstanding voting stock not owned by the interested stockholder.

In general, a “business combination” is defined to include mergers, asset sales and other transactions resulting in financial benefit to a stockholder and an “interested stockholder” is any person who, together with affiliates and associates, is the owner of 15% or more of our outstanding voting stock or is our affiliate or associate and was the owner of 15% or more of our outstanding voting stock at any time within the three-year period immediately before the date of determination. Under our amended and restated certificate of incorporation, an “interested stockholder” generally does not include our Sponsor and any affiliate thereof or their direct and indirect transferees.

This provision of our amended and restated certificate of incorporation could prohibit or delay mergers or other takeover or change in control attempts and, accordingly, may discourage attempts to acquire us even though such a transaction may offer our stockholders the opportunity to sell their stock at a price above the prevailing market price.

Amendment of Our Certificate of Incorporation

Under Delaware law, our amended and restated certificate of incorporation may be amended only with the affirmative vote of holders of at least a majority of the outstanding stock entitled to vote thereon.

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Notwithstanding the foregoing, our amended and restated certificate of incorporation provides that, from and after the time Apollo ceases to beneficially own at least 50.1% of our outstanding common stock, in addition to any vote required by applicable law, our amended and restated certificate of incorporation or our amended and restated bylaws, the affirmative vote of holders of at least 66 2/3% of all of the outstanding shares of our capital stock entitled to vote thereon, voting together as a single class is required to amend the following provisions of our amended and restated certificate of incorporation:

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the provision authorizing the board of directors to designate one or more series of preferred stock and, by resolution, to provide the rights, powers and preferences, and the qualifications, limitations and restrictions thereof, of any series of preferred stock;

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the provisions providing for a classified board of directors, establishing the term of office of directors, relating to the removal of directors, and specifying the manner in which vacancies on the board of directors and newly created directorships may be filled;

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the provisions authorizing our board of directors to make, alter, amend or repeal our amended and restated bylaws;

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the provisions regarding the calling of special meetings and stockholder action by written consent in lieu of a meeting;

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the provisions eliminating monetary damages for breaches of fiduciary duty by a director;

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the provisions providing for indemnification and advance of expenses of our directors and officers;

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the provisions regarding competition and corporate opportunities;

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the provision specifying that, unless we consent in writing to the selection of an alternative forum, the Chancery Court of the State of Delaware will be the sole and exclusive forum for intra-corporate disputes;

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the provisions regarding entering into business combinations with interested stockholders;

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the provision requiring that, from and after the time Apollo ceases to beneficially owns at least 50.1% in voting power of our outstanding common stock, amendments to specified provisions of our amended and restated certificate of incorporation require the affirmative vote of 66 2/3% in voting power of our outstanding stock, voting as a single class; and

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the provision requiring that, from and after the time Apollo ceases to beneficially owns at least 50.1% of our outstanding common stock, amendments by the stockholders to our amended and restated bylaws require the affirmative vote of 66 2/3% in voting power of our outstanding stock, voting as a single class.

Amendment of Our Bylaws

Our amended and restated bylaws provide that they can be amended by the vote of the holders of shares constituting a majority of the voting power or by the vote of a majority of the board of directors. However, our amended and restated certificate of incorporation provides that, from and after the time Apollo ceases to beneficially owns at least 50.1% in voting power of our outstanding common stock, in addition to any vote required under our amended and restated certificate of incorporation, the affirmative vote of the holders of at least 66 2/3% of the voting power of the outstanding shares of stock entitled to vote thereon, voting as a single class, is required for the stockholders to alter, amend or repeal any provision of our amended and restated bylaws or to adopt any provision inconsistent therewith.

The provisions of the DGCL, our amended certificate and our amended bylaws could have the effect of discouraging others from attempting hostile takeovers and, as a consequence, they may also inhibit temporary fluctuations in the market price of our common stock that often result from actual or rumored hostile takeover

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attempts. These provisions may also have the effect of preventing changes in our management. It is possible that these provisions could make it more difficult to accomplish transactions that stockholders may otherwise deem to be in their best interests.

Corporate Opportunity

Under Delaware law, officers and directors generally have an obligation to present to the corporation they serve business opportunities which the corporation is financially able to undertake and which falls within the corporation’s business line and are of practical advantage to the corporation, or in which the corporation has an actual or expectant interest. A corollary of this general rule is that when a business opportunity comes to an officer or director that is not one in which the corporation has an actual or expectant interest, the officer is generally not obligated to present it to the corporation. Certain of our officers and directors may serve as officers, directors or fiduciaries of other entities and, therefore, may have legal obligations relating to presenting available business opportunities to us and to other entities. Potential conflicts of interest may arise when our officers and directors learn of business opportunities (e.g., the opportunity to acquire an asset or portfolio of assets, to make a specific investment, to effect a sale transaction, etc.) that would be of material advantage to us and to one or more other entities of which they serve as officers, directors or other fiduciaries.

Section 122(17) of the Delaware General Corporation Law permits a corporation to renounce, in advance, in its certificate of incorporation or by action of its board of directors, any interest or expectancy of a corporation in certain classes or categories of business opportunities. Where business opportunities are so renounced, certain of our officers and directors will not be obligated to present any such business opportunities to us. Our amended and restated certificate of incorporation provides that, to the fullest extent permitted by law, no officer or director of ours who is also an officer, director, employee, managing director or other affiliate of Apollo, the Co-Investor, or the Koch Investor will be liable to us or our stockholders for breach of any fiduciary duty by reason of the fact that any such individual directs a corporate opportunity to Apollo, the Co-Investor, or the Koch Investor, as applicable, instead of us, or does not communicate information regarding a corporate opportunity to us that the officer, director, employee, managing director or other affiliate has directed to Apollo, the Co-Investor, or the Koch Investor, as applicable. As of the date of this prospectus, this provision of our amended and restated certificate of incorporation relates only to the Apollo Designees, the Co-Investor Designee, and the Koch Investor Designee.

Exclusive Forum Selection

Unless we consent in writing to the selection of an alternative forum, the Chancery Court of the State of Delaware will, to the fullest extent permitted by law, be the sole and exclusive forum for:

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any derivative action or proceeding brought on our behalf;

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any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders;

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any action asserting a claim arising pursuant to any provision of the DGCL or of our amended and restated certificate of incorporation or our amended and restated bylaws; or

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any action asserting a claim against us or any of our directors or officers governed by the internal affairs doctrine,

in each such case subject to the Delaware Court of Chancery having personal jurisdiction over the indispensable parties named as defendants. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of and, to the fullest extent permitted by law, to have consented to the provisions described in this paragraph. However, the enforceability of similar forum provisions in other companies’ certificates of incorporation have been challenged in legal proceedings, and it is possible that a court could find these types of provisions to be unenforceable.

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Limitation of Liability and Indemnification

Our amended and restated certificate of incorporation limits the liability of our directors to the maximum extent permitted by the DGCL. The DGCL provides that directors will not be personally liable for monetary damages for breach of their fiduciary duties as directors, except liability:

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for any breach of their duty of loyalty to the corporation or its stockholders;

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for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of laws;

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under Section 174 of the DGCL (governing distributions to stockholders); or

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for any transaction from which the director derived an improper personal benefit.

However, if the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of our directors will be eliminated or limited to the fullest extent permitted by the DGCL, as so amended. The modification or repeal of this provision of our amended and restated certificate of incorporation will not adversely affect any right or protection of a director existing at the time of such modification or repeal.

Our amended and restated certificate of incorporation provides that we will, to the fullest extent from time to time permitted by law, indemnify our directors and officers against all liabilities and expenses in any suit or proceeding, arising out of their status as an officer or director or their activities in these capacities. We will also indemnify any person who, at our request, is or was serving as a director, officer or employee of another corporation, partnership, joint venture, trust or other enterprise. We may, by action of our board of directors, provide indemnification to our employees and agents within the same scope and effect as the foregoing indemnification of directors and officers.

The right to be indemnified will include the right of an officer or a director to be paid expenses in advance of the final disposition of any proceeding, provided that, if required by law, we receive an undertaking to repay such amount if it will be determined that he or she is not entitled to be indemnified.

Our board of directors may take such action as it deems necessary to carry out these indemnification provisions, including adopting procedures for determining and enforcing indemnification rights and purchasing insurance policies. Our board of directors may also adopt bylaws, resolutions or contracts implementing indemnification arrangements as may be permitted by law. Neither the amendment nor the repeal of these indemnification provisions, nor any provision of our amended and restated certificate of incorporation that is inconsistent with these indemnification provisions, will eliminate or reduce any rights to indemnification relating to their status or any activities prior to such amendment, repeal or adoption.

We believe these provisions will assist in attracting and retaining qualified individuals to serve as directors.

Listing

Our shares of common stock will be listed on the NYSE under the symbol “ADT.”

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is American Stock Transfer.

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DESCRIPTION OF THE KOCH PREFERRED SECURITIES

On May 2, 2016, concurrently with the consummation of the ADT Acquisition, the Company issued 750,000 shares of preferred securities and Ultimate Parent issued 7,420,730 detachable warrants for the purchase of Class A-1 Units in Ultimate Parent to an affiliate of Koch Industries, Inc. for an aggregate amount in cash of $750 million. The Company allocated $659 million to the Koch Preferred Securities, which is reflected net of issuance costs of $27 million as a liability in the Company’s historical consolidated balance sheet. The Company allocated the remaining $91 million in proceeds to the Warrants, which proceeds were contributed by Ultimate Parent in the form of common equity to the Company, net of $4 million in issuance costs.

The Koch Preferred Securities have payment priority, liquidation preference, and rank senior to any other class or series of equity of the Company, subject to certain specified exceptions. The Koch Preferred Securities have no voting rights, except with respect to certain specified actions. The Koch Preferred Securities accrue and accumulate preferential cumulative dividends in arrears on the then current stated value of the Koch Preferred Securities. Dividends are payable quarterly in cash at a rate equal to the daily five-year treasury rate plus 9.00% per annum. In the event that dividends for any quarter are not paid in cash for any reason, dividends for such quarter will accrue and accumulate at a rate equal to the daily five-year treasury rate plus 9.75% per annum and will be added to the then current stated value of the Koch Preferred Securities at the end of such quarter.

The Company is required to redeem the Koch Preferred Securities on May 2, 2030. The Company may redeem the Koch Preferred Securities at its option, in whole or in part, at any time on or after May 2, 2019. In connection with any redemption occurring on or after May 2, 2019, the redemption price per share shall be equal to (i) the aggregate accumulated dividends as of such redemption date (declared and paid separately in cash prior to payment of amounts set forth in clauses (ii) or (iii)), (ii) any dividends received deduction gross up payments owing, if any, and (iii) an amount per share equal to the difference of (1) the Series A Preference Amount (as defined below) as of such redemption date minus (2) the aggregate accumulated dividends as of such redemption date. The “Series A Preference Amount” means, as of any date that is on or after May 2, 2019, an amount per share equal to the product of (a) the redemption percentage applicable as of such redemption date multiplied by (b) the accumulated stated value of such share (which includes aggregate accumulated dividends) as of such redemption date. The applicable redemption percentages are set forth below:


Time Period	Redemption Percentage
May 2, 2019 to May 1, 2020		105.50	%
May 2, 2020 to May 1, 2021		102.75	%
On or after May 2, 2021		100.00	%

In addition, prior to May 2, 2019, the Company may redeem the Koch Preferred Securities at its option, in whole or in part, from time to time, at a redemption price per share equal to (A) the sum of (1) the aggregate accumulated dividends as of such redemption date plus (2) a “make-whole” premium as of such redemption date (calculated on the basis of 105.5% of the accumulated stated value as of May 2, 2019) (each to be declared and paid separately in cash prior to payment of amounts set forth in clause (B)) and (B) the sum of (1) $750 million and (2) any dividends that received deduction gross up payments, if any.

If the applicable redemption date with respect to the Koch Preferred Securities occurs on or after June 30, 2018 but prior to May 2, 2019, and if the cash balance of the Segregated Account has been at all times between the date of the consummation of this offering and July 1, 2018 equal to at least the Minimum Segregated Account Amount, then the “make-whole” premium shall be reduced by an amount equal to the sum of (x) the difference between (A) the “make-whole” premium per share calculated on the basis of the accumulated stated value of such share assuming a redemption date of July 1, 2018 and (B) the “make-whole” premium per share calculated on the basis of the accumulated stated value equal to $1,000 (assuming a redemption date of July 1, 2018 without regard to any compounding dividends with respect to such share as of July 1, 2018), plus (y) the difference

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between (A) the aggregate accumulated dividends as of July 1, 2018 for any optional redemption and (B) the aggregate accumulated dividends as of July 1, 2018 for any optional redemption, calculated assuming that (i) from June 30, 2017 to and including July 1, 2018, the accrued dividend rate was equal to the daily five-year treasury rate plus 9.00% per annum irrespective of whether the dividend accrued at such rate and (ii) dividends accrued on each date during such period accumulated in arrears on a stated value per share equal to $1,000.

In connection with this offering, the Company is required to deposit into a separate account (the Segregated Account) an amount in cash equal to at least $750 million (the Minimum Segregated Account Amount), which amount may only be used by the Company to redeem the Koch Preferred Securities (in whole or in part, from time to time). The Company has agreed with the Koch Investor to maintain at all times the balance of the segregated account in an amount equal to at least the Minimum Segregated Account Amounts until the Koch Preferred Securities have been redeemed in full. In the event that the Company does not maintain the Minimum Segregated Account Amount balance at any time, the Company is required to redeem the Koch Preferred Securities in full. The Company intends to fund approximately $ million of the Segregated Account with the net proceeds of this offering. If the Company consummates any subsequent public offering of equity prior to June 30, 2018, the Company will deposit additional funds in the Segregated Account so that the Minimum Segregated Account Amount is equal to the redemption price of the Koch Preferred Securities on July 1, 2018. Additionally, if the Company consummates any subsequent public offering of equity after June 30, 2018, the Company will deposit additional funds in the Segregated Account so that the Minimum Segregated Account Amount is equal to the Redemption Price of the Koch Preferred Securities on the last date of the quarter during which such subsequent public offering of equity occurs.

Prior to the redemption of the Koch Preferred Securities in full, the Company and its subsidiaries are subject to certain affirmative and negative covenants under the certificate of designation and other definitive agreements governing the Koch Preferred Securities. For example, the definitive agreements governing the Koch Preferred Securities restrict the Company from engaging in certain transactions with affiliates of the Company and paying dividend on our common stock, among other things. Additionally, the Company is required to offer to redeem all the Koch Preferred Securities in cash upon the occurrence of (i) any liquidation, dissolution, winding up or voluntary or involuntary bankruptcy of AP VIII Prime Security LP, Parent GP, Ultimate Parent, the Company, Prime Borrower, or any material subsidiary of the foregoing, (ii) an acceleration of any long term indebtedness of the Company, or (iii) a change in control, which, as defined in the certificate of designations governing the Koch Preferred Securities, includes (a) a change in control in Parent GP, Ultimate Parent, or the Company, (b) our Sponsor ceasing to have the power to appoint a majority of the directors or manager of Parent GP, Ultimate Parent, or the Company, and (c) the beneficial ownership of our Sponsor in Ultimate Parent or the Company falling below approximately 30%, in each case subject to certain exceptions.

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DESCRIPTION OF MATERIAL INDEBTEDNESS

We are a holding company that does not conduct any business operations of our own and have not issued or guaranteed any indebtedness. Two of our operating subsidiaries, however, Prime Borrower, Prime Finance Inc., and The ADT Corporation, have issued significant amounts of indebtedness pursuant to financing arrangements that are described below. Additionally, a significant number of our other subsidiaries guarantee the obligations under these financing arrangements and a significant amount of our consolidated assets secure these obligations. The following summary of the material terms of these financing arrangements does not purport to be complete and is subject to, and qualified in its entirety by reference to, the underlying documents that are included elsewhere in this prospectus and are incorporated herein by reference.

First Lien Credit Facilities

General

Prime Borrower is the borrower under the following credit arrangements, which we refer to herein as the “First Lien Credit Facilities” and which provide senior secured financing of $3,895 million, consisting of:

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a first lien term loan, in an aggregate principal amount of $3,545 million, maturing on May 2, 2022 (the “First Lien Term Loan Facility”);

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As of September 30, 2017, Prime Borrower had borrowings of $3,545 million outstanding under the First Lien Term Loan Facility, no borrowings outstanding under the 2020 Revolving Credit Facility in the form of letters of credit, leaving $95 million undrawn thereunder, and no borrowings outstanding under the 2021 Revolving Credit Facility in the form of letters of credit or swingline loans, leaving $255 million undrawn thereunder, with a total borrowing capacity of $303 million, after giving effect to letters of credit and swingline loans, as applicable.

In addition: (i) under the First Lien Credit Facilities, Prime Borrower may request one or more incremental term loan facilities or incremental revolving credit facilities and/or increase commitments under the First Lien Term Loan Facility or the Revolving Credit Facilities in an aggregate amount of up to the sum of a specified dollar amount plus any additional amounts so long as on a pro forma basis (a) in the case of loans under such incremental facilities secured by liens that rank pari passu with the liens securing the First Lien Credit Facilities, Prime Borrower’s consolidated net first lien senior secured leverage ratio would be no greater than 2.35 to 1.00 and (b) in the case of loans under such incremental facilities that rank junior to the liens securing the First Lien Credit Facilities, Prime Borrower’s consolidated total net secured leverage ratio would be no greater than 3.60 to 1.00. The incurrence of incremental facilities under the credit agreements governing the First Lien Credit Facilities is subject, in each case, to certain conditions, the receipt of commitments from existing or additional lenders and the limitations on incurring additional indebtedness applicable to Prime Borrower and its subsidiaries, including under the indentures governing the Prime Notes and the ADT Notes and each other agreement governing Prime Borrower’s indebtedness.

All borrowings under the Revolving Credit Facilities are subject to the satisfaction of customary conditions, including the absence of a default and the material accuracy of representations and warranties, and are available to fund any ordinary course working capital requirements or for general corporate purposes.

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Interest Rates and Fees

Borrowings under the First Lien Credit Facilities bear interest at a rate per annum equal to, at our option, either (a) adjusted LIBOR determined by reference to the cost of funds for dollar deposits for the interest period relevant to such borrowing, subject to a 1.00% floor in the case of term loans and a 0.00% floor in the case of the Revolving Credit Facilities, or (b) a base rate determined by reference to the highest of (i) the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted or any similar release by the Federal Reserve Board, (ii) the federal funds effective rate plus 0.50% and (iii) one-month adjusted LIBOR plus 1.00%, in each case plus an applicable margin. The applicable margin for borrowings under the Revolving Credit Facilities is subject to one step-down based on a certain specified leverage ratio.

In addition to paying interest on outstanding principal under the First Lien Credit Facilities, Prime Borrower is required to pay a commitment fee equal 0.50% in respect of the unutilized commitments under the Revolving Credit Facilities. The commitment fee under the Revolving Credit Facilities is subject to one step-down based on a certain specified leverage ratio. Prime Borrower is also required to pay customary agency fees as well as letter of credit participation fees computed at a rate per annum equal to the applicable margin on the revolver for LIBOR rate borrowings on the dollar equivalent of the daily stated amount of outstanding letters of credit, plus such letter of credit issuer’s customary documentary and processing fees and charges and a fronting fee computed at a rate equal to 0.125% per annum on the daily stated amount of each letter of credit.

Amortization and Prepayments

The First Lien Term Loan Facility requires scheduled quarterly payments in annual amounts equal to 1.0% of the original principal amount of the term loans, with the balance payable at maturity.

In addition, the First Lien Credit Facilities require us to prepay outstanding term loan borrowings, subject to certain exceptions, with:

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50% (which percentage will be reduced if the consolidated net first lien senior secured leverage ratio is less than or equal to certain thresholds) of Prime Borrower’s excess cash flow, as defined under the First Lien Credit Facilities;

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100% of the net cash proceeds of all non-ordinary course asset sales, other dispositions of property or certain casualty events, in each case subject to certain exceptions and provided that Prime Borrower may (a) reinvest within twelve months or (b) commit to reinvest those proceeds and so reinvest such proceeds within 18 months in assets to be used in its business, or certain other permitted investments; and

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100% of the net cash proceeds of any issuance of debt, other than proceeds from debt permitted under the First Lien Credit Facilities.

Collateral and Guarantors

All obligations under the First Lien Credit Facilities are unconditionally guaranteed by Holdings on a limited-recourse basis and by each of Prime Borrower’s existing and future direct and indirect material, wholly owned domestic subsidiaries, subject to certain exceptions. The obligations are secured by a pledge of Prime Borrower’s capital stock and substantially all of Prime Borrower’s assets and those of each subsidiary guarantor, including capital stock of the subsidiary guarantors and 65% of the capital stock of the first-tier foreign subsidiaries that are not subsidiary guarantors, in each case subject to certain exceptions. Such security interests consist of a first-priority lien with respect to the collateral.

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Restrictive Covenants and Other Matters

The Revolving Credit Facilities require that Prime Borrower, subject to a testing threshold, comply as of the last day of each fiscal quarter with a specified maximum consolidated net first lien senior secured leverage ratio. The testing threshold will be satisfied at any time at which the sum of outstanding loans under the Revolving Credit Facilities, and swingline loans and letters of credit, subject to certain exceptions, exceeds 30% of the outstanding commitments under the Revolving Credit Facilities at such fiscal quarter end.

The First Lien Credit Facilities contain certain customary affirmative covenants and events of default. The negative covenants in the First Lien Credit Facilities include, among other things, limitations (none of which are absolute) on our ability to:

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incur additional debt or issue certain preferred equity interests;

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create liens on certain assets;

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make certain loans or investments (including acquisitions);

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pay dividends on or make distributions in respect of our capital stock or make other restricted payments;

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consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;

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sell assets;

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enter into certain transactions with our affiliates;

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enter into sale-leaseback transactions;

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restrict dividends from our subsidiaries or restrict liens;

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change our fiscal year; and

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modify the terms of certain debt or organizational agreements in a manner materially adverse to lenders under the First Lien Credit Facilities.

Prime Notes

On May 2, 2016, Prime Borrower and Prime Finance Inc. issued $3,140 million in principal amount of 9.250% Second-Priority Senior Secured Notes due 2023 (the “Prime Notes”). The Prime Notes mature on May 15, 2023 and bear interest at a rate of 9.250% per annum, payable semi-annually in arrears on May 15 and November 15 of each year, commencing on November 15, 2016.

Prime Borrower and Prime Finance Inc. may redeem the Prime Notes at their option, in whole or in part, at any time on or after May 15, 2019, at certain redemption prices. In addition, prior to May 15, 2019, Prime Borrower and Prime Finance Inc. may redeem the Prime Notes at their option, in whole at any time or in part from time to time, at a redemption price equal to 100% of the principal amount of the Prime Notes redeemed, plus a “make-whole” premium and accrued and unpaid interest and additional interest, if any. Notwithstanding the foregoing, at any time and from time to time on or prior to May 15, 2019, Prime Borrower and Prime Finance Inc. may redeem in the aggregate up to 40% of the original aggregate principal amount of the Prime Notes (calculated after giving effect to any issuance of additional notes) in an aggregate amount equal to the net cash proceeds of one or more equity offerings at a redemption price equal to 109.250% of the principal amount being redeemed, plus accrued and unpaid interest and additional interest, if any, so long as at least 50% of the original aggregate principal amount of the Prime Notes (calculated after giving effect to any issuance of additional notes) must remain outstanding after each such redemption. In addition, the issuers of the Prime Notes are required to make an offer to repurchase such notes in the event of certain change in control transactions. We intend to redeem $ million aggregate principal amount of the Prime Notes and pay the related call premium with the proceeds of this offering. See “Use of Proceeds.”

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The Prime Notes are fully and unconditionally guaranteed by each of Prime Borrower’s domestic restricted subsidiaries that guarantee the First Lien Credit Facilities. The Prime Notes are also secured by substantially all of Prime Borrower’s assets and those of each subsidiary guarantor, in each case by the same assets that secure the First Lien Credit Facilities including the capital stock of the subsidiary guarantors and 65% of the capital stock of the first-tier foreign subsidiaries that are not subsidiary guarantors, in each case subject to certain exceptions. Such security interests consist of a second-priority lien with respect to the collateral.

The Prime Notes contain certain customary negative covenants and events of default. The negative covenants limit Prime Borrower and its restricted subsidiaries’ ability to, among other things, incur additional indebtedness or issue certain preferred shares, create liens on certain assets, pay dividends or prepay junior debt or make other restricted payments, make certain loans, acquisitions or investments, engage in transactions with affiliates, conduct asset sales, restrict dividends from subsidiaries or restrict liens, or merge, consolidate, sell or otherwise dispose of all or substantially all of Prime Borrower’s assets.

ADT Notes

The ADT Corporation is the issuer of each of the following series of notes, which we refer to collectively as the “ADT Notes”:

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$300 million aggregate principal amount of 5.250% Senior Notes due 2020, which mature on March 15, 2020;

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$1,000 million aggregate principal amount of 6.250% Senior Notes due 2021, which mature on October 15, 2021;

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$1,000 million aggregate principal amount of 3.500% Notes due 2022, which mature on July 15, 2022;

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$700 million aggregate principal amount of 4.125% Senior Notes due 2023, which mature on June 15, 2023;

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$22 million aggregate principal amount of 4.875% Notes due 2042, which mature on July 15, 2042; and

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$728 million aggregate principal amount of 4.875% First-Priority Senior Secured Notes due 2032, which mature on July 15, 2032.

Each series of ADT Notes is governed by an indenture between ADT and Wells Fargo Bank, National Association, as trustee, and we refer to these indentures (as they may have been supplemented from time to time prior to the date hereof) collectively as the “ADT Notes Indentures.” Under the ADT Notes Indentures, The ADT Corporation may redeem ADT Notes, in whole or in part, at any time at a redemption price equal to the principal amount of the notes to be redeemed, plus an applicable make-whole premium for each series of the ADT Notes, plus accrued and unpaid interest to, but excluding, the redemption date.

The ADT Notes Indentures contain covenants that, among other things and subject to a number of qualifications and exceptions, limit The ADT Corporation’s ability, and the ability of its restricted subsidiaries, to (i) create liens on certain assets; (ii) enter into sale and lease-back transactions; and (iii) consolidate, merge, sell or otherwise dispose of all or substantially all of its assets. In the event of a change in control triggering event (as defined in the applicable indenture), the ADT Corporation is required to make an offer to repurchase such notes. The ADT Notes Indentures also provide for customary events of default which, if triggered, would permit the acceleration of the debt thereunder.

In addition, the ADT Notes benefit from (i) guarantees by Prime Borrower and each of its domestic restricted subsidiaries that guarantees the First Lien Credit Facilities (other than The ADT Corporation, as the issuer of the ADT Notes), (ii) first-priority security interests, subject to permitted liens, in substantially all of Prime Borrower’s existing and future assets and those of each guarantor, which assets also secure the First Lien Credit Facilities on a first-priority basis and the Prime Notes on a second-priority basis, and (iii) the same reporting covenant as the Prime Notes.

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SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for our common stock. As described below, only a limited number of shares will be available for sale shortly after this offering due to contractual and legal restrictions on resale. Nevertheless, sales of a substantial number of shares of our common stock in the public market after such restrictions lapse, or the perception that those sales may occur, could adversely affect the prevailing market price of our common stock at such time and our ability to raise equity-related capital at a time and price we deem appropriate.

Upon the completion of this offering, we will have outstanding an aggregate of shares of common stock. Additionally, we will have options outstanding, which are exercisable into shares of common stock. Of these shares, all of the shares of common stock to be sold in this offering (or shares assuming the underwriters exercise the over-allotment option in full) will be freely tradable without restriction unless the shares are held by any of our “affiliates” as such term is defined in Rule 144 under the Securities Act, and without further registration under the Securities Act. All remaining shares of common stock will be deemed “restricted securities” as such term is defined under Rule 144. The restricted securities were, or will be, issued and sold by us in private transactions and are eligible for public sale only if registered under the Securities Act or if they qualify for an exemption from registration under Rule 144 or Rule 701 under the Securities Act, which rules are summarized below.

As a result of the lock-up agreements described below and the provisions of Rule 144 and Rule 701 under the Securities Act, the shares of our common stock (excluding the shares to be sold in this offering) that will be available for sale in the public market are as follows:

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no shares will be eligible for sale on the date of this prospectus or prior to 180 days after the date of this prospectus; and

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shares will be eligible for sale upon the expiration of the lock-up agreements beginning 180 days after the date of this prospectus and when permitted under Rule 144 or Rule 701.

Lock-up Agreements

We, affiliates of Apollo, certain of our other existing stockholders and all of our directors and executive officers have agreed not to sell any common stock or securities convertible into or exercisable or exchangeable for shares of common stock for a period of 180 days from the date of this prospectus, subject to certain exceptions. Please see “Underwriting (Conflict of Interest)” for a description of these lock-up provisions. Certain underwriters, as described in “Underwriting (Conflict of Interest),” in their sole discretion, may at any time release all or any portion of the shares from the restrictions in such agreements.

Rule 144

In general, under Rule 144 under the Securities Act as currently in effect, a person (or persons whose shares are aggregated) who is not deemed to have been an affiliate of ours at any time during the six months preceding a sale, and who has beneficially owned restricted securities within the meaning of Rule 144 for at least six months (including any period of consecutive ownership of preceding non-affiliated holders) would be entitled to sell those shares, subject only to the availability of current public information about us. A non-affiliated person who has beneficially owned restricted securities within the meaning of Rule 144 for at least one year would be entitled to sell those shares without regard to the provisions of Rule 144.

A person (or persons whose shares are aggregated) who is deemed to be an affiliate of ours and who has beneficially owned restricted securities within the meaning of Rule 144 for at least six months would be entitled to sell within any three-month period a number of shares that does not exceed the greater of one percent of the then outstanding shares of our common stock or the average weekly trading volume of our common stock

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reported by the NYSE during the four calendar weeks preceding the filing of notice of the sale. Such sales are also subject to certain manner of sale provisions, notice requirements and the availability of current public information about us.

Rule 701

In general, under Rule 701 under the Securities Act, any of our employees, directors, officers, consultants or advisors who purchases shares from us in connection with a compensatory stock or option plan or other written agreement before the effective date of this offering is entitled to sell such shares 90 days after the effective date of this offering in reliance on Rule 144, without having to comply with the holding period requirement of Rule 144 and, in the case of non-affiliates, without having to comply with the public information, volume limitation or notice filing provisions of Rule 144. The SEC has indicated that Rule 701 will apply to typical stock options granted by an issuer before it becomes subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), along with the shares acquired upon exercise of such options, including exercises after the date of this prospectus.

Stock Options

As of December 19, 2017, we had issued 2,848,419 outstanding options to purchase shares of our common stock, of which options to purchase 176,944 shares have met the vesting criteria. Assuming an initial public offering price of $ per share of common stock, the midpoint of the price range set forth on the cover page of this prospectus, we will grant options in redemption of Class B Units of Ultimate Parent in connection with this offering, of which options to purchase shares have met the vesting criteria. See “Executive Compensation—Looking Ahead—Post-IPO Compensation.” During the period the options are outstanding, we will reserve from our authorized and unissued common stock a sufficient number of shares to provide for the issuance of shares of common stock underlying the options upon the exercise of the options, including an additional shares of our common stock reserved for future grants under our 2018 Omnibus Incentive Plan.

Stock Issued to Certain Employee

Assuming an initial public offering price of $ per share of common stock, the midpoint of the price range set forth on the cover page of this prospectus, we will issue shares of common stock to certain employees in redemption of Class B Units of Ultimate Parent in connection with this offering, of which shares have met the vesting criteria. See “Executive Compensation—Looking Ahead—Post-IPO Compensation.”

Stock Issued Under Employee Plans

We intend to file a registration statement on Form S-8 under the Securities Act to register stock issuable under the Equity Incentive Plan and the 2018 Omnibus Incentive Plan. This registration statement on Form S-8 is expected to be filed following the effective date of the registration statement of which this prospectus is a part and will be effective upon filing. Accordingly, shares registered under such registration statement will be available for sale in the open market following the effective date, unless such shares are subject to vesting restrictions with us, Rule 144 restrictions applicable to our affiliates or the lock-up restrictions described above. No further issuances of securities shall take place under the Equity Incentive Plan.

Registration Rights

Following this offering, and subject to the lock-up agreements, Ultimate Parent will be entitled to certain rights with respect to the registration of the sale of its shares of our common stock under the Securities Act. For more information, see “Certain Relationships and Related Party Transactions—Registration Rights Agreement.” After such registration, these shares of our common stock will become freely tradable without restriction under the Securities Act.

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MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

The following is a discussion of the material U.S. federal income tax considerations applicable to Non-U.S. Holders (as defined herein) with respect to the ownership and disposition of our common stock issued pursuant to this offering. The following discussion is based upon current provisions of the Internal Revenue Code of 1986, as amended (the “Code”), U.S. judicial decisions, administrative pronouncements and existing and proposed Treasury regulations, all as in effect as of the date hereof. All of the preceding authorities are subject to change at any time, possibly with retroactive effect, so as to result in U.S. federal income tax consequences different from those discussed below. We have not requested, and will not request, a ruling from the U.S. Internal Revenue Service (the “IRS”) with respect to any of the U.S. federal income tax consequences described below, and as a result there can be no assurance that the IRS will not disagree with or challenge any of the conclusions we have reached and describe herein.

This discussion only addresses beneficial owners of our common stock that hold such common stock as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all aspects of U.S. federal income taxation that may be important to a Non-U.S. Holder in light of such Non-U.S. Holder’s particular circumstances or that may be applicable to Non-U.S. Holders subject to special treatment under U.S. federal income tax law (including, for example, financial institutions, regulated investment companies, real estate investment trusts, dealers in securities, traders in securities that elect mark-to-market treatment, insurance companies, tax-exempt entities, Non-U.S. Holders who acquire our common stock pursuant to the exercise of employee stock options or otherwise as compensation for their services, Non-U.S. Holders liable for the alternative minimum tax, controlled foreign corporations, passive foreign investment companies, former citizens or former long-term residents of the United States, and Non-U.S. Holders that hold our common stock as part of a hedge, straddle, constructive sale or conversion transaction). In addition, this discussion does not address U.S. federal tax laws other than those pertaining to U.S. federal income tax (such as U.S. federal estate or gift tax or the Medicare contribution tax on certain net investment income), nor does it address any aspects of U.S. state, local or non-U.S. taxes. Non-U.S. Holders are urged to consult with their own tax advisors regarding the possible application of these taxes.

For purposes of this discussion, the term “Non-U.S. Holder” means a beneficial owner of our common stock that is an individual, corporation, estate or trust, other than:

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an individual who is a citizen or resident of the United States, as determined for U.S. federal income tax purposes;

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a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in the United States or under the laws of the United States, any state thereof or the District of Columbia;

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an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or

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a trust if: (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust; or (ii) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a domestic trust.

If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds shares of our common stock, the tax treatment of a person treated as a partner of such partnership generally will depend on the status of the partner and the activities of the partnership. Persons that, for U.S. federal income tax purposes, are treated as partners in a partnership holding shares of our common stock are urged to consult their own tax advisors.

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Prospective purchasers are urged to consult their tax advisors as to the particular consequences to them under U.S. federal, state and local, and applicable foreign tax laws of the acquisition, ownership and disposition of our common stock.

Distributions

Distributions of cash or property that we pay in respect of our common stock will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Subject to the discussions below under “—U.S. Trade or Business Income,” “—Information Reporting and Backup Withholding” and “—FATCA,” you generally will be subject to U.S. federal withholding tax at a 30% rate, or at a reduced rate prescribed by an applicable income tax treaty, on any dividends received in respect of our common stock. If the amount of the distribution exceeds our current and accumulated earnings and profits, such excess first will be treated as a return of capital to the extent of your tax basis in our common stock, and thereafter will be treated as capital gain. However, except to the extent that we elect (or the paying agent or other intermediary through which you hold your common stock elects) otherwise, we (or the intermediary) must generally withhold on the entire distribution, in which case you would be entitled to a refund from the IRS for the withholding tax on the portion of the distribution that exceeded our current and accumulated earnings and profits.

In order to obtain a reduced rate of U.S. federal withholding tax under an applicable income tax treaty, you will be required to provide a properly executed IRS Form W-8BEN or Form W-8BEN-E (or, in each case, a successor form) certifying your entitlement to benefits under the treaty. Special certifications and other requirements apply to certain Non-U.S. Holders that are pass-through entities rather than corporations or individuals. If you are eligible for a reduced rate of U.S. federal withholding tax under an income tax treaty, you may obtain a refund or credit of any excess amounts withheld by filing an appropriate claim for a refund with the IRS. You are urged to consult your own tax advisor regarding your possible entitlement to benefits under an applicable income tax treaty.

Sale, Exchange or Other Taxable Disposition of Common Stock

Subject to the discussions below under “—U.S. Trade or Business Income,” “—Information Reporting and Backup Withholding” and “—FATCA,” you generally will not be subject to U.S. federal income or withholding tax in respect of any gain on a sale, exchange or other taxable disposition of our common stock unless:

•

the gain is U.S. trade or business income, in which case, such gain will be taxed as described in “—U.S. Trade or Business Income” below;

•

you are an individual who is present in the United States for 183 or more days in the taxable year of the disposition and certain other conditions are met, in which case you will be subject to U.S. federal income tax at a rate of 30% (or a reduced rate under an applicable income tax treaty) on the amount by which certain capital gains allocable to U.S. sources exceed certain capital losses allocable to U.S. sources; or

•

we are or have been a “United States real property holding corporation” (a “USRPHC”) under Section 897 of the Code at any time during the shorter of the five-year period ending on the date of the disposition and your holding period for the common stock, in which case, subject to the exception set forth in the second sentence of the next paragraph, such gain will be subject to U.S. federal income tax in the same manner as U.S. trade or business income discussed below.

In general, a corporation is a USRPHC if the fair market value of its “United States real property interests” equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests and its other assets used or held for use in a trade or business. In the event that we are determined to be a USRPHC, gain will not be subject to tax as U.S. trade or business income if your holdings (direct and indirect) at all times during the

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applicable period described in the third bullet point above constituted 5% or less of our common stock, provided that our common stock was regularly traded on an established securities market during such period. We believe that we are not currently, and we do not anticipate becoming in the future, a “United States real property holding corporation” for U.S. federal income tax purposes.

U.S. Trade or Business Income

For purposes of this discussion, dividend income and gain on the sale, exchange or other taxable disposition of our common stock will be considered to be “U.S. trade or business income” if (A)(i) such income or gain is effectively connected with your conduct of a trade or business within the United States and (ii) if you are eligible for the benefits of an income tax treaty with the United States and such treaty requires, such gain is attributable to a permanent establishment (or, if you are an individual, a fixed base) that you maintain in the United States or (B) with respect to gain, we are or have been a USRPHC at any time during the shorter of the five-year period ending on the date of the disposition of our common stock and your holding period for our common stock (subject to the 5% ownership exception set forth above in the second paragraph of “—Sale, Exchange or Other Taxable Disposition of Common Stock”). Generally, U.S. trade or business income is not subject to U.S. federal withholding tax (provided that you comply with applicable certification and disclosure requirements, including providing a properly executed IRS Form W-8ECI (or successor form)); instead, you are subject to U.S. federal income tax on a net basis at regular U.S. federal income tax rates (generally in the same manner as a U.S. person) on your U.S. trade or business income. If you are a corporation, any U.S. trade or business income that you receive may also be subject to a “branch profits tax” at a 30% rate, or at a lower rate prescribed by an applicable income tax treaty.

Information Reporting and Backup Withholding

We must annually report to the IRS and to each Non-U.S. Holder any dividend income that is subject to U.S. federal withholding tax or that is exempt from such withholding pursuant to an income tax treaty. Copies of these information returns may also be made available under the provisions of a specific treaty or agreement to the tax authorities of the country in which a Non-U.S. Holder resides. Under certain circumstances, the Code imposes a backup withholding obligation on certain reportable payments. Dividends paid to you will generally be exempt from backup withholding if you provide a properly executed IRS Form W-8BEN or Form W-8BEN-E (or, in each case, a successor form) or otherwise establish an exemption and the applicable withholding agent does not have actual knowledge or reason to know that you are a U.S. person or that the conditions of such other exemption are not, in fact, satisfied.

The payment of the proceeds from the disposition of our common stock to or through the U.S. office of any broker (U.S. or non-U.S.) will be subject to information reporting and possible backup withholding unless you certify as to your non-U.S. status under penalties of perjury or otherwise establish an exemption and the broker does not have actual knowledge or reason to know that you are a U.S. person or that the conditions of any other exemption are not, in fact, satisfied. The payment of proceeds from the disposition of our common stock to or through a non-U.S. office of a non-U.S. broker will not be subject to information reporting or backup withholding unless the non-U.S. broker has certain types of relationships with the United States (a “U.S. related financial intermediary”). In the case of the payment of proceeds from the disposition of our common stock to or through a non-U.S. office of a broker that is either a U.S. person or a U.S. related financial intermediary, the Treasury regulations require information reporting (but not backup withholding) on the payment unless the broker has documentary evidence in its files that the owner is not a U.S. person and the broker has no knowledge to the contrary. You are urged to consult your tax advisor on the application of information reporting and backup withholding in light of your particular circumstances.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to you will be refunded or credited against your U.S. federal income tax liability, if any, provided that the required information is timely furnished to the IRS.

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FATCA

Pursuant to Section 1471 through 1474 of the Code, commonly referred to as the Foreign Account Tax Compliance Act (“FATCA”), foreign financial institutions (which include most foreign hedge funds, private equity funds, mutual funds, securitization vehicles and any other investment vehicles) and certain other foreign entities that do not otherwise qualify for an exemption must comply with information reporting rules with respect to their U.S. account holders and investors or be subject to a withholding tax on U.S. source payments made to them (whether received as a beneficial owner or as an intermediary for another party).

More specifically, a foreign financial institution or other foreign entity that does not comply with the FATCA reporting requirements or otherwise qualify for an exemption will generally be subject to a 30% withholding tax with respect to any “withholdable payments.” For this purpose, withholdable payments generally include U.S.-source payments otherwise subject to nonresident withholding tax (e.g., U.S.-source dividends) and also include the entire gross proceeds from the sale of any equity instruments of U.S. issuers (such as our common stock). The FATCA withholding tax will apply even if the payment would otherwise not be subject to U.S. nonresident withholding tax (e.g., because it is capital gain). Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be subject to different rules.

FATCA currently applies to dividends made in respect of our common stock. Final Treasury regulations defer this withholding obligation for gross proceeds from dispositions of U.S. common stock until January 1, 2019. To avoid withholding on dividends and gross proceeds, as applicable, Non-U.S. Holders may be required to provide the Company (or its withholding agents) with applicable tax forms or other information. Non-U.S. Holders are urged to consult with their own tax advisors regarding the effect, if any, of the FATCA provisions to them based on their particular circumstances.

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UNDERWRITING (CONFLICT OF INTEREST)

We are offering the shares of common stock described in this prospectus through a number of underwriters. Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC, Barclays Capital Inc., Deutsche Bank Securities Inc., and RBC Capital Markets, LLC are acting as joint book-managers of the offering and as representatives of the underwriters. Under the terms and subject to the conditions in an underwriting agreement dated the date of this prospectus, the underwriters named below have severally agreed to purchase, and we have agreed to sell to them the number of shares indicated below:


Name		Number of Shares
Morgan Stanley & Co. LLC
Goldman Sachs & Co. LLC
Barclays Capital Inc.
Deutsche Bank Securities Inc.
RBC Capital Markets, LLC
Citigroup Global Markets Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporation
Credit Suisse Securities (USA) LLC
Apollo Global Securities, LLC
Imperial Capital, LLC
Academy Securities, Inc.
Allen & Company LLC
Citizens Capital Markets, Inc.
LionTree Advisors LLC
SunTrust Robinson Humphrey, Inc.
The Williams Capital Group, L.P.

Total

The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the shares of common stock offered by this prospectus are subject to certain conditions. The underwriters are obligated to take and pay for all of the shares of common stock offered by this prospectus if any such shares are taken. However, the underwriters are not required to take or pay for the shares covered by the underwriters’ over-allotment option, as described below.

The underwriters initially propose to offer part of the shares of common stock directly to the public at the offering price listed on the cover page of this prospectus and part to certain dealers at a price that represents a concession not in excess of $ per share under the public offering price. After the initial offering of the shares of common stock, the offering price and other selling terms may from time to time be varied by the representatives. The offering of the shares by the underwriters is subject to receipt and acceptance and subject to the underwriters’ right to reject any order in whole or in part.

We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to additional shares of common stock at the public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions and the per share amount, if any, of dividends declared by us and payable on the shares purchased by them from us other than by exercise of their over-allotment option but not payable on the shares that are subject to that option. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the shares of common stock offered by this prospectus.

To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase about the same percentage of the additional shares of common stock as the number listed next to the

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underwriter’s name in the preceding table bears to the total number of shares of common stock listed next to the names of all underwriters in the preceding table.

The following table shows the per share and total public offering price, underwriting discounts and commissions, and proceeds before expenses to us. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase up to an additional shares of common stock.

Total

Per Share

No Exercise

Full Exercise

Public offering price

Underwriting discounts and commissions to be paid by us

Proceeds, before expenses, to us

The estimated offering expenses payable by us, exclusive of the underwriting discounts and commissions, are approximately $ million. We have agreed to reimburse the underwriters for certain expenses, in amount up to $ incurred in connection with the review by the Financial Industry Regulatory Authority, Inc. of the terms of this offering, as set forth in the underwriting agreement.

The underwriters have informed us that they do not intend sales to discretionary accounts to exceed 5% of the total number of shares of common stock offered by them.

We intend to apply to have our common stock listed on the NYSE under the trading symbol “ADT.”

We, all of our directors and officers, and certain of our existing stockholders (including Apollo) have agreed with the underwriters that, without the prior written consent of , we and they will not, during the period ending 180 days after the date of this prospectus:

•

offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares of common stock or any securities convertible into or exercisable or exchangeable for shares of common stock;

•

file any registration statement with the SEC relating to the offering of any shares of common stock or any securities convertible into or exercisable or exchangeable for common stock, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing; or

•

enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the common stock or such other securities;

whether any such transaction described above is to be settled by delivery of common stock or such other securities, in cash or otherwise. In addition, each of our directors, officers and certain funds affiliated with Apollo have agreed that, without the prior written consent of , it will not, during the period ending days after the date of this prospectus, make any demand for, or exercise any right with respect to, the registration of any shares of common stock or any security convertible into or exercisable or exchangeable for common stock.

The restrictions described in the immediately preceding paragraph do not apply to the sale of shares to the underwriters and are subject to other customary exceptions.

In order to facilitate the offering of the common stock, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the common stock. Specifically, the underwriters may sell more shares than they are obligated to purchase under the underwriting agreement, creating a short position. A short sale is covered if the short position is no greater than the number of shares available for purchase by the

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underwriters under the over-allotment option. The underwriters can close out a covered short sale by exercising the over-allotment option or purchasing shares in the open market. In determining the source of shares to close out a covered short sale, the underwriters will consider, among other things, the open market price of shares compared to the price available under the over-allotment option. The underwriters may also sell shares in excess of the over-allotment option creating a naked short position. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in this offering. As an additional means of facilitating this offering, the underwriters may bid for, and purchase, shares of common stock in the open market to stabilize the price of the common stock. These activities may raise or maintain the market price of the common stock above independent market levels or prevent or retard a decline in the market price of the common stock. The underwriters are not required to engage in these activities and may end any of these activities at any time.

The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions. We have agreed to indemnify the several underwriters, including their controlling persons, against certain liabilities, including liabilities under the Securities Act.

A prospectus in electronic format may be made available on websites maintained by one or more underwriters, or selling group members, if any, participating in this offering. The representatives may agree to allocate a number of shares of common stock to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters that may make Internet distributions on the same basis as other allocations.

Pricing of the Offering

Prior to this offering, there has been no public market for our common stock. The initial public offering price was determined by negotiations between us and the representatives. Among the factors considered in determining the initial public offering price were our future prospects and those of our industry in general, our sales, earnings and certain other financial and operating information in recent periods, and the price-earnings ratios, price-sales ratios, market prices of securities and certain financial and operating information of companies engaged in activities similar to ours.

Directed Share Program

At our request, the underwriters have reserved percent of the shares of common stock to be issued by the Company and offered by this prospectus for sale, at the initial public offering price, to . If purchased by these persons, these shares will be subject to a lock-up restrictions for a period of 180 days. The number of shares of common stock available for sale to the general public will be reduced to the extent these individuals purchase such reserved shares. Any reserved shares that are not so purchased will be offered by the underwriters to the general public on the same basis as the other shares offered by this prospectus.

Selling Restrictions

Canada

The common stock may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the common stock must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

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Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.

Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State, no offer of shares may be made to the public in that Relevant Member State other than:

(a) to any legal entity which is a qualified investor as defined in the Prospectus Directive;

(b) to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), subject to obtaining the prior consent of the underwriters; or

provided that no such offer of shares shall require the Company or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive and each person who initially acquires any shares or to whom any offer is made will be deemed to have represented, acknowledged and agreed to and with each of the underwriters and the Company that it is a “qualified investor” within the meaning of the law in that Relevant Member State implementing Article 2(1)(e) of the Prospectus Directive.

In the case of any shares being offered to a financial intermediary as that term is used in Article 3(2) of the Prospectus Directive, each such financial intermediary will be deemed to have represented, acknowledged and agreed that the shares acquired by it in the offer have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer of any shares to the public other than their offer or resale in a Relevant Member State to qualified investors as so defined or in circumstances in which the prior consent of the representatives has been obtained to each such proposed offer or resale.

For the purposes of this provision, the expression an “offer of shares to the public” in relation to any shares in any Relevant Member State means the communication in any form and by means of sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression “Prospectus Directive” means Directive 2003/71/EC (as amended, including by Directive 2010/73/EU), and includes any relevant implementing measure in the Relevant Member State.

Hong Kong

The shares have not been offered or sold and will not be offered or sold in Hong Kong, by means of any document, other than (a) to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or (b) in other circumstances which do not result

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in the document being a “prospectus” as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance. No advertisement, invitation or document relating to the shares has been or may be issued or has been or may be in the possession of any person for the purposes of issue, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the Securities and Futures Ordinance and any rules made under that Ordinance.

Japan

The shares have not been and will not be registered pursuant to Article 4, Paragraph 1 of the Financial Instruments and Exchange Act. Accordingly, none of the shares nor any interest therein may be offered or sold, directly or indirectly, in Japan or to, or for the benefit of, any “resident” of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to or for the benefit of a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Act and any other applicable laws, regulations and ministerial guidelines of Japan in effect at the relevant time.

Singapore

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the shares are subscribed or purchased under Section 275 of the SFA by a relevant person which is: (a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the shares pursuant to an offer made under Section 275 of the SFA except: (a) to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA; (b) where no consideration is or will be given for the transfer; (c) where the transfer is by operation of law; (d) as specified in Section 276(7) of the SFA; or (e) as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore.

Switzerland

The shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (“SIX”) or on any other stock exchange or regulated trading facility in Switzerland. This document does not constitute a prospectus within the meaning of, and has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure

233

standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the shares or the offering may be publicly distributed or otherwise made publicly available in Switzerland.

Neither this document nor any other offering or marketing material relating to the offering, the Company, the shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of shares will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA (FINMA), and the offer of shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes (“CISA”). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA.

United Kingdom

In addition, in the United Kingdom, this document is being distributed only to, and is directed only at, and any offer subsequently made may only be directed at persons who are “qualified investors” (as defined in the Prospectus Directive) (i) who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”) and/or (ii) who are high net worth companies (or persons to whom it may otherwise be lawfully communicated) falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”) or otherwise in circumstances which have not resulted and will not result in an offer to the public of the shares in the United Kingdom within the meaning of the Financial Services and Markets Act 2000.

Any person in the United Kingdom that is not a relevant person should not act or rely on the information included in this document or use it as basis for taking any action. In the United Kingdom, any investment or investment activity that this document relates to may be made or taken exclusively by relevant persons.

Other Relationships

The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities and other financial and non-financial activities and services. Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for us, for which they have received or may receive customary fees and expenses. Certain of the underwriters or their affiliates may have an indirect ownership interest in us through various private equity funds, including funds affiliated with Apollo.

In the ordinary course of business, the underwriters and their respective affiliates may make or hold a broad array of investments, including serving as counterparties to certain derivative and hedging arrangements and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account or for the accounts of their customers, and such investment and securities activities may involve or relate to assets, securities or instruments of the issuer (directly, as collateral securing other obligations or otherwise) or persons and entities with relationships with the issuer. The underwriters and their respective affiliates may also make investment recommendations, market color or trading ideas or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long or short positions in such assets, securities and instruments.

In particular, affiliates of Barclays Capital Inc. and Credit Suisse Securities (USA) LLC, act as various agents, and together with affiliates of certain other underwriters and/or their respective affiliates, are lenders under our First Lien Credit Facilities, for which such underwriters and their affiliates received or will receive customary fees and expenses. In addition, an affiliate of Apollo Global Securities, LLC, an underwriter, also

234

received certain fees relating to management consulting and advisory services provided under the Management Consulting Agreement, which will terminate in accordance with its terms upon the consummation of this offering. See “Certain Relationships and Related Party Transactions.”

Certain underwriters and/or their respective affiliates may hold positions in the Prime Notes, and to the extent they hold any such notes, they may also receive a portion of the proceeds from this offering. See “Use of Proceeds.”

In June 2017 and October 2017, we issued to Ultimate Parent an aggregate of 40,096 shares of our common stock for aggregate proceeds of approximately $490,000. Apollo and certain of its affiliates beneficially own shares of our common stock through Ultimate Parent, and Apollo Global Securities, LLC, an underwriter in this offering, is an affiliate of Apollo. The 40,096 shares of common stock may be deemed underwriting compensation pursuant to FINRA Rule 5110. Such securities may not be sold during the offering or sold, transferred, assigned, pledged or hypothecated or be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of such securities for a period of 180 days immediately following the date of effectiveness or commencement of sales of the offering, except as permitted by FINRA Rule 5110(g)(2). During the first and second quarters of 2017, we paid dividends in an aggregate amount of $750 million to equity holders of the Company and Ultimate Parent, which includes distributions to Apollo, an affiliate of one of our underwriters.

Conflict of Interest

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LEGAL MATTERS

The validity of the shares of common stock offered hereby will be passed upon for us by Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York, New York. The validity of the shares of common stock offered hereby will be passed upon for the underwriters by Simpson Thacher & Bartlett LLP, New York, New York.

EXPERTS

The consolidated financial statements of ADT Inc. and subsidiaries (Successor) as of December 31, 2016 and December 31, 2015, and for the year ended December 31, 2016, and for the period from May 15, 2015 (date of inception) through December 31, 2015 included in this Prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered certified public accounting firm, given on the authority of said firm as experts in auditing and accounting.

The consolidated financial statements of Protection One, Inc. and subsidiaries (Predecessor) for the period from January 1, 2015 through June 30, 2015 and for the year ended December 31, 2014 included in this Prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered certified public accounting firm, given on the authority of said firm as experts in auditing and accounting.

The consolidated financial statements of Alarm Security Holdings LLC at June 30, 2015 and for the six months then ended and at December 31, 2014 and for the year then ended, appearing in this prospectus and Registration Statement have been audited by Ernst & Young LLP, independent auditors, as set forth in their reports thereon appearing elsewhere herein, and are included in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.

The consolidated financial statements of The ADT Corporation as of September 25, 2015 and September 26, 2014, and for each of the three years in the period ended September 25, 2015, included in this prospectus have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein. Such financial statements are included in reliance upon such report given on the authority of said firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-1 with respect to the common stock being sold in this offering. This prospectus constitutes a part of that registration statement. This prospectus does not contain all the information set forth in the registration statement and the exhibits and schedules to the registration statement, because some parts have been omitted in accordance with the rules and regulations of the SEC. For further information with respect to us and our common stock being sold in this offering, you should refer to the registration statement and the exhibits and schedules filed as part of the registration statement. Statements contained in this prospectus regarding the contents of any agreement, contract or other document referred to herein are not necessarily complete; reference is made in each instance to the copy of the contract or document filed as an exhibit to the registration statement. Each statement is qualified by reference to the exhibit. You may inspect a copy of the registration statement without charge at the SEC’s principal office in Washington, D.C. Copies of all or any part of the registration statement may be obtained after payment of fees prescribed by the SEC from the SEC’s Public Reference Room at the SEC’s principal office, at 100 F Street, N.E., Washington, D.C. 20549.

You may obtain information regarding the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The SEC’s website address is www.sec.gov.

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After we have completed this offering, we will file annual, quarterly and current reports, proxy statements and other information with the SEC. We intend to make these filings available on our website once this offering is completed. You may read and copy any reports, statements or other information on file at the public reference rooms. You can also request copies of these documents, for a copying fee, by writing to the SEC, or you can review these documents on the SEC’s website, as described above. In addition, we will provide electronic or paper copies of our filings free of charge upon request.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


	Page
ADT INC.

Unaudited Interim Condensed Consolidated Financial Statements as of September 30, 2017 and for the periods ended September 30, 2017 and September 30, 2016

ADT INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) AS OF SEPTEMBER 30, 2017 AND DECEMBER 31, 2016		F-4

ADT INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016		F-5

ADT INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016		F-6

ADT INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017		F-7

ADT INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016		F-8

ADT INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS		F-9

Audited Consolidated Financial Statements as of December 31, 2016 and 2015 (Successor) and for the year ended December 31, 2016, for the periods from May 15, 2015 (date of Inception) through December 31, 2015 (Successor) and January 1, 2015 through June 30, 2015 (Predecessor) and for the year ended December 31, 2014 (Predecessor)

REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM (SUCCESSOR)		F-26

REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM (PREDECESSOR)		F-27

ADT INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (SUCCESSOR) AS OF DECEMBER 31, 2016 AND DECEMBER 31, 2015		F-28

ADT INC. AND SUBSIDIARIES (SUCCESSOR) AND PROTECTION ONE, INC. AND SUBSIDIARIES (PREDECESSOR) CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2016, FROM INCEPTION THROUGH DECEMBER 31, 2015, FOR THE PERIOD FROM JANUARY 1, 2015 THOUGH JUNE 30, 2015 AND FOR THE YEAR ENDED DECEMBER 31, 2014		F-29

ADT INC. AND SUBSIDIARIES (SUCCESSOR) AND PROTECTION ONE, INC. AND SUBSIDIARIES (PREDECESSOR) CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS FOR THE YEAR ENDED DECEMBER 31, 2016, FROM INCEPTION THROUGH DECEMBER 31, 2015, FOR THE PERIOD FROM JANUARY 1, 2015 THOUGH JUNE 30, 2015 AND FOR THE YEAR ENDED DECEMBER 31, 2014		F-30

PROTECTION ONE, INC. AND SUBSIDIARIES (PREDECESSOR) CONSOLIDATED STATEMENTS OF SHAREHOLDER’S EQUITY		F-31

ADT INC. AND SUBSIDIARIES (SUCCESSOR) CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY		F-32

F-1


	Page
ADT INC. AND SUBSIDIARIES (SUCCESSOR) AND PROTECTION ONE, INC. AND SUBSIDIARIES (PREDECESSOR) CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2016, FROM INCEPTION THROUGH DECEMBER 31, 2015, FOR THE PERIOD FROM JANUARY 1, 2015 THOUGH JUNE 30, 2015 AND FOR THE YEAR ENDED DECEMBER 31, 2014		F-33

ADT INC. (SUCCESSOR) AND PROTECTION ONE, INC. AND SUBSIDIARIES (PREDECESSOR) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS		F-34

ADT INC. AND SUBSIDIARIES (SUCCESSOR) AND PROTECTION ONE, INC. AND SUBSIDIARIES (PREDECESSOR) SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS FOR THE YEAR ENDED DECEMBER 31, 2016, FROM INCEPTION THROUGH DECEMBER 31, 2015, FOR THE PERIOD FROM JANUARY 1, 2015 THROUGH JUNE 30, 2015 AND FOR THE YEAR ENDED DECEMBER 31, 2014		F-74

The ADT Corporation

Unaudited Interim Condensed Consolidated Financial Statements for the periods ended March 31, 2016 and March 27, 2015

THE ADT CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) AS OF MARCH 31, 2016 AND SEPTEMBER 25, 2015		F-75

THE ADT CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE QUARTERS ENDED MARCH 31, 2016 AND MARCH 27, 2015 AND FOR THE SIX MONTHS ENDED MARCH 31, 2016 AND MARCH 27, 2015		F-76

THE ADT CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) FOR THE QUARTERS ENDED MARCH 31, 2016 AND MARCH 27, 2015 AND FOR THE SIX MONTHS ENDED MARCH 31, 2016 AND MARCH 27, 2015		F-77

THE ADT CORPORATION CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED) AS OF SEPTEMBER 25, 2015 AND MARCH 31, 2016		F-78

THE ADT CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE SIX MONTHS ENDED MARCH 31, 2016 AND MARCH 27, 2015		F-79

THE ADT CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)		F-80

Audited Consolidated Financial Statements for the years ended September 25, 2015, September 26, 2014 and September 27, 2013

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		F-96

THE ADT CORPORATION CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 25, 2015 AND SEPTEMBER 26, 2014		F-97

THE ADT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS FISCAL YEARS ENDED SEPTEMBER 25, 2015, SEPTEMBER 26, 2014, AND SEPTEMBER 27, 2013		F-98

THE ADT CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FISCAL YEARS ENDED SEPTEMBER 25, 2015, SEPTEMBER 26, 2014, AND SEPTEMBER 27, 2013		F-99

THE ADT CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY FISCAL YEARS ENDED SEPTEMBER 25, 2015, SEPTEMBER 26, 2014, AND SEPTEMBER 27, 2013		F-100

F-2


	Page
THE ADT CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS FISCAL YEARS ENDED SEPTEMBER 25, 2015, SEPTEMBER 26, 2014, AND SEPTEMBER 27, 2013		F-101

THE ADT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS		F-102

Alarm Security Holdings LLC

Audited Consolidated Financial Statements for the period ended June 30, 2015

REPORT OF INDEPENDENT AUDITORS		F-131

ALARM SECURITY HOLDINGS LLC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2015		F-132

ALARM SECURITY HOLDINGS LLC AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2015		F-133

ALARM SECURITY HOLDINGS LLC AND SUBSIDIARIES CONSOLIDATED STATEMENT OF MEMBERS’ DEFICIT FOR THE SIX MONTHS ENDED JUNE 30, 2015		F-134

ALARM SECURITY HOLDINGS LLC AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2015		F-135

ALARM SECURITY HOLDINGS LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS		F-136

Audited Consolidated Financial Statements for the year ended December 31, 2014

REPORT OF INDEPENDENT AUDITORS		F-151

ALARM SECURITY HOLDINGS LLC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2014		F-152

ALARM SECURITY HOLDINGS LLC AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2014		F-153

ALARM SECURITY HOLDINGS LLC AND SUBSIDIARIES CONSOLIDATED STATEMENT OF MEMBERS’ DEFICIT FOR THE YEAR ENDED DECEMBER 31, 2014		F-154

ALARM SECURITY HOLDINGS LLC AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2014		F-155

ALARM SECURITY HOLDINGS LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014		F-156

F-3

ADT INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and per share data)


	September 30, 2017			December 31, 2016
Assets
Current Assets:
Cash and cash equivalents	$	170,657		$	75,891
Current portion of restricted cash and cash equivalents		3,881			14,932
Accounts receivable trade, less allowance for doubtful accounts of $31,980 and $28,109, respectively		134,243			135,218
Inventories		86,311			89,513
Work-in-progress		23,796			19,376
Prepaid expenses and other current assets		73,855			53,426

Total current assets		492,743			388,356
Property and equipment, net		342,513			342,994
Subscriber system assets, net		2,891,939			2,836,733
Intangible assets, net		7,974,823			8,308,749
Goodwill		5,041,262			5,013,376
Deferred subscriber acquisition costs, net		258,192			179,100
Other assets		85,525			107,173

Total Assets	$	17,086,997		$	17,176,481

Liabilities and Stockholder’s Equity
Current Liabilities:
Current maturities of long-term debt	$	44,456		$	40,288
Accounts payable		199,774			212,239
Deferred revenue		315,483			313,278
Accrued expenses and other current liabilities		398,750			286,734

Total current liabilities		958,463			852,539
Long-term debt		10,130,009			9,469,682
Mandatorily redeemable preferred securities—authorized 1,000,000 shares Series A of $0.01 par value; issued and outstanding 750,000 shares of $0.01 par value as of September 30, 2017 and December 31, 2016		658,402			633,691
Deferred subscriber acquisition revenue		324,340			167,075
Deferred tax liabilities		2,077,656			2,117,943
Other liabilities		141,425			130,575

Total Liabilities		14,290,295			13,371,505

Commitments and contingencies (See Note 6)
Stockholders’ Equity:
Common stock—authorized 406,155,769 shares of $0.01 par value; issued and outstanding shares—381,372,799 as of September 30, 2017 and 381,348,583 as of December 31, 2016		2			2
Additional paid-in capital		4,432,599			4,424,321
Accumulated deficit		(1,636,400	)		(590,840	)
Accumulated other comprehensive income (loss)		501			(28,507	)

Total Stockholders’ Equity		2,796,702			3,804,976

Total Liabilities and Stockholders’ Equity	$	17,086,997		$	17,176,481

See Notes to Condensed Consolidated Financial Statements

F-4

ADT INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share data)


	For the Nine Months Ended
	September 30, 2017			September 30, 2016
Monitoring and related services	$	3,017,026		$	1,757,923
Installation and other		192,944			140,691

Total revenue		3,209,970			1,898,614
Cost of revenue (exclusive of depreciation and amortization shown separately below)		658,095			465,357
Selling, general and administrative expenses		923,048			561,337
Depreciation and intangible asset amortization		1,387,245			805,389
Merger, restructuring, integration, and other costs		54,170			370,860

Operating income (loss)		187,412			(304,329	)
Interest expense, net		(553,529	)		(337,441	)
Other income (expense)		31,634			(39,567	)

Loss before income taxes		(334,483	)		(681,337	)
Income tax benefit		38,922			229,695

Net loss	$	(295,561	)	$	(451,642	)

Net loss per share:
Basic and Diluted	$	(0.78	)	$	(1.18	)

Weighted-average number of shares:
Basic and Diluted		381,357			381,156

Pro forma net loss per share (unaudited):
Basic and Diluted	$

Pro forma weighted-average number of shares (unaudited):
Basic and Diluted

See Notes to Condensed Consolidated Financial Statements

F-5

ADT INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

(in thousands)


	For the Nine Months Ended
	September 30, 2017			September 30, 2016
Net loss	$	(295,561	)	$	(451,642	)
Other comprehensive income (loss):
Foreign currency translation and other		29,008			(33,768	)

Total other comprehensive income (loss), net of tax		29,008			(33,768	)

Comprehensive loss	$	(266,553	)	$	(485,410	)

See Notes to Condensed Consolidated Financial Statements

F-6

ADT INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(in thousands)


	Number of Common Shares		Common Stock		Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity
Balance as of December 31, 2016		381,349	$	2	$	4,424,321		$	(590,840	)	$	(28,507	)	$	3,804,976
Issuance of shares		—		—		—			—			—			—
Other comprehensive income, net of tax		—		—		—			—			29,008			29,008
Net loss		—		—		—			(295,561	)		—			(295,561	)
Dividends		—		—		—			(749,999	)		—			(749,999	)
Share-based compensation expense		24		—		8,498			—			—			8,498
Other		—		—		(220	)		—			—			(220	)

Balance as of September 30, 2017		381,373	$	2	$	4,432,599		$	(1,636,400	)	$	501		$	2,796,702

See Notes to Condensed Consolidated Financial Statements

F-7

ADT INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)


	For the Nine Months Ended
	September 30, 2017			September 30, 2016
Cash Flows from Operating Activities:
Net loss	$	(295,561	)	$	(451,642	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and intangible asset amortization		1,387,245			805,389
Amortization of deferred subscriber acquisition costs and revenue, net		3,987			3,169
Amortization of unearned revenue fair value adjustment		—			59,348
Share-based compensation expense		8,498			2,763
Deferred income taxes		(46,133	)		(230,680	)
Provision for losses on accounts receivable and inventory		42,322			24,373
Loss on extinguishment of debt		4,325			13,897
Other non-cash items, net		36,804			38,399
Changes in operating assets and liabilities, net of the effects of acquisitions		120,853			116,797

Net cash provided by operating activities		1,262,340			381,813

Cash Flows from Investing Activities:
Dealer generated customer accounts and bulk account purchases		(486,037	)		(259,330	)
Subscriber system assets and deferred subscriber installation costs		(445,201	)		(320,906	)
Capital expenditures		(102,671	)		(51,088	)
Acquisition of businesses, net of cash acquired		(31,810	)		(8,501,542	)
Proceeds received from settlement of derivative contracts, net		—			41,586
Other investing		27,670			28,324

Net cash used in investing activities		(1,038,049	)		(9,062,956	)

Cash Flows from Financing Activities:
Proceeds from long-term borrowings		1,344,126			5,387,303
Proceeds received from issuance of preferred securities		—			658,551
Repayment of long-term borrowings		(712,690	)		(741,181	)
Equity capital contribution		—			3,658,186
Dividends		(749,999	)		—
Deferred financing costs		(400	)		(104,205	)
Other financing		(10,623	)		(29,384	)

Net cash (used in) provided by financing activities		(129,586	)		8,829,270

Effect of currency translation on cash		61			(859	)
Net increase in cash and cash equivalents		94,766			147,268
Cash and cash equivalents at beginning of period		75,891			15,759

Cash and cash equivalents at end of period	$	170,657		$	163,027

See Notes to Condensed Consolidated Financial Statements

F-8

ADT INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENT

Note 1. Basis of Presentation and Summary of Significant Accounting Policies

Nature of Business —ADT Inc. (“ADT Inc.”), a company incorporated in the state of Delaware, and its wholly owned subsidiaries (collectively, the “Company”), is principally engaged in the sale, installation, servicing, and monitoring of electronic home and business security and automation systems in the United States and Canada. ADT Inc. is owned by Prime Security Services TopCo Parent, L.P. (“Ultimate Parent”). Ultimate Parent is owned by Apollo Investment Fund VIII, L.P. and related funds that are directly or indirectly managed by Apollo Global Management, LLC, its subsidiaries and its affiliates (“Apollo” or the “Sponsor”), and management investors.

On July 1, 2015, ADT Inc.’s wholly owned subsidiary, Prime Protection One MS, Inc. (“Merger Sub”) was merged with and into a holding company of Protection One, Inc. (“Protection One”) (the “Protection One Acquisition”). Upon consummation of the Protection One Acquisition, the separate corporate existence of Merger Sub ceased, and the holding company continued as a wholly owned subsidiary of ADT Inc. Additionally, on July 1, 2015, ADT Inc. acquired all of the outstanding stock of ASG Intermediate Holding Corp. (“ASG”) (the “ASG Acquisition”). Following the ASG Acquisition, ASG became a wholly owned subsidiary of ADT Inc.

On May 2, 2016, ADT Inc.’s wholly owned subsidiary, Prime Security One MS, Inc., a Delaware corporation, (“Prime Merger Sub”) was merged with and into The ADT Security Corporation (formerly named The ADT Corporation) (“The ADT Corporation”) (the “ADT Acquisition”). Upon consummation of the ADT Acquisition, the separate corporate existence of Prime Merger Sub ceased, and The ADT Corporation continued as a wholly owned subsidiary of ADT Inc. Refer to Note 2 for additional information regarding the ADT Acquisition.

Basis of Presentation —The Condensed Consolidated Financial Statements include the accounts of ADT Inc. and its wholly owned subsidiaries, and have been prepared in U.S. dollars in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The Condensed Consolidated Financial Statements included herein are unaudited, but in the opinion of management, such financial statements include all adjustments, consisting of normal recurring adjustments, necessary to summarize fairly the Company’s financial position, results of operations, and cash flows for the interim periods presented. All intercompany transactions have been eliminated. The interim results reported in these Condensed Consolidated Financial Statements should not be taken as indicative of results that may be expected for future interim periods or the full year. For a more comprehensive understanding of the Company and its Condensed Consolidated Financial Statements, these interim financial statements should be read in conjunction with the Company’s audited financial statements included elsewhere in this prospectus for the year ended December 31, 2016.

The Company conducts business through its operating entities based on the manner in which the Chief Executive Officer, who is the chief operating decision maker (“CODM”), evaluates performance and makes decisions about how to allocate resources. Beginning with the second quarter of 2017, in connection with the integration of The ADT Corporation businesses, the Company changed its operating segment structure to a single operating segment to better align with how the CODM evaluates the performance of the business. In connection with this realignment, the Company also changed its reporting units, which are now comprised of two reporting units: United States and Canada. The United States reporting unit is comprised of the Company’s historical retail, wholesale, and ADT United States reporting units. The Company’s historical ADT Canada reporting unit (now referred to as “Canada”) was not impacted by this change. Refer to Note 3 for additional information regarding the Company’s goodwill impairment tests performed associated with this reporting unit change.

The results of companies acquired are included in these Condensed Consolidated Financial Statements from the effective dates of the acquisitions.

Use of Estimates —The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent

F-9

assets and liabilities, and reported amounts of revenue and expenses. Significant estimates and judgments inherent in the preparation of the consolidated financial statements include, but are not limited to, estimates of future cash flows and valuation related assumptions associated with asset impairment testing, useful lives and methods for depreciation and amortization, loss contingencies, income taxes and tax valuation allowances, and purchase price allocations. Actual results could differ materially from these estimates.

Radio Conversion Costs —Charges incurred related to a program that began in 2015 to upgrade cellular technology used in many of the Company’s security systems are reflected in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

Merger, Restructuring, Integration, and Other Costs —These costs include certain direct and incremental costs resulting from acquisitions made by the Company and certain related integration efforts as a result of those acquisitions, as well as costs related to the Company’s restructuring efforts. Also, included in other costs are certain impairment charges. Refer to Note 2 for additional information regarding the Company’s acquisitions and Note 8 for further discussion on restructuring activities.

Other Income (Expense) —Other income (expense) primarily includes net foreign currency gains and losses related to the translation of monetary assets and liabilities that are denominated in Canadian dollars, primarily due to intercompany loans, as well as a loss on extinguishment of debt associated with amendments and restatements to our First Lien Credit Agreement.

Inventories —Inventories are primarily comprised of security system components and parts, as well as finished goods. The Company records inventory at the lower of cost and net realizable value. Inventories are presented net of an obsolescence reserve.

Work-in-Progress —Work-in-progress includes certain costs incurred for installations of security system equipment sold outright to customers that have not yet been completed.

Prepaid Expenses and Other Current Assets —Prepaid expenses are assets resulting from expenditures for goods or services that occur before the goods are used or services are received. Prepaid expenses are included in prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets, and were $30 million and $25 million as of September 30, 2017 and December 31, 2016, respectively.

Subscriber System Assets —Subscriber system assets represent capitalized equipment and installation costs incurred in connection with transactions in which the Company retains ownership of the security system. The following table sets forth the gross carrying amount and accumulated depreciation of the Company’s subscriber system assets as of September 30, 2017 and December 31, 2016 ($ in thousands):


	September 30, 2017			December 31, 2016
Gross carrying amount	$	3,630,646		$	3,182,064
Accumulated depreciation		(738,707	)		(345,331	)

Subscriber system assets, net	$	2,891,939		$	2,836,733

Depreciation expense relating to subscriber system assets for nine months ended September 30, 2017 was $401 million.

Accrued Expenses and Other Current Liabilities —Accrued expenses and other current liabilities include accrued interest of $166 million and $93 million as of as of September 30, 2017 and December 31, 2016, respectively. Accrued expenses and other current liabilities also include $70 million and $44 million of payroll-related accruals as of September 30, 2017 and December 31, 2016, respectively.

F-10

Financial Instruments —The Company’s financial instruments consist primarily of cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, accounts payable, debt, and derivatives. Due to their short-term and/or liquid nature, the fair values of cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, and accounts payable approximated their carrying values as of September 30, 2017 and December 31, 2016.

Cash Equivalents —Included in cash and cash equivalents as of September 30, 2017 are investments in money market mutual funds of approximately $86 million. These investments are classified as Level 1 for purposes of fair value measurement. Cash equivalents were not material as of December 31, 2016.

Restricted Cash and Cash Equivalents —Restricted cash and cash equivalents are restricted for specific purposes and cannot be included in the general cash account. The Company’s restricted cash and cash equivalents as of September 30, 2017 and December 31, 2016 were restricted to cover potential adjustments to the purchase price of the Protection One Acquisition and ASG Acquisition. Restricted cash and cash equivalents consist of highly liquid investments with remaining maturities when purchased of three months or less. The fair value of restricted cash and cash equivalents is determined using quoted prices available in active markets for identical investments, which is a Level 1 input.

Long-Term Debt Instruments and Preferred Securities —The fair values of the Company’s debt instruments were determined using market pricing data, which is considered a Level 2 input. The carrying amount of debt outstanding, if any, under the Company’s Revolving Credit Facilities approximates fair value as interest rates on these borrowings approximate current market rates, which are considered Level 2 inputs. The fair value of the Koch Preferred Securities (as defined below) was estimated using a discounted cash-flow approach in conjunction with a binomial lattice interest rate model to incorporate the contractual dividends and the Company’s ability to redeem the Koch Preferred Securities. Key input assumptions to the valuation analysis are the credit spread and yield volatility associated with the Koch Preferred Securities, which are considered Level 3 inputs. The credit spread was estimated using the credit spread at issuance of the Koch Preferred Securities and adjusted for the change in observed publicly traded debt of the Company between the issuance date and the measurement date. The yield volatility estimate was based on the historical yield volatility observed from comparable public high yield debt.

The carrying value and fair value of the Company’s debt and Koch Preferred Securities that are subject to fair value disclosures as of September 30, 2017 and December 31, 2016 were as follows ($ in thousands):


	September 30, 2017				December 31, 2016
	Carrying Value		Fair Value		Carrying Value		Fair Value
Debt instruments, excluding capital lease obligations and other debt	$	10,130,100	$	10,898,102	$	9,464,251	$	10,014,292
Koch Preferred Securities	$	658,402	$	852,100	$	633,691	$	776,800

Derivative Instruments —All derivative financial instruments are reported on the Condensed Consolidated Balance Sheets at fair value. The fair values of the Company’s derivative instruments were determined using market pricing data, which is considered a Level 2 input. The Company has not designated any of its derivative financial instruments as hedges, and therefore, all changes in fair value are recognized in the Condensed Consolidated Statements of Operations. Refer to Note 7 for information about the Company’s derivatives.

Guarantees —In the normal course of business, the Company is liable for contract completion and product performance. The Company does not believe such obligations will significantly affect its financial position, results of operations, or cash flows. As of September 30, 2017 and December 31, 2016, the Company had $48 million and $53 million, respectively, primarily in standby letters of credit related to its insurance programs.

F-11

Recent Hurricanes —In the third quarter of 2017, there were three hurricanes that impacted certain areas in which the Company operates that resulted in power outages and service disruptions to certain of the Company’s customers. The financial impact from these hurricanes to the third quarter 2017 results was not material. The Company is currently in the process of estimating the potential financial and business impacts that these hurricanes may have on future periods.

Recently Adopted Accounting Pronouncements— In July 2015, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance to simplify the subsequent measurement of inventory. Under this new standard, an entity should measure inventory at the lower of cost and net realizable value. In the first quarter of 2017, the Company adopted this guidance on a prospective basis. The adoption of this guidance did not have a material impact on these Condensed Consolidated Financial Statements.

In March 2016, the FASB issued authoritative guidance to simplify the accounting for employee share-based payment transactions. The new guidance simplifies the accounting for income taxes, forfeitures, and statutory tax withholding requirements associated with share-based payment transactions, as well as simplifies the classification of transactions in the statement of cash flows. In the first quarter of 2017, the Company adopted this guidance on a prospective basis, accordingly, prior periods have not been adjusted. The adoption of this standard did not have a material impact on these Condensed Consolidated Financial Statements.

Recently Issued Accounting Pronouncements —In May 2014, the FASB issued authoritative guidance, which sets forth a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Companies may use either a full retrospective or a modified retrospective approach to adopt this guidance. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted. This guidance, including subsequently issued amendments by the FASB, will be effective for the Company in the first quarter of 2018.

A final decision regarding the adoption method has not been finalized at this time. The Company’s final determination will depend on a number of factors such as the significance of the impact of the new standard on the Company’s financial results, system readiness, and the Company’s ability to accumulate and analyze the information necessary to assess the impact on prior period financial statements, as necessary.

The Company is in the process of evaluating the impact of the new standard on its accounting policies, processes, and system requirements. The Company has assigned internal resources in addition to the engagement of third-party service providers to assist in the evaluation. While the Company continues to assess the potential impacts under the new standard, the Company is assessing the potential impacts related to the allocation of contract revenues to the identified performance obligations, and the timing in which those revenues are recognized.

Additionally, the Company is assessing all incremental costs of obtaining contracts, as the new cost guidance, as interpreted by the FASB Transition Resource Group for Revenue Recognition, requires the capitalization of all incremental costs that the Company incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained, provided the Company expects to recover the costs.

While the Company continues to assess the potential impacts of the new standard, including the areas described above, the Company does not know or cannot reasonably estimate quantitative information related to the impact of the new standard on the financial statements at this time.

F-12

provision within this guidance to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. An entity should apply the amendments in the standard by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments in the standard that address equity securities without readily determinable fair values should be applied prospectively to equity investments that exist as of the date of adoption of the standard. The Company is currently evaluating the impact of this guidance.

In February 2016, the FASB issued authoritative guidance on accounting for leases. This new guidance requires lessees to recognize a right-to-use asset and a lease liability for substantially all leases and to disclose key information about leasing arrangements. The recognition, measurement, and presentation of expenses and cash flows for lessees will remain significantly unchanged from current guidance. This guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. This guidance will be effective for the Company in the first quarter of 2019. Early adoption is permitted. The guidance is to be adopted using a modified retrospective approach as of the earliest period presented. The Company is currently evaluating the impact of this guidance.

In January 2017, the FASB issued authoritative guidance to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. This guidance will be effective for the Company for annual or any interim goodwill impairment tests beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact of this guidance.

In May 2017, the FASB issued authoritative guidance that addresses changes to the terms or conditions of a share-based payment award, specifically regarding which changes to the terms or conditions of a share-based payment award would require modification accounting. This guidance does not change the accounting for modifications, but clarifies that an entity should apply modification accounting except when the fair value, vesting conditions, and classification of the modified award are the same as the original award immediately before the original award is modified. This guidance will be effective for the Company for the first quarter of 2018. Early adoption is permitted, including during an interim period. The adoption of this guidance will be applied prospectively to an award that is modified on or after the adoption date. The Company is currently evaluating the impact of this guidance.

Note 2. Acquisitions

The ADT Acquisition

On May 2, 2016, the Company completed its acquisition of The ADT Corporation, a leading provider of monitored security, interactive automation, and related monitoring services in the United States and Canada. The ADT Acquisition provides the Company the ability to continue to expand its market presence in the security industry by leveraging The ADT Corporation brand name and other best practices. In September 2017, the Company changed its name from Prime Security Services Parent Inc. to ADT Inc.

Upon completion of the ADT Acquisition, The ADT Corporation shareholders received $42.00 in cash, without interest and subject to applicable withholding taxes, for each share of common stock held immediately prior to the closing of the ADT Acquisition.

Additionally, pursuant to the agreement to acquire The ADT Corporation, all outstanding stock option awards, and restricted stock awards (except for certain performance share awards), held by The ADT Corporation employees were automatically canceled and converted into the right to receive cash consideration of $42.00 per share. Outstanding performance share awards held by The ADT Corporation employees were cancelled and converted into the right to receive cash at 115% of the target award, and will be paid only if the requisite service period vesting conditions are met or if The ADT Corporation employee is separated from the Company under certain conditions.

F-13

Total consideration in connection with the ADT Acquisition was $12,114 million, which included the assumption, on the acquisition date, of The ADT Corporation’s outstanding debt (inclusive of capital lease obligations and other debt) at fair value of $3,551 million and cash of $54 million.

The Company funded the ADT Acquisition, as well as amounts due for merger costs, using the net proceeds from a combination of the following:

(i)	equity proceeds of $3,571 million, net of issuance costs, which resulted from equity issuances by the Company and Ultimate Parent to our Sponsor and certain other investors;

(ii)	incremental first lien term loan borrowings of $1,555 million and the issuance of $3,140 million of Prime Notes; and

(iii)

issuance by the Company of 750,000 shares of Series A preferred securities (the “Koch Preferred Securities”) and issuance by Ultimate Parent of detachable warrants for the purchase of Class A-1 Units in Ultimate Parent (the “Warrants”) to an affiliate of Koch Industries, Inc. (the “Koch Investor”) for an aggregate amount of $750 million. The Company allocated $659 million to the Koch Preferred Securities, which is reflected net of issuance costs of $27 million as a liability in the Company’s historical consolidated balance sheet. The Company allocated the remaining $91 million in proceeds to the Warrants which was contributed by Ultimate Parent in the form of common equity to the Company, net of $4 million in issuance costs.

The Company accounted for the ADT Acquisition using the acquisition method of accounting for business combinations, whereby the total purchase price was allocated to the net tangible and intangible assets acquired and liabilities assumed, based on estimated fair values as of the acquisition date, with the excess of the purchase price over the fair values of the acquired net assets allocated to goodwill. The goodwill associated with the ADT Acquisition is not deductible for income tax purposes.

The purchase price allocation, as reflected in these Condensed Consolidated Financial Statements, is based on estimates from currently available information. The following table summarizes the allocation of the purchase price to the estimated fair values of the net tangible and intangible assets acquired and liabilities assumed at the date of acquisition ($ in thousands):


Estimated fair value of assets acquired and liabilities assumed:
Current assets	$	281,215
Property and equipment		296,246
Definite-lived intangible assets		6,245,564
Goodwill		4,126,512
Indefinite-lived intangible assets		1,333,000
Subscriber system assets		2,739,383
Other assets		167,454
Current liabilities		(626,707	)
Long-term debt (excluding capital lease obligations and other debt)		(3,519,351	)
Deferred tax liabilities, net		(2,330,491	)
Other liabilities		(149,409	)

Total consideration transferred	$	8,563,416

Significant assumptions inherent in developing the valuations included the estimated annual net cash flows for each indefinite-lived or definite-lived intangible asset (including net sales, cost of revenue, selling and marketing costs, and working capital/contributory asset charges), the discount rate that appropriately reflects the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, as well as other factors. The primary assumptions used in the financial forecasts were developed using historical data, supplemented by current and anticipated market conditions, estimated growth rates, and attrition rates.

F-14

Goodwill from the ADT Acquisition was assigned to both the United States and Canada reporting units. Goodwill primarily represents the value of the assembled workforce, the value attributable to future customer additions and expansion of services to both new and existing customers, and expected synergies from combining operations.

Trade receivables and payables, as well as certain other current and non-current assets and liabilities were valued at the existing carrying values as they were determined to represent the fair value of those items at the time of the ADT Acquisition.

Property and equipment and subscriber system assets have been valued using the cost approach, which is based on current replacement and/or reproduction cost of the asset as new, less depreciation attributable to physical, functional, and economic factors.

Indefinite-lived intangible assets consist of the ADT trade name. The ADT trade name has been valued using the relief from royalty method. The relief from royalty method is an income approach that estimates the cost savings that accrue to the Company, which it would otherwise have to pay in the form of royalties or license fees on revenues earned through the use of the asset.

Definite-lived intangible assets primarily consist of customer relationships and dealer relationships under the ADT Authorized Dealer Program. Customer relationships and dealer relationships were valued using the excess earnings method. The excess earnings method is an income approach that estimates the amount of residual (or excess) cash flows generated by an asset, which are reduced by certain contributory asset charges that represent the charges for the use of the asset. As of the acquisition date, customer relationships had a weighted average remaining useful life of approximately 6 years, and are being amortized on an accelerated basis. Dealer relationships had a remaining life of 19 years as of the acquisition date, and are being amortized on a straight-line basis.

The fair value of long-term debt assumed in the ADT Acquisition was determined using broker-quoted market prices of identical or similar instruments.

Deferred tax liabilities, net, which includes deferred tax assets and liabilities as of the acquisition date, represent the expected future tax consequences of temporary differences between the fair values of the assets acquired and liabilities assumed and their tax bases.

During the nine months ended September 30, 2016, the Company incurred $309 million, in merger related costs on a pretax basis in connection with the ADT Acquisition. These costs are reflected in merger, restructuring, integration, and other costs in the Condensed Consolidated Statements of Operations.

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Pro Forma Results

The following summary, prepared on a pro forma basis, presents the Company’s unaudited Condensed Consolidated Results of Operations for the nine months ended September 30, 2016 as if the ADT Acquisition had been completed as of January 1, 2015. The pro forma results below include the impact of certain adjustments related to the amortization of intangible assets, merger related costs incurred as of the acquisition date, and interest expense on related borrowings, and in each case, the related income tax effects, as well as certain other post-acquisition adjustments directly attributable to the acquisition. This pro forma presentation does not include any impact of transaction synergies. The pro forma results are not necessarily indicative of the results of operations that would have been achieved had the ADT Acquisition been consummated as of that time ($ in thousands):


	For the Nine Months Ended
	September 30, 2016
Revenue	$	3,052,919
Net loss		(462,101	)

Revenues and net loss attributable to The ADT Corporation of $1,387 million and $120 million, respectively, are included in the Condensed Consolidated Statement of Operations from the date of the ADT Acquisition to September 30, 2016.

Other Acquisitions

From time to time, the Company may pursue acquisitions of companies that either strategically fit with the Company’s existing core business or expands the Company’s security and monitoring solutions in new and attractive adjacent markets. There were no material acquisitions during the nine months ended September 30, 2017.

Dealer Generated Customer Accounts and Bulk Account Purchases

During the nine months ended September 30, 2017 and September 30, 2016, the Company paid $486 million and $259 million, respectively, for customer contracts for electronic security services purchased under the ADT Authorized Dealer Program and bulk account purchases. These contracts are reflected in the consolidated balance sheet as definite-lived intangible assets, and are recorded at their contractually determined purchase price.

Note 3. Goodwill and Other Intangible Assets

Goodwill

There were no material changes in the carrying amount of goodwill during the nine months ended September 30, 2017.

As discussed in Note 1, in connection with the change in the Company’s reporting units during the second quarter of 2017, the Company tested goodwill for the historical retail, wholesale, and ADT United States reporting units prior to and immediately after this change. The fair values of the reporting units tested were determined under a discounted cash flow approach which utilized forecasted cash flows that were then discounted using an estimated weighted-average cost of capital of market participants. In determining fair value, management relies on and considers a number of factors, including operating results, business plans, economic projections, anticipated future cash flows, and other market data. There are inherent uncertainties related to these factors which require judgment in applying them during these impairment tests. As a result of the impairment tests, the fair values of the Company’s historical retail, wholesale, and ADT United States reporting units each substantially exceeded its respective carrying value, resulting in no impairment.

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While the Company’s impairment tests resulted in fair values in excess of carrying values, if the Company’s assumptions are not realized, or if there are changes in any of the assumptions in the future due to a change in economic conditions, it is possible that in the future an impairment charge may need to be recorded.

Other Intangible Assets

The following table sets forth the gross carrying amounts and accumulated amortization of the Company’s other intangible assets as of September 30, 2017 and December 31, 2016 ($ in thousands):


	September 30, 2017					December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Definite-lived intangible assets:
Contracts and related customer relationships	$	6,575,219	$	(1,493,328	)	$	6,046,702	$	(756,068	)
Dealer relationships		1,606,617		(125,005	)		1,600,231		(60,570	)
Other		203,258		(124,938	)		202,502		(57,048	)

Total amortizable intangible assets		8,385,094		(1,743,271	)		7,849,435		(873,686	)

Indefinite-lived intangible assets:
Trade names		1,333,000		—			1,333,000		—

Total intangible assets	$	9,718,094	$	(1,743,271	)	$	9,182,435	$	(873,686	)

The changes in the net carrying amount of contracts and related customer relationships during the nine months ended September 30, 2017 were as follows ($ in thousands):


Balance as of December 31, 2016	$	5,290,634
Customer contract additions, net of dealer charge-backs		486,820
Acquisitions of customer relationship		16,132
Amortization		(733,116	)
Currency translation and other		21,421

Balance as of September 30, 2017	$	5,081,891

The weighted-average amortization period for customer contract additions during the nine months ended September 30, 2017 was 15 years. Amortization expense for definite-lived intangible assets for the periods presented was as follows ($ in thousands):


	For the Nine Months Ended
	September 30, 2017		September 30, 2016
Definite-lived intangible asset amortization expense	$	864,918	$	535,012

The estimated aggregate amortization expense for definite-lived intangible assets is expected to be as follows ($ in thousands):


Remainder of 2017	$	294,871
2018		1,109,125
2019		1,030,730
2020		997,110
2021		911,417
2022		577,978

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Note 4. Debt

First Lien Credit Agreement

On February 13, 2017, the Company amended and restated its first lien credit agreement, dated as of July 1, 2015, and as amended and restated on May 2, 2016, June 23, 2016, and December 28, 2016 (the “First Lien Credit Agreement”), which consists of term loan facilities and revolving credit facilities (the “First Lien Credit Facilities”).

Significant terms of the February 13, 2017 amendment and restatement consist of the following:

•

The Company issued an incremental first lien term loan facility under the First Lien Credit Agreement in an aggregate principal amount of $800 million (the “2017 Incremental First Lien Term B-1 Loan”). The 2017 Incremental First Lien Term B-1 Loan has the same terms as the existing first lien term loan under the First Lien Credit Agreement.

•

Certain covenants under the First Lien Credit Agreement governing restricted payments were amended to permit the Company to fund one or more distributions to certain investors of ADT Inc. and Ultimate Parent in an aggregate amount not to exceed $795 million (collectively, the “Special Dividend”).

During the nine months ended September 30, 2017, the net proceeds from the 2017 Incremental First Lien Term B-1 Loan, together with cash on hand, were used to fund distributions of $750 million of the Special Dividend, and to pay related fees and expenses.

On June 29, 2017, the Company further amended and restated its First Lien Credit Agreement. Under the June 29, 2017 amendment and restatement, the applicable margin utilized in the calculation of interest for all term borrowings under the First Lien Credit Agreement decreased from 3.25% to 2.75%, and the applicable margin with respect to borrowing under the Revolving Credit Facilities remained at 4.50%, subject to adjustment to 4.25% pursuant to a leverage-based pricing grid.

As a result of the February and June 2017 amendments and restatements to the First Lien Credit Agreement and the payment of the Special Dividend, the Company incurred fees of $64 million during the nine months ended September 30, 2017. These fees are included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations. The Company also recorded an immaterial loss on extinguishment of debt for the nine months ended September 30, 2017.

Revolving Credit Facilities

The First Lien Credit Facilities include a $255 million revolving credit facility maturing on May 2, 2021 (“2021 Revolving Credit Facility”), and a $95 million revolving credit facility maturing on July 1, 2020 (collectively, with the 2021 Revolving Credit Facility, the “Revolving Credit Facilities”). As of December 31, 2016, the Company had $140 million of outstanding borrowings under the Revolving Credit Facilities, which the Company repaid in its entirety during the nine months ended September 30, 2017. The applicable margin with respect to term borrowings under the Revolving Credit Facilities remains at 4.50%, subject to adjustment to 4.25% pursuant to a leverage-based pricing grid. As of September 30, 2017, the Company had $303 million in available borrowing capacity under its Revolving Credit Facilities after giving effect to $47 million in outstanding letters of credit.

Refer to Note 1 for information on the fair value of the Company’s debt.

Note 5. Income Taxes

Unrecognized Tax Benefits

During the nine months ended September 30, 2017, the Company increased its unrecognized tax benefits by $38 million primarily related to deductions claimed in the Company’s pre-separation from Tyco tax returns. The

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Company’s uncertain tax positions relate to tax years that are subject to audit by the taxing authorities in the U.S. federal, state and local, and foreign jurisdictions. Based on the current tax statutes and status of its income tax audits, it is reasonably possible that a significant portion of the Company’s remaining unrecognized tax benefits will be resolved in the next twelve months.

Effective Tax Rate

The Company’s income tax benefit for the nine months ended September 30, 2017 was $39 million, resulting in an effective tax rate of 11.6%. The effective tax rate primarily reflects the impact of an increase in the Company’s unrecognized tax benefits as discussed above, as well as permanent non-deductible expenses. The Company’s income tax benefit for the nine months ended September 30, 2016 was $230 million, resulting in an effective tax rate of 33.7%. The effective tax rate for the nine months ended September 30, 2016 primarily reflects the impact of permanent items mainly related to non-deductible acquisition costs associated with the ADT Acquisition.

The effective tax rates for both periods reflect the tax impact of permanent items, state tax expense, changes in tax laws, and non-U.S. net earnings. The effective tax rate can vary from period to period due to permanent tax adjustments, discrete items such as the settlement of income tax audits and changes in tax laws, as well as recurring factors such as changes in the overall effective state tax rate.

Note 6. Commitments and Contingencies

Purchase Obligations

As of September 30, 2017, there have been no material changes to the Company’s purchase obligations outside the ordinary course of business as compared to December 31, 2016, except as noted below.

In May 2017, the Company entered into an agreement with one of its suppliers for the purchase of certain security system equipment and components. Based on certain milestones in the agreement, the Company could potentially be required to make purchases in aggregate of up to $150 million over a multi-year period. As of September 30, 2017, the Company does not have any purchase obligation under this agreement.

Legal Proceedings

The Company is subject to various claims and lawsuits in the ordinary course of business, including from time to time, contractual disputes, employment matters, product and general liability claims, claims that the Company has infringed on the intellectual property rights of others, claims related to alleged security system failures, and consumer and employment class actions. In the ordinary course of business, the Company is also subject to regulatory and governmental examinations, information requests and subpoenas, inquiries, investigations, and threatened legal actions and proceedings. In connection with such formal and informal inquiries, the Company receives numerous requests, subpoenas, and orders for documents, testimony, and information in connection with various aspects of its activities. The Company has recorded accruals for losses that it believes are probable to occur and are reasonably estimable. While the ultimate outcome of these matters cannot be predicted with certainty, the Company believes that the resolution of any such proceedings (other than matters specifically identified below), will not have a material adverse effect on its financial position, results of operations, or cash flows.

Environmental Matters relating to The ADT Corporation and Protection One

On October 25, 2013, The ADT Corporation was notified by subpoena that the Office of the Attorney General of California, in conjunction with the Alameda County District Attorney, is investigating whether certain of The ADT Corporation’s electronic waste disposal policies, procedures, and practices are in violation of the California

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Business and Professions Code and the California Health and Safety Code. The California Attorney General is also investigating Tyco Integrated Security (“TycoIS”), the former commercial business operations of ADT Security Services, Inc., now a subsidiary of Johnson Controls plc (the surviving entity from the merger of Tyco International plc with Johnson Controls), because of commingled ADT residential and commercial business operations out of California branch offices that existed through early 2014. During 2016, Protection One was also notified by the same parties that it was subject to a similar investigation. The California Attorney General has invited a joint handling of The ADT Corporation/TycoIS investigations. The Company is attempting to coordinate joint handling of the TycoIS and Protection One investigations. The ADT Corporation, TycoIS, and Protection One have entered into a Joint Defense Agreement. The Company is otherwise cooperating fully with the respective authorities. The Company is currently unable to predict the outcome of this investigation or reasonably estimate a range of possible loss.

Wireless Encryption Litigation relating to The ADT Corporation

The Company is subject to five class action claims regarding wireless encryption in certain ADT security systems. Jurisdictionally, three of the five cases are in Federal Court (in districts within Illinois, Arizona, and California), and both of the remaining two cases are in Florida State Court (both in Palm Beach County Circuit Court). Each of the five plaintiffs brought a claim under the respective state’s consumer fraud statute alleging that The ADT Corporation made misrepresentations and material omissions in its advertising regarding the unencrypted wireless signal pathways in certain security systems monitored by The ADT Corporation. The complaints in all five cases further allege that certain security systems monitored by The ADT Corporation are not secure because the wireless signal pathways are unencrypted, and can be easily hacked. On January 10, 2017, the parties agreed to settle all five class action lawsuits. On October 16, 2017, the U.S. District Court for the Northern District of California entered an order granting preliminary approval of the settlement. Administration of the settlement process is expected to take approximately six months. The Company believes its reserves are adequate for this matter.

TCPA Class Action relating to 2G-3G Radio Conversion Project

In August 2016, the Company was served with a class action complaint pending in the United States District Court for the Northern District of Georgia filed by a customer alleging that The ADT Corporation violated the Telephone Consumer Protection Act of 1991 (“TCPA”) by calling his cell phone, which was the only telephone number he provided to The ADT Corporation for his customer account, as part of The ADT Corporation’s efforts to communicate with customers affected by the Federal Communications Commission order allowing wireless carriers to sunset 2G wireless networks. Plaintiff seeks to represent a nationwide class of all The ADT Corporation customers who received such calls to their cell phones from 2013 to present. The premise of the plaintiff’s claim is that The ADT Corporation’s calls were telemarketing calls, which require a higher level of consent, and not transactional/business relationship calls because The ADT Corporation used the 2G transactional calls in an attempt to sell additional products and services. Plaintiff filed a motion for class certification. The ADT Corporation filed its opposition to class certification and further filed a motion for summary judgment. The Company firmly disputes liability and is currently unable to predict the outcome of this litigation.

Income Tax Matters

On September 28, 2012, Tyco, now known as Johnson Controls International plc (and hereinafter referred to as “Tyco”), distributed to its public stockholders The ADT Corporation’s common stock (the “Separation from Tyco”), and The ADT Corporation became an independent public company. In connection with the Separation from Tyco in September 2012, The ADT Corporation entered into a tax sharing agreement with Tyco and Pentair Ltd. (the “2012 Tax Sharing Agreement”) that governs the rights and obligations of The ADT Corporation, Tyco, and Pentair Ltd. for certain pre-Separation from Tyco tax liabilities, including Tyco’s obligations under the tax sharing agreement among Tyco, Covidien plc (“Covidien”) now operating as a subsidiary of Medtronic plc

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(“Medtronic”), and TE Connectivity Ltd. (“TE Connectivity”) entered into in 2007 (the “2007 Tax Sharing Agreement”). The ADT Corporation is responsible for all of its own taxes that are not shared pursuant to the 2012 Tax Sharing Agreement’s sharing formulae. Tyco and Pentair Ltd. are likewise responsible for their tax liabilities that are not subject to the 2012 Tax Sharing Agreement’s sharing formulae. Tyco has the right to administer, control, and settle all U.S. income tax audits for the periods prior to and including the Separation from Tyco.

During 2016, Tyco resolved all aspects of the disputes before the U.S. Tax Court and before the Appeals Division of the IRS for audit cycles 1997 through 2007. The resolution did not have a material impact on the Company’s financial position, results of operations, and cash flows.

During 2015, the IRS concluded its field examination of certain of Tyco’s U.S. federal income tax returns for the 2008 and 2009 tax years of Tyco and its subsidiaries. Tyco received Revenue Agents’ Reports (the “2008-2009 RARs”) proposing adjustments to certain Tyco entities’ previously filed tax return positions, including the predecessor to The ADT Corporation, relating primarily to certain intercompany debt. In response, Tyco filed a formal, written protest with the IRS Office of Appeals requesting review of the 2008-2009 RARs. During the first quarter of 2017, Tyco successfully resolved the dispute with the IRS. This resolution did not have a material impact on the Company’s financial position, results of operations, and cash flows.

The IRS is currently auditing the 2010-2012 tax years, and should the IRS successfully challenge any tax positions taken in those years, the Company’s share of the collective liability, if any, would be determined pursuant to the 2012 Tax Sharing Agreement. In accordance with the 2012 Tax Sharing Agreement, Tyco is responsible for the first $500 million of tax, interest, and penalties assessed against pre-2013 tax years, including its 27% share of the tax, interest, and penalties assessed for periods prior to Tyco’s 2007 spin-off transaction. In addition to the Company’s share of cash taxes pursuant to the 2012 Tax Sharing Agreement, the Company’s net operating loss (“NOL”) and credit carryforwards may be significantly reduced or eliminated by audit adjustments to pre-2013 tax periods. NOL and credit carryforwards may be reduced prior to incurring any cash tax liability, and will not be compensated for under the 2012 Tax Sharing Agreement. The Company believes that its income tax reserves and the liabilities recorded on the Condensed Consolidated Balance Sheet for the 2012 Tax Sharing Agreement continue to be appropriate. However, the ultimate resolution of these matters is uncertain, and if the IRS were to prevail, could have a material adverse impact on the Company’s financial position, results of operations, and cash flows, potentially including a significant reduction in the Company’s available NOL and credit carryforwards generated in pre-Separation from Tyco periods. Further, to the extent The ADT Corporation is responsible for any liability under the 2012 Tax Sharing Agreement, there could be a material impact on its financial position, results of operations, cash flows, or its effective tax rate in future reporting periods.

During the third quarter of 2017, Tyco was notified by the IRS of its intent to disallow amortization deductions claimed on the Company’s $987 million trademark. Tyco intends to challenge this decision before the Appeals Division of the IRS. If Tyco were to lose the dispute, it would result in minimal cash tax liabilities to ADT Corporation, no impact to the Company’s income statement, but material loss to the Company’s Net Operating Loss deferred tax asset. The Company strongly disagrees with the IRS’s position and maintains that the deductions claimed are appropriate. Tyco has advised the Company that they intend to vigorously defend its originally filed tax return position.

Other liabilities on the Company’s Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016 include $2 million and $11 million, respectively, related to The ADT Corporation’s obligations under certain tax related agreements entered into in conjunction with the Separation from Tyco. The maximum amount of potential future payments is not determinable as such payments relate to unknown conditions and future events that cannot be predicted.

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Note 7. Derivative Financial Instruments

In April 2017, the Company entered into interest rate swap contracts with a notional amount of $1,000 million to economically hedge future cash flows associated with a portion of its variable rate debt under its First Lien Credit Facilities. The Company did not apply hedge accounting to these derivative instruments. Immaterial changes in fair market value were recorded to interest expense in the Condensed Consolidated Statements of Operations.

During the nine months ended September 30, 2016, the Company held derivative financial instruments with varying counterparties to hedge future cash flows associated with the ADT Acquisition (“2016 Derivatives”). Additionally, in connection with the ADT Acquisition, the Company acquired $47 million of derivative assets related to The ADT Corporation interest rate swap transactions that were previously used to hedge certain of The ADT Corporation’s outstanding debt. The Company did not apply hedge accounting to these derivative financial instruments and all changes in fair market value were recorded to other income (expense) in the Condensed Consolidated Statements of Operations.

In addition, the Company terminated the 2016 Derivatives and received approximately $42 million in net proceeds, which are reflected in the proceeds from the settlement of derivative contracts, net in the investing activities section on the Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2016. There was an immaterial impact to the Condensed Consolidated Statement of Operations as a result of the settlements.

Note 8. Restructuring

The Company has identified and pursued opportunities for cost savings through restructuring activities and workforce reductions to improve operating efficiencies, including certain restructuring actions entered into in connection with the ADT Acquisition. The Company incurred certain expenses primarily related to employee severance and other employee benefits as a direct result of these restructuring efforts. These charges are included in merger, restructuring, integration, and other costs in the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2017 and September 30, 2016.

The Company had accrued restructuring liabilities of $12 million and $11 million as of September 30, 2017 and December 31, 2016, respectively. During the nine months ended September 30, 2017, the Company incurred restructuring charges of $21 million that are primarily related to employee severance in connection with the integration of The ADT Corporation. During the nine months ended September 30, 2017, the Company paid $20 million related to these restructuring activities.

During the nine months ended September 30, 2016, the Company incurred restructuring charges of $51 million primarily related to employee severance and other employee benefits as a direct result of restructuring efforts in connection with the ADT Acquisition. Restructuring payments during the nine months ended September 30, 2016 were $38 million.

Note 9. Equity

Dividends

During the nine months ended September 30, 2017, the Company paid $750 million of dividends to certain investors of the Company and Ultimate Parent, which primarily includes distributions to the Company’s Sponsors. Such dividends are presented on the condensed consolidated statement of stockholders’ equity for the nine months ended September 30, 2017.

Other

During the nine months ended September 30, 2017, the Company did not record any material reclassifications out of accumulated other comprehensive income (loss).

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Note 10. Net Loss Per Share and Unaudited Pro Forma Net Loss Per Share

Basic net loss per share is computed by dividing net loss attributable to common shares by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by dividing net loss available to common stockholders by the diluted weighted average number of common shares outstanding for the period. Diluted net loss per share would reflect the potential dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. For purposes of the diluted net loss per share calculation, issued non-qualified stock options of 1.5 million shares for the nine months ended September 30, 2017 are considered to be common stock equivalents but are excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive and therefore, basic and diluted net loss per share were the same for all periods presented. In addition, non-qualified stock options of 1.5 million shares with performance conditions have been excluded from diluted weighted-average number of shares outstanding for the nine months ended September 30, 2017 since performance condition on these awards were not met in the period.

The computations of basic and diluted net loss per share for the periods presented are as follows:


	For the Nine Months Ended
(in thousands, except per share amounts)	September 30, 2017			September 30, 2016
Numerator:
Net loss	$	(295,561	)	$	(451,642	)
Denominator:
Weighted-average number of shares outstanding, basic and diluted		381,357			381,156
Net loss per share, basic and diluted	$	(0.78	)	$	(1.18	)

Unaudited Pro Forma Net Loss Per Share

On February 16, 2017, the Company paid a dividend in an aggregate amount of $550 million to equity holders of the Company and Ultimate Parent, which includes distributions to our Sponsor. On April 18, 2017, we paid an additional dividend of $200 million to equity holders of the Company and Ultimate Parent, which includes distributions to its Sponsor (collectively, the “Special Dividend”). The Company did not declare or pay any dividend during the nine months ended September 30, 2016. On February 13, 2017, the Company issued an incremental $800 million under the First Lien Credit Facilities and used the proceeds together with cash on hand, to fund the Special Dividend and to pay related fees and expenses. To the extent that dividends declared in the 12 months preceding an initial public offering exceed earnings during such period, such dividends are deemed to be in contemplation of the offering, with the intention of repayment out of offering proceeds. Unaudited pro forma earnings per share for the nine months ended September 30, 2017 give effect to the sale of the number of shares the proceeds of which would be necessary to pay the dividend amount that is in excess of earnings from the last 12 months.

F-23

The below table sets forth the computation of unaudited pro forma basic and diluted net loss per share as of September 30, 2017:


(in thousands, except per share amounts)
Numerator:
Net loss	$	(259,561	)

Denominator:
Weighted-average number of shares outstanding, basic and diluted		381,357
Adjustment for common shares issued whose proceeds will be used to pay dividends in excess of earnings ^(a)
Pro forma weighted average common shares used in computing basic and diluted loss per common share outstanding
Pro forma net loss per share, basic and diluted	$

(a) Dividends declared in the past twelve months	$
Net loss attributable to common shareholders in the past twelve months

Dividends paid in excess of earnings	$
Offering price per common share	$

Common shares assumed issued in this offering necessary to pay dividends in excess of earnings

Note 11. Mandatorily Redeemable Preferred Securities

In 2016, the Company issued 750,000 shares of Series A cumulative preferred securities (the “Koch Preferred Securities”) at $0.01 par value per share.

The Company paid cash dividends of $41 million and elected to satisfy the dividend obligation to the holders of the Koch Preferred Securities through a payment-in-kind, which increased mandatorily redeemable preferred securities on our consolidated balance sheet by approximately $22 million as of September 30, 2017. Such amounts are reflected in interest expense in the Condensed Consolidated Statement of Operations for the nine months ended September 30, 2017.

See Note 1 for information on the fair value of the Company’s redeemable Koch Preferred Securities.

Note 12. Related Party Transactions

Management Consulting Agreement

In 2016, in connection with the ADT Acquisition, Apollo Management Holdings, L.P., an affiliate of the Company’s Sponsor (the “Management Service Provider”) entered into a management consulting agreement with the Company (the “Management Consulting Agreement”) relating to the provision of certain management consulting and advisory services to the Company following the ADT Acquisition. In exchange for the provision of such services, the Company is required to pay a fee of $5 million each quarter to the Management Service Provider.

Fees under the Management Consulting Agreement were $15 million for the nine months ended September 30, 2017 and $8 million for the nine months ended September 30, 2016. These costs are included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

Transaction Fee Agreement

Also in 2016, in connection with the ADT Acquisition, Apollo Global Securities, LLC (the “Service Provider”) entered into a transaction fee agreement with the Company (“Transaction Fee Agreement”), relating

F-24

to the provision of certain structuring, financial, investment banking, and other similar advisory services by the Service Provider to the Company. During the second quarter of 2016, the Company paid the Service Provider a one-time transaction fee of $65 million in the aggregate in exchange for services rendered in connection with structuring, arranging the financing, and performing other services in connection with the ADT Acquisition. This transaction fee is reflected in merger, restructuring, integration, and other costs in the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2016.

Participation of our Sponsor in the Issuance of the Prime Notes

An affiliate of our Sponsor purchased $4 million of the Prime Notes upon their issuance on May 2, 2016. All of such Prime Notes have been sold by such affiliate.

Koch

The Company paid cash dividends of $41 million to meet the dividend obligation associated with the Koch Preferred Securities to the Koch Investor during the nine months ended September 30, 2017, and this amount is reflected in interest expense in the Condensed Consolidated Statement of Operations.

As discussed in Note 4, we incurred fees of $64 million during the nine months ended September 30, 2017 in connection with the February and June 2017 amendments and restatements to the First Lien Credit Agreement and the payment of the Special Dividend. Of this amount, $45 million of structuring fees was paid to the Koch Investor.

Other Transactions

During the nine months ended September 30, 2017, the Company paid $750 million of dividends to certain investors of the Company and Ultimate Parent, which primarily includes distributions to its Sponsors. Such dividends are presented on the condensed consolidated statement of stockholders’ equity for the nine months ended September 30, 2017. Refer to Note 9 for further discussion regarding the Company’s equity distributions.

During the nine months ended September 30, 2017, the Company paid approximately $980,000 to the Service Provider related to the February and June 2017 amendments and restatements to the First Lien Credit Agreement. These expenses are reflected in selling, general and administrative expenses in the Condensed Consolidated Statement of Operations for the nine months ended September 30, 2017. Similar fees paid to the Service Provider related to amendments and restatements of the First Lien Credit Agreement during the nine months ended September 30, 2016 were not material.

Additionally, during the second quarter of 2016, the Company paid various structuring fees associated with the ADT Acquisition, primarily to the Service Provider, in the amount of $9 million. These fees are reflected in merger, restructuring, integration, and other costs in the Condensed Consolidated Statements of Operations for the quarter and nine months ended September 30, 2016.

Note 13. Subsequent Events

The Company has evaluated the impact of subsequent events to the condensed consolidated financial statements presented herein through November 21, 2017, the date the financial statements were available for issuance, for the nine months ended September 30, 2017.

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Report of Independent Registered Certified Public Accounting Firm

To the Board of Directors and Stockholders’ of ADT Inc.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows present fairly, in all material respects, the financial position of ADT Inc. and its subsidiaries (Successor) as of December 31, 2016 and 2015, and the results of their operations and their cash flows for the year ended December 31, 2016 and for the period from May 15, 2015 (date of inception) through December 31, 2015 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule of valuation and qualifying accounts for the year ended December 31, 2016 and for the period from May 15, 2015 (date of inception) through December 31, 2015 presents fairly, in all material respect, the information set for therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Fort Lauderdale, Florida

September 28, 2017

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Report of Independent Registered Certified Public Accounting Firm

To the Board of Members of Prime Security Services Borrower, LLC

In our opinion, the consolidated statements of operations, comprehensive loss, shareholder’s equity and cash flows for the period from January 1, 2015 through June 30, 2015 and for the year ended December 31, 2014 present fairly, in all material respects, the results of their operations and their cash flows of Protection One, Inc. and its subsidiaries (Predecessor) for the period from January 1, 2015 through June 30, 2015 and for the year ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule of valuation and qualifying accounts for the period from January 1, 2015 through June 30, 2015 and for the year ended December 31, 2014 presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Fort Lauderdale, Florida

March 31, 2016, except for the effects of disclosing loss per share information as discussed in Note 14 to the consolidated financial statements, as to which the date is September 28, 2017.

F-27

ADT INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Successor)

(in thousands, except share and per share data)


	December 31, 2016			December 31, 2015
Assets
Current Assets:
Cash and cash equivalents	$	75,891		$	15,759
Current portion of restricted cash and cash equivalents		14,932			26,820
Accounts receivable trade, less allowance for doubtful accounts of $28,109 and $1,498, respectively		135,218			71,501
Inventories		89,513			13,107
Work-in-progress		19,376			10,927
Prepaid expenses and other current assets		53,426			3,579

Total current assets		388,356			141,693
Property and equipment, net		342,994			34,822
Subscriber system assets, net		2,836,733			—
Intangible assets, net		8,308,749			1,149,912
Goodwill		5,013,376			927,896
Deferred subscriber acquisition costs, net		179,100			43,366
Other assets		107,173			21,826

Total Assets	$	17,176,481		$	2,319,515

Liabilities and Stockholder’s Equity
Current Liabilities:
Current maturities of long-term debt	$	40,288		$	16,813
Accounts payable		212,239			21,128
Deferred revenue		313,278			69,143
Accrued expenses and other current liabilities		286,734			64,875

Total current liabilities		852,539			171,959
Long-term debt		9,469,682			1,330,145
Mandatorily redeemable preferred securities—authorized 1,000,000 shares Series A of $0.01 par value; issued and outstanding 750,000 shares as of December 31, 2016		633,691			—
Deferred subscriber acquisition revenue		167,075			9,967
Deferred tax liabilities		2,117,943			89,404
Other liabilities		130,575			15,143

Total Liabilities		13,371,505			1,616,618

Commitments and contingencies (See Note 8)

Stockholders’ Equity:
Common stock—authorized 406,155,769 shares of $0.01 par value; issued and outstanding shares—381,348,583 as of December 31, 2016 and 381,155,769 as of December 31, 2015		2			—
Additional paid-in capital		4,424,321			757,150
Accumulated deficit		(590,840	)		(54,253	)
Accumulated other comprehensive loss		(28,507	)		—

Total Stockholders’ Equity		3,804,976			702,897

Total Liabilities and Stockholders’ Equity	$	17,176,481		$	2,319,515

See Notes to Consolidated Financial Statements

F-28

ADT INC. AND SUBSIDIARIES (SUCCESSOR) AND

PROTECTION ONE, INC. AND SUBSIDIARIES (PREDECESSOR)

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)


	Successor						Predecessor
	Year Ended December 31, 2016			From Inception through December 31, 2015			Period from January 1, 2015 through June 30, 2015			Year Ended December 31, 2014
Monitoring and related services	$	2,748,222		$	238,257		$	189,028		$	358,439
Installation and other		201,544			73,310			48,681			108,118

Total revenue		2,949,766			311,567			237,709			466,557
Cost of revenue (exclusive of depreciation and amortization shown separately below)		693,430			148,521			100,591			200,054
Selling, general and administrative expenses		858,896			84,134			74,977			134,299
Depreciation and intangible asset amortization		1,232,967			83,650			41,548			79,650
Merger, restructuring, integration, and other costs		393,788			35,036			9,361			10,252

Operating (loss) income		(229,315	)		(39,774	)		11,232			42,302
Interest expense, net		(521,491	)		(45,169	)		(29,129	)		(59,329	)
Other (expense) income		(51,932	)		325			331			1,087

Loss before income taxes		(802,738	)		(84,618	)		(17,566	)		(15,940	)
Income tax benefit (expense)		266,151			30,365			(1,025	)		(2,548	)

Net loss	$	(536,587	)	$	(54,253	)	$	(18,591	)	$	(18,488	)

Net loss per share:
Basic and Diluted	$	(1.41	)	$	(0.14	)	$	(185,910	)	$	(184,880	)

Weighted-average number of shares:
Basic and Diluted		381,157			381,156			0.1			0.1

Pro forma net loss per share (unaudited):
Basic and Diluted	$

Pro forma weighted-average number of shares (unaudited):
Basic and Diluted	$

See Notes to Consolidated Financial Statements

F-29

ADT INC. AND SUBSIDIARIES (SUCCESSOR) AND

PROTECTION ONE, INC. AND SUBSIDIARIES (PREDECESSOR)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)


	Successor						Predecessor
	Year Ended December 31, 2016			From Inception through December 31, 2015			Period from January 1, 2015 through June 30, 2015			Year Ended December 31, 2014
Net loss	$	(536,587	)	$	(54,253	)	$	(18,591	)	$	(18,488	)
Other comprehensive (loss) income:
Foreign currency translation and other		(28,507	)		—			—			2,419

Total other comprehensive (loss) income, net of tax		(28,507	)		—			—			2,419

Comprehensive loss	$	(565,094	)	$	(54,253	)	$	(18,591	)	$	(16,069	)

See Notes to Consolidated Financial Statements

F-30

PROTECTION ONE, INC. AND SUBSIDIARIES (PREDECESSOR)

CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY

(in thousands, except share data)


	Number of Common Shares		Common Stock		Additional Paid-In Capital		Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Stockholder’s Equity
Predecessor:
Balance as of December 31, 2013		100	$	—	$	130,580	$	(72,113	)	$	(2,419	)	$	56,048
Net loss		—		—		—		(18,488	)		—			(18,488	)
Share-based compensation expense		—		—		1,913		—			—			1,913
Other comprehensive income, net of tax		—		—		—		—			2,419			2,419

Balance as of December 31, 2014		100		—		132,493		(90,601	)		—			41,892
Net loss		—		—		—		(18,591	)		—			(18,591	)
Share-based compensation expense		—		—		781		—			—			781

Balance as of June 30, 2015		100	$	—	$	133,274	$	(109,192	)	$	—		$	24,082

See Notes to Consolidated Financial Statements

F-31

ADT INC. AND SUBSIDIARIES (SUCCESSOR)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)


	Number of Common Shares		Common Stock		Additional Paid-In Capital		Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
Successor:
Balance as of May 15, 2015 (“Inception”)		381,156	$	—	$	—	$	—		$	—		$	—
Equity capital contributions		—		—		754,891		—			—			754,891
Net loss		—		—		—		(54,253	)		—			(54,253	)
Share-based compensation expense		—		—		2,259		—			—			2,259

Balance as of December 31, 2015		381,156		—		757,150		(54,253	)		—			702,897
Issuance of shares		193		2		4,013		—			—			4,015
Equity capital contributions		—		—		3,658,186		—			—			3,658,186
Net loss		—		—		—		(536,587	)		—			(536,587	)
Other comprehensive loss, net of tax		—		—		—		—			(28,507	)		(28,507	)
Share-based compensation expense		—		—		4,625		—			—			4,625
Other		—		—		347		—			—			347

Balance as of December 31, 2016		381,349	$	2	$	4,424,321	$	(590,840	)	$	(28,507	)	$	3,804,976

See Notes to Consolidated Financial Statements

F-32

ADT INC. AND SUBSIDIARIES (SUCCESSOR) AND

PROTECTION ONE, INC. AND SUBSIDIARIES (PREDECESSOR)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


	Successor						Predecessor
	Year Ended December 31, 2016			From Inception through December 31, 2015			Period from January 1, 2015 through June 30, 2015			Year Ended December 31, 2014
Cash Flows from Operating Activities:
Net loss	$	(536,587	)	$	(54,253	)	$	(18,591	)	$	(18,488	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and intangible asset amortization		1,232,967			83,650			41,548			79,650
Amortization of deferred subscriber acquisition costs and revenue, net		6,052			770			7,578			10,656
Amortization of unearned revenue fair value adjustment		62,845			18,574			—			—
Share-based compensation expense		4,625			2,259			781			1,913
Deferred income taxes		(272,512	)		(30,491	)		958			2,296
Provision for losses on accounts receivable and inventory		37,620			2,141			862			2,416
Loss on extinguishment of debt		24,787			—			—			377
Other non-cash items		60,038			3,435			2,508			7,551
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable, net		(34,221	)		(7,741	)		(1,495	)		3,331
Inventories and work-in-progress		(8,797	)		(1,941	)		(3,912	)		(7,002	)
Accounts payable		(9,103	)		(12,176	)		9,753			(1,393	)
Deferred subscriber acquisition costs		(144,583	)		(16,615	)		(19,634	)		(37,322	)
Deferred subscriber acquisition revenue		167,784			10,345			6,827			14,980
Other		26,608			3,797			7,373			1,860

Net cash provided by operating activities		617,523			1,754			34,556			60,825

Cash Flows from Investing Activities:
Dealer generated customer accounts and bulk account purchases		(407,102	)		—			—			—
Subscriber system assets and deferred subscriber installation costs		(468,594	)		(29,556	)		(24,527	)		(48,996	)
Capital expenditures		(78,499	)		(4,490	)		(6,095	)		(8,916	)
Acquisition of businesses, net of cash acquired		(8,501,542	)		(1,988,126	)		(9,377	)		(1,787	)
Proceeds received from settlement of derivative contracts, net		41,586			—			—			—
Other investing		29,282			(39,850	)		361			1,480

Net cash used in investing activities		(9,384,869	)		(2,062,022	)		(39,638	)		(58,219	)

Cash Flows from Financing Activities:
Proceeds from long-term borrowings		6,040,019			1,367,625			—			99,875
Proceeds received from issuance of preferred securities		658,551			—			—			—
Repayment of long-term borrowings		(1,392,549	)		(6,393	)		(5,932	)		(11,220	)
Equity capital contribution		3,662,201			754,891			—			—
Deferred financing costs		(104,205	)		(38,727	)		—			(1,563	)
Other financing		(35,242	)		(1,369	)		(280	)		(3,229	)

Net cash provided by (used in) financing activities		8,828,775			2,076,027			(6,212	)		83,863

Effect of currency translation on cash		(1,297	)		—			—			—
Net increase (decrease) in cash and cash equivalents		60,132			15,759			(11,294	)		86,469
Cash and cash equivalents at beginning of period		15,759			—			89,834			3,365

Cash and cash equivalents at end of period	$	75,891		$	15,759		$	78,540		$	89,834

Supplementary Cash Flow Information:
Interest paid	$	430,686		$	42,320		$	26,667		$	54,046
Income taxes paid, net of refunds		5,446			(38	)		87			114

See Notes to Consolidated Financial Statements

F-33

ADT INC. (SUCCESSOR) AND PROTECTION ONE, INC. AND SUBSIDIARIES (PREDECESSOR)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Basis of Presentation

Nature of Business —ADT Inc. (“ADT Inc.”), a company incorporated in the state of Delaware, and its wholly owned subsidiaries (collectively the “Company”), is principally engaged in the sale, installation, servicing, and monitoring of electronic home and business security and automation systems in the United States (or “U.S.”) and Canada. ADT Inc. is owned by Prime Security Services TopCo Parent, L.P. (“Ultimate Parent”). Ultimate Parent is owned by Apollo Investment Fund VIII, L.P. and related funds that are directly or indirectly managed by Apollo Global Management, LLC, its subsidiaries, and its affiliates (“Apollo” or the “Sponsor”), and management investors.

On July 1, 2015, ADT Inc.’s wholly owned subsidiary, Prime Protection One MS, Inc. (“Merger Sub”) was merged with and into Protection Holdings II, Inc., which is the holding company of Protection One, Inc. (“Protection One”) (the “Protection One Acquisition”). Upon consummation of the Protection One Acquisition, the separate corporate existence of Merger Sub ceased and Protection Holdings II, Inc. continued as a wholly owned subsidiary of ADT Inc. Additionally, on July 1, 2015, ADT Inc. acquired all of the outstanding stock of ASG Intermediate Holding Corp. (“ASG”) (the “ASG Acquisition”). Following the ASG Acquisition, ASG became a wholly owned subsidiary of ADT Inc. The Protection One Acquisition and the ASG Acquisition are hereinafter, unless otherwise noted, referred to collectively as the “Formation Transactions.” Prior to the Formation Transactions, ADT Inc. was a holding company with no assets or liabilities. The periods presented after Inception is comprised of Company activity and is hereinafter referred to as the “Successor.”

Prior to the Protection One Acquisition, Protection Holdings II, Inc. was owned by affiliates of GTCR Golder Rauner II, LLC (collectively, “GTCR”), management investors, and certain co-investors. Protection One is the predecessor of ADT Inc. for accounting purposes. The period presented prior to the Protection One Acquisition is comprised solely of Predecessor activity and is hereinafter referred to as the “Predecessor.”

Refer to Note 3 for additional information regarding these acquisitions.

Basis of Presentation —The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries and have been prepared in U.S. dollars in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

The Protection One Acquisition established a new accounting basis, and therefore, the Consolidated Financial Statements present both Predecessor and Successor periods. The Predecessor and Successor periods are separated by a vertical line on the face of the Consolidated Financial Statements, or elsewhere as necessary, to highlight that the financial information for such periods has been prepared under two different historical bases of accounting.

The Company conducts business through its operating entities based on the manner in which the Chief Executive Officer, who is the chief operating decision maker (“CODM”), evaluates performance and makes decisions about how to allocate resources. Prior to the ADT Acquisition, the Company had two operating segments, retail and wholesale. Beginning with the second quarter of 2016, the Company added two additional operating segments, ADT United States and ADT Canada, in connection with the ADT Acquisition.

F-34

Then, in connection with the integration of the ADT businesses, the Company changed its operating segment structure beginning with the second quarter of 2017 to a single operating segment to better align with how the CODM evaluates the performance of the business. In connection with this realignment, the Company also changed its reporting units, which are now comprised of two reporting units: United States and Canada. The United States reporting unit is comprised of the Company’s historical retail, wholesale, and ADT United States reporting units. The Company’s historical ADT Canada reporting unit (now referred to as “Canada”) was not impacted by this change. Refer to Note 4 for additional information regarding the Company’s goodwill impairment tests performed associated with this reporting unit change.

All intercompany transactions have been eliminated. The results of companies acquired are included in the Consolidated Financial Statements from the effective dates of the acquisitions.

Use of Estimates —The preparation of the Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of revenue and expenses. Significant estimates in these Consolidated Financial Statements include, but are not limited to, estimates of future cash flows and valuation related assumptions associated with asset impairment testing, useful lives and methods for depreciation and amortization, loss contingencies, income taxes and tax valuation allowances, and purchase price allocations. Actual results could differ materially from these estimates.

Reclassifications— Certain prior period amounts have been reclassified to conform with the current period presentation.

Note 2. Summary of Significant Accounting Policies

Revenue Recognition —Substantially all of the Company’s revenue is generated by contractual monthly recurring fees received for monitoring services provided to customers. Revenue from monitoring services is recognized as those services are provided to customers. Customer billings for services not yet rendered are deferred and recognized as revenue as the services are rendered. The balance of deferred revenue is included in current liabilities or long-term liabilities, as appropriate.

For transactions in which the Company retains ownership of the security system, non-refundable fees (referred to as deferred subscriber acquisition revenue) received in connection with the initiation of a monitoring contract are deferred and amortized over the estimated life of the customer relationship.

Sales of security monitoring systems, whereby ownership of the system is transferred to the customer, may have multiple elements, and can include equipment, installation, monitoring services, and maintenance agreements. The Company determines the deliverables under such arrangements, as well as the appropriate units of accounting for those deliverables. Revenues associated with the sale of equipment and related installations are recognized once delivery, installation, and customer acceptance is complete, while the revenue for monitoring and maintenance services are recognized as those services are rendered. Amounts assigned to each unit of accounting are based on an allocation of total arrangement consideration using a hierarchy of estimated selling price for the deliverables. The selling price used for each deliverable is based on Vendor Specific Objective Evidence (“VSOE”) if available, Third Party Evidence (“TPE”) if VSOE is not available, or estimated selling price if neither VSOE or TPE is available.

Early termination of the contract by the customer results in a termination charge in accordance with the customer contract, which is recognized when collectability is reasonably assured. Contract termination charges recognized in revenue during 2016, 2015, and 2014 were not material.

Advertising —Advertising costs were $105 million for the year ended December 31, 2016. Advertising costs were not material for the Successor and Predecessor 2015 periods and Predecessor year ended December 31, 2014. These costs are expensed when incurred, and are included in selling, general and administrative expenses in the Consolidated Statements of Operations.

F-35

Radio Conversion Costs —In 2015, the Company began a program to upgrade cellular technology used in many of its security systems. During the year ended December 31, 2016, the Company incurred charges of $34 million related to this program, which include costs related to The ADT Corporation customers under a similar program from the date of the ADT Acquisition. Charges related to this program during the Successor and Predecessor 2015 periods were not material. These costs are reflected in selling, general and administrative expenses in the Consolidated Statements of Operations.

Merger, Restructuring, Integration, and Other Costs —Included in merger, restructuring, integration, and other costs in the Consolidated Statements of Operations are certain direct and incremental costs resulting from acquisitions made by the Company and certain related integration efforts as a result of those acquisitions, as well as costs related to the Company’s restructuring efforts. For the year ended December 31, 2016, these costs are primarily related to transaction costs and restructuring efforts incurred in connection with the ADT Acquisition. In addition, costs incurred during the Successor and Predecessor 2015 periods primarily relate to charges associated with the Formation Transactions. Costs incurred during the Predecessor year ended December 31, 2014 were not material. Furthermore, included in other costs, are certain impairment charges. Refer to Note 3 for additional information regarding the Company’s acquisitions and Note 10 for further discussion on restructuring activities.

Other (Expense) Income —Included in other (expense) income for the year ended December 31, 2016 are charges primarily related to (i) net foreign currency transaction losses of $16 million from the translation of monetary assets and liabilities that are denominated in Canadian dollars, most of which relates to intercompany loans, and (ii) losses on extinguishment of debt of $28 million primarily relating to the write-off of debt discount and issuance costs associated with the aggregate voluntarily paydown of $260 million of second lien borrowings in July 2016 and October 2016, and amendments to the first lien credit agreement as of June 23, 2016 and December 28, 2016. Charges included in other (expense) income were not material for the Successor and Predecessor 2015 periods and Predecessor year ended December 31, 2014.

Cash and Cash Equivalents —All highly liquid investments with original maturities of three months or less from the time of purchase are considered to be cash equivalents.

Restricted Cash and Cash Equivalents —Restricted cash and cash equivalents are restricted for a specific purpose and cannot be included in the general cash account. At December 31, 2016 and December 31, 2015, the Company’s restricted cash and cash equivalents were held by a third-party trustee and primarily related to amounts placed in escrow to cover potential adjustments to the purchase price of the Protection One Acquisition and ASG Acquisition. Restricted cash and cash equivalents consist of highly liquid investments with remaining maturities when purchased of three months or less. The fair value of restricted cash and cash equivalents is determined using quoted prices available in active markets for identical investments, which is a Level 1 input.

Allowance for Doubtful Accounts —The allowance for doubtful accounts reflects the best estimate of probable losses inherent in the Company’s receivable portfolio determined on the basis of historical experience and other currently available evidence.

Inventories —Inventories are primarily comprised of security system components and parts, as well as finished goods. The Company records inventory at the lower of cost or market value. Inventories are presented net of an obsolescence reserve.

Work-in-Progress —Work-in-progress includes certain costs incurred for customer installations that have not yet been completed.

Prepaid Expenses and Other Current Assets —Prepaid expenses are assets resulting from expenditures for goods or services that occur before the goods are used or services are received. Prepaid expenses are presented in prepaid expenses and other current assets on the Consolidated Balance Sheet and were $25 million as of December 31, 2016.

F-36

Property and Equipment, net —Property and equipment, net is recorded at cost less accumulated depreciation. Depreciation expense, including depreciation associated with capital lease assets, was $77 million for the year ended December 31, 2016, $8 million and $7 million for the Successor and Predecessor 2015 periods, respectively, and $12 million for the Predecessor year ended December 31, 2014. Repairs and maintenance expenditures are expensed when incurred. Depreciation expense, which is included in depreciation and intangible asset amortization in the Consolidated Statements of Operations, is calculated using the straight-line method over the estimated useful lives of the related assets as follows:


Buildings and related improvements		Up to 40 years
Leasehold improvements		Lesser of remaining term of the lease or economic useful life
Capitalized software		3 to 10 years
Machinery, equipment, and other		Up to 14 years

The carrying value of property and equipment, net as of December 31, 2016 and December 31, 2015 was as follows ($ in thousands):


	December 31, 2016			December 31, 2015
Land	$	13,448		$	1,054
Buildings and leasehold improvements		73,353			2,837
Capitalized software		135,439			7,762
Machinery, equipment, and other		96,844			9,127
Construction in progress		64,146			5,932
Capital leases		44,385			15,915
Accumulated depreciation		(84,621	)		(7,805	)

Property and equipment, net	$	342,994		$	34,822

Included in accumulated depreciation in the table above is accumulated depreciation related to capital leases of $13 million and $3 million for the years ended December 31, 2016 and December 31, 2015, respectively.

Subscriber System Assets and Deferred Subscriber Acquisition Costs —The Company capitalizes certain costs associated with transactions in which the Company retains ownership of the security system. These costs include equipment, installation costs, and other direct and incremental costs. These costs are recorded in subscriber system assets, net and deferred subscriber acquisition costs, net. These assets embody a probable future economic benefit as they contribute to the generation of future monitoring revenue for the Company.

Subscriber system assets represent capitalized equipment and installation costs incurred in connection with the transactions described above. Upon customer termination, the Company may retrieve such assets. Accumulated depreciation and depreciation expense of subscriber system assets was $346 million as of and for the year ended December 31, 2016.

Deferred subscriber acquisition costs, net primarily represent direct and incremental selling expenses (i.e., commissions) related to acquiring customers. Commissions paid in connection with the establishment of a monitoring contract are determined based on a percentage of the contractual fees and generally do not exceed deferred subscriber acquisition revenue. Amortization expense relating to deferred subscriber acquisition costs was $27 million for the year ended December 31, 2016, $3 million and $29 million for the Successor and Predecessor 2015 periods, respectively, and $47 million for the Predecessor year ended December 31, 2014.

Subscriber system assets and any related deferred subscriber acquisition costs and deferred subscriber acquisition revenue resulting from customer acquisitions are accounted for using pools based on the month and year of acquisition. The Company amortizes its pooled subscriber system assets and related deferred subscriber

F-37

acquisition costs and deferred subscriber acquisition revenue using an accelerated method over the expected life of the customer relationship, which is 15 years. In cases where deferred subscriber acquisition costs are in excess of deferred subscriber acquisition revenues, the Company amortizes such costs over the initial term of the contract on a straight-line basis. In order to align the amortization of subscriber system assets and related deferred costs and deferred revenue to the pattern in which their economic benefits are consumed, the accelerated method utilizes an average declining balance rate of approximately 250% and converts to straight-line methodology when the resulting amortization charge is greater than that from the accelerated method, resulting in an average amortization of approximately 55% of the pool within the first five years, 25% within the second five years and 20% within the final five years.

Definite-Lived Intangible Assets —Definite-lived intangible assets primarily include customer and dealer relationships which originated from the Formation Transactions and the ADT Acquisition. The amortizable life and method of amortization of the Company’s customer relationship intangible assets are based on management estimates about the amounts and timing of expected future revenue from customer accounts and average customer account life. The amortizable life and method of amortization of the Company’s dealer relationship intangible assets are based on management estimates about the longevity of the underlying dealer network and the attrition of those respective dealers that existed as of the Formation Transactions and the ADT Acquisition, respectively.

Certain contracts and related customer relationships are generated from an external network of independent dealers who operate under the ADT authorized dealer program. These contracts and related customer relationships are recorded at their contractually determined purchase price. During the charge-back period, generally twelve to fifteen months, any cancellation of monitoring service, including those that result from customer payment delinquencies, results in a charge-back by the Company to the dealer for the full amount of the contract purchase price. The Company records the amount charged back to the dealer as a reduction of the intangible assets.

Definite-lived intangible assets arising from the ADT authorized dealer program, as described above, are accounted for using pools based on the month and year of acquisition. The Company amortizes its pooled dealer intangible assets using an accelerated method over the expected life of the pool of customer relationships, which is 15 years. The accelerated method for amortizing these intangible assets utilizes an average declining balance rate of approximately 300% and converts to straight-line methodology when the resulting amortization charge is greater than that from the accelerated method, resulting in an average amortization of approximately 65% of the pool within the first five years, 25% within the second five years, and 10% within the final five years.

Other definite-lived intangible assets are amortized on a straight-line basis over 2 to 10 years. The Company evaluates amortization methods and remaining useful lives of intangible assets on a periodic basis to determine whether events and circumstances warrant a revision to the amortization method or remaining useful lives. Refer to Note 4 for additional information regarding the Company’s definite-lived intangible assets.

Long-Lived Asset Impairments —The Company reviews long-lived assets, including property and equipment, definite-lived intangible assets, and deferred subscriber acquisition costs for impairment whenever events or changes in business circumstances indicate that the carrying amount of an asset may not be fully recoverable. Recoverability is measured by a comparison of the carrying value of the asset or asset group to the future undiscounted cash flows expected to be generated by the assets. The Company groups assets and liabilities at the lowest level for which cash flows are separately identified. The amount of impairment recognized, if applicable, is calculated based on the amount by which the carrying value exceeds fair value. There were no material long-lived asset impairments during the year ended December 31, 2016, during the Predecessor and Successor 2015 periods, or during the Predecessor year ended December 31, 2014.

Goodwill and Other Indefinite-Lived Intangible Assets —The Company evaluates goodwill for its reporting units and indefinite-lived intangible assets for impairment annually, or more frequently, any time an event occurs

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or circumstances change that would indicate that it is more likely than not that the carrying value of a reporting unit or indefinite-lived intangible asset exceeds its fair value. Refer to Note 4 for a discussion regarding the Company’s 2016 annual impairment test.

Business Combinations and Acquisitions —The Company accounts for businesses combinations using the acquisition method of accounting. Under the acquisition method of accounting, the Consolidated Financial Statements reflect the operations of an acquired business starting from the completion of the acquisition. In addition, the assets acquired and liabilities assumed are recorded at the date of acquisition at their estimated fair values, with any excess of the purchase price over the estimated fair values of the net assets acquired recorded as goodwill.

Additionally, as noted above, the Company purchases customer accounts from an external network of independent dealers who operate under the ADT authorized dealer program. Purchases of new accounts are considered asset acquisitions and are recorded at their contractually determined purchase price. Refer to Note 3 for a discussion regarding the Company’s acquisitions.

Accrued Expenses and Other Current Liabilities —Accrued expenses and other current liabilities as of December 31, 2016 and December 31, 2015 consisted of the following ($ in thousands):


	December 31, 2016		December 31, 2015
Accrued interest	$	92,901	$	227
Payroll-related accruals		44,253		13,159
Current portion of escrow liability		14,932		26,820
Other accrued liabilities		134,648		24,669

Total accrued expenses and other current liabilities	$	286,734	$	64,875

Concentration of Credit Risks —The primary financial instruments that could potentially subject the Company to concentrations of credit risks are accounts receivable. The Company’s concentration of credit risk with respect to accounts receivable is limited due to the significant size of its customer base which is primarily homogeneous in nature.

Financial Instruments —The Company’s financial instruments consist primarily of cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, accounts payable, debt, preferred securities, and derivative financial instruments. Due to their short-term and/or liquid nature, the fair values of cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, and accounts payable approximated their respective carrying values as of December 31, 2016 and December 31, 2015.

Cash Equivalents —Included in cash and cash equivalents as of December 31, 2016 and December 31, 2015 are investments in money market mutual funds, which were not material as of December 31, 2016, and were $8 million as of December 31, 2015. These investments are classified as Level 1 for purposes of fair value measurement.

Long-Term Debt Instruments and Preferred Securities —The fair value of the Company’s debt instruments was determined using broker-quoted market prices, which are considered Level 2 inputs. The carrying amount of debt outstanding, if any, under the Company’s revolving credit facilities approximates fair value as interest rates on these borrowings approximate current market rates, and are considered Level 2 inputs. The fair value of the preferred securities was estimated using a discounted cash-flow approach in conjunction with a binomial lattice interest rate model to incorporate the contractual dividends and the Company’s ability to redeem the Koch Preferred Securities. Key input assumptions to the valuation analysis are the credit spread and yield volatility

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associated with the preferred securities, which are considered Level 3 inputs. The credit spread was estimated using the credit spread at issuance of the Koch Preferred Securities and adjusted for the change in observed publicly traded debt of the Company between the issuance date and the measurement date. The yield volatility estimate was based on the historical yield volatility observed from comparable public high yield debt. Refer to Note 5 and Note 6 for additional details on the Company’s debt and Koch Preferred Securities.

The carrying value and fair value of the Company’s debt and Koch Preferred Securities that are subject to fair value disclosures as of December 31, 2016 and December 31, 2015 were as follows ($ in thousands):


	December 31, 2016				December 31, 2015
	Carrying Value		Fair Value		Carrying Value		Fair Value
Debt instruments, excluding capital lease obligations and other	$	9,464,251	$	10,014,292	$	1,332,036	$	1,351,235
Koch Preferred Securities	$	633,691	$	776,800	$	—	$	—

Derivative Financial Instruments —All derivative financial instruments are reported on the Consolidated Balance Sheets at fair value. The Company has not designated any of its derivative financial instruments as hedges, and therefore, all changes in fair value are recognized in the Consolidated Statements of Operations. Refer to Note 9 for more information about the Company’s derivatives.

Translation of Foreign Currency —The Company’s Consolidated Financial Statements are reported in U.S. dollars. As a result of the ADT Acquisition, a portion of the Company’s business is transacted in Canadian dollars. The functional currency of Company’s Canadian entities is the Canadian dollar. The assets and liabilities of the Company’s Canadian entities are translated into U.S. dollars using rates of exchange at the balance sheet date and translation adjustments are recorded in accumulated other comprehensive loss. Revenues and expenses are translated at average rates of exchange in effect during the year.

In determining taxable income for the Company’s Consolidated Financial Statements, the Company must make certain estimates and judgments. These estimates and judgments affect the calculation of certain tax liabilities and the determination of the recoverability of certain of the deferred tax assets, which arise from temporary differences between the tax and financial statement recognition of revenue and expense.

In evaluating the Company’s ability to recover its deferred tax assets, the Company considers all available positive and negative evidence including its past operating results, the existence of cumulative losses in the most recent years, and its forecast of future taxable income. In estimating future taxable income, the Company develops assumptions including the amount of future pre-tax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates the Company is using to manage its underlying businesses.

The Company does not have any significant valuation allowances against its net deferred tax assets.

Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. Management records the effect of a tax rate or law change on the Company’s deferred tax assets and liabilities in the period of enactment. Future tax rate or law changes could have a material effect on the Company’s results of operations, financial condition, or cash flows. Refer to Note 7 for additional information regarding the Company’s income taxes.

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Loss Contingencies —The Company records accruals for various contingencies including legal proceedings and other claims that arise in the normal course of business. The accruals are based on judgment, the probability of losses, and where applicable, the consideration of opinions of internal and/or external legal counsel, and actuarially determined estimates. The Company records an accrual when a loss is deemed probable to occur and is reasonably estimable. Additionally, the Company records insurance recovery receivables from third-party insurers when recovery has been determined to be probable.

Guarantees —In the normal course of business, the Company is liable for contract completion and product performance. The Company does not believe such obligations will significantly affect its financial position, results of operations, or cash flows. As of December 31, 2016, the Company had no material guarantees other than $53 million in standby letters of credit, which primarily relate to its insurance programs. As of December 31, 2015, there were no material guarantees.

Recently Adopted Accounting Pronouncements— In August 2014, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance which requires management to assess a company’s ability to continue as a going concern within one year after the date that the financial statements are issued and to provide related footnote disclosures in certain circumstances. The evaluation requires management to perform two steps. Management must first evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern. If management concludes that substantial doubt is raised, management also is required to consider whether its plans alleviate that doubt. Disclosures in the notes to the financial statements are required if management concludes that substantial doubt exists or that its plans alleviate the substantial doubt that was raised. The Company adopted this guidance for the year ended 2016, and has determined that no additional disclosures are required in the Consolidated Financial Statements as a result of the adoption.

In April 2015, the FASB issued authoritative guidance to simplify the presentation of debt issuance costs and require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. The recognition and measurement guidance for debt issuance costs were not affected by the amendments in this guidance. In the first quarter of 2016, the Company adopted this guidance on a retrospective basis, and as a result, the Company decreased other assets and long-term debt by $33 million in the Consolidated Balance Sheet as of December 31, 2015 to conform with current-period classifications. There was no other impact to the Consolidated Financial Statements as a result of the adoption.

In April 2015, the FASB issued authoritative guidance regarding the accounting for fees paid in a cloud computing arrangement. The new standard provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The Company adopted this guidance in the first quarter of 2016 using a prospective approach for all arrangements entered into or materially modified after the effective date. There was no material impact to the Consolidated Financial Statements as a result of the adoption.

In August 2015, the FASB issued authoritative guidance which specifically discusses debt issuance costs incurred related to line-of-credit arrangements. Given the absence of authoritative guidance within the April 2015 debt issuance costs guidance mentioned above, this guidance indicates that an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the debt issuance costs ratably over the term of the line-of-credit arrangement would be appropriate. The amortization term would be the length of the line-of-credit arrangement and would disregard whether there were any outstanding borrowings on the line-of-credit arrangement. In the first quarter of 2016, the Company adopted this guidance, and will continue to reflect debt issuance costs incurred related to line-of-credit arrangements in other assets in the Consolidated Balance Sheet. Refer to Note 5 for additional information related to the Company’s debt.

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In September 2015, the FASB issued authoritative guidance intended to reduce the cost and complexity of financial reporting when recognizing adjustments to provisional amounts in connection with a business combination. This guidance eliminates the requirement to restate prior period financial statements, but requires entities to present separately on the face of the income statement, or disclose in the notes, the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. In the first quarter of 2016, the Company adopted this guidance. There was no material impact to these Consolidated Financial Statements as a result of the adoption.

In November 2015, the FASB issued authoritative guidance to simplify the presentation of deferred income taxes, and require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position instead of separating deferred tax assets and liabilities into current and non-current amounts. The current requirement that deferred tax liabilities and assets be offset and presented as a single amount for each jurisdiction is not affected by the amendments in this guidance. In the first quarter of 2016, the Company adopted this guidance on a retrospective basis. There was no material impact to these Consolidated Financial Statements as a result of the adoption.

Recently Issued Accounting Pronouncements —In May 2014, the FASB issued authoritative guidance which sets forth a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Companies may use either a full retrospective or a modified retrospective approach to adopt this guidance. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted. This guidance, including subsequently issued amendments by the FASB, will be effective for the Company in the first quarter of 2018.

A final decision regarding the adoption method has not been finalized at this time. The Company’s final determination will depend on a number of factors such as the significance of the impact of the new standard on the Company’s financial results, system readiness and the Company’s ability to accumulate and analyze the information necessary to assess the impact on prior period financial statements, as necessary.

The Company is in the early stages of its evaluation of the impact of the new standard on its accounting policies, processes, and system requirements. The Company has assigned internal resources in addition to the engagement of third-party service providers to assist in the evaluation. While the Company continues to assess the potential impacts under the new standard, the Company is assessing the potential impacts related to the allocation of contract revenues between various services and equipment, and the timing in which those revenues are recognized. The Company is still in the process of determining the impact on the timing of revenue recognition and the allocation of revenue to products and segments.

As part of its preliminary evaluation, the Company has also considered the impact of the guidance in ASC 340-40, Other Assets and Deferred Costs; Contracts with Customers, and the interpretations of the FASB Transition Resource Group for Revenue Recognition (TRG) from their November 7, 2016 meeting with respect to capitalization and amortization of incremental costs of obtaining a contract. As a result of this new guidance, the Company is assessing all incremental costs of obtaining contracts, as the new cost guidance, as interpreted by the TRG, requires the capitalization of all incremental costs that the Company incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained, provided the Company expects to recover the costs.

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realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. This guidance will be effective for the Company in the first quarter of 2017. The amendments in this guidance should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of this guidance.

In January 2016, the FASB issued authoritative guidance related to the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, this update clarifies the guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from the unrealized losses on available-for-sale debt securities. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. This guidance will be effective for the Company in the first quarter of 2018. Entities may early adopt the provision within this guidance to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. An entity should apply the amendments in the standard by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments in the standard that address equity securities without readily determinable fair values should be applied prospectively to equity investments that exist as of the date of adoption of the standard. The Company is currently evaluating the impact of this guidance.

In March 2016, the FASB issued authoritative guidance to simplify the accounting for employee share-based payment transactions. The new guidance simplifies the accounting for income taxes, forfeitures, and statutory tax withholding requirements associated with share-based payment transactions, as well as simplifies the classification of transactions in the statement of cash flows. This guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within those annual reporting periods. This guidance will be effective for the Company in the first quarter of 2017. Early adoption is permitted. The guidance also includes the acceptable or required transition methods for each of the various amendments included in the new standard. The Company is currently evaluating the impact of this guidance.

Note 3. Acquisitions

The following briefly describes the Company’s material acquisition activity for the three years ended December 31, 2016.

The ADT Acquisition

On May 2, 2016, the Company completed its acquisition of The ADT Corporation, a leading provider of monitored security, interactive home and business automation, and related monitoring services in the United

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States and Canada. The ADT Acquisition provides the Company the ability to continue to expand its market presence in the security industry by leveraging the ADT brand name and other best practices.

Additionally, and pursuant to the Merger Agreement, all outstanding stock option awards, and restricted stock awards (except for certain performance share awards), held by The ADT Corporation employees issued under various The ADT Corporation shareholder-approved plans were automatically canceled and converted into the right to receive cash consideration of $42.00 per share. Outstanding performance share awards held by The ADT Corporation employees were cancelled and converted to the right to receive cash at 115% of the target award, and will be paid only if the requisite service period vesting conditions are met or if The ADT Corporation employee is separated from the Company under certain conditions.

Total consideration in connection with the ADT Acquisition was $12,114 million, which includes the assumption, on the acquisition date, of The ADT Corporation’s outstanding debt (inclusive of capital lease obligations) at fair value of $3,551 million and cash of $54 million.

The Company funded the ADT Acquisition, as well as amounts due for merger costs, using the net proceeds from a combination of the following:

(i)

equity proceeds of $3,571 million, net of issuance costs, which resulted from equity issuances by the Company and Ultimate Parent to our Sponsor and certain other investors;

(ii)

incremental first lien term loan borrowings of $1,555 million and the issuance of $3,140 million of Prime Notes; and

(iii)

issuance by the Company of 750,000 shares of the Koch Preferred Securities and issuance by Ultimate Parent of the Warrants to the Koch Investor for an aggregate amount of $750 million. The Company allocated $659 million to the Koch Preferred Securities, which is reflected net of issuance costs of $27 million as a liability in the Company’s historical consolidated balance sheet. The Company allocated the remaining $91 million in proceeds to the Warrants, which was contributed by Ultimate Parent in the form of common equity to the Company, net of $4 million in issuance costs.

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The purchase price allocation, as reflected in these Consolidated Financial Statements, is preliminary and is based on estimates from currently available information. The following table summarizes the allocation of the purchase price to the estimated fair values of the net tangible and intangible assets acquired and liabilities assumed at the date of acquisition:


Estimated fair value of assets acquired and liabilities assumed: ($ in thousands)
Current assets	$	281,800
Property and equipment		296,246
Definite-lived intangible assets		6,245,564
Goodwill		4,126,532
Indefinite-lived intangible assets		1,333,000
Subscriber system assets		2,739,383
Other assets		167,454
Current liabilities		(626,707
Long-term debt (excluding capital lease obligations and other)		(3,519,351	)
Deferred tax liabilities, net		(2,331,096	)
Other liabilities		(149,409	)

Total consideration transferred	$	8,563,416

Some of the more significant assumptions inherent in developing the valuations included the estimated annual net cash flows for each indefinite-lived or definite-lived intangible asset (including net sales, cost of revenue, selling and marketing costs, and working capital/contributory asset charges), the discount rate that appropriately reflects the risk inherent in each future cash flow stream, and the assessment of each asset’s life cycle, as well as other factors. Some of the primary assumptions used in the financial forecasts were developed using historical data, supplemented by current and anticipated market conditions, estimated growth rates, and attrition rates.

Goodwill from the ADT Acquisition was assigned to the ADT United States and ADT Canada reporting units. Goodwill primarily represents the value of the assembled workforce, the value attributable to future customer additions and expansion of services to both new and existing customers, and expected synergies from combining operations.

Indefinite-lived intangible assets consist of the ADT trade name. The ADT trade name has been valued using the relief from royalty method. The relief from royalty method is an income approach that estimates the cost savings that accrue to the Company which it would otherwise have to pay in the form of royalties or license fees on revenues earned through the use of the asset.

Definite-lived intangible assets consist of customer relationships, dealer relationships under the ADT Authorized Dealer Program, and other intangible assets. Customer relationships and dealer relationships were valued using the excess earnings method. The excess earnings method is an income approach that estimates the amount of residual (or excess) cash flows generated by an asset which are reduced by certain contributory asset charges that represent the charges for the use of the asset. As of the acquisition date, customer relationships have a weighted average remaining useful life of approximately six years, and are amortized on an accelerated basis.

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Dealer relationships have a remaining life of 19 years and are amortized on a straight-line basis. The values assigned to other definite-lived intangible assets were not material to the Consolidated Financial Statements.

The fair value of long-term debt assumed in the ADT Acquisition was determined using broker-quoted market prices of identical or similar instruments.

For the year ended December 31, 2016, the Company incurred $311 million in merger related costs on a pre-tax basis in connection with the ADT Acquisition. These costs consisted of (i) financing costs associated with unused bridge and backstop credit facilities, (ii) transaction fees paid to Apollo, (iii) incremental stock-based compensation expense as a result of the acceleration of vesting of all unvested stock options and restricted stock units outstanding as of the acquisition date, and (iv) other merger-related costs such as advisory fees, legal, accounting, and other professional costs. These costs are reflected in merger, restructuring, integration, and other costs in the Consolidated Statements of Operations.

Formation Transactions

The Formation Transactions were completed on July 1, 2015, and were funded by a combination of equity invested by Apollo and the Predecessor’s management of $755 million, as well as borrowings under (i) a first lien credit facility, which included a term loan facility with an initial borrowing amount of $1,095 million and a $95 million revolving credit facility, and (ii) a second lien term loan facility with an initial borrowing amount of $260 million (see Note 5 for information related to the Company’s debt).

Cash from these transactions was used to repay outstanding borrowings, purchase all of the outstanding stock of Alarm Security Group LLC (the primary operating entity of ASG), settle share-based awards, purchase equity units of the Company, and pay transaction fees and expenses. In addition, a portion of the total purchase price was placed in escrow to cover potential adjustments to the purchase consideration associated with general representations and warranties and adjustments to tangible net worth.

Total consideration in connection with the Protection One Acquisition and ASG Acquisition was $1,526 million and $509 million, respectively.

The fair values of the assets acquired and liabilities assumed for both the Predecessor and ASG are based on information obtained from various sources including management and historical experience. The fair value of the intangible assets was determined using the income, market, and cost approaches. Key assumptions used in the determination of fair value include projected cash flows, subscriber attrition rates, and discount rates.

The following table summarizes the fair values of the assets acquired and liabilities assumed for the Predecessor at the date of acquisition ($ in thousands):


Fair value of assets acquired and liabilities assumed:
Current assets	$	84,194
Property and equipment		31,242
Definite-lived intangible assets		805,540
Goodwill		684,368
Indefinite-lived intangible assets		171,685
Other assets		3,709
Current liabilities		(91,375	)
Deferred tax liabilities, net		(153,854	)
Other liabilities		(9,917	)

Total consideration transferred	$	1,525,592

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During 2016, in connection with the Company’s July 1, 2016 annual impairment test, the Company began amortizing the indefinite-lived intangible assets that were subject to impairment testing. Refer to Note 4 for additional information about the Company’s annual impairment tests.

Goodwill from the Protection One Acquisition primarily represents the value of the assembled workforce, as well as expected synergies from combining operations. Goodwill resulting from the Protection One Acquisition is not deductible for income tax purposes.

The following table summarizes the fair values of the assets acquired and liabilities assumed for ASG at the date of acquisition ($ in thousands):


Fair value of assets acquired and liabilities assumed:
Current assets	$	18,678
Property and equipment		3,518
Definite-lived intangible assets		246,834
Goodwill		243,505
Long-term deferred tax asset		29,431
Other assets		179
Current liabilities		(31,305	)
Other liabilities		(2,313	)

Total consideration transferred	$	508,527

Goodwill resulting from the ASG Acquisition is primarily attributable to expected synergies from combining operations. Goodwill resulting from the ASG Acquisition is not deductible for income tax purposes.

Definite-lived intangible assets acquired in the Formation Transactions were primarily comprised of customer accounts and dealer relationships. Customer accounts relate to the Company’s relationships with customers. Dealer relationships relate to the Company’s wholesale operations and relationships with dealers. The Company amortizes such assets using pools on an accelerated method over the expected future life of the customer account and dealer relationship. The amortization method for customer accounts is 15 years on a 210% declining balance, and 20 years on a 190% declining balance for dealer relationships.

The Company incurred costs associated with the Formation Transactions of approximately $20 million in the Successor period ended December 31, 2015. Costs incurred were $3 million during the Predecessor period ended June 30, 2015. These costs consisted of accounting, investment banking, legal, and other professional fees associated with the Formation Transactions, and are included in merger, restructuring, integration, and other costs in the Consolidated Statements of Operations. In addition, transaction costs of $14 million, that were contingent upon the Protection One Acquisition, were paid on July 1, 2015, and were included as part of the consideration for the Predecessor.

Pro Forma Results

The following summary, prepared on a pro forma basis, presents the Company’s unaudited Consolidated Results of Operations for the year ended December 31, 2016 and December 31, 2015 as if the ADT Acquisition had been completed as of January 1, 2015, and as if the Formation Transactions had been completed as of January 1, 2014. The pro forma results below include the impact of certain adjustments related to the amortization of intangible assets, merger-related costs incurred as of the acquisition dates, and interest expense on related borrowings, and in each case, the related income tax effects, as well as certain other post-acquisition adjustments directly attributable to the acquisitions. This pro forma presentation does not include any impact of transaction synergies. The pro forma results are not necessarily indicative of the results of operations that actually would have been

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achieved had the ADT Acquisition and the Formation Transactions been consummated as of that time ($ in thousands):


	Year Ended December 31, 2016			Year Ended December 31, 2015
Revenue	$	4,104,071		$	3,975,173
Net loss		(541,840	)		(552,582	)

Revenues and net loss attributable to The ADT Corporation of $2,260 million and $78 million, respectively, are included in the Consolidated Statements of Operations from the acquisition date, May 2, 2016, to December 31, 2016.

Dealer-Generated Customer Accounts and Bulk Account Purchases

The Company paid $407 million for customer contracts for electronic security services generated under the ADT Authorized Dealer Program and bulk account purchases during the period from the acquisition date, May 2, 2016, to December 31, 2016.

Note 4. Goodwill and Other Intangible Assets

Goodwill

The changes in the carrying amount of goodwill are as follows ($ in thousands):


Predecessor:
Balance as of December 31, 2014	$	362,565
Acquisitions		964

Balance as of June 30, 2015	$	363,529

Successor:
Balance as of Inception	$	—
Acquisitions (Protection One and ASG)		927,896

Balance as of December 31, 2015	$	927,896
Acquisition (The ADT Corporation)		4,126,532
Currency translation and other		(41,052	)

Balance as of December 31, 2016	$	5,013,376

During 2016, the Company performed its annual impairment test over the Company’s goodwill for its reporting units, which resulted in no impairment charges recorded during the year. Refer below for further discussion around the Company’s annual impairment test.

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Other Intangible Assets

The following table sets forth the gross carrying amounts and accumulated amortization of the Company’s other intangible assets as of December 31, 2016 and December 31, 2015 ($ in thousands):


	December 31, 2016					December 31, 2015
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Definite-lived intangible assets:
Customer contracts acquired and customer relationships	$	6,046,702	$	(756,068	)	$	984,615	$	(66,939	)
Dealer relationships ⁽¹⁾		1,600,231		(60,570	)		45,020		(2,097	)
Other		202,502		(57,048	)		22,801		(5,173	)

Total amortizable intangible assets		7,849,435		(873,686	)		1,052,436		(74,209	)

Indefinite-lived intangible assets:
Trade names		1,333,000		—			171,685		—

Total intangible assets	$	9,182,435	$	(873,686	)	$	1,224,121	$	(74,209	)

(1)	Dealer relationships primarily include relationships with dealers under the ADT Authorized Dealer Program.

The Company’s definite-lived intangible assets are comprised primarily of customer accounts acquired and customer relationships and relationships with dealers. The Company recorded $985 million of acquired customer relationships in connection with the Formation Transactions and recognized related amortization expense of $67 million during the Successor period from Inception through December 31, 2015. The weighted-average amortization period for these acquired customer relationships was 15 years.

For the year ended December 31, 2016, the changes in the net carrying amount of customer contracts acquired and customer relationships were follows ($ in thousands):


Balance as of December 31, 2015	$	917,676
Acquisition of customer relationships (The ADT Corporation)		4,676,000
Customer contract additions, net of dealer charge-backs		408,213
Amortization		(691,034	)
Currency translation and other		(20,221	)

Balance as of December 31, 2016	$	5,290,634

The weighted-average amortization period for customer relationships acquired as part of the ADT Acquisition was six years. The weighted-average amortization period for customer contract additions primarily purchased through the ADT authorized dealer network during the year ended December 31, 2016 was 15 years. In addition, $1,561 million of dealer relationships were acquired as a result of the ADT Acquisition, which have a remaining estimated useful life of 19 years.

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Amortization expense for definite-lived intangible assets for the periods presented was as follows ($ in thousands):


	Successor				Predecessor
	Year Ended December 31, 2016		From Inception through December 31, 2015		Period from January 1, 2015 through June 30, 2015		Year Ended December 31, 2014
Definite-lived intangible asset amortization expense	$	800,203	$	74,126	$	17,157	$	38,272

The estimated aggregate amortization expense for definite-lived intangible assets is expected to be as follows ($ in thousands):


2017	$	1,102,489
2018		1,025,783
2019		961,929
2020		942,691
2021		864,507

In addition, the Company’s indefinite-lived intangible assets, as of December 31, 2016, is solely comprised of $1,333 million related to the ADT trade name acquired as part of the ADT Acquisition that was assigned to the ADT United States reporting unit. Indefinite-lived intangible assets, as of December 31, 2015, relate to the trade names acquired as part of the Formation Transactions. The Company performed its annual impairment test over the Company’s indefinite-lived intangible assets, which resulted in no impairment charges recorded during the year. Refer below for further discussion around the Company’s annual impairment test.

Annual Goodwill and Indefinite-Lived Intangible Asset Impairment Analysis

Annually and more frequently if events or changes in business circumstances indicate that it is more likely than not that the carrying value of a reporting unit exceeds its fair value, the Company tests goodwill for impairment by comparing the fair value of the Company’s reporting units with their carrying amounts. The Company tested the retail and wholesale reporting units for impairment as of the Company’s July 1, 2016 annual test date. The fair values of the reporting units tested were determined under a discounted cash flow approach which utilized forecasted cash flows that were then discounted using an estimated weighted-average cost of capital of market participants. In determining fair value, management relies on and considers a number of factors, including operating results, business plans, economic projections, anticipated future cash flows, and other market data. There are inherent uncertainties related to these factors which require judgment in applying them during the annual impairment test. The fair values of the retail and wholesale reporting units each exceeded their respective carrying values, resulting in no goodwill impairment.

On July 1, 2016, as part of its annual impairment test, the Company also tested certain indefinite-lived intangible assets included in the retail and wholesale reporting units, primarily consisting of the Protection One trade name. When performing the test, the Company compares the carrying value of the indefinite-lived intangible asset to its fair value. If the carrying value exceeds the fair value for any indefinite-lived intangible asset tested, that excess would be recorded as an impairment charge and the asset would be subsequently written down to its estimated fair value. When estimating the fair value of the Company’s indefinite-lived trade names, the Company uses the relief from royalty method, which is an income approach that estimates the cost savings that accrue to the Company which it would otherwise have to pay in the form of royalties or license fees on revenues earned through the use of the asset. The utilization of the relief from royalty method requires the Company to make significant assumptions including revenue growth rates, implied royalty rates, and discount rates. As a result of the test, the fair values of the indefinite-lived intangible assets tested exceeded their

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respective carrying values, resulting in no impairment. Following this annual impairment test and commencing on July 1, 2016, the Company began amortizing the indefinite-lived intangible assets that were subject to impairment testing, with the majority of which amortizing over a remaining period of two years. This resulted in the gross carrying amount of $172 million of indefinite-lived intangible asset trade names being reflected in other definite-lived intangible assets in the table included in the “Other Intangible Assets” section above.

On October 1, 2016, and as a result of the continued integration of The ADT Corporation business, the Company changed its annual impairment test date to the first day of the Company’s fourth quarter in order to align the annual impairment test dates for the Company’s goodwill and indefinite-lived intangible assets across all of its reporting units with the Company’s budgeting and forecasting cycle. As a result of the change in impairment test date, the Company qualitatively tested the goodwill associated with the retail and wholesale reporting units for impairment on October 1, 2016, due to the recency of the quantitative test, as described above. As a result of the qualitative test, the Company concluded that it was not more likely than not that the fair value of the retail and wholesale reporting units were less than their respective carrying values.

Additionally, on October 1, 2016, the Company quantitatively tested the goodwill associated with the ADT United States and ADT Canada reporting units for impairment. The fair values of the reporting units tested were determined under a discounted cash flow approach which utilized forecasted cash flows that were then discounted using an estimated weighted-average cost of capital of market participants. In determining fair value, management relies on and considers a number of factors, including operating results, business plans, economic projections, anticipated future cash flows, and other market data. There are inherent uncertainties related to these factors which require judgment in applying them during the annual impairment test. The fair values of the ADT United States and ADT Canada reporting units each exceeded their respective carrying values, resulting in no goodwill impairment. Furthermore, on October 1, 2016, the Company quantitatively tested the ADT trade name for impairment. When performing the test, the Company compares the carrying value of the trade name to its fair value. If the carrying value exceeds the fair value, that excess would be recorded as an impairment charge and the asset would be subsequently written down to its estimated fair value. When estimating the fair value of the ADT trade name, the Company uses the relief from royalty method, which is an income approach that estimates the cost savings that accrue to the Company which it would otherwise have to pay in the form of royalties or license fees on revenues earned through the use of the asset. The utilization of the relief from royalty method requires the Company to make significant assumptions including revenue growth rates, implied royalty rates, and discount rates. As a result of the test, the fair value of the ADT trade name exceeded its respective carrying value, resulting in no impairment.

While the Company’s impairment tests resulted in fair values in excess of carrying values, if the Company’s assumptions are not realized, or if there are changes in any of the assumptions in the future due to a change economic conditions, it is possible that in the future an impairment charge may need to be recorded.

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Note 5. Debt

Debt as of December 31, 2016 and December 31, 2015 was comprised of the following ($ in thousands):


	December 31, 2016			December 31, 2015
Current maturities of long-term debt:
First Lien Term B Loan and First Lien Term B-1 Loan	$	27,626		$	10,952
Capital lease obligations and other		12,662			5,861

Current maturities of long-term debt		40,288			16,813

Long-term debt:
First Lien Term B Loan due 2021	$	—		$	1,081,311
First Lien Term B-1 Loan due 2022		2,734,975			—
Second Lien Term B Loan due 2022		—			260,000
9.250% Second-Priority Senior Secured Notes due 2023		3,140,000			—
4.875% First-Priority Senior Secured Notes due 2032		547,832			—
5.250% First-Priority Senior Secured Notes due 2020		313,506			—
6.250% First-Priority Senior Secured Notes due 2021		1,050,000			—
3.500% First-Priority Senior Secured Notes due 2022		940,470			—
4.125% First-Priority Senior Secured Notes due 2023		651,000			—
4.875% First-Priority Senior Secured Notes due 2042		16,543			—
Revolving Credit Facilities		140,000			22,000
Unamortized discount and debt issuance costs ^(a)		(103,564	)		(42,227	)
Accretion of purchase accounting fair value adjustment		5,863			—
Capital lease obligations and other		33,057			9,061

Total long-term debt		9,469,682			1,330,145

Total debt	$	9,509,970		$	1,346,958

(a)	December 31, 2015 has been adjusted by $33 million based on an accounting standard adopted in the first quarter of 2016 related to the presentation of debt issuance costs. Refer to Note 2 under Recently Adopted Accounting Pronouncements for more information.

First Lien Credit Agreement

Concurrently with the consummation of the Formation Transactions, the Company entered into a first lien credit agreement (the “First Lien Credit Agreement”), which included a term loan facility with an initial aggregate principal amount of $1,095 million maturing on July 1, 2021 (the “First Lien Term B Loan”) and a first lien revolving credit facility maturing on July 1, 2020, with an aggregate commitment of up to $95 million (the “2020 Revolving Credit Facility”).

The interest rate for the First Lien Term B Loan was originally calculated as a margin of 4.00% over the greater of three-month London Interbank Offered Rate (“LIBOR”) or a floor of 1.00% and was payable on each interest payment date, at least quarterly, in arrears. In addition, the First Lien Credit Agreement requires the Company to pay a commitment fee between 0.375% and 0.50% (determined based on a net first senior secured lien leverage ratio) in respect of the unused commitments under the Revolving Credit Facilities (as defined herein).

Outstanding borrowings under the First Lien Term B Loan were $1,092 million as of December 31, 2015, and $22 million was outstanding under the 2020 Revolving Credit Facility at December 31, 2015. The Company repaid the entire remaining outstanding balance of $22 million under the 2020 Revolving Credit Facility during the year ended December 31, 2016. Refer to the discussion below regarding the amendments to the First Lien

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Credit Agreement and resulting re-allocation of the First Lien Term B Loan during the year ended December 31, 2016.

Second Lien Credit Agreement

In addition, concurrently with the consummation of the Formation Transactions, the Company entered into a second lien credit agreement (the “Second Lien Credit Agreement”), which included second lien term loan facility with an initial aggregate principal amount of $260 million maturing on July 1, 2022 (the “Second Lien Term B Loan”). The interest rate for the Second Lien Term B Loan was originally calculated as a margin of 8.75% over the greater of three-month LIBOR or a floor of 1.00% and was payable on each interest payment date, at least quarterly, in arrears. Refer to the discussion below regarding the repayment of the entire remaining outstanding balance of the Second Lien Term B Loan during 2016.

Credit Facilities Amendments

On May 2, 2016, in connection with the ADT Acquisition, the Company amended and restated its First Lien Credit Agreement, dated as of July 1, 2015. Significant terms consist of the following:

•

The Company issued an incremental first lien term loan facility, in an aggregate principal amount of $1,555 million, maturing on May 2, 2022 (the “First Lien Term B-1 Loan”) and received net cash proceeds totaling $1,516 million. The interest rate for the First Lien Term B-1 Loan was originally calculated as a margin of 4.50% (subsequently reduced following amendments and restatements of the First Lien Credit Agreement on June 23, 2016 and December 28, 2016 described below) over the greater of LIBOR or a floor of 1.00% and is payable on each interest payment date, at least quarterly, in arrears.

•

The Company entered into an incremental first lien revolving credit facility, with an aggregate commitment of up to $255 million, maturing on May 2, 2021 (the “2021 Revolving Credit Facility,” collectively with the 2020 Revolving Credit Facility, the “Revolving Credit Facilities”). The interest rate for the 2021 Revolving Credit Facility is calculated as a margin of 4.50% over LIBOR, subject to adjustment to 4.25% pursuant to a leverage-based pricing grid, and is payable on each interest payment date, at least quarterly, in arrears. During the year ended December 31, 2016, the Company borrowed $210 million and repaid $70 million under the 2021 Revolving Credit Facility. As of December 31, 2016, $140 million remained outstanding.

•

The ADT Corporation and its domestic subsidiaries were added as guarantors under the First Lien Credit Agreement.

•

In connection with the amendment and restatement, the applicable margins utilized for the First Lien Term B Loan and the 2020 Revolving Credit Facility were increased from 4.00% to 4.50%.

On May 2, 2016, The ADT Corporation and its domestic subsidiaries were also added as guarantors under the Second Lien Credit Agreement. The Second Lien Credit Agreement was not otherwise amended or modified.

On June 23, 2016, the Company amended and restated its First Lien Credit Agreement, dated as of July 1, 2015, and as amended and restated as of May 2, 2016. Significant terms consist of the following:

•

The Company issued an incremental first lien term loan facility, in an aggregate principal amount of $125 million, maturing on May 2, 2022 (the “Incremental First Lien Term B-1 Loan”) and received net cash proceeds totaling $108 million. The proceeds were used to pay down a portion of the outstanding principal balance on the Second Lien Term B Loan on July 1, 2016, see below for further discussion. The interest rate for the Incremental First Lien Term B-1 Loan was originally calculated as a margin of 3.75% over the greater of LIBOR or a floor of 1.00% and is payable on each interest payment date, at least quarterly, in arrears.

•

The Company reallocated an aggregate principal amount of $172 million from the First Lien Term B Loan to the First Lien Term B-1 Loan.

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•

On December 28, 2016 (together with May 2, 2016 and June 23, 2016, the “2016 First Lien Credit Agreement Amendment Dates”), the Company amended and restated its First Lien Credit Agreement, dated as of July 1, 2015, and as amended and restated as of May 2, 2016 and June 23, 2016 (collectively, the “2016 First Lien Credit Agreement Amendments”). Significant terms consist of the following:

•

The Company allocated the remaining outstanding principal amount of $916 million from the First Lien Term B Loan to the First Lien Term B-1 Loan.

•

As a result of the 2016 First Lien Credit Agreement Amendments noted above, the Company incurred third-party modification fees of $22 million, a significant portion of which is included in merger, restructuring, integration, and other costs in the Consolidated Statement of Operations for the year ended December 31, 2016. The Company also recorded a loss on extinguishment of debt of $14 million, which is included in other (expense) income in the Consolidated Statement of Operations for the year ended December 31, 2016.

Additionally, and as discussed above, in July 2016, the Company used the proceeds received from the Incremental First Lien Term B-1 Loan to voluntarily prepay $125 million of the Second Lien Term B Loan. In October 2016, the Company voluntarily prepaid the remaining outstanding balance of $135 million of the Second Lien Term B Loan using proceeds from operations, and terminated the Second Lien Credit Agreement. In connection with these prepayments, the Company recorded a loss on extinguishment of debt of $14 million primarily related to the write-off of deferred financing costs and discount, which is included in other (expense) income in the Consolidated Statement of Operations for the year ended December 31, 2016.

The Company’s obligations relating to the First Lien Credit Facility are guaranteed, jointly and severally, on a senior secured first-priority basis, by substantially all of the Company’s domestic subsidiaries and are secured by first-priority security interests in substantially all of the domestic assets of the Company, subject to certain permitted liens and exceptions.

The First Lien Term B-1 Loan requires scheduled quarterly payments in annual amounts equal to 1.0% of the original principal amount of the term loan, as subsequently adjusted for the principal amount of the term loan outstanding on each of the 2016 First Lien Credit Agreement Amendment Dates, with the balance payable at maturity.

In addition, the Company is required to make mandatory prepayments on outstanding term loan borrowings with the Company’s excess cash flow, as defined in the First Lien Credit Agreement, if it exceeds certain specified thresholds.

9.250% Senior Secured Notes due 2023

On May 2, 2016, the Company successfully completed the offering of $3,140 million aggregate principal amount of 9.250% Second-Priority Senior Secured Notes that mature on May 15, 2023 (the “Prime Notes”) and received net cash proceeds totaling $3,096 million. Interest on the Prime Notes accrues at 9.250% per annum and will be paid semi-annually, in arrears, on May 15 and November 15 of each year.

The Prime Notes were offered and sold to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), to persons outside of the United States in compliance

F-54

with Regulation S under the Securities Act, and to certain accredited investors as defined under Regulation D under the Securities Act. The Prime Notes have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent an effective registration statement or an applicable exemption from registration requirements or a transaction not subject to the registration requirements of the Securities Act or any state securities laws.

The Company’s obligations relating to the Prime Notes are guaranteed, jointly and severally, on a senior secured second-priority basis, by substantially all of the Company’s domestic subsidiaries and are secured by second-priority security interests in substantially all of the domestic assets of the Company, subject to certain permitted liens and exceptions.

On or after May 15, 2019, the Company may redeem the Prime Notes at its option, in whole at any time or in part from time to time, at the redemption prices set forth in the Prime Notes Indenture, including exhibits and attachments. In addition, prior to May 15, 2019, the Company may redeem the Prime Notes at its option, in whole at any time or in part from time to time, at a redemption price equal to 100% of the principal amount of the Prime Notes redeemed, plus a make-whole premium and accrued and unpaid interest to, but excluding, the redemption date. Notwithstanding the foregoing, at any time and from time to time on or prior to May 15, 2019, the Company may redeem in the aggregate up to 40% of the original aggregate principal amount of the Prime Notes (calculated after giving effect to any issuance of additional notes) in an aggregate amount equal to the net cash proceeds of one or more equity offerings at a redemption price equal to 109.250%, plus accrued and unpaid interest, so long as at least 50% of the original aggregate principal amount of the Prime Notes (calculated after giving effect to any issuance of additional notes) shall remain outstanding after each such redemption.

ADT Notes

In connection with the ADT Acquisition, $718 million aggregate principal amount of The ADT Corporation’s existing 4.875% Notes due 2042 (the “2042 Notes”), held by qualified institutional buyers pursuant to Rule 144A under the Securities Act, persons outside of the United States in compliance with Regulation S under the Securities Act, and accredited investors as defined under Regulation D under the Securities Act, were exchanged for 4.875% First-Priority Senior Secured Notes due 2032 (the “2032 Notes”) which were assumed by the Company. In August 2016, an additional $10 million of 2042 Notes were exchanged for 2032 Notes pursuant to a second supplemental indenture and constitute part of the same series of notes as the $718 million of 2032 Notes. The 2032 Notes will mature on July 15, 2032. Interest on the 2032 Notes accrues at 4.875% per annum and is payable on January 15 and July 15 of each year.

The 2032 Notes have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent an effective registration statement or an applicable exemption from registration requirements or a transaction not subject to the registration requirements of the Securities Act or any state securities laws.

The Company’s obligations pertaining to the 2032 Notes are guaranteed, jointly and severally, on a senior secured first-priority basis, by substantially all of the Company’s existing domestic subsidiaries and are secured by substantially all of the Company’s existing and future domestic assets.

The Company may redeem the 2032 Notes, in whole at any time or in part from time to time, at a price equal to the greater of (i) 100% of the principal amount of the notes to be redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon due on any date after the redemption date discounted to the redemption date at an adjusted treasury rate plus 0.035%.

Also in connection with the ADT Acquisition, the Company was added as a guarantor to the following notes originally issued by The ADT Corporation (collectively, the “ADT Notes”). These notes remained outstanding and became obligations of the combined Company:

•

$300 million aggregate principal amount of 5.250% Senior Notes due 2020, which will mature on March 15, 2020. Interest is payable on March 15 and September 15 of each year;

F-55

•

$1,000 million aggregate principal amount of 6.250% Senior Notes due 2021, which will mature on October 15, 2021. Interest is payable on April 15 and October 15 of each year;

•

$1,000 million aggregate principal amount of 3.500% Notes due 2022, which will mature on July 15, 2022. Interest is payable on January 15 and July 15 of each year;

•

$700 million aggregate principal amount of 4.125% Senior Notes due 2023, which will mature on June 15, 2023. Interest is payable on June 15 and December 15 of each year; and

•

$32 million aggregate principal amount of 4.875% Senior Notes due 2042, which will mature on July 15, 2042. Interest is payable on January 15 and July 15 of each year. As discussed above, in August 2016, an additional $10 million of 2042 Notes were exchanged for 2032 Notes pursuant to a second supplemental indenture.

The Company may redeem the ADT Notes, in whole at any time or in part from time to time, at a redemption price equal to the principal amount of the notes to be redeemed, plus a make-whole premium, plus accrued and unpaid interest to, but excluding, the redemption date.

In connection with the ADT Acquisition, the Company also entered into supplemental indentures providing for each series of ADT Notes to benefit from (i) guarantees by the Company and substantially all of its domestic subsidiaries and (ii) first-priority security interests, subject to permitted liens, in substantially all of the Company’s existing and future domestic assets.

Debt Covenants

The credit agreement and indentures associated with the borrowings above contain certain covenants and restrictions that limit the Company’s ability to, among other things, incur additional debt or issue certain preferred equity interests; create liens on certain assets; make certain loans or investments (including acquisitions); pay dividends on or make distributions in respect of our capital stock or make other restricted payments; consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; sell assets; enter into certain transactions with our affiliates; enter into sale-leaseback transactions; restrict dividends from our subsidiaries or restrict liens; change our fiscal year; and modify the terms of certain debt or organizational agreements.

The Company is also subject to a springing financial maintenance covenant under the Revolving Credit Facilities, which requires the Company to maintain a net first lien senior secured leverage ratio of no greater than 3.30 to 1.00 at the end of each fiscal quarter. The covenant is tested if the outstanding loans under the Revolving Credit Facilities, subject to certain exceptions, exceed 30% of the total commitments under the Revolving Credit Facilities at the testing date (i.e., the last day of any fiscal quarter).

Additionally, upon the occurrence of specified change of control events, the Company must offer to purchase the Notes at 101% of the principal amount, plus accrued and unpaid interest, if any, to, but not including, the purchase date.

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Other

Aggregate annual maturities of long-term debt and capital lease obligations are as follows ($ in thousands):


2017	$	42,571
2018		40,283
2019		37,678
2020		335,385
2021		1,032,707
Thereafter		8,356,906

Total		9,845,530
Less: unamortized discount and deferred financing costs		(103,564	)
Less: unamortized purchase accounting fair value adjustment		(224,786	)
Less: amount representing interest on capital leases		(7,210	)

Total		9,509,970
Less: current maturities of long-term debt		(40,288	)

Total long-term debt	$	9,469,682

Interest expense, excluding interest on the Koch Preferred Securities, for the periods presented was as follows ($ in thousands):


	Successor				Predecessor
	Year Ended December 31, 2016		From Inception through December 31, 2015		Period from January 1, 2015 through June 30, 2015		Year Ended December 31, 2014
Interest expense	$	467,995	$	45,184	$	29,178	$	59,386

See Note 2 for information on the fair value of the Company’s debt.

Note 6. Mandatorily Redeemable Preferred Securities

On May 2, 2016 (the “Issuance Date”), and concurrent with the consummation of the ADT Acquisition, the Company issued 750,000 shares of Series A cumulative preferred securities (the “Koch Preferred Securities”) at $0.01 par value per share, and Ultimate Parent issued detachable warrants for the purchase of limited partnership interests of Ultimate Parent (the “Warrants”) to the Koch Investor in exchange for an aggregate amount of $750 million in consideration. The Koch Preferred Securities had a stated value of $1,000 share as of the Issuance Date, which is a contractually stated amount in the certificate of designation which governs the Koch Preferred Securities. The Company allocated $659 million to the Koch Preferred Securities and incurred issuance costs of $27 million. The Koch Preferred Securities are reflected in the Consolidated Balance Sheet as a liability in accordance with authoritative accounting guidance for distinguishing liabilities from equity, as the Koch Preferred Securities have a mandatory redemption feature which requires repayment at 100% of the stated value, adjusted for any declared but unpaid dividends, on May 2, 2030, the 14 ^th anniversary of the Issuance Date.

Pursuant to the terms and conditions of the certificate of designation and other definitive agreements governing the Koch Preferred Securities, the Koch Preferred Securities have payment priority, liquidation preference, and rank senior to any other class or series of equity of the Company, except with respect to certain specified exceptions. The Koch Preferred Securities also have no voting rights, except with respect to certain specified actions as outlined in the certificate of designation. The Koch Preferred Securities accrue and accumulate preferential cumulative dividends in arrears on the then current stated value. Dividends are payable quarterly, or in the event that dividends are not paid for any reason, such unpaid dividends are added to the then-current stated value. Dividends are paid at a cash rate of the five-year U.S. Treasury yield plus 9.00% per annum

F-57

compound quarterly, subject to increase in certain circumstances. The Company paid cash dividends of $53 million to meet the dividend obligation associated with the Koch Preferred Securities to the holders of the Koch Preferred Securities during the year ended December 31, 2016, and this amount is reflected in interest expense in the Consolidated Statement of Operations.

At its discretion, the Company may redeem the Koch Preferred Securities at various redemption prices, adjusted for any accrued but unpaid dividends. From Issuance Date to May 1, 2019, the Koch Preferred Securities may be redeemed at 105.5% of the stated value plus a “make-whole” premium. Thereafter, the Koch Preferred Securities may be redeemed based on varying redemption percentages of stated value through maturity. Redemption of the Koch Preferred Securities prior to maturity will result in a material impact on the Company’s consolidated financial statements.

Under the certificate of designation and other definitive agreements governing the Koch Preferred Securities, the holders of a majority of the Koch Preferred Securities have the right, upon the occurrence of certain events, including on or after the tenth anniversary of the closing date of the ADT Acquisition, to require the initiation of a process to consummate:

(i)

a sale of the Company and its subsidiaries, including a sale of all or substantially all of the assets of the Company,

(ii)

an initial public offering of the common stock of the Company, the net cash proceeds of which must allow for and be used to redeem the Koch Preferred Securities in full, or

(iii)

any other transaction resulting in the Company or any of its subsidiaries having sufficient cash on hand used to redeem the Koch Preferred Securities in full.

If any of the above transactions are not consummated within twelve months of such holders’ request, then the Koch Investor will have the right to control and implement any such transaction.

Under the certificate of designation, the Company is required to offer to redeem all the Koch Preferred Securities in cash upon the occurrence of (i) any liquidation, dissolution, winding up, or voluntary or involuntary bankruptcy (ii) a change of control, or (iii) any acceleration of long-term debt.

See Note 2 for information on the fair value of the Company’s redeemable preferred securities.

Note 7. Income Taxes

Significant components of loss before income taxes for the periods presented are as follows ($ in thousands):


	Successor						Predecessor
	Year Ended December 31, 2016			From Inception through December 31, 2015			Period from January 1, 2015 through June 30, 2015			Year Ended December 31, 2014
United States	$	(792,118	)	$	(84,618	)	$	(17,566	)	$	(15,940	)
Non-U.S.		(10,620	)		—			—			—

Loss before income taxes	$	(802,738	)	$	(84,618	)	$	(17,566	)	$	(15,940	)

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Significant components of income tax (benefit) expense for periods presented are as follows ($ in thousands):


	Successor						Predecessor
	Year Ended December 31, 2016			From Inception through December 31, 2015			Period from January 1, 2015 through June 30, 2015		Year Ended December 31, 2014
Current :
United States:
Federal	$	(261	)	$	—		$	—	$	—
State		1,630			126			67		252
Non-U.S.		4,992			—			—		—

Current income tax expense		6,361			126			67		252

Deferred :
United States:
Federal		(246,089	)		(28,165	)		663		1,825
State		(19,347	)		(2,326	)		295		471
Non-U.S.		(7,076	)		—			—		—

Deferred income tax (benefit) expense		(272,512	)		(30,491	)		958		2,296

Income tax (benefit) expense	$	(266,151	)	$	(30,365	)	$	1,025	$	2,548

The reconciliations between the actual effective tax rate on continuing operations and the statutory U.S. federal income tax rate for periods presented are as follows ($ in thousands):


	Successor						Predecessor
	Year Ended December 31, 2016			From Inception through December 31, 2015			Period from January 1, 2015 through June 30, 2015			Year Ended December 31, 2014
Federal statutory tax rate		35.0	%		35.0	%		35.0	%		35.0	%
Increases (reductions in taxes due to:
U.S. state income tax provision, net		1.5	%		3.8	%		5.0	%		1.7	%
Non-U.S. net earnings		0.6	%		—	%		—	%		—	%
Nondeductible charges		(4.1	)%		(1.9	)%		14.0	%		(5.8	)%
Valuation Allowance		—	%		(1.0	)%		(60.0	)%		(38.6	)%
Other		0.2	%		—	%		0.2	%		(8.3	)%

Provision for income taxes		33.2	%		35.9	%		(5.8	)%		(16.0	)%

Deferred income taxes result from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes.

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The components of the Company’s net deferred income tax liability as of December 31, 2016 and December 31, 2015 were as follows ($ in thousands):


	December 31, 2016			December 31, 2015
Deferred tax assets:
Property and equipment	$	—		$	16,272
Accrued liabilities and reserves		56,649			11,655
Tax loss and credit carryforwards		1,313,756			225,816
Post-retirement benefits		19,373			—
Deferred revenue		52,058			—
Other		7,911			6,457

		1,449,747			260,200

Deferred tax liabilities:
Property and equipment	$	(20,287	)	$	—
Subscriber system assets		(734,327	)		—
Intangible assets		(2,743,186	)		(326,605	)
Other		(55,909	)		(13,069	)

		(3,553,709	)		(339,674	)

Net deferred tax liability before valuation allowance		(2,103,962	)		(79,474	)
Valuation allowance		(10,948	)		(9,930	)

Net deferred tax liability	$	(2,114,910	)	$	(89,404	)

The Company had a significant change to its deferred tax assets and liabilities during the year ended December 31, 2016 as a result of the ADT Acquisition.

The valuation allowance for deferred tax assets relates to the uncertainty of the utilization of certain U.S. federal and state deferred tax assets. The Company believes that it is more likely than not that it will generate sufficient future taxable income to realize the tax benefits related to its remaining deferred tax assets, including credit and net operating loss (“NOL”) carryforwards, on the Company’s Consolidated Balance Sheet.

As of December 31, 2016, the Company had approximately $3,411 million of U.S. Federal NOL carryforwards with expiration periods between 2017 and 2036. Although future utilization will depend on the Company’s actual profitability and the result of income tax audits, the Company anticipates that the majority of its NOL carryforwards will be fully utilized prior to expiration. A valuation allowance has been recorded against the portion of the Company’s NOLs that are expected to expire prior to utilization. Of the $3,411 million of U.S. Federal NOL carryforwards, $3,109 million is subject to limitation due to “ownership changes” which have occurred under Internal Revenue Code (the “Code”) Section 382. The Company does not, however, expect that this limitation will impact its ability to utilize its tax attributes.

Unrecognized Tax Benefits

The Company had a significant change to its unrecognized tax benefits during the year ended December 31, 2016 as a result of the ADT Acquisition. As of December 31, 2016 and December 31, 2015, the Company had unrecognized tax benefits of $102 million and $109,000, respectively, all of which if recognized, would affect the effective tax rate. The Company recognized interest and penalties related to unrecognized tax benefits in income tax expense. Accrued interest and penalties related to the unrecognized tax benefits as of December 31, 2016 and December 31, 2015 were not material. All unrecognized tax benefits and related interest were presented as non-current in the Company’s Consolidated Balance Sheet as of December 31, 2016.

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The following is a roll forward of unrecognized tax benefits for the periods presented ($ in thousands):


	Successor						Predecessor
	Year Ended December 31, 2016			From Inception through December 31, 2015			Period from January 1, 2015 through June 30, 2015			Year Ended December 31, 2014
Beginning balance	$	109		$	150		$	3,619		$	3,658
Additions/(Reductions) based on tax positions related to prior years		(470	)		(41	)		(21	)		(41	)
Additions/(Reductions) based on tax positions related to current years		—			—			—			2
Increases related to acquisitions		102,822			—			—			—
Other changes not impacting the statement of operations		(911	)		—			—			—

Ending balance	$	101,550		$	109		$	3,598		$	3,619

Based on the current status of its income tax audits, the Company does not believe that a significant portion of its unrecognized tax benefits will be resolved in the next 12 months. The resolution of certain components of The ADT Corporation’s uncertain tax positions may be partially offset by an adjustment to the receivable from Tyco International plc. (“Tyco”), which was recorded pursuant to the 2012 Tax Sharing Agreement. See below for more information on the 2012 Tax Sharing Agreement, as defined therein.

A significant portion of the Company’s uncertain tax positions relate to tax years that remain subject to audit by the taxing authorities in the U.S. federal, state and local, or foreign jurisdictions. Open tax years in significant jurisdictions are as follows:


Jurisdiction	Years Open To Audit
Canada		2009 – 2015
United States		2008 – 2015

Tax Sharing Agreement and Other Income Tax Matters

In connection with the Separation from Tyco, the Company entered into a tax sharing agreement (the “2012 Tax Sharing Agreement”) with Tyco and Pentair Ltd., formerly Tyco Flow Control International, Ltd. (“Pentair”) that governs the rights and obligations of The ADT Corporation, Tyco and Pentair for certain pre-Separation from Tyco tax liabilities, including Tyco’s obligations under the tax sharing agreement among Tyco, Covidien Ltd. (“Covidien”), and TE Connectivity Ltd. (“TE Connectivity”) entered into in 2007 (the “2007 Tax Sharing Agreement”). The 2012 Tax Sharing Agreement provides that The ADT Corporation, Tyco and Pentair will share (i) certain pre-Separation from Tyco income tax liabilities that arise from adjustments made by tax authorities to The ADT Corporation’s, Tyco’s, and Pentair’s U.S. and certain non-U.S. income tax returns, and (ii) payments required to be made by Tyco in respect to the 2007 Tax Sharing Agreement (collectively, “Shared Tax Liabilities”). Tyco will be responsible for the first $500 million of Shared Tax Liabilities. The ADT Corporation and Pentair will share 58% and 42%, respectively, of the next $225 million of Shared Tax Liabilities. The ADT Corporation, Tyco and Pentair will share 27.5%, 52.5% and 20.0%, respectively, of Shared Tax Liabilities above $725 million.

In addition, under the terms of the 2012 Tax Sharing Agreement, in the event the distribution of The ADT Corporation’s common shares to the Tyco shareholders (the “Distribution”), the distribution of Pentair common shares to the Tyco shareholders (the “Pentair Distribution” and, together with the Distribution, the “Distributions”), or certain internal transactions undertaken in connection therewith were determined to be taxable as a result of actions taken by The ADT Corporation, Pentair or Tyco after the Distributions, the party

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responsible for such failure would be responsible for all taxes imposed on The ADT Corporation, Pentair or Tyco as a result thereof. Taxes resulting from the determination that the Distribution, the Pentair Distribution, or any internal transaction that were intended to be tax-free is taxable are referred to herein as “Distribution Taxes.” If such failure is not the result of actions taken after the Distributions by The ADT Corporation, Pentair or Tyco, then The ADT Corporation, Pentair and Tyco would be responsible for any Distribution Taxes imposed on The ADT Corporation, Pentair or Tyco as a result of such determination in the same manner and in the same proportions as the Shared Tax Liabilities. The ADT Corporation has sole responsibility of any income tax liability arising as a result of Tyco’s acquisition of Broadview Security in May 2010, including any liability of Broadview Security under the tax sharing agreement between Broadview Security and The Brink’s Company, dated October 31, 2008 (collectively, “Broadview Tax Liabilities”). Costs and expenses associated with the management of Shared Tax Liabilities, Distribution Taxes, and Broadview Tax Liabilities will generally be shared 20.0% by Pentair, 27.5% by The ADT Corporation, and 52.5% by Tyco. The ADT Corporation is responsible for all of its own taxes that are not shared pursuant to the 2012 Tax Sharing Agreement’s sharing formulae. In addition, Tyco and Pentair are responsible for their tax liabilities that are not subject to the 2012 Tax Sharing Agreement’s sharing formulae.

The 2012 Tax Sharing Agreement also provides that, if any party defaults in its obligation to another party to pay its share of the distribution taxes that arise as a result of no party’s fault, each non-defaulting party is required to pay, equally with any other non-defaulting party, the amounts in default. In addition, if another party to the 2012 Tax Sharing Agreement that is responsible for all or a portion of an income tax liability defaults in its payment of such liability to a taxing authority, The ADT Corporation could be legally liable under applicable tax law for such liabilities and required to make additional tax payments. Accordingly, under certain circumstances, The ADT Corporation may be obligated to pay amounts in excess of its agreed-upon share of its, Tyco’s and Pentair’s tax liabilities.

In conjunction with the Separation from Tyco, substantially all of Tyco’s outstanding equity awards were converted into like-kind awards of The ADT Corporation, Tyco and Pentair. Pursuant to the terms of the 2012 Separation from Tyco and Distribution Agreement, each of the three companies is responsible for issuing its own shares upon employee exercises of stock option awards or vesting of restricted stock units. However, the 2012 Tax Sharing Agreement provides that any allowable compensation tax deduction for such awards is to be claimed by the employee’s current employer. The 2012 Tax Sharing Agreement requires the employer claiming a tax deduction for shares issued by the other companies to pay a percentage of the allowable tax deduction to the company issuing the equity. During the year ended December 31, 2016, amounts recorded in connection with this arrangement were immaterial.

Note 8. Commitments and Contingencies

Lease Obligations

The Company leases facilities, vehicles, and equipment that have various lease terms and maturities that extend out through 2026. Rent expense under these leases was $30 million for the year ended December 31, 2016, $4 million and $3 million for the Successor and Predecessor 2015 periods, respectively, and $6 million for the Predecessor year ended December 31, 2014. Sublease income was not material for all years presented.

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The following table provides a schedule of minimum lease payments under non-cancelable operating leases as of December 31, 2016 ($ in thousands):


2017	$	63,051
2018		57,677
2019		47,701
2020		36,841
2021		20,792
Thereafter		28,609

		254,671
Less sublease income		16,025

Total	$	238,646

In addition to operating leases, the Company has commitments under capital leases for certain facilities and vehicles. Capital lease obligations were not material as of December 31, 2016.

Purchase Obligations

The following table provides a schedule of commitments related to agreements to purchase certain goods and services, including purchase orders, entered into in the ordinary course of business, as of December 31, 2016 ($ in thousands):


2017	$	184,926
2018		4,765
2019		1,054

Total	$	190,745

The purchase obligations in the table above primarily relate to an existing supply and purchasing agreement, as amended, between The ADT Corporation and one of its suppliers for the purchase of certain security system equipment and components. The agreement provides that The ADT Corporation meet minimum purchase requirements, which are subject to adjustments based on certain performance conditions. The agreement expires on December 31, 2017.

Legal Proceedings

Environmental Matters relating to The ADT Corporation and Protection One

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of The ADT Corporation’s electronic waste disposal policies, procedures, and practices are in violation of the California Business and Professions Code and the California Health and Safety Code. During 2016, Protection One was also notified by the same parties that it was subject to a similar investigation. The Company is attempting to coordinate joint handling with the Protection One investigation and is otherwise cooperating fully with the respective authorities. The Company is currently unable to predict the outcome of this investigation or reasonably estimate a range of possible loss.

Wireless Encryption Litigation relating to The ADT Corporation

The Company is subject to five class action claims regarding wireless encryption in certain of ADT Corporation’s security systems. Jurisdictionally, three of the five cases are in Federal Court (in districts within Illinois, Arizona, and California), and both of the remaining two cases are in Florida State Court (both in Palm Beach County Circuit Court). Each of the five plaintiffs brought a claim under the respective state’s consumer fraud statute alleging that The ADT Corporation made misrepresentations and material omissions in its advertising regarding the unencrypted wireless signal pathways in certain security systems monitored by The ADT Corporation. The complaints in all five cases further allege that certain security systems monitored by The ADT Corporation are not secure because the wireless signal pathways are unencrypted, and can be easily hacked. The ADT Corporation filed motions to dismiss in all five cases. The courts in the Federal cases have all ruled on the motions, and the motions in the Florida State Court cases are pending. In the three Federal cases, the courts found that the vast majority of the allegedly misleading express marketing statements were unactionable puffery. However, those courts allowed the actions to proceed based on at least the claim that the relevant consumer fraud statute applies because The ADT Corporation omitted to disclose that the wireless communications with peripheral intrusion detection sensors are unencrypted, as well as unjust enrichment claims. On January 10, 2017, a mediation conference was held at which the parties agreed in principal to settle all five class action lawsuits. A settlement agreement has been finalized and executed. The parties will be seeking preliminary and final approval of the settlement in the U.S. District Court for the Northern District of California. The Company believes its reserves are adequate for this matter.

TCPA Class Action relating to 2G-3G Radio Conversion Project

In August 2016, the Company was served with a class action complaint pending in the United States District Court for the Northern District of Georgia filed by a customer alleging that The ADT Corporation violated the Telephone Consumer Protection Act of 1991 (“TCPA”) by calling his cell phone, which was the only telephone number he provided to The ADT Corporation for his customer account, as part of The ADT Corporation’s efforts to communicate with customers affected by the FCC order allowing wireless carriers to sunset 2G wireless networks. Plaintiff seeks to represent a nationwide class of all The ADT Corporation customers who received such calls to their cell phones from 2013 to present. The premise of the plaintiff’s claim is that The ADT Corporation’s calls were telemarketing calls, which require a higher level of consent, and not transactional/business relationship calls because The ADT Corporation used the 2G transactional calls in an attempt to “upsell” customers to Pulse. The ADT Corporation’s third-party call vendor was also joined as a co-defendant. Before launching the 2G-3G customer calling campaign in late 2013, The ADT Corporation took detailed and focused measures to assure adherence with all contact compliance statutes and regulations; accordingly, The ADT Corporation firmly disputes liability. The case is in the very early stages of discovery and the Company is currently unable to predict the outcome of this litigation.

Income Tax Matters

On September 28, 2012, Tyco distributed to its public stockholders The ADT Corporation’s common stock (the “Separation from Tyco”), and The ADT Corporation became an independent public company. In connection with the Separation from Tyco in September 2012, The ADT Corporation entered into 2012 Tax Sharing Agreement that governs the rights and obligations of The ADT Corporation, Tyco, and Pentair Ltd. for certain pre-Separation from Tyco tax liabilities, including Tyco’s obligations under the 2007 Tax Sharing Agreement among Tyco, Covidien, now operating as a subsidiary of Medtronic, and TE Connectivity. The ADT Corporation

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is responsible for all of its own taxes that are not shared pursuant to the 2012 Tax Sharing Agreement’s sharing formulae. Tyco and Pentair Ltd. are likewise responsible for their tax liabilities that are not subject to the 2012 Tax Sharing Agreement’s sharing formulae. Tyco has the right to administer, control, and settle all U.S. income tax audits for the periods prior to and including the Separation from Tyco.

On May 31, 2016, the U.S. Tax Court entered decisions consistent with the Stipulation of Settled Issues that settled all matters on appeal with respect to audit cycles 1997 through 2007. As a result, Tyco has resolved all aspects of the disputes with respect to these audit cycles before the U.S. Tax Court and before the Appeals Division of the IRS. The resolution did not have a material impact on the Company’s financial position, results of operations, or cash flows.

During 2015, the IRS concluded its field examination of certain of Tyco’s U.S. federal income tax returns for the 2008 and 2009 tax years of Tyco and its subsidiaries. Tyco received Revenue Agents’ Reports (the “2008-2009 RARs”) proposing adjustments to certain Tyco entities’ previously filed tax return positions, including the predecessor to The ADT Corporation, relating primarily to certain intercompany debt. In response, Tyco filed a formal, written protest with the IRS Office of Appeals requesting review of the 2008-2009 RARs. Tyco has advised the Company that it strongly disagrees with the IRS position and intends to vigorously defend its prior filed tax return positions and believes the previously reported taxes for the years in question are appropriate. The 2008-2009 RARs are still under administrative review by the IRS, and are not covered by the U.S. Tax Court decision described above.

If the IRS should successfully assert its positions with respect to the matters in 2008 and 2009 described above, and any matters arising as a result of the current 2010-2012 IRS audit, the Company’s share of the collective liability, if any, would be determined pursuant to the 2012 Tax Sharing Agreement. In accordance with the 2012 Tax Sharing Agreement, Tyco is responsible for the first $500 million of tax, interest, and penalties assessed against pre-2013 tax years including its 27% share of the tax, interest, and penalties assessed for periods prior to Tyco’s 2007 spin-off transaction. In addition to the Company’s share of cash taxes pursuant to the 2012 Tax Sharing Agreement, the Company’s NOL and credit carryforwards may be significantly reduced or eliminated by audit adjustments to pre-2013 tax periods. NOL and credit carryforwards may be reduced prior to incurring any cash tax liability, and will not be compensated for under the tax sharing agreement. The Company believes that its income tax reserves and the liabilities recorded in the Consolidated Balance Sheet for the 2012 Tax Sharing Agreement continue to be appropriate. However, the ultimate resolution of these matters is uncertain, and if the IRS were to prevail, could have a material adverse impact on the Company’s financial position, results of operations, and cash flows, potentially including a significant reduction in or the elimination of the Company’s available NOL and credit carryforwards generated in pre-Separation from Tyco periods. Further, to the extent The ADT Corporation is responsible for any liability under the 2012 Tax Sharing Agreement, there could be a material impact on its financial position, results of operations, cash flows, or its effective tax rate in future reporting periods.

Other liabilities in the Company’s Consolidated Balance Sheet, as of December 31, 2016, include $11 million for The ADT Corporation’s obligations under certain tax related agreements entered into in conjunction with the Separation from Tyco. The maximum amount of potential future payments is not determinable as they relate to unknown conditions and future events that cannot be predicted.

Note 9. Derivative Financial Instruments

During the first half of 2016, the Company held derivative financial instruments with varying counterparties to hedge forecasted cash flows in connection with the ADT Acquisition. Additionally, in connection with the ADT Acquisition, the Company acquired $47 million of derivative assets related to The ADT Corporation interest rate swap transactions that were previously used to hedge certain of The ADT Corporation’s outstanding debt. The Company did not apply hedge accounting to these derivative instruments and all changes in fair market value were recorded to other (expense) income in the Consolidated Statement of Operations for the year ended December 31, 2016.

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During the second quarter of 2016, the Company terminated these derivative instruments and received approximately $42 million in net proceeds which are reflected in the proceeds received from settlement of derivative contracts, net in the investing activities section of the Consolidated Statement of Cash Flows for the year ended December 31, 2016. There was an immaterial impact to the Consolidated Statement of Operations as a result of the settlements.

Note 10. Restructuring

The Company has identified and pursued opportunities for cost savings through restructuring activities and workforce reductions to improve operating efficiencies across the Company’s operations. This includes certain restructuring actions entered into in connection with the ADT Acquisition. The Company incurred certain expenses primarily related to employee severance and other employee benefits as a direct result of these restructuring efforts.

For the year ended December 31, 2016, the Company incurred restructuring charges of $54 million, which were primarily related to severance of certain former ADT Corporation executives and other employees in connection with the ADT Acquisition. Restructuring payments during the year ended December 31, 2016 were $52 million. Restructuring charges are reflected in merger, restructuring, integration, and other costs in the Consolidated Statements of Operations.

Note 11. Retirement Plans

Defined Contribution Plans

The Company maintains several qualified defined contribution plans, which include 401(k) matching programs in the United States, as well as similar matching programs outside the United States related to the ADT Canada business. Expense for the defined contribution plans is computed as a percentage of participants’ compensation and was $18 million for the year ended December 31, 2016, $1 million and $1 million for the Successor and Predecessor 2015 periods, respectively, and $2 million for the Predecessor year ended December 31, 2014.

Defined Benefit Plans

The Company has retirement obligations that were assumed in connection with the ADT Acquisition. These retirement obligations relate to The ADT Corporation’s defined benefit plans, which provide a defined benefit pension plan and certain other post-retirement benefits to certain employees. The Company measures its retirement plans as of year end. These plans were frozen prior to The ADT Corporation’s Separation from Tyco and are not material to the Company’s consolidated financial statements. As of December 31, 2016, the fair values of pension plan assets were $60 million, and the fair values of projected benefit obligations in aggregate was $88 million. As a result, the plans were underfunded by approximately $28 million at December 31, 2016, and were recorded as a net liability in the Consolidated Balance Sheet as of December 31, 2016. Net periodic benefit cost associated with these plans were not material for the year ended December 31, 2016.

Deferred Compensation Plan

Following the ADT Acquisition, the Company maintains the ADT nonqualified Supplemental Savings and Retirement Plan (“SSRP”), which permits eligible employees to defer a portion of their compensation. A record- keeping account is set up for each participant and the participant chooses from a variety of measurement funds for the deemed investment of their accounts. The measurement funds correspond to a number of funds in the Company’s 401(k) plan and the account balance fluctuates with the investment returns on those funds. Deferred compensation liabilities were $23 million as of December 31, 2016. Deferred compensation expense was $2 million for the year ended December 31, 2016.

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Note 12. Share-Based Compensation

Successor

During the fourth quarter of 2016, the Company approved its 2016 Equity Incentive Plan (“Equity Incentive Plan”) which provides for the issuance of non-qualified stock options (the “Options”) and a special opportunity bonus to various employees of the Company. The Company records share-based compensation expense related to options granted to employees under the Equity Incentive Plan, as well as share-based compensation expense related to Profit Unit Award Agreements (“Profit Unit Plan”) granted to employees by Ultimate Parent.

Profit Unit Awards

The Ultimate Parent has authorized awards representing the right to share a portion of the value appreciation on the initial equity capital contribution (“Awards”). As of December 31, 2016, a total of 25,000 thousand Awards have been authorized under the Profit Unit Plan. A total of 13,479 thousand and 6,600 thousand Awards have been granted in 2016 and 2015, respectively, at a weighted average grant date fair value of $3.85 and $3.16, respectively. These Awards are subject to time-based and performance-based vesting conditions, with half of the Awards issued subject to ratable time-based vesting over a five-year period and the other half subject to the achievement of certain investment return thresholds by Apollo. The fair value of the Awards is measured at the grant date and is recognized as expense over the requisite service period. No share-based compensation expense was recorded related to the performance-based portion of the Awards, as the achievement of certain vesting conditions is not yet deemed probable. Share-based compensation expense is included in selling, general and administrative expenses in the Consolidated Statements of Operations, and was $5 million for the year ended December 31, 2016 and $2 million for the Successor period ended December 31, 2015.

The grant date fair value was determined using a Black-Scholes valuation approach with the following assumptions:


	Successor
	Year Ended December 31, 2016	From Inception through December 31, 2015
Risk-free interest rate	0.76% – 1.58%	0.59% – 1.39%
Expected exercise term (years)	1.50 – 4.00	1.75 – 4.00
Expected dividend yield	— %	— %
Expected volatility	40% – 55%	60%

As of December 31, 2016, total unrecognized compensation cost related to the Awards subject to time-based vesting conditions was $44 million, which will be recognized over a period of 4.2 years.

Option Awards

As of December 31, 2016, a total of 25,000 thousand Options have been authorized under the Equity Incentive Plan. In 2016, 1,911 thousand Options were granted to employees at a weighted average grant date fair value $3.25. The fair value of the Options is measured at the grant date and is recognized as expense over the requisite service period. The grant date fair value was determined using a Black-Scholes valuation approach with the following assumption: risk-free interest rate of 0.93% – 1.58%, expected exercise term of 1.50 – 4.00 years, expected volatility 40% – 55%, and a dividend yield of 0%. Share-based compensation expense related to Options granted under the Equity Incentive Plan is not material for the year ended December 31, 2016. The Equity Incentive Plan has the same vesting conditions as the Profit Unit Plan, described above. As of December 31, 2016, total unrecognized compensation cost related to the Options subject to time-based vesting conditions was $3 million, which will be recognized over a period of 4.3 years.

Predecessor

The Predecessor had no share-based compensation arrangements of its own. However, profit interest awards were issued to certain employees (“Profit Interest Awards”). No Profit Interest Awards were granted during the

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year ended December 31, 2014 or the Predecessor period January 1, 2015 through June 30, 2015. The Predecessor accounted for the Profit Interest Awards using the Black-Scholes option-pricing model to determine the fair value.

All Profit Interest Awards became fully vested upon consummation of the Protection One Acquisition when it met certain criterion that qualified it as a sale or liquidation. The Predecessor recorded share-based compensation expense of $1 million for the Predecessor period January 1, 2015 through June 30, 2015 and $2 million for the year ended December 31, 2014.

Note 13. Equity

Common Stock

On May 15, 2015, in connection with the Formation Transactions, the Company issued 100 shares of common stock, par value $0.01 per share, to Ultimate Parent for total proceeds of $1.00.

On May 2, 2016, in connection with the ADT Acquisition, the Company effected a stock split whereby the 100 shares of common stock issued and outstanding as of such date were reclassified as 950,000 shares of common stock.

On November 7, 2016, the Company effected a stock split whereby the 950,000 shares of common stock issued and outstanding as of such date were reclassified as 381,155,769 shares of common stock.

On December 30, 2016, the Company issued 192,814 shares of common stock to Ultimate Parent for total proceeds of $2,514,291.

Equity Contributions

During the year ended December 31, 2016, as a result of the ADT Acquisition, the Company received equity proceeds in the amount of $3,571 million, net of issuance costs, which resulted from equity and detachable warrant issuances by Ultimate Parent to Apollo and certain other investors, which were contributed to the Company in the form of common equity. Additionally, the Company received $4 million in equity contributions from certain management investors during the fourth quarter of 2016. These contributions are reflected in the Consolidated Statement of Stockholders’ Equity for the year ended December 31, 2016.

During the year ended December 31, 2015, the Company received equity proceeds in the amount of $755 million from Apollo and the Predecessor’s management as a result of the Formation Transactions, which is reflected in the Consolidated Statements of Stockholder’s Equity for the year ended December 31, 2015.

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss reflected on the Consolidated Balance Sheets are as follows ($ in thousands):


	Currency Translation Adjustments			Deferred Pension Gains			Accumulated Other Comprehensive Loss
Balance as of December 31, 2015	$	—		$	—		$	—
Pre-tax current period change		(30,663	)		3,433			(27,230	)
Income tax (expense) benefit		—			(1,277	)		(1,277	)

Balance as of December 31, 2016	$	(30,663	)	$	2,156		$	(28,507	)

The Company did not record any adjustments to accumulated other comprehensive loss during the Predecessor or Successor 2015 periods. During the year ended December 31, 2014, the Company reclassified the entire remaining balance of $2 million, net of tax, out of accumulative other comprehensive loss.

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Note 14. Net Loss Per Share and Unaudited Pro Forma Net Loss Per Share

Net Loss Per Share

Basic net loss per share is computed by dividing net loss attributable to common shares by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by dividing net loss available to common stockholders by the diluted weighted average number of common shares outstanding for the period. Diluted net loss per share would reflect the potential dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. For purposes of the diluted net loss per share calculation, Options of 943,000 shares for the year ended December 31, 2016 are considered to be common stock equivalents but are excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive and therefore, basic and diluted net loss per share were the same for all periods presented. In addition, options of 943,000 shares with performance conditions have been excluded from diluted weighted-average number of shares outstanding for the year ended December 31, 2016 since performance condition on these awards were not met in the period.

The computations of basic and diluted net loss per share for the periods presented are as follows:


	Successor						Predecessor
(in thousands, except per share amounts)	Year Ended December 31, 2016			From Inception through December 31, 2015			Period from January 1, 2015 through June 30, 2015			Year Ended December 31, 2014
Numerator:
Net loss	$	(536,587	)	$	(54,253	)	$	(18,591	)	$	(18,488	)
Denominator:
Weighted-average number of shares outstanding, basic and diluted		381,157			381,156			0.1			0.1

Net loss per share, basic and diluted	$	(1.41	)	$	(0.14	)	$	(185,910	)	$	(184,880	)

Unaudited Pro Forma Net Loss Per Share

On February 16, 2017, the Company paid a dividend in an aggregate amount of $550 million to equity holders of the Company and Ultimate Parent, which includes distributions to our Sponsor. On April 18, 2017, we paid an additional dividend of $200 million to equity holders of the Company and Ultimate Parent, which includes distributions to our Sponsor (collectively, the “Special Dividend”). The Company did not declare or pay any dividend in the years ended December 31, 2016, 2015, and 2014. On February 13, 2017, the Company issued an incremental $800 million under the First Lien Credit Facilities and used the proceeds together with cash on hand, to fund the Special Dividend and to pay related fees and expenses. To the extent that dividends declared in the 12 months preceding an initial public offering exceed earnings during such period, such dividends are deemed to be in contemplation of the offering, with the intention of repayment out of offering proceeds. Unaudited pro forma earnings per share for the year ended December 31, 2016 give effect to the sale of the number of shares the proceeds of which would be necessary to pay the dividend amount that is in excess of earnings from the last 12 months.

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The below table sets forth the computation of unaudited pro forma basic and diluted net loss per share as of December 31, 2016:


(in thousands, except per share amounts)
Numerator:
Net loss	$	(536,587	)
Denominator:
Weighted-average number of shares outstanding, basic and diluted		381,157
Adjustment for common shares issued whose proceeds will be used to pay dividends in excess of earnings ^(a)
Pro forma weighted average common shares used in computing basic and diluted loss per common share outstanding
Pro forma net loss per share, basic and diluted	$
(a) Dividends declared in the past 12 months	$
Net loss attributable to common shareholders in the past 12 months
Dividends paid in excess of earnings	$
Offering price per common share	$
Common shares assumed issued in this offering necessary to pay dividends in excess of earnings

Note 15. Geographic Data

Revenue by geographic area for the periods presented was as follows ($ in thousands):


	Successor				Predecessor
	Year Ended December 31, 2016		From Inception through December 31, 2015		Period from January 1, 2015 through June 30, 2015		Year Ended December 31, 2014
United States	$	2,791,233	$	311,567	$	237,709	$	466,557
Canada		158,533		—		—		—

Total revenue	$	2,949,766	$	311,567	$	237,709	$	466,557

Revenues are attributed to individual countries based upon the operating entity that records the transaction. Long-lived assets, which are comprised of subscriber system assets, net and property and equipment, net located in the United States approximate 94.8% and 100.0% of total long-lived assets as of December 31, 2016 and December 31, 2015, respectively, with the remainder residing in Canada.

Note 16. Related-Party Transactions

Transaction Fee Agreement

Apollo Global Securities, LLC, an affiliate of the Company’s Sponsor (the “Service Provider”) entered into a transaction fee agreement with the Company (the “Transaction Fee Agreement”), relating to the provision of certain structuring, financial, investment banking, and other similar advisory services by the Service Provider to the Company, in connection with the ADT Acquisition and future transactions. During the second quarter of 2016, the Company paid the Service Provider a one-time transaction fee of $65 million in the aggregate in exchange for services rendered in connection with structuring, arranging the financing, and performing other services in connection with the ADT Acquisition. This transaction fee is reflected in merger, restructuring, integration, and other costs in the Consolidated Statements of Operations for the year ended December 31, 2016.

Management Consulting Agreement

In connection with the ADT Acquisition, Apollo Management Holdings, L.P., an affiliate of the Company’s Sponsor (the “Management Service Provider”) entered into a management consulting agreement with the

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Company (the “Management Consulting Agreement”) relating to the provision of certain management consulting and advisory services to the Company following the ADT Acquisition. In exchange for the provision of such services, the Company is required to pay the Management Service Provider $5 million each quarter. Fees under the Management Consulting Agreement of $13 million are included in selling, general and administrative expenses in the Consolidated Statements of Operations for the year ended December 31, 2016.

Participation of Our Sponsor in the Issuance of the Prime Notes

An affiliate of our Sponsor purchased $4 million of the Prime Notes upon their issuance on May 2, 2016. All of such Prime Notes have been sold by such affiliate.

Koch

The Company paid cash dividends of $53 million to meet the dividend obligation associated with the Koch Preferred Securities to the Koch Investor during the year ended December 31, 2016, and this amount is reflected in interest expense in the Condensed Consolidated Statement of Operations.

Other Fees

During the second quarter of 2016, the Company also paid various structuring fees associated with the ADT Acquisition, primarily to the Service Provider in the amount of $9 million, which are reflected in merger, restructuring, integration, and other costs in the Consolidated Statements of Operations for the year ended December 31, 2016.

During the year ended December 31, 2016, the Company paid approximately $425 thousand to the Service Provider related to the amendments and restatements to the First Lien Credit Agreement as discussed in Note 5. These expenses are reflected in selling, general and administrative expenses in the Consolidated Statement of Operations for the year ended December 31, 2016.

In addition, in connection with the Formation Transactions, the Company incurred expenses of $10 million with the Service Provider. These expenses are reflected in merger, restructuring, integration, and other costs in the Consolidated Statements of Operations for the Successor period ended December 31, 2015.

During the Predecessor period ended June 30, 2015 and the year ended December 31, 2014, the Predecessor had a Professional Services Agreement with GTCR, which required Predecessor to pay GTCR a management fee as well as certain reimbursements for out-of-pocket expenses incurred in connection with the management services provided under a professional services agreement. The management fees were not material for the Predecessor period ended June 30, 2015 or the Predecessor year ended December 31, 2014.

Note 17. Quarterly Financial Data (Unaudited)

The following table presents quarterly financial data for the periods presented ($ in thousands):


	Successor
	For the Quarters Ended
	March 31, 2016			June 30, 2016			September 30, 2016			December 31, 2016
Revenue	$	170,419		$	690,688		$	1,037,507		$	1,051,152
Operating (loss) income		(1,602	)		(332,579	)		29,852			75,014
Net loss		(22,931	)		(337,294	)		(91,417	)		(84,945	)

F-71


	Predecessor						Successor
	For the Quarters Ended						For the Quarters Ended
	March 31, 2015			June 30, 2015			September 30, 2015			December 31, 2015
Revenue	$	114,553		$	123,156		$	149,504		$	162,063
Operating income (loss)		8,303			2,929			(31,431	)		(8,343	)
Net (loss) income		(6,589	)		(12,002	)		(55,372	)		1,119

Acquisitions —During the third quarter of 2015 and second quarter of 2016, we completed the Formation Transactions and the ADT Acquisition, respectively. The impact of these transactions on our operating results has been included from the dates of these acquisitions and impact quarter-over-quarter and year-over-year comparability. See Note 3 for details about these acquisitions.

Note 18. Condensed Financial Information of Registrant

ADT INC.

(PARENT COMPANY ONLY)

CONDENSED BALANCE SHEETS

(in thousands, except share data)


	December 31, 2016			December 31, 2015
Assets
Investment in subsidiaries	$	4,438,667		$	702,897

Liabilities and Stockholders’ Equity
Mandatorily redeemable preferred securities-issued and outstanding as of December 31, 2016, 750,000 shares Series A of $0.01 par value		633,691			—
Stockholders’ Equity:
Common stock—authorized 406,155,769 shares of $0.01 par value; issued and outstanding shares—381,348,583 as of December 31, 2016 and 381,155,769 as of December 31, 2015		2			—
Additional paid-in capital		4,424,321			757,150
Accumulated deficit		(590,840	)		(54,253	)
Accumulated other comprehensive loss		(28,507	)		—

Total Stockholders’ Equity		3,804,976			702,897

Total Liabilities and Stockholders’ Equity	$	4,438,667		$	702,897

The accompanying note is an integral part of these condensed financial statements.

ADT INC. (PARENT COMPANY ONLY)

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except per share data)


	Year Ended December 31, 2016			From Inception through December 31, 2015
Interest expense		(54,907	)		—
Equity in net loss of subsidiaries		(481,680	)		(54,253	)

Net loss and total comprehensive loss	$	(536,587	)	$	(54,253	)

Net loss per share attributable to common stockholders:
Basic and diluted	$	(1.41	)	$	(0.14	)
Weighted average number of common shares outstanding :
Basic and diluted		381,157			381,156

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A statement of cash flows has not been presented as ADT Inc. parent company did not have any cash as of, or at any point in time during, the years ended December 31, 2016 and December 31, 2015.

The accompanying note is an integral part of these condensed financial statements.

Note to Condensed Financial Statements of Registrant (Parent Company Only)

Basis of Presentation

These condensed parent company-only financial statements have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X, as the restricted net assets of the subsidiaries of ADT Inc. (as defined in Rule 4-08(e)(3) of Regulation S-X) exceed 25% of the consolidated net assets of the Company. The ability of ADT Inc.’s operating subsidiaries to pay dividends may be restricted due to the terms of the subsidiaries’ first lien credit facilities and indenture, as described in Note 5 to the audited consolidated financial statements.

These condensed parent company financial statements have been prepared using the same accounting principles and policies described in the notes to the consolidated financial statements, with the only exception being that the parent company accounts for its subsidiaries using the equity method. These condensed financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this prospectus.

Note 19. Subsequent Events

The Company has evaluated the impact of subsequent events to the consolidated financial statements presented herein through September 28, 2017, the date the financial statements were available for issuance, for the year ended December 31, 2016.

On February 13, 2017, the Company amended and restated its First Lien Credit Agreement, dated as of July 1, 2015, and as amended and restated on the 2016 First Lien Credit Agreement Amendment Dates (the “2017 First Lien Credit Agreement Amendments”). As a result of the 2017 First Lien Credit Agreement Amendments, the Company issued an incremental first lien term loan facility in an aggregate principal amount of $800 million under the First Lien Credit Facilities (the “2017 Incremental First Lien Term B-1 Loan”). The 2017 Incremental First Lien Term B-1 Loan has the same terms as the existing term loans under the First Lien Credit Facilities.

The 2017 First Lien Credit Agreement Amendments adds an exception to the covenant under the First Lien Credit Facilities governing restricted payments to permit the Company to fund one or more distributions to the Company’s equity holders in an aggregate amount not to exceed $795 million (collectively, the “Special Dividend”).

The net proceeds from the 2017 Incremental First Lien Term B-1 Loan, together with cash on hand, were used to fund a portion of the Special Dividend and to pay related fees and expenses.

In September 2017, the Company was notified by Tyco that the IRS intended to disallow amortization deductions claimed on one of the Company’s trademarks. Tyco intends to challenge this decision before the Appeals Division of the IRS. If Tyco were to lose the dispute, it would materially impact the Company’s Net Operating Loss deferred tax asset. The Company strongly disagrees with the IRS’s position and maintains that the deductions claimed are appropriate. Tyco has advised the Company that they intend to vigorously defend its originally filed tax return position.

F-73

ADT INC. AND SUBSIDIARIES (SUCCESSOR) AND

PROTECTION ONE, INC. AND SUBSIDIARIES (PREDECESSOR)

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

(in thousands)


	Successor						Predecessor
	Year Ended December 31, 2016			From Inception through December 31, 2015			Period from January 1, 2015 through June 30, 2015			Year Ended December 31, 2014
Allowance for Doubtful Accounts:
Beginning Balance	$	1,498		$	—		$	5,692		$	5,498
Additions Charged to Income		37,407			2,141			862			2,416
Deductions		(10,796	)		(643	)		(1,027	)		(2,222	)

Ending Balance	$	28,109		$	1,498		$	5,527		$	5,692

F-74

THE ADT CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in millions, except share and per share data)


	March 31, 2016			September 25, 2015
Assets
Current Assets:
Cash and cash equivalents	$	75		$	78
Accounts receivable trade, less allowance for doubtful accounts of $21 and $23, respectively		86			102
Inventories		80			76
Prepaid expenses and other current assets		42			47
Deferred tax assets		94			96

Total current assets		377			399
Property and equipment, net		287			283
Subscriber system assets, net		2,610			2,502
Goodwill		3,687			3,680
Intangible assets, net		2,983			2,999
Deferred subscriber acquisition costs, net		648			631
Other assets		231			232

Total Assets	$	10,823		$	10,726

Liabilities and Stockholders’ Equity
Current Liabilities:
Current maturities of long-term debt	$	6		$	5
Accounts payable		173			190
Accrued expenses and other current liabilities		201			231
Deferred revenue		269			232

Total current liabilities		649			658
Long-term debt		5,347			5,389
Deferred subscriber acquisition revenue		922			895
Deferred tax liabilities		845			732
Other liabilities		136			133

Total Liabilities		7,899			7,807

Commitments and contingencies (See Note 7)

Stockholders’ Equity:
Common stock—authorized 1,000,000,000 shares of $0.01 par value; issued and outstanding shares—165,549,250 as of March 31, 2016 and 165,850,306 as of September 25, 2015		2			2
Additional paid-in capital		2,307			2,374
Retained earnings		687			633
Accumulated other comprehensive loss		(72	)		(90	)

Total Stockholders’ Equity		2,924			2,919

Total Liabilities and Stockholders’ Equity	$	10,823		$	10,726

See Notes to Condensed Consolidated Financial Statements

F-75

THE ADT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in millions, except per share data)


	For the Quarters Ended						For the Six Months Ended
	March 31, 2016			March 27, 2015			March 31, 2016			March 27, 2015
Revenue	$	899		$	890		$	1,799		$	1,777
Cost of revenue		404			392			805			780
Selling, general and administrative expenses		326			331			656			649
Radio conversion costs (See Note 1)		26			19			50			42

Operating income		143			148			288			306
Interest expense, net		(53	)		(51	)		(106	)		(101	)
Other income		—			3			—			3

Income before income taxes		90			100			182			208
Income tax expense		(28	)		(32	)		(56	)		(68	)

Net income	$	62		$	68		$	126		$	140

Net income per share:
Basic	$	0.38		$	0.40		$	0.76		$	0.81
Diluted	$	0.37		$	0.40		$	0.76		$	0.81

Weighted-average number of shares:
Basic		165			171			165			173
Diluted		166			172			166			173

Dividends declared per common share	$	0.22		$	0.42		$	0.43		$	0.42

See Notes to Condensed Consolidated Financial Statements

F-76

THE ADT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(in millions)


	For the Quarters Ended					For the Six Months Ended
	March 31, 2016		March 27, 2015			March 31, 2016		March 27, 2015
Net income	$	62	$	68		$	126	$	140
Other comprehensive income (loss):
Foreign currency translation and other		40		(57	)		18		(88	)

Total other comprehensive income (loss), net of tax		40		(57	)		18		(88	)

Comprehensive income	$	102	$	11		$	144	$	52

See Notes to Condensed Consolidated Financial Statements

F-77

THE ADT CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(in millions)


	Number of Common Shares			Common Stock		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
Balance as of September 25, 2015		166		$	2	$	2,374		$	633		$	(90	)	$	2,919
Other comprehensive income													18			18
Net income										126						126
Dividends declared										(72	)					(72	)
Common stock repurchases		(1	)				(31	)								(31	)
Exercise of stock options and vesting of restricted stock units		1					10									10
Stock-based compensation expense							12									12
Pre-Separation related tax adjustments							(58	)								(58	)

Balance as of March 31, 2016		166		$	2	$	2,307		$	687		$	(72	)	$	2,924

See Notes to Condensed Consolidated Financial Statements

F-78

THE ADT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in millions)


	For the Six Months Ended
	March 31, 2016			March 27, 2015
Cash Flows from Operating Activities:
Net income	$	126		$	140
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and intangible asset amortization		583			553
Amortization of deferred subscriber acquisition costs		76			69
Amortization of deferred subscriber acquisition revenue		(86	)		(80	)
Stock-based compensation expense		12			12
Deferred income taxes		53			59
Provision for losses on accounts receivable and inventory		26			30
Changes in operating assets and liabilities and other		(1	)		(27	)

Net cash provided by operating activities		789			756

Cash Flows from Investing Activities:
Dealer-generated customer accounts and bulk account purchases		(282	)		(267	)
Subscriber system assets		(340	)		(352	)
Capital expenditures		(43	)		(50	)
Other investing		23			(39	)

Net cash used in investing activities		(642	)		(708	)

Cash Flows from Financing Activities:
Proceeds from exercise of stock options		10			27
Repurchases of common stock under approved program		(30	)		(138	)
Dividends paid		(71	)		(71	)
Proceeds from long-term borrowings		130			505
Repayment of long-term debt		(188	)		(367	)
Other financing		(2	)		(5	)

Net cash used in financing activities		(151	)		(49	)

Effect of currency translation on cash		1			(2	)

Net decrease in cash and cash equivalents		(3	)		(3	)
Cash and cash equivalents at beginning of period		78			66

Cash and cash equivalents at end of period	$	75		$	63

See Notes to Condensed Consolidated Financial Statements

F-79

THE ADT CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Basis of Presentation and Summary of Significant Accounting Policies

Nature of Business —The ADT Corporation (“ADT” or the “Company”), a company incorporated in the state of Delaware, is a leading provider of monitored security, interactive home and business automation, and related monitoring services in the United States (“U.S.”) and Canada.

Merger —On February 14, 2016, the Company, as authorized by the Company’s Board of Directors, entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, Prime Security Services Borrower, LLC, a Delaware limited liability company (“Parent”), Prime Security One MS, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), and solely for the purposes of Article IX thereof, Prime Security Services Parent, Inc., a Delaware corporation (“Parent Inc.”) and Prime Security Services TopCo Parent, L.P., a Delaware limited partnership (“Parent LP”), pursuant to which, on May 2, 2016 (the “Closing Date”), Merger Sub merged with and into the Company, with the Company surviving as a wholly owned subsidiary of Parent (the “Merger”).

At the effective time of the Merger, each share of the Company’s common stock, par value $0.01 per share, issued and outstanding immediately prior to the effective time of the Merger (other than shares of the Company’s common stock held by Parent, Merger Sub, or any other direct or indirect wholly owned subsidiary of Parent, shares owned by the Company, including shares held in treasury, or any of its direct or indirect wholly owned subsidiaries, and shares owned by stockholders who have properly made and not withdrawn a demand for appraisal rights under Delaware law) was cancelled and converted into the right to receive cash consideration of $42.00 per share, without interest and subject to applicable withholding taxes.

In connection with the closing of the Merger, on the Closing Date, the Company’s common stock was delisted from the New York Stock Exchange. The Company deregistered under the Securities Exchange Act of 1934 on May 12, 2016.

The completion of the Merger was subject to customary closing conditions including, among others, ADT stockholder approval and regulatory approval. On March 9, 2016, the U.S. Federal Trade Commission granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and on March 11, 2016, the Commissioner of Competition issued a no-action letter and waiver of the obligations to notify with respect to the Merger under Section 113(c) of the Competition Act (Canada). On April 22, 2016, ADT’s stockholders adopted the Merger Agreement.

Refer to the Company’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 16, 2016 for additional information on the Merger and the definitive proxy statement relating to the Merger filed with the SEC on Schedule 14A on March 25, 2016.

Consent Solicitations

On April 1, 2016, in connection with the Merger, the Company commenced consent solicitations (the “Consent Solicitations”) with respect to ADT’s 5.250% Senior Notes due 2020, 6.250% Senior Notes due 2021, 3.500% Notes due 2022, 4.125% Senior Notes due 2023, and 4.875% Notes due 2042 (collectively, the “ADT Notes”), and such consents would (i) waive (with respect to each series of ADT Notes, the “Waiver” and, collectively, the “Waivers”) any potential “Change of Control Triggering Event,” including any potential obligation of ADT to make a “Change of Control Offer” (each as defined in the indentures governing the ADT Notes), and (ii) amend the indentures governing each series of ADT Notes, which would (a) amend the definition of “Change of Control” and (b) limit any required grant of capital stock as collateral with respect to the ADT

F-80

Notes to the extent necessary not to be subject to any requirement pursuant to the SEC rules to file separate financial statements with the SEC or any other governmental agency (clauses (a) and (b) together, with respect to each series of ADT Notes, the “Proposed Amendments”).

In the Consent Solicitations, the Company was seeking consents to the applicable Waiver and the Proposed Amendments for each series of ADT Notes as a single proposal, which under each ADT Rollover Note Indenture requires the consent of holders of not less than a majority in aggregate principal amount of each such series of ADT Notes. As of April 25, 2016, the requisite consents for the Waiver and the Proposed Amendments (the “Requisite Consents”) were obtained with respect to each series of ADT Notes. On the Closing Date, Parent funded the payment of consent fees in connection with the Consent Solicitations.

Following receipt of the Requisite Consents, the Company has executed a supplemental indenture to each series of ADT Notes (each, a “Supplemental Indenture”) giving effect to (a) the Waiver of any “Change of Control Triggering Event” in connection with the Merger and (b) the Proposed Amendments. The Supplemental Indentures also provide each series of ADT Notes the benefit of (1) guarantees by Parent and all wholly owned domestic subsidiaries of the combined company and (2) a first-priority security interest in substantially all of the combined company’s existing and future assets. The Supplemental Indenture became operative upon the closing of the Merger.

Tender Offers

On April 1, 2016, in connection with the Merger, Merger Sub commenced tender offers (the “Tender Offers”) to purchase for cash any and all of the Company’s outstanding $750 million aggregate principal amount of 2.250% Notes due 2017 (the “2017 Notes”) and $500 million aggregate principal amount of 4.125% Senior Notes due 2019. On the Closing Date, $667 million aggregate principal amount of the 2017 Notes were purchased in the applicable Tender Offer, leaving $83 million aggregate principal amount of the 2017 Notes outstanding (the “Remaining 2017 Notes”), and $453 million aggregate principal amount of the 2019 Notes were purchased in the applicable Tender Offer, leaving $47 million aggregate principal amount of the 2019 Notes outstanding (the “Remaining 2019 Notes” and, together with the Remaining 2017 Notes, the “Remaining Notes”).

On the Closing Date, following the completion of the Merger and the purchase of the tendered 2017 and 2019 Notes in the Tender Offers, the Company delivered a notice of redemption (the “Redemption Notice”) to the holders of the Remaining Notes. The Redemption Notice provides for the Company’s redemption of the Remaining Notes on June 1, 2016 (the “Redemption Date”) at a redemption price as specified in the Company’s Current Report on Form 8-K filed with the SEC on May 6, 2016.

Exchange Offer

On April 1, 2016, Merger Sub launched an offer to exchange (the “Exchange Offer”) new 4.875% First-Priority Senior Secured Notes due 2032 (the “Exchange Notes”) for any and all of ADT’s outstanding 4.875% Notes due 2042 that are held by eligible holders. On the Closing Date, Merger Sub successfully completed the Exchange Offer and issued $718 million aggregate principal amount of Exchange Notes pursuant to the Exchange Offer. Following the completion of the Exchange Offer, $32 million aggregate principal amount of the ADT’s 4.875% Notes due 2042 remained outstanding as of the Closing Date. The Exchange Notes have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent an effective registration statement or an applicable exemption from registration requirements or a transaction not subject to the registration requirements of the Securities Act or any state securities laws.

Revolving Credit Facility

On the Closing Date, the Company terminated its five-year unsecured senior revolving credit facility, dated as of June 22, 2012. In connection with the termination, the Company repaid all of its outstanding obligations in respect of principal, interest, and fees under its revolving credit facility.

F-81

Basis of Presentation— The Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries and have been prepared in United States dollars (“USD”) in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The Condensed Consolidated Financial Statements included herein are unaudited, but in the opinion of management, such financial statements include all adjustments, consisting of normal recurring adjustments, necessary to summarize fairly the Company’s financial position, results of operations, and cash flows for the interim periods presented. The interim results reported in these Condensed Consolidated Financial Statements should not be taken as indicative of results that may be expected for the entire year. For a more comprehensive understanding of ADT and its Condensed Consolidated Financial Statements, please review these interim financial statements in conjunction with the Company’s audited financial statements included in its Annual Report on Form 10-K for the fiscal year ended September 25, 2015 (“2015 Form 10-K”), which was filed with the SEC on November 12, 2015.

Historically, the Company had a 52- or 53-week fiscal year that ended on the last Friday in September. Fiscal year 2015 was a 52-week fiscal year. On October 14, 2015, the Company’s Board of Directors approved a change to the Company’s fiscal year end from the last Friday in September to September 30 of each year, and thereafter the end of each fiscal quarter will be the last day of the calendar month-end. The fiscal year change is effective for the 2016 fiscal year, which began on September 26, 2015, the day after the last day of the 2015 fiscal year, and will end on September 30, 2016. This change better aligns the Company’s external reporting with the monthly recurring nature of revenues and expenses associated with its customer base.

The Company conducts business through its operating entities. During the fourth quarter of fiscal year 2015, the Company changed its segment reporting structure in connection with a change in the manner in which the Chief Executive Officer, who is the chief operating decision maker (“CODM”), evaluates performance and makes decisions about how to allocate resources. This change resulted in the reorganization of the Company’s single operating segment into two operating segments, United States and Canada. These operating segments are also the Company’s reportable segments and are identified by the Company based on how resources are allocated and operating decisions are made. Where applicable, presentation of the Company’s operating segments and prior period amounts reported herein are based on the new segment structure. Refer to Note 9 for segment data.

All intercompany transactions have been eliminated. The results of companies acquired are included in the Condensed Consolidated Financial Statements from the effective date of acquisition.

Radio Conversion Costs —Charges incurred related to a three-year conversion program to replace 2G radios used in many of the Company’s security systems are reflected in radio conversion costs in the Company’s Condensed Consolidated Statements of Operations.

Inventories —Inventories are recorded at the lower of cost (average cost) or market value. Inventories consisted of the following ($ in millions):


	March 31, 2016		September 25, 2015
Work in progress	$	3	$	3
Finished goods		77		73

Inventories	$	80	$	76

Prepaid Expenses and Other Current Assets —Prepaid expenses and other current assets includes prepaid expenses of $22 million and $15 million as of March 31, 2016 and September 25, 2015, respectively.

F-82

following table sets forth the gross carrying amount and accumulated depreciation of the Company’s subscriber system assets as of March 31, 2016 and September 25, 2015 ($ in millions):


	March 31, 2016			September 25, 2015
Gross carrying amount	$	5,391		$	5,124
Accumulated depreciation		(2,781	)		(2,622	)

Subscriber system assets, net	$	2,610		$	2,502

Depreciation expense relating to subscriber system assets for the quarters and six months ended March 31, 2016 and March 27, 2015 was as follows ($ in millions):


	For the Quarters Ended				For the Six Months Ended
	March 31, 2016		March 27, 2015		March 31, 2016		March 27, 2015
Subscriber system assets depreciation expense	$	120	$	107	$	237	$	211

Financial Instruments —The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, debt, and derivative financial instruments. Due to their short-term nature, the fair value of cash and cash equivalents, accounts receivable, and accounts payable approximated carrying value as of March 31, 2016 and September 25, 2015.

Long-Term Debt Instruments —The fair value of the Company’s unsecured notes was determined using broker-quoted market prices, which are considered Level 2 inputs. The carrying amount of debt outstanding under the Company’s revolving credit facility approximates fair value as interest rates on these borrowings approximate current market rates, which are considered Level 2 inputs.

The carrying value and fair value of the Company’s debt that is subject to fair value disclosures as of March 31, 2016 and September 25, 2015 were as follows ($ in millions):


	March 31, 2016				September 25, 2015
	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt instruments, excluding capital lease obligations and other	$	5,321	$	4,865	$	5,361	$	5,044

Derivative Instruments —All derivative financial instruments are reported on the Condensed Consolidated Balance Sheets at fair value. For derivative financial instruments designated as fair value hedges, the changes in fair value of both the derivatives and the hedged items are recognized in the Condensed Consolidated Statements of Operations. The fair values of the Company’s derivative financial instruments are not material.

Accrued Expenses and Other Current Liabilities —Accrued expenses and other current liabilities as of March 31, 2016 and September 25, 2015 consisted of the following ($ in millions):


	March 31, 2016		September 25, 2015
Payroll-related accruals	$	44	$	79
Insurance-related accruals		36		39
Accrued interest		44		44
Other accrued liabilities		77		69

Total accrued expenses and other current liabilities	$	201	$	231

F-83

Guarantees —In the normal course of business, the Company is liable for contract completion and product performance. In the opinion of management, such obligations will not significantly affect the Company’s financial position, results of operations, or cash flows. As of March 31, 2016 and September 25, 2015, there were no material guarantees.

Recent Accounting Pronouncements —In May 2014, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance which sets forth a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Companies may use either a full retrospective or a modified retrospective approach to adopt this guidance. In August 2015, the FASB issued an amendment to defer the effective date of this guidance by one year to December 15, 2017, for annual reporting periods, including interim reporting periods within those periods, beginning after that date. Early adoption is permitted, but not before the original effective date of December 15, 2016. This guidance, including all subsequently issued amendments by the FASB to this guidance, will be effective for the Company in the first quarter of fiscal year 2019. The Company is currently evaluating the impact of this guidance.

In April 2015, the FASB issued authoritative guidance to simplify the presentation of debt issuance costs and require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this guidance. This guidance is to be applied on a retrospective basis and is effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. This guidance will be effective for the Company in the first quarter of fiscal year 2017. Early adoption is permitted for financial statements that have not been previously issued. The adoption of this guidance is not expected to have a material impact on the Company’s financial position, results of operations, or cash flows.

In April 2015, the FASB issued authoritative guidance regarding the accounting for fees paid in a cloud computing arrangement. The new standard provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. This guidance will be effective for the Company in the first quarter of fiscal year 2017. Early adoption is permitted. Companies may elect to adopt this guidance using either (1) a prospective approach for all arrangements entered into or materially modified after the effective date, or (2) a retrospective approach. The Company is currently evaluating the impact of this guidance.

In July 2015, the FASB issued authoritative guidance to simplify the subsequent measurement of inventory. Under this new standard, an entity should measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016, and will be effective for the Company in the first quarter of fiscal year 2018. The amendments in this guidance should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of this guidance.

In November 2015, the FASB issued authoritative guidance to simplify the presentation of deferred income taxes, and require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The current requirement that deferred tax liabilities and assets be offset and presented as a single amount for each jurisdiction is not affected by the amendments in this guidance. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016, and will be effective for the Company in the first quarter of fiscal year 2018. The amendments in this guidance may be

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applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. Early adoption is permitted as of the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of this guidance.

In January 2016, the FASB issued authoritative guidance related to the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, this update clarifies the guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from the unrealized losses on available-for-sale debt securities. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. This guidance will be effective for the Company in the first quarter of 2019. Entities may early adopt the provision within this guidance to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. An entity should apply the amendments in the standard by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments in the standard that address equity securities without readily determinable fair values should be applied prospectively to equity investments that exist as of the date of adoption of the standard. The Company is currently evaluating the impact of this guidance.

In February 2016, the FASB issued authoritative guidance on accounting for leases. This new guidance requires lessees to recognize a right-to-use asset and a lease liability for substantially all leases and to disclose key information about leasing arrangements. The recognition, measurement, and presentation of expenses and cash flows for lessees will remain significantly unchanged from current guidance. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, and will be effective for the Company in the first quarter of fiscal year 2020. Early adoption is permitted. The guidance is to be adopted using a modified retrospective approach as of the earliest period presented. The Company is currently evaluating the impact of this guidance.

In March 2016, the FASB issued authoritative guidance to simplify the accounting for employee share-based payment transactions. The new guidance simplifies the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as simplifies the classification of transactions related to share-based payments in the statement of cash flows. The guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within those annual reporting periods, and will be effective for the Company in the first quarter of fiscal year 2018. Early adoption is permitted, provided that all amendments are adopted in the same period. The guidance also includes the acceptable or required transition methods for each of the various amendments included in the new standard. The Company is currently evaluating the impact of this guidance.

2. Acquisitions

Dealer Generated Customer Accounts and Bulk Account Purchases

During the six months ended March 31, 2016 and March 27, 2015, the Company paid $282 million and $267 million, respectively, for customer contracts for electronic security services generated under the ADT authorized dealer program and bulk account purchases.

3. Goodwill and Other Intangible Assets

Goodwill

There were no material changes in the carrying amount of goodwill in either of the Company’s reportable segments during the six months ended March 31, 2016.

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Other Intangible Assets

The following table sets forth the gross carrying amounts and accumulated amortization of the Company’s other intangible assets as of March 31, 2016 and September 25, 2015 ($ in millions):


	March 31, 2016					September 25, 2015
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Amortizable:
Contracts and related customer relationships	$	8,223	$	(5,274	)	$	8,147	$	(5,183	)
Other		41		(7	)		41		(6	)

Total	$	8,264	$	(5,281	)	$	8,188	$	(5,189	)

The changes in the net carrying amount of contracts and related customer relationships during the six months ended March 31, 2016 were as follows ($ in millions):


Balance as of September 25, 2015	$	2,964
Customer contract additions, net of dealer charge-backs		285
Amortization		(308	)
Currency translation and other		8

Balance as of March 31, 2016	$	2,949

The weighted-average amortization period for contracts and related customer relationships acquired during the six months ended March 31, 2016 was 15 years. Intangible asset amortization expense for the quarters and six months ended March 31, 2016 and March 27, 2015 was as follows ($ in millions):


	For the Quarters Ended				For the Six Months Ended
	March 31, 2016		March 27, 2015		March 31, 2016		March 27, 2015
Intangible asset amortization expense	$	155	$	153	$	309	$	309

The estimated aggregate amortization expense for intangible assets is expected to be as follows ($ in millions):


Remainder of fiscal 2016	$	296
Fiscal 2017		516
Fiscal 2018		430
Fiscal 2019		368
Fiscal 2020		295
Fiscal 2021		214

Other than goodwill, the Company does not have any other indefinite-lived intangible assets as of March 31, 2016.

4. Debt

Revolving Credit Facility

As of March 31, 2016, the Company had $280 million outstanding borrowings under its $750 million revolving credit facility compared with $335 million outstanding as of September 25, 2015. During the six months ended March 31, 2016, the Company borrowed $130 million under the revolving credit facility and

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repaid $185 million. The interest rate for borrowings under the revolving credit facility is based on the London Interbank Offered Rate or an alternative base rate, plus a spread, based upon the Company’s credit rating. The revolving credit facility has a maturity date of June 22, 2017.

Other

Refer to Note 1 for information on the fair value of the Company’s debt including the Company’s unsecured notes as well as information about the Merger’s impact on the Company’s debt.

5. Equity

Dividends

During the six months ended March 31, 2016, the Company’s Board of Directors declared and paid the following dividends on ADT’s common stock:


Declaration Date	Dividend per Share		Record Date	Payment Date
October 14, 2015	$	0.21	October 28, 2015	November 18, 2015
January 7, 2016	$	0.22	January 27, 2016	February 17, 2016

On December 15, 2015, the Company’s Board of Directors authorized an increase in the Company’s quarterly dividend from $0.21 per share to $0.22 per share of its common stock.

Pursuant to the terms of the Merger Agreement, the Company was not permitted to declare, authorize, or pay any dividends prior to the consummation of the Merger, other than the quarterly dividend announced on January 7, 2016, or dividends to its wholly owned subsidiaries.

Share Repurchase Programs

On November 18, 2013, the Company’s Board of Directors authorized a $1 billion increase to the $2 billion, three-year share repurchase program that was previously approved on November 26, 2012 (“FY2013 Share Repurchase Program”). On November 26, 2015, the FY2013 Share Repurchase Program expired. Prior to the expiration of this share repurchase program, during the six months ended March 31, 2016, the Company made open market repurchases of 985 thousand shares of ADT’s common stock at an average price of $30.01 per share. The total cost of open market repurchases was approximately $30 million, all of which was paid during the period. On the expiration date of this share repurchase program, the remaining authorized amount of $27 million expired.

The Company’s share repurchases for the six months ended March 31, 2016 were made in accordance with the publicly announced board approved FY2013 Share Repurchase Program. In addition, the Company’s repurchases were treated as effective retirements of the purchased shares, and therefore reduced reported shares issued and outstanding by the number of shares repurchased. The Company recorded the excess of the purchase price over the par value of the common stock as a reduction to additional paid-in capital.

On July 17, 2015, the Company’s Board of Directors approved a new, three-year share repurchase program authorizing the Company to purchase up to $1 billion of ADT’s common stock (“FY2015 Share Repurchase Program”). Pursuant to this approval, the Company may enter into accelerated share repurchase plans, as well as repurchase shares on the open market pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, in private transactions, or otherwise. The FY2015 Share Repurchase Program expires on July 17, 2018, and may be terminated at any time. As of March 31, 2016, no shares have been repurchased under the approved FY2015 Share Repurchase Program.

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The Company may also repurchase shares in connection with tax withholding requirements associated with the vesting of share-based awards, which are separate from the share repurchase programs described above. During the six months ended March 31, 2016, shares repurchased to satisfy tax withholding requirements were not material.

Pursuant to the terms of the Merger Agreement, the Company was not permitted to repurchase shares of its common stock prior to the consummation of the Merger, subject to certain exceptions.

Other

During the six months ended March 31, 2016, the Company did not record any material reclassifications out of Accumulated Other Comprehensive Loss.

Effective on September 28, 2012, Tyco International plc (“Tyco”) distributed to its public stockholders the Company’s common stock (the “Separation from Tyco”), and ADT became an independent public company. During the second quarter of fiscal year 2016, the Company increased its unrecognized tax benefits and reduced additional paid-in capital by approximately $58 million associated with certain pre-Separation from Tyco intercompany transactions which potentially impact the Company’s NOL carryforwards. Refer to Note 6 and Note 7 for more information regarding the Company’s unrecognized tax benefits and the 2012 Tax Sharing Agreement, as defined therein.

6. Income Taxes

Unrecognized Tax Benefits

During the second quarter of fiscal year 2016, the Company increased its unrecognized tax benefits and reduced additional paid-in capital by approximately $58 million associated with certain pre-Separation from Tyco intercompany transactions which potentially impact NOL carryforwards. Refer to Note 5 for a discussion. The Company’s uncertain tax positions relate to tax years that remain subject to audit by the taxing authorities in the U.S. federal, state and local, and foreign jurisdictions. Based on the current status of its income tax audits, the Company does not believe that the balance of its unrecognized tax benefits will be resolved in the next 12 months. The resolution of certain components of the Company’s uncertain tax positions may be partially offset by an adjustment to the receivable from Tyco, which was recorded pursuant to the 2012 Tax Sharing Agreement. Refer to Note 7 for more information on the 2012 Tax Sharing Agreement, as defined therein.

Effective Tax Rate

The Company’s income tax expense for the quarter and six months ended March 31, 2016 totaled $28 million and $56 million, respectively, resulting in an effective tax rate for the periods of 31.1% and 30.8%, respectively. The Company’s income tax expense for the quarter and six months ended March 27, 2015 totaled $32 million and $68 million, respectively, resulting in an effective tax rate for the periods of 32.0% and 32.7%, respectively. The effective tax rates reflect the tax impact of permanent items, state tax expense, changes in tax laws, and non-U.S. net earnings. The effective tax rate can vary from period to period due to permanent tax adjustments, discrete items such as the settlement of income tax audits and changes in tax laws, as well as recurring factors such as changes in the overall effective state tax rate.

7. Commitments and Contingencies

Purchase Obligations

As of March 31, 2016, there have been no material changes to the Company’s purchase obligations outside the ordinary course of business as compared to September 25, 2015.

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Legal Proceedings

Environmental Matter

On October 25, 2013, the Company was notified by subpoena that the Office of the Attorney General of California, in conjunction with the Alameda County District Attorney, is investigating whether certain of the Company’s waste disposal policies, procedures, and practices are in violation of the California Business and Professions Code and the California Health and Safety Code. The Company is cooperating fully with the respective authorities. The Company is currently unable to predict the outcome of this investigation or reasonably estimate a range of possible loss.

Securities Litigation

On April 28, 2014, the Company and certain of its current and former officers and directors were named as defendants in a lawsuit filed in the United States District Court for the Southern District of Florida. The plaintiff alleges violations of the Securities Exchange Act of 1934 and SEC Rule 10b-5 and seeks monetary damages, including interest, and class action status on behalf of all plaintiffs who purchased the Company’s common stock during the period between November 27, 2012 and January 29, 2014, inclusive. The claims focus primarily on the Company’s statements concerning its financial condition and future business prospects for fiscal 2013 and the first quarter of fiscal 2014, its stock repurchase program in 2012 and 2013, and the buyback of stock from Corvex Management LP (“Corvex”) in November 2013. On June 27, 2014, another plaintiff filed a similar action in the same court. On July 14, 2014, the Court entered an order consolidating the two actions under the caption Henningsen v. The ADT Corporation , Case No. 14-80566-CIV- DIMITROULEAS , and appointing IBEW Local 595 Pension and Money Purchase Pension Plans, Macomb County Employees’ Retirement System, and KBC Asset Management NV as Lead Plaintiffs in the consolidated action. In addition to the Company, the defendants named in the action are Naren Gursahaney, Kathryn A. Mikells, Michael S. Geltzeiler, Keith A. Meister, and Corvex. On September 25, 2014, defendants moved to dismiss this action. On November 13, 2014, Mr. Geltzeiler was dismissed as a defendant without prejudice from this action. On June 4, 2015, the Court entered an order granting the motions to dismiss and dismissed plaintiffs’ complaint in its entirety. The Court granted plaintiffs leave to file an amended complaint on or before July 1, 2015. That deadline passed, and the Court dismissed the action with prejudice on July 8, 2015. Plaintiffs filed a notice of appeal to the United States Court of Appeals for the Eleventh Circuit on August 7, 2015. On August 21, 2015, defendants filed a motion to dismiss the appeal as untimely, and on December 7, 2015, the Court denied the motion. The appeal is still pending before the United States Court of Appeals for the Eleventh Circuit.

On January 14, 2015, the SEC sent the Company a letter stating that it is investigating the matters at issue in the foregoing litigation and requesting that the Company voluntarily provide the information and documents set forth in the letter concerning the same litigation. On February 16, 2016, the SEC sent the Company a letter stating they have concluded their investigation, and they do not intend to recommend an enforcement action against the Company.

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Derivative Litigation

In May and June 2014, four derivative actions were filed against a number of past and present officers and directors of the Company. Like the securities actions described above, the derivative actions focus primarily on the Company’s stock repurchase program in 2012 and 2013, the buyback of stock from Corvex in November 2013, and the Company’s statements concerning its financial condition and future business prospects for fiscal 2013 and the first quarter of fiscal 2014. Three of the derivative actions were filed in the United States District Court for the Southern District of Florida. On July 16, 2014, the Court consolidated those three actions under the caption In re The ADT Corporation Derivative Litigation , Lead Case No. 14-80570-CIV-DIMITROULEAS/SNOW, and on May 20, 2015, the Florida federal court entered an order of dismissal. The fourth derivative action, entitled Seidl v. Colligan , Case No. 2014CA007529, was filed in the Circuit Court of the 15th Judicial Circuit, Palm Beach County, Florida. The action was stayed pending the resolution of the Ryan Action, described below, and was voluntarily dismissed by the plaintiff on November 19, 2015. A fifth derivative action asserting similar claims, entitled Ryan v. Gursahaney , C.A. No. 9992-VCP (the “ Ryan Action”), was filed in the Delaware Court of Chancery on August 1, 2014. The Delaware Court of Chancery dismissed the Ryan Action on April 28, 2015, and on November 19, 2015, the Delaware Supreme Court affirmed the dismissal. A sixth derivative action asserting similar claims against the same group of past and present officers and directors was filed in the Delaware Court of Chancery on January 27, 2015 under the caption entitled Binning v. Gursahaney , C.A. No. 10586-VCP (the “ Binning Action”). Defendants moved to dismiss Binning’s amended complaint on July 7, 2015 and, on December 11, 2015, also forwarded a copy of the Delaware Supreme Court’s affirmance of the Ryan Action dismissal. On May 6, 2016, the Court granted Defendants’ motion and dismissed the complaint.

Merger Litigation

Following the February 16, 2016 announcement of the execution of the Merger Agreement, six purported stockholders of ADT initiated legal actions challenging the Merger. On February 24, 2016, two purported stockholders filed putative class action complaints, entitled Shannon Seidl v. The ADT Corporation , et al., C.A. No. 50-2016-CA-1984-XXXX-MBN and Yun Li v. The ADT Corporation , et al., C.A. No. 50-2016-CA-1995-XXXX-MB, in the Circuit Court of the Fifteenth Judicial Circuit in and for Palm Beach County, Florida against ADT, the members of the ADT Board, Apollo Global Management, LLC (together with its consolidated subsidiaries and affiliates, “Apollo”), Parent, Merger Sub, Parent Inc., and Parent LP. On March 9, 2016 and March 10, 2016, respectively, two purported stockholders filed putative class action complaints, entitled Rosenfeld Family Foundation v. The ADT Corporation , et al., C.A. No. 50-2016-CA-002566-XXXX-MB and Federico Castro v. The ADT Corporation , et al., C.A. No. 50-2016-CA-002661-XXXX-MB, also in the Circuit Court of the Fifteenth Judicial Circuit in and for Palm Beach County, Florida against the same defendants (collectively the “Florida Actions”). The complaints in all four of the Florida Actions included claims for breach of fiduciary duty against the individual directors, alleging that the directors violated the duties of loyalty, good faith, due care, and/or disclosure owed to ADT stockholders. The complaints also included claims for aiding and abetting breaches of fiduciary duty against Apollo, Parent, Merger Sub, Parent Inc., and Parent LP.

Plaintiffs Seidl, Rosenfeld, and Castro sought an order, inter alia , permanently enjoining the defendants from consummating the Merger and enjoining the director defendants from initiating any defensive measures that would inhibit their ability to maximize value for ADT stockholders. Plaintiff Li sought an order, inter alia , requiring the director defendants to fulfill their fiduciary duties. All plaintiffs also sought certification of the actions as class actions, an accounting of all damages suffered or to be suffered as a result of the transaction, and attorneys’ fees and costs. On April 8, 2016, the plaintiffs in each of the Florida Actions filed notices voluntarily dismissing each of those actions.

On March 24, 2016 and April 4, 2016, two purported stockholders filed putative class action complaints, respectively entitled MSS 12-09 Trust v. Thomas Colligan , et al., Case No. 12133 and Peter Roy v. The ADT Corporation , et al., Case No. 12160 (the “Delaware Actions”), in the Court of Chancery of the State of Delaware asserting claims for breach of fiduciary duty against the individual ADT directors. Plaintiffs sought an order

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finding the directors liable for breaching their fiduciary duties based on the claim that the definitive proxy statement, defined herein, failed to disclose certain allegedly material information necessary to permit ADT stockholders to cast a fully informed vote on the Merger transaction. Plaintiff Peter Roy also filed motions seeking expedited discovery and a preliminary injunction.

ADT believes that the Florida Actions and the Delaware Actions were without merit and that no further disclosure was required to supplement the Company’s definitive proxy statement that was filed with the SEC on March 25, 2016 (as amended or supplemented from time to time, the “definitive proxy statement”), under applicable laws. However, to eliminate the burden, expense, and uncertainties inherent in such litigation, and without admitting any liability or wrongdoing, ADT determined to make certain supplemental disclosures to the definitive proxy statement, as set forth in the Company’s Form 8-K filed on April 11, 2016. Nothing in the supplemental disclosures shall be deemed an admission of the legal necessity or materiality under applicable laws of any of the disclosures. On April 12, 2016 and April 13, 2016, Plaintiff MSS 12-09 Trust and Plaintiff Roy, respectively, filed notices voluntarily dismissing the Delaware Actions.

ADT and the other named defendants have vigorously denied, and continue to vigorously deny, that they have committed any violation of law or engaged in any of the wrongful acts that were alleged in the Florida Actions or the Delaware Actions.

Income Tax Matters

In connection with the Separation from Tyco, the Company entered into a tax sharing agreement with Tyco and Pentair Ltd. (the “2012 Tax Sharing Agreement”) that governs the rights and obligations of the Company, Tyco, and Pentair Ltd. for certain pre-Separation from Tyco tax liabilities, including Tyco’s obligations under the tax sharing agreement among Tyco, Covidien plc (“Covidien”) now operating as a subsidiary of Medtronic plc (“Medtronic”), and TE Connectivity Ltd. (“TE Connectivity”) entered into in 2007 (the “2007 Tax Sharing Agreement”). The Company is responsible for all of its own taxes that are not shared pursuant to the 2012 Tax Sharing Agreement’s sharing formulae. Tyco and Pentair Ltd. are likewise responsible for their tax liabilities that are not subject to the 2012 Tax Sharing Agreement’s sharing formulae. Tyco has the right to administer, control, and settle all U.S. income tax audits for the periods prior to and including the Separation from Tyco.

With respect to years prior to and including the 2007 separation of Covidien and TE Connectivity by Tyco, tax authorities have raised issues and proposed tax adjustments that are generally subject to the sharing provisions of the 2007 Tax Sharing Agreement. On July 1, 2013, Tyco announced that the IRS issued Notices of Deficiency to Tyco primarily related to the treatment of certain intercompany debt transactions (the “Tyco IRS Notices”). These notices assert that additional taxes of $883 million plus penalties of $154 million are owed based on audits of the 1997 through 2000 tax years of Tyco and its subsidiaries, as they existed at that time. Further, Tyco reported receiving Final Partnership Administrative Adjustments (the “Partnership Notices”) for certain U.S. partnerships owned by its former U.S. subsidiaries, for which Tyco has indicated that it estimates an additional tax deficiency of approximately $30 million will be asserted. The additional tax assessments related to the Tyco IRS Notices and the Partnership Notices exclude interest and do not reflect the impact on subsequent periods if the IRS challenge to Tyco’s tax filings is proved correct. Tyco has filed petitions with the U.S. Tax Court to contest the IRS assessments. Consistent with its petitions filed with the U.S. Tax Court, Tyco has advised the Company that it strongly disagrees with the IRS position and believes (i) it has meritorious defenses for the respective tax filings, (ii) the IRS positions with regard to these matters are inconsistent with applicable tax laws and Treasury regulations, and (iii) the previously reported taxes for the years in question are appropriate. No payments with respect to the Tyco IRS Notices would be required until the dispute is resolved in the U.S. Tax Court. At the request of the IRS, the trial start date was postponed and rescheduled for October 2016.

On January 15, 2016, Tyco entered into a Stipulation of Settled Issues with the IRS regarding the Tyco IRS Notices and the Partnership Notices intending to resolve all disputes related to the intercompany debt issues for IRS audits of 1997 through 2000 tax years of Tyco and its subsidiaries, as they existed at the time. On May 17,

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2016, the IRS Office of Appeals issued fully executed Forms 870-AD that effectively settle the matters on appeal on the same terms as those set forth in the Stipulation of Settled Issues and, on May 31, 2016, the U.S. Tax Court entered decisions consistent with the Stipulation of Settled Issues. As a result, Tyco has resolved all aspects of the controversy before the U.S. Tax Court and before the Appeals Division of the IRS for audit cycles 1997 through 2007. The resolution resulted in a total cash payment to the IRS shared among Tyco, Medtronic, and TE Connectivity in accordance with the formula in the 2007 Tax Sharing Agreement. Consequently, the cash payment was split among Tyco, Medtronic, and TE Connectivity 27%, 42%, and 31%, respectively. ADT’s share of the collective liability is determined pursuant to the 2012 Tax Sharing Agreement, and, under such agreement, ADT is not responsible for any cash payments under the resolution. The resolution has no impact on ADT’s financial position, results of operations, or cash flows.

During the fiscal year 2015, the IRS concluded its field examination of certain of Tyco’s U.S. federal income tax returns for the 2008 and 2009 tax years of Tyco and its subsidiaries. Tyco received anticipated Revenue Agents’ Reports (the “2008-2009 RARs”) proposing adjustments to certain Tyco entities’ previously filed tax return positions, including the predecessor to ADT, relating primarily to certain intercompany debt. In response, Tyco filed a formal, written protest with the IRS Office of Appeals requesting review of the 2008-2009 RARs. Tyco has advised the Company that it strongly disagrees with the IRS position and intends to vigorously defend its prior filed tax return positions and believes the previously reported taxes for the years in question are appropriate. The 2008-2009 RARs are still under administrative review by the IRS, and are not covered by the Stipulation of Settled Issues.

If the IRS should successfully assert its positions with respect to the matters described above, the Company’s share of the collective liability, if any, would be determined pursuant to the 2012 Tax Sharing Agreement. In accordance with the 2012 Tax Sharing Agreement, Tyco is responsible for the first $500 million of tax, interest, and penalty assessed against pre-2013 tax years, including its 27% share of the tax, interest, and penalty assessed for periods prior to Tyco’s 2007 spin-off transaction (“Pre-2007 Spin Periods”). In accordance with the 2012 Tax Sharing Agreement, the amount ultimately assessed against Pre-2007 Spin Periods with respect to the Tyco IRS Notices and the Partnership Notices would have to be in excess of $1.85 billion, including other assessments for unrelated historical tax matters Tyco has, or may settle in the future, before the Company would be required to pay any of the amounts assessed. In addition to the Company’s share of cash taxes pursuant to the 2012 Tax Sharing Agreement, the Company’s net operating loss (“NOL”) and credit carryforwards may be significantly reduced or eliminated by audit adjustments to pre-2013 tax periods. NOL and credit carryforwards may be reduced prior to incurring any cash tax liability, and will not be compensated for under the tax sharing agreement. The Company believes that its income tax reserves and the liabilities recorded in the Condensed Consolidated Balance Sheet for the 2012 Tax Sharing Agreement continue to be appropriate. However, the ultimate resolution of these matters is uncertain, and if the IRS were to prevail, it could have a material adverse impact on the Company’s financial position, results of operations, and cash flows, potentially including a significant reduction in or the elimination of the Company’s available NOL and credit carryforwards generated in pre-Separation from Tyco periods. Further, to the extent ADT is responsible for any liability under the 2012 Tax Sharing Agreement, there could be a material impact on its financial position, results of operations, cash flows, or its effective tax rate in future reporting periods.

Refer to Note 6 for information regarding a change to the Company’s unrecognized tax benefits during the second quarter of fiscal year 2016.

Other liabilities in the Company’s Condensed Consolidated Balance Sheets, as of both March 31, 2016 and September 25, 2015, include $19 million for ADT’s obligations under certain tax-related agreements entered into in conjunction with the Separation from Tyco. The maximum amount of potential future payments is not determinable as they relate to unknown conditions and future events that cannot be predicted.

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8. Earnings Per Share

Basic earnings per share is computed by dividing net income attributable to common shares by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of securities that could participate in earnings, but not securities that are anti-dilutive. The computations of basic and diluted earnings per share for the quarters and six months ended March 31, 2016 and March 27, 2015 are as follows:


	For the Quarters Ended				For the Six Months Ended
	March 31, 2016		March 27, 2015		March 31, 2016		March 27, 2015
(in millions, except per share amounts)
Basic Earnings Per Share
Numerator:
Net income	$	62	$	68	$	126	$	140
Denominator:
Basic weighted-average shares outstanding		165		171		165		173
Basic earnings per share	$	0.38	$	0.40	$	0.76	$	0.81


	For the Quarters Ended				For the Six Months Ended
	March 31, 2016		March 27, 2015		March 31, 2016		March 27, 2015
(in millions, except per share amounts)
Diluted Earnings Per Share
Numerator:
Net income	$	62	$	68	$	126	$	140
Denominator:
Basic weighted-average shares outstanding		165		171		165		173
Effect of dilutive securities:
Dilutive effect of stock options and restricted stock units		1		1		1		—

Diluted weighted-average shares outstanding		166		172		166		173

Diluted earnings per share	$	0.37	$	0.40	$	0.76	$	0.81

The computation of diluted earnings per share excludes potentially dilutive securities whose effect would have been anti-dilutive in the amount of approximately 2.9 million shares and 2.2 million shares for the quarters ended March 31, 2016 and March 27, 2015, respectively, and approximately 2.8 million shares and 2.2 million shares for the six months ended March 31, 2016 and March 27, 2015, respectively.

9. Segment Data

The Company’s operating segments are also its reportable segments and are comprised of the following:

•

United States : Includes sales, installation, and monitoring for residential, business, and health customers in the U.S. and Puerto Rico, as well as corporate and other operating expenses associated with support functions in the United States.

•

Canada : Includes sales, installation, and monitoring for residential, business, and health customers in Canada, as well as operating expenses associated with certain support functions in Canada.

The Company’s CODM evaluates segment performance based on several factors, of which the primary financial measures are revenue and adjusted earnings before interest, taxes, depreciation and amortization

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(“Adjusted EBITDA”). Revenue is attributed to individual countries based upon the operating entity that records the transaction. Adjusted EBITDA is defined as net income adjusted for interest, taxes, and certain non-cash items including depreciation of subscriber system assets and other fixed assets, amortization of deferred costs and deferred revenue associated with customer acquisitions, and amortization of dealer and other intangible assets. Adjusted EBITDA is also adjusted to exclude charges and gains related to the Merger, acquisitions, integrations, restructurings, impairments, and other income or charges. Such items are excluded to eliminate the impact of items that management does not consider indicative of the Company’s core operating performance and/or business trends of the Company.

All discussions and amounts reported below, including the prior year period, are based on the new segment structure. There is no impact on the previously reported condensed consolidated balance sheet, statement of operations, or statement of cash flows.

Segment results for the quarters and six months ended March 31, 2016 and March 27, 2015 are as follows ($ in millions):


	For the Quarters Ended				For the Six Months Ended
	March 31, 2016		March 27, 2015		March 31, 2016		March 27, 2015
Revenue:
United States	$	837	$	820	$	1,673	$	1,631
Canada ⁽¹⁾		62		70		126		146

Total	$	899	$	890	$	1,799	$	1,777

Adjusted EBITDA:
United States	$	442	$	412	$	871	$	834
Canada ⁽¹⁾		26		32		54		63

Total	$	468	$	444	$	925	$	897

Depreciation and Amortization:
United States	$	311	$	291	$	617	$	576
Canada ⁽¹⁾		21		22		42		46

Total	$	332	$	313	$	659	$	622

(1)	Results include the impact of fluctuations in foreign currency exchange rates.

The Company’s CODM does not evaluate the performance of the Company’s assets on a segment basis for internal management reporting. Therefore, such information is not presented.

F-94

The following table sets forth a reconciliation of segment Adjusted EBITDA to the Company’s consolidated income before income taxes for the quarters and six months ended March 31, 2016 and March 27, 2015 ($ in millions):


	For the Quarters Ended						For the Six Months Ended
	March 31, 2016			March 27, 2015			March 31, 2016			March 27, 2015
Income before income taxes	$	90		$	100		$	182		$	208
Interest expense, net		53			51			106			101
Depreciation and intangible asset amortization		294			278			583			553
Amortization of deferred subscriber acquisition costs		38			35			76			69
Amortization of deferred subscriber acquisition revenue		(43	)		(40	)		(86	)		(80	)
Restructuring and other		2			2			5			4
Merger, acquisition, and integration costs		8			—			9			1
Radio conversion costs		26			19			50			42
Separation related other income		—			(1	)		—			(1	)

Adjusted EBITDA	$	468		$	444		$	925		$	897

F-95

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

The ADT Corporation

Boca Raton, Florida

We have audited the accompanying consolidated balance sheets of The ADT Corporation and subsidiaries (the “Company”) as of September 25, 2015 and September 26, 2014, and the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the three fiscal years in the period ended September 25, 2015. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of The ADT Corporation and subsidiaries as of September 25, 2015 and September 26, 2014, and the results of their operations and their cash flows for each of the three fiscal years in the period ended September 25, 2015, in conformity with accounting principles generally accepted in the United States of America.

/s/ DELOITTE & TOUCHE LLP

Certified Public Accountants

Boca Raton, Florida

November 12, 2015

F-96

THE ADT CORPORATION

CONSOLIDATED BALANCE SHEETS

As of September 25, 2015 and September 26, 2014

(in millions, except share and per share data)


	2015			2014
Assets
Current Assets:
Cash and cash equivalents	$	78		$	66
Accounts receivable trade, less allowance for doubtful accounts of $23 and $24, respectively		102			101
Inventories		76			76
Prepaid expenses and other current assets		47			55
Deferred tax assets		96			111

Total current assets		399			409
Property and equipment, net		283			265
Subscriber system assets, net		2,502			2,260
Goodwill		3,680			3,738
Intangible assets, net		2,999			3,120
Deferred subscriber acquisition costs, net		631			571
Other assets		232			186

Total Assets	$	10,726		$	10,549

Liabilities and Stockholders’ Equity
Current Liabilities:
Current maturities of long-term debt	$	5		$	4
Accounts payable		190			208
Accrued and other current liabilities		231			260
Deferred revenue		232			236

Total current liabilities		658			708
Long-term debt		5,389			5,096
Deferred subscriber acquisition revenue		895			838
Deferred tax liabilities		732			651
Other liabilities		133			128

Total Liabilities		7,807			7,421

Commitments and contingencies (See Note 7)

Stockholders’ Equity:
Common stock—authorized 1,000,000,000 shares of $0.01 par value; issued and outstanding shares—165,850,306 as of September 25, 2015 and 174,109,318 as of September 26, 2014		2			2
Additional paid-in capital		2,374			2,643
Retained earnings		633			445
Accumulated other comprehensive (loss) income		(90	)		38

Total Stockholders’ Equity		2,919			3,128

Total Liabilities and Stockholders’ Equity	$	10,726		$	10,549

See Notes to Consolidated Financial Statements

F-97

THE ADT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

Fiscal Years Ended September 25, 2015, September 26, 2014, and September 27, 2013

(in millions, except per share data)


	2015			2014			2013
Revenue	$	3,574		$	3,408		$	3,309
Cost of revenue		1,575			1,457			1,378
Selling, general and administrative expenses		1,305			1,231			1,173
Radio conversion costs (See Note 1)		55			44			—
Separation costs (See Note 1)		—			17			23

Operating income		639			659			735
Interest expense, net		(205	)		(192	)		(117	)
Other income (expense)		3			(35	)		24

Income before income taxes		437			432			642
Income tax expense		(141	)		(128	)		(221	)

Net income	$	296		$	304		$	421

Net income per share:
Basic	$	1.73		$	1.67		$	1.90
Diluted	$	1.72		$	1.66		$	1.88

Weighted-average number of shares:
Basic		171			182			222
Diluted		172			183			224

See Notes to Consolidated Financial Statements

F-98

THE ADT CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Fiscal Years Ended September 25, 2015, September 26, 2014, and September 27, 2013

(in millions)


	2015			2014			2013
Net income	$	296		$	304		$	421
Other comprehensive loss:
Foreign currency translation and other, net of tax		(128	)		(42	)		(13	)

Total other comprehensive loss, net of tax		(128	)		(42	)		(13	)

Comprehensive income	$	168		$	262		$	408

See Notes to Consolidated Financial Statements

F-99

THE ADT CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Fiscal Years Ended September 25, 2015, September 26, 2014, and September 27, 2013

(in millions)


	Number of Common Shares			Common Stock		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Total Stockholders’ Equity
Balance as of September 28, 2012		231		$	2	$	5,062		$	—		$	93		$	5,157
Other comprehensive loss													(13	)		(13	)
Net income										421						421
Dividends declared ($0.625 per share)										(138	)					(138	)
Common stock repurchases		(27	)				(1,274	)								(1,274	)
Exercise of stock options and vesting of restricted stock units		5					85									85
Stock-based compensation expense							19									19
Separation-related adjustments to additional paid-in capital							65									65

Balance as of September 27, 2013		209			2		3,957			283			80			4,322
Other comprehensive loss													(42	)		(42	)
Net income										304						304
Dividends declared ($0.80 per share)										(142	)					(142	)
Common stock repurchases		(36	)				(1,353	)								(1,353	)
Exercise of stock options and vesting of restricted stock units		1					17									17
Stock-based compensation expense							20									20
Other							2									2

Balance as of September 26, 2014		174			2		2,643			445			38			3,128
Other comprehensive loss													(128	)		(128	)
Net income										296						296
Dividends declared ($0.63 per share)										(108	)					(108	)
Common stock repurchases		(9	)				(324	)								(324	)
Exercise of stock options and vesting of restricted stock units		1					32									32
Stock-based compensation expense							23									23

Balance as of September 25, 2015		166		$	2	$	2,374		$	633		$	(90	)	$	2,919

See Notes to Consolidated Financial Statements

F-100

THE ADT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

Fiscal Years Ended September 25, 2015, September 26, 2014 and September 27, 2013

(in millions)


	2015			2014			2013
Cash Flows from Operating Activities:
Net income	$	296		$	304		$	421
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and intangible asset amortization		1,124			1,040			942
Amortization of deferred subscriber acquisition costs		141			131			123
Amortization of deferred subscriber acquisition revenue		(163	)		(151	)		(135	)
Stock-based compensation expense		23			20			19
Deferred income taxes		124			123			207
Provision for losses on accounts receivable and inventory		60			41			51
Other non-cash items		4			3			7
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable, net		(63	)		(52	)		(55	)
Inventories		(1	)		(5	)		(25	)
Accounts payable		(1	)		(18	)		58
Accrued and other liabilities		24			(7	)		35
Income taxes, net		(4	)		(30	)		16
Deferred subscriber acquisition costs		(209	)		(184	)		(181	)
Deferred subscriber acquisition revenue		231			226			232
Other		19			78			(49	)

Net cash provided by operating activities		1,605			1,519			1,666

Cash Flows from Investing Activities:
Dealer-generated customer accounts and bulk account purchases		(559	)		(526	)		(555	)
Subscriber system assets		(699	)		(658	)		(580	)
Capital expenditures		(103	)		(84	)		(71	)
Acquisition of businesses, net of cash acquired		(4	)		(517	)		(162	)
Other investing		(41	)		(7	)		(26	)

Net cash used in investing activities		(1,406	)		(1,792	)		(1,394	)

Cash Flows from Financing Activities:
Proceeds from exercise of stock options		32			17			85
Repurchases of common stock under approved program		(324	)		(1,384	)		(1,235	)
Dividends paid		(142	)		(132	)		(112	)
Proceeds received for allocation of funds related to the Separation		—			—			61
Proceeds from long-term borrowings		755			2,100			850
Repayment of long-term debt		(500	)		(378	)		(3	)
Other financing		(5	)		(21	)		(12	)

Net cash (used in) provided by financing activities		(184	)		202			(366	)

Effect of currency translation on cash		(3	)		(1	)		(2	)
Net increase (decrease) in cash and cash equivalents		12			(72	)		(96	)
Cash and cash equivalents at beginning of year		66			138			234

Cash and cash equivalents at end of year	$	78		$	66		$	138

Supplementary Cash Flow Information:
Interest paid	$	202		$	171		$	107
Income taxes paid, net of refunds		18			61			(2	)

See Notes to Consolidated Financial Statements

F-101

THE ADT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation —The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries and have been prepared in United States dollars (“USD”) in accordance with generally accepted accounting principles in the United States of America (“GAAP”). Unless otherwise indicated, references to 2015, 2014, and 2013 are to the Company’s fiscal years ended September 25, 2015, September 26, 2014, and September 27, 2013, respectively.

The Company has a 52- or 53-week fiscal year that ends on the last Friday in September. Fiscal years 2015, 2014, and 2013 were 52-week years. The Company’s next 53-week year will occur in fiscal year 2016. Subsequent to September 25, 2015, the Company’s Board of Directors approved a change to the Company’s fiscal year end from the last Friday in September to September 30 of each year. See Note 14 for further information.

The Company conducts business through its operating entities. During the fourth quarter of fiscal year 2015, the Company finalized its reporting structure following the acquisition of Reliance Protectron Inc. (“Protectron”), which the Company acquired during the fourth quarter of fiscal year 2014. See Note 2 for details about this acquisition. In connection with this reporting structure finalization, the manner in which the Chief Executive Officer, who is the chief operating decision maker (“CODM”), evaluates performance and makes decisions about how to allocate resources changed, resulting in the reorganization of the Company’s operating segment. The Company now has two reportable segments, which are the Company’s operating segments, United States (“U.S.”) and Canada. See Note 12 for further discussion on the Company’s segments.

All intercompany transactions have been eliminated. The results of companies acquired are included in the Consolidated Financial Statements from the effective date of acquisition.

Use of Estimates —The preparation of the Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities and reported amounts of revenue and expenses. Significant estimates in these Consolidated Financial Statements include, but are not limited to, estimates of future cash flows and valuation-related assumptions associated with asset impairment testing, useful lives, and methods for depreciation and amortization, loss contingencies, income taxes and tax valuation allowances, and purchase price allocations. Actual results could differ materially from these estimates.

For transactions in which the Company retains ownership of the security system, non refundable fees (referred to as deferred subscriber acquisition revenue) received in connection with the initiation of a monitoring contract are deferred and amortized over the estimated life of the customer relationship. Transactions in which the Company transfers ownership of the security system to the customer occur only in certain limited circumstances.

F-102

Advertising —Advertising costs which amounted to $199 million, $168 million, and $163 million for fiscal years 2015, 2014, and 2013, respectively, are expensed when incurred and are included in selling, general and administrative expenses.

Radio Conversion Costs —During fiscal year 2013, the Company implemented a three-year conversion program to replace 2G cellular technology used in many of its security systems, and began incurring costs under this program in fiscal year 2014. The Company incurred charges of $55 million and $44 million in fiscal years 2015 and 2014, respectively, related to the conversion program. These costs are reflected in radio conversion costs in the Consolidated Statements of Operations.

Separation Costs —Effective on September 28, 2012 (the “Distribution Date”), Tyco International Ltd. (“Tyco”) distributed to its public stockholders the Company’s common stock (the “Separation from Tyco”), and the Company became an independent public company. Charges incurred directly related to the Separation from Tyco are reflected in separation costs in the Company’s Consolidated Statements of Operations.

Other Income (Expense) —During fiscal year 2015, there was no material activity in other income (expense). During fiscal year 2014, the Company recorded $35 million of other expense, which is comprised primarily of $38 million of non-taxable expense representing a reduction in the receivable from Tyco pursuant to the tax sharing agreement entered into in conjunction with the Separation from Tyco largely due to the resolution of certain components of the Company’s unrecognized tax benefits. During fiscal year 2013, the Company recorded $24 million of other income, which is comprised primarily of $23 million of non-taxable income recorded pursuant to the tax sharing agreement for amounts owed by Tyco and Pentair Ltd. in connection with the exercise of ADT share based awards held by certain Tyco and Pentair Ltd. employees. See Note 6 for further information.

Translation of Foreign Currency —The Company’s Consolidated Financial Statements are reported in U.S. dollars. A portion of the Company’s business is transacted in Canadian dollars. The Company’s Canadian entities maintain their records in Canadian dollars. The assets and liabilities are translated into U.S. dollars using rates of exchange at the balance sheet date and translation adjustments are recorded in accumulated other comprehensive income. Revenue and expenses are translated at average rates of exchange in effect during the year.

Cash and Cash Equivalents —All highly liquid investments with original maturities of three months or less from the time of purchase are considered to be cash equivalents.

Allowance for Doubtful Accounts —The allowance for doubtful accounts receivable reflects the best estimate of probable losses inherent in the Company’s receivable portfolio determined on the basis of historical experience and other currently available evidence.

Inventories —Inventories are recorded at the lower of cost (average cost) or market value. Inventories consisted of the following ($ in millions):


	September 25, 2015		September 26, 2014
Work in progress	$	3	$	2
Finished goods		73		74

Inventories	$	76	$	76

Property and Equipment, Net —Property and equipment, net is recorded at cost less accumulated depreciation. Depreciation expense on property and equipment for fiscal years 2015, 2014, and 2013 was

F-103

$71 million, $70 million, and $48 million, respectively. Repairs and maintenance expenditures are expensed when incurred. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets as follows:


Buildings and related improvements		Up to 40 years
Leasehold improvements		Lesser of remaining term of the lease or economic useful life
Other machinery, equipment, and furniture and fixtures		3 to 14 years

Subscriber System Assets and Deferred Subscriber Acquisition Costs —The Company records certain assets in connection with the acquisition of new customers depending on how the accounts are generated: subscriber system assets and deferred subscriber acquisition costs for customer accounts that are generated internally; and dealer intangibles for customer accounts that are generated through the ADT dealer program.

Subscriber system assets represent capitalized equipment and installation costs incurred in connection with transactions in which the Company retains ownership of the security system. These assets embody a probable future economic benefit as they generate future monitoring revenue for the Company. The Company pays property taxes on the subscriber system assets and upon customer termination, may retrieve such assets. Accumulated depreciation of subscriber system assets was $2.6 billion and $2.4 billion as of September 25, 2015 and September 26, 2014, respectively. Depreciation expense relating to subscriber system assets for fiscal years 2015, 2014, and 2013 was $436 million, $381 million, and $325 million, respectively.

Deferred subscriber acquisition costs represent direct and incremental selling expenses (i.e., commissions) related to acquiring the customer. Commissions paid in connection with the establishment of the monitoring contract are determined based on a percentage of the contractual fees and do not exceed deferred subscriber acquisition revenue. Amortization expense relating to deferred subscriber acquisition costs for fiscal years 2015, 2014, and 2013 was $141 million, $131 million, and $123 million, respectively.

Subscriber system assets and any related deferred subscriber acquisition costs and deferred subscriber acquisition revenue resulting from the customer acquisition are accounted for using pools based on the month and year of acquisition. The Company amortizes its pooled subscriber system assets and related deferred costs and deferred revenue using an accelerated method over the expected life of the customer relationship, which is 15 years. In order to align the amortization of subscriber system assets and related deferred costs and deferred revenue to the pattern in which their economic benefits are consumed, the accelerated method utilizes an average declining balance rate of 250% and converts to straight-line methodology when the resulting amortization charge is greater than that from the accelerated method, resulting in an average amortization of 60% of the pool within the first five years, 24% within the second five years, and 16% within the final five years.

Dealer and Other Amortizable Intangible Assets, Net —Intangible assets primarily include contracts and related customer relationships. Certain contracts and related customer relationships are generated from an external network of independent dealers who operate under the ADT dealer program. These contracts and related customer relationships are recorded at their contractually determined purchase price. During the charge-back period, generally 12 to 15 months, any cancellation of monitoring service, including those that result from customer payment delinquencies, results in a charge-back by the Company to the dealer for the full amount of the contract purchase price. The Company records the amount charged back to the dealer as a reduction of the intangible assets.

Intangible assets arising from the ADT dealer program described above are accounted for using pools based on the month and year of acquisition. The Company amortizes its pooled dealer intangible assets using an accelerated method over the expected life of the customer relationship, which is 15 years. The accelerated method for amortizing these intangible assets utilizes an average declining balance rate of 300% and converts to straight-line methodology when the resulting amortization charge is greater than that from the accelerated

F-104

method, resulting in an average amortization of 67% of the pool within the first five years, 22% within the second five years, and 11% within the final five years.

Other amortizable intangible assets are amortized on a straight-line basis over six to 40 years. The Company evaluates the amortization methods and remaining useful lives of intangible assets on a periodic basis to determine whether events and circumstances warrant a revision to the amortization method or remaining useful lives.

Long-Lived Asset Impairments —The Company reviews long-lived assets, including property and equipment and amortizable intangible assets, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the asset may not be fully recoverable. The Company analyzes undiscounted future net cash flow associated with that asset to determine if impairment exists. For purposes of recognition and measurement of an impairment for assets held and used, the Company groups assets and liabilities at the lowest level for which cash flows are separately identified. If an impairment is determined to exist, any related impairment loss is calculated based on fair value. Impairment losses on assets to be disposed of, if any, are based on the estimated proceeds to be received, less costs of disposal. There were no material long-lived asset impairments in fiscal years 2015, 2014, and 2013.

Goodwill —Goodwill is assessed for impairment at the reporting unit level annually or more frequently if events or changes in business circumstances indicate that it is more likely than not that the carrying value of a reporting unit exceeds its fair value. In performing these assessments, management relies on various factors and assumptions, including operating results, business plans, economic projections, anticipated future cash flows, and other market data. There are inherent uncertainties related to these factors and judgment is required in applying them to the goodwill impairment test. The Company performs its annual impairment tests for goodwill at the reporting unit level as of the first day of the Company’s fourth fiscal quarter of each year. See Note 4 for further information.

In testing goodwill for impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of the reporting unit is less than its carrying amount. If the Company elects to perform a qualitative assessment and determines that an impairment is more likely than not, a two-step, quantitative impairment test is then required, otherwise no further analysis is required. The Company also may elect not to perform the qualitative assessment and, instead, proceed directly to the quantitative impairment test and may resume performing the qualitative assessment in any subsequent period.

Under the qualitative goodwill assessment, events and circumstances that would affect the estimated fair value of a reporting unit are identified and evaluated. Factors such as the inputs to and results of the most recent two-step quantitative impairment test, current and long-term forecasted financial results, changes in strategic outlook or organizational structure, industry and market changes, and macroeconomic indicators are also considered in the assessment.

As discussed above, the two-step, quantitative goodwill impairment test is performed either at the Company’s election or when the results of the qualitative goodwill assessment indicate that it is more likely than not that the estimated fair value of the reporting unit is less than its carrying amount. Under the two-step, quantitative goodwill impairment test, the Company first compares the fair value of a reporting unit with its carrying amount. The estimated fair value of the reporting unit used in the goodwill impairment test is determined utilizing a discounted cash flow analysis based on the Company’s forecasts discounted using market participants’ weighted average cost of capital and market indicators of terminal year cash flows. If the carrying amount of a reporting unit exceeds its fair value, goodwill is considered potentially impaired and step two of the goodwill impairment test is performed to measure the amount of impairment loss. In the second step of the goodwill impairment test, the Company compares the implied fair value of the reporting unit’s goodwill with the carrying amount of the reporting unit’s goodwill. If the carrying amount of the reporting unit’s goodwill exceeds

F-105

the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to the excess of the carrying amount of goodwill over its implied fair value. The implied fair value of goodwill is determined in the same manner that the amount of goodwill recognized in a business combination is determined. The fair value of the reporting unit is then allocated to all of the assets and liabilities of that unit, including intangible assets, as if the reporting unit had been acquired in a business combination. Any excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities represents the implied fair value of goodwill.

Accrued Expenses and Other Current Liabilities— Accrued and other current liabilities as of September 25, 2015 and September 26, 2014 consisted of the following ($ in millions):


	September 25, 2015		September 26, 2014
Payroll-related accruals	$	79	$	45
Insurance-related accruals		39		38
Accrued interest		44		44
Accrued dividends		—		35
Other accrued liabilities		69		98

Total	$	231	$	260

Income Taxes —The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. The calculation of income taxes for the Company requires a considerable amount of judgment and use of both estimates and allocations. Prior to the Separation from Tyco, the Company primarily operated within a Tyco U.S. consolidated group and within a standalone Canadian entity. In certain instances, tax losses or credits generated by Tyco’s other businesses continue to be available to the Company in periods after the Separation from Tyco.

The Company does not have any significant valuation allowances against its net deferred tax assets.

In addition, the calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations in the United States and Canada. The Company recognizes potential liabilities and records tax liabilities for anticipated tax audit issues in the United States and other tax jurisdictions based on its estimate of whether, and the extent to which, additional taxes will be due in accordance with the

F-106

authoritative guidance regarding the accounting for uncertain tax positions. These tax liabilities are reflected net of related tax loss carryforwards. The Company adjusts these reserves in light of changing facts and circumstances; however, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the Company’s current estimate of the tax liabilities. If the Company’s estimate of tax liabilities proves to be less than the ultimate assessment, an additional charge to expense would result. If payment of these amounts ultimately proves to be less than the recorded amounts, the reversal of the liabilities would result in tax benefits being recognized in the period when the Company determines the liabilities are no longer necessary.

Concentration of Credit Risks —The primary financial instruments which potentially subject the Company to concentrations of credit risks are accounts receivable. The Company’s concentration of credit risk with respect to accounts receivable is limited due to the significant size of its customer base.

Financial Instruments —The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, debt, and derivative financial instruments. Due to their short-term nature, the fair value of cash and cash equivalents, accounts receivable and accounts payable approximated book value as of September 25, 2015 and September 26, 2014.

The carrying value and fair value of the Company’s debt that is subject to fair value disclosures as of September 25, 2015 and September 26, 2014 is as follows ($ in millions):


	September 25, 2015				September 26, 2014
	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt instruments, excluding capital lease obligations and other	$	5,361	$	5,044	$	5,065	$	4,759

Derivative Instruments —All derivative financial instruments are reported on the Consolidated Balance Sheets at fair value. For derivative financial instruments designated as fair value hedges, the changes in fair value of both the derivatives and the hedged items are recognized currently in the Consolidated Statements of Operations. The fair values of the Company’s derivative financial instruments are not material.

During the year ended September 26, 2014, the Company entered into interest rate swap transactions to hedge $500 million of its $1 billion, 6.250% fixed-rate notes due October 2021, and all $500 million of its 4.125% fixed-rate notes due April 2019. During the year ended September 25, 2015, the Company entered into interest rate swap transactions to hedge all $300 million of its 5.250% fixed-rate notes due March 2020. These transactions are designated as fair value hedges with the objective of managing the exposure to interest rate risk by converting the interest rates on the fixed-rate notes to floating rates. These transactions did not have a material impact on the Company’s Consolidated Financial Statements as of and for the years ended September 25, 2015 and September 26, 2014.

Restructuring and Other Charges —During the year ended September 25, 2015, restructuring and other charges were not material. During the year ended September 26, 2014, the Company recognized $8 million in severance charges related to the separation of employees in conjunction with actions taken to reduce general and administrative expenses, $6 million in charges primarily related to a loss on the sublease of a portion of its office space and $3 million of other costs associated with consulting services focused on identifying actions to reduce its cost structure and streamline operations. Substantially all of these charges were paid as of September 25, 2015.

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The Company also recognized other charges of $8 million related to accelerated depreciation on certain assets in fiscal year 2014 in connection with the rationalization of its business processes and system landscape. Restructuring and other charges during fiscal year 2013 were not material.

Guarantees —In the normal course of business, the Company is liable for contract completion and product performance. In the opinion of management, such obligations will not significantly affect the Company’s financial position, results of operations or cash flows. As of September 25, 2015 and September 26, 2014, the Company did not have material guarantees.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance which sets forth a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The guidance is effective for annual reporting periods, including interim reporting periods within those periods, beginning after December 15, 2016, and early adoption is not permitted. Companies may use either a full retrospective or a modified retrospective approach to adopt this guidance. The Company is currently evaluating the impact of this guidance.

In August 2015, the FASB issued an amendment to the above-mentioned revenue recognition guidance. This amendment defers the effective date by one year to December 15, 2017, for annual reporting periods, including interim reporting periods within those periods, beginning after that date. Early adoption is permitted, but not before the original effective date of December 15, 2016.

In April 2015, the FASB issued authoritative guidance to simplify the presentation of debt issuance costs and require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this guidance. The guidance is to be applied on a retrospective basis and is effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued. The adoption of this guidance is not expected to have a material impact on the Company’s financial position, results of operations, or cash flows.

In April 2015, the FASB issued authoritative guidance regarding the accounting for fees paid in a cloud computing arrangement. The new standard provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Companies may elect to adopt this guidance using either (1) a prospective approach for all arrangements entered into or materially modified after the effective date or (2) a retrospective approach. The Company is currently evaluating the impact of this guidance.

In July 2015, the FASB issued authoritative guidance to simplify the subsequent measurement of inventory. Under this new standard, an entity should measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The amendments in this guidance should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of this guidance.

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2. Acquisitions

Dealer-Generated Customer Accounts and Bulk Account Purchases

During fiscal years 2015, 2014, and 2013, the Company paid $559 million, $526 million, and $555 million, respectively, for customer contracts for electronic security services generated under the ADT dealer program and bulk account purchases.

Acquisitions

On July 8, 2014, the Company acquired all of the issued and outstanding capital stock of Protectron, a leading electronic security services company in Canada. The primary purpose of the acquisition was to expand the Company’s market share in Canada and create a stronger organization that is better positioned to serve Canadian customers. The consideration transferred in Canadian dollars (“CAD”) was CAD $560 million ($525 million), and cash paid during fiscal year 2014 was $517 million, net of cash acquired. The transaction was financed with borrowings of $375 million under the Company’s revolving credit facility and cash on hand.

Under the acquisition method of accounting, the purchase price has been allocated to Protectron’s tangible and identifiable intangible assets acquired and liabilities assumed based on estimates of fair value using available information and making assumptions management believes are reasonable. The excess of the purchase price over those fair values was recorded as goodwill. The following table summarizes the allocation of the purchase price of this acquisition and the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition for fiscal year 2014:


Estimated fair value of assets acquired and liabilities assumed ($ in millions):
Cash and cash equivalents	$	5
Customer relationships		253
Trade name and other intangibles		43
Goodwill		296
Deferred tax liabilities		(65	)
Other, net		(7	)

Consideration transferred	$	525

Adjustments made to the purchase price allocation for the Protectron acquisition during fiscal 2015 were not material to the Consolidated Financial Statements. The amortization period for intangible assets acquired ranges from seven to 20 years. The Company recorded approximately $296 million of goodwill, reflecting the strategic fit and the value of Protectron’s recurring revenue and earnings growth potential to the Company. The goodwill amount was not deductible for tax purposes. Protectron’s impact on the Company’s Consolidated Results of Operations for fiscal year 2014 and pro-forma results for fiscal years 2014 and 2013 was immaterial.

On August 2, 2013, the Company acquired all of the issued and outstanding capital stock of Devcon Security Holdings, Inc. (“Devcon Security”) for cash consideration of $146 million, net of cash acquired. Devcon Security provides alarm monitoring services and related equipment to residential homes, businesses, and homeowner associations in the United States. As part of this acquisition, the Company recognized intangible assets of $84 million in customer relationships and $60 million of goodwill as well as insignificant amounts of net working capital and tangible assets. On October 1, 2012, the Company completed its acquisition of Absolute Security, which had been an ADT authorized dealer, with $16 million of cash paid during fiscal year 2013. As part of this acquisition, the Company recognized $20 million of goodwill.

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3. Property and Equipment

Property and equipment as of September 25, 2015 and September 26, 2014 consisted of the following ($ in millions):


	September 25, 2015			September 26, 2014
Land	$	9		$	9
Buildings and leasehold improvements		108			101
Machinery and equipment		404			392
Property under capital leases		45			45
Construction in progress		40			15
Accumulated depreciation		(323	)		(297	)

Property and equipment, net	$	283		$	265

4. Goodwill and Other Intangible Assets

Goodwill

On the first day of the fiscal fourth quarter of 2015, the Company performed a quantitative impairment assessment on its two reporting units and concluded that goodwill was not impaired. Additionally, there were no goodwill impairments as a result of performing the Company’s annual impairment tests for fiscal years 2014 and 2013.

As discussed further in Note 1, effective for the fourth quarter of fiscal year 2015, the Company changed its operating segment reporting structure. Under this new structure, the Company now has two operating segments, which are also the Company’s reporting units. As a result of this change, the Company reallocated goodwill to the U.S. and Canada reporting units using the relative fair value approach.

The changes in the carrying amount of goodwill by segment for the years ended September 25, 2015 and September 26, 2014 are as follows ($ in millions):


	United States			Canada			Total
Balance as of September 27, 2013	$	3,409		$	67		$	3,476
Acquisition		—			296			296
Currency translation and other		(13	)		(21	)		(34	)

Balance as of September 26, 2014	$	3,396		$	342		$	3,738
Currency translation and other		(1	)		(57	)		(58	)

Balance as of September 25, 2015	$	3,395		$	285		$	3,680

All prior period balances in the table above are presented under the new segment structure.

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Other Intangible Assets

The following table sets forth the gross carrying amounts and accumulated amortization of the Company’s other intangible assets as of September 25, 2015 and September 26, 2014 ($ in millions):


	September 25, 2015					September 26, 2014
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Amortizable:
Contracts and related customer relationships	$	8,147	$	(5,183	)	$	8,098	$	(5,022	)
Other		41		(6	)		51		(7	)

Total	$	8,188	$	(5,189	)	$	8,149	$	(5,029	)

The changes in the net carrying amount of contracts and related customer relationships for the years ended September 25, 2015 and September 26, 2014 are as follows ($ in millions):


Balance as of September 27, 2013	$	2,917
Acquisition of customer relationships		253
Customer contract additions, net of dealer charge-backs		523
Amortization		(587	)
Currency translation and other		(30	)

Balance as of September 26, 2014	$	3,076
Customer contract additions, net of dealer charge-backs		561
Amortization		(614	)
Currency translation and other		(59	)

Balance as of September 25, 2015	$	2,964

Other than goodwill, the Company does not have any other indefinite-lived intangible assets as of September 25, 2015 and September 26, 2014. Intangible asset amortization expense for fiscal years 2015, 2014 and 2013 was $617 million, $589 million, and $569 million, respectively. The weighted-average amortization periods for contracts and related customer relationships acquired during fiscal years 2015 and 2014, were 15 and 14 years, respectively.

The estimated aggregate amortization expense for intangible assets is expected to be as follows ($ in millions):


Fiscal 2016	$	571
Fiscal 2017		476
Fiscal 2018		398
Fiscal 2019		342
Fiscal 2020		274

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5. Debt

Debt as of September 25, 2015 and September 26, 2014 consisted of the following ($ in millions):


	September 25, 2015		September 26, 2014
Current maturities of long-term debt:
Capital lease obligations and other	$	5	$	4

Current maturities of long-term debt		5		4

Long-term debt:
2.250% notes due July 2017	$	750	$	750
4.125% notes due April 2019		509		498
5.250% notes due March 2020		306		—
6.250% notes due October 2021		1,020		1,001
3.500% notes due July 2022		998		998
4.125% notes due June 2023		700		700
4.875% notes due July 2042		743		743
Revolving credit facility		335		375
Capital lease obligations and other		28		31

Total long-term debt		5,389		5,096

Total debt	$	5,394	$	5,100

Senior Unsecured Notes

Fiscal Year 2015

On December 18, 2014, the Company completed a public offering of $300 million of its 5.250% senior unsecured notes due March 15, 2020 (the “December 2014 Debt Offering”). Net cash proceeds from the issuance of this term indebtedness totaled $296 million and were primarily used to repay outstanding borrowings under the Company’s revolving credit facility and for general corporate purposes. Interest is payable on March 15 and September 15 of each year and commenced on March 15, 2015. The Company may redeem the notes, in whole or in part, at any time prior to the maturity date at a redemption price equal to the greater of the principal amount of the notes to be redeemed or a make-whole premium, plus, in each case, accrued and unpaid interest to, but excluding, the redemption date.

Additionally, in December 2014, the Company entered into interest rate swap transactions on all $300 million of the December 2014 Debt Offering. These transactions are designated as fair value hedges with the objective of managing the exposure to interest rate risk by converting the interest rates on the fixed-rate notes to floating rates. These transactions did not have a material impact on the Company’s Consolidated Financial Statements as of September 25, 2015.

Fiscal Year 2014

On October 1, 2013, the Company issued $1 billion aggregate principal amount of 6.250% senior unsecured notes due October 2021 in a private placement conducted pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended (the “October 2013 Debt Offering”). Net cash proceeds from the issuance of this term indebtedness totaled $987 million, of which $150 million was used to repay the outstanding borrowings under the Company’s revolving credit facility. The remaining net proceeds were used primarily for repurchases of outstanding shares of ADT’s common stock. Interest is payable on April 15 and October 15 of each year and commenced on April 15, 2014. The Company may redeem the notes, in whole or in part, at any time prior to the maturity date at a redemption price equal to the greater of the principal amount of the notes to be redeemed, or a

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make-whole premium, plus, in each case, accrued and unpaid interest to, but excluding, the redemption date. In connection with the October 2013 Debt Offering, the Company entered into an exchange and registration rights agreement with the initial purchasers, and on April 4, 2014, the Company commenced an offer to exchange the $1 billion notes. This exchange offer was completed on May 9, 2014.

On March 19, 2014, the Company completed a public offering of $500 million of its 4.125% senior unsecured notes due April 2019. Net cash proceeds from the issuance of this term indebtedness totaled $493 million, of which $200 million was used to repay outstanding borrowings under the Company’s revolving credit facility. The remaining net proceeds were used primarily for general corporate purposes and repurchases of outstanding shares of ADT’s common stock. Interest is payable on April 15 and October 15 of each year, and commenced on October 15, 2014. The Company may redeem the notes, in whole or in part, at any time prior to the maturity date at a redemption price equal to the greater of the principal amount of the notes to be redeemed, or a make-whole premium, plus in each case, accrued and unpaid interest to, but excluding, the redemption date.

Additionally, during the year ended September 26, 2014, the Company entered into interest rate swap transactions to hedge $500 million of its $1 billion October 2013 Debt Offering, and all $500 million of its 4.125% fixed-rate notes due April 2019. These transactions are designated as fair value hedges with the objective of managing the exposure to interest rate risk by converting the interest rates on the fixed-rate notes to floating rates. These transactions did not have a material impact on the Company’s Consolidated Financial Statements as of September 25, 2015 and September 26, 2014.

Fiscal Year 2013

On January 14, 2013, the Company issued $700 million aggregate principal amount of 4.125% unsecured notes due June 2023 in a private placement conducted pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended (the “January 2013 Debt Offering”). Net cash proceeds from the issuance of this term indebtedness totaled $694 million and were primarily used for the repurchase of outstanding shares of ADT’s common stock. Interest is payable on June 15 and December 15 of each year, and commenced on June 15, 2013. The Company may redeem the notes, in whole or in part, at any time prior to the maturity date at a redemption price equal to the greater of the principal amount of the notes to be redeemed, or a make-whole premium, plus in each case, accrued and unpaid interest to, but excluding, the redemption date. In connection with the January 2013 Debt Offering, the Company entered into an exchange and registration rights agreement with the initial purchasers, and on April 18, 2013 the Company commenced an offer to exchange the $700 million notes. This exchange offer was completed during the third quarter of fiscal year 2013.

Fiscal Year 2012

On July 5, 2012, the Company issued $2.5 billion aggregate principal amount of unsecured notes, of which $750 million aggregate principal amount of 2.250% notes will mature on July 15, 2017, $1.0 billion aggregate principal amount of 3.500% notes will mature on July 15, 2022, and $750 million aggregate principal amount of 4.875% notes will mature on July 15, 2042 in a private placement conducted pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. Cash proceeds from the issuance of this term indebtedness, net of debt issuance costs, totaled $2.47 billion and were used primarily to repay intercompany debt and to make other cash payments to Tyco in conjunction with the Separation from Tyco. Interest is payable on January 15 and July 15 of each year. The Company may redeem each series of the notes, in whole or in part, at any time at a redemption price equal to the principal amount of the notes to be redeemed, plus a make-whole premium, plus in each case, accrued and unpaid interest to, but excluding, the redemption date. In connection with the issuance of the $2.5 billion notes, the Company entered into an exchange and registration rights agreement with the initial purchasers, and on April 1, 2013 the Company commenced an offer to exchange such notes. This exchange offer was completed during the third quarter of fiscal year 2013.

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Revolving Credit Facility

On June 22, 2012, the Company entered into an unsecured senior revolving credit facility with a maturity date of June 22, 2017 and an aggregate commitment of $750 million, which is available to be used for working capital, capital expenditures and other corporate purposes. The interest rate for borrowings under the revolving credit facility is based on the London Interbank Offered Rate (“LIBOR”) or an alternative base rate, plus a spread, based upon the Company’s credit rating. As of September 25, 2015 and September 26, 2014, the Company had outstanding borrowings under the facility of $335 million and $375 million, respectively, at interest rates of 1.651% and 1.606%, respectively.

The Company’s revolving credit facility contains customary covenants, including a limit on the ratio of debt to earnings before interest, taxes, depreciation, and amortization (“EBITDA”), a minimum required ratio of EBITDA to interest expense and limits on incurrence of liens and subsidiary debt. In addition, the indenture governing the Company’s senior unsecured notes contains customary covenants including limits on liens and sale/leaseback transactions. Furthermore, acceleration of any obligation under any of the Company’s material debt instruments will permit the holders of its other material debt to accelerate their obligations.

As of September 25, 2015, the Company was in compliance with all covenants on its debt instruments.

Aggregate annual maturities of long-term debt and capital lease obligations are as follows ($ in millions):


Fiscal 2016	$	8
Fiscal 2017		1,093
Fiscal 2018		7
Fiscal 2019		506
Fiscal 2020		306
Thereafter		3,457

Total		5,377
Less amount representing discount on notes		9
Less amount representing interest on capital leases		9
Plus hedge accounting fair value adjustment		35

Total		5,394
Less current maturities of long-term debt		5

Total long-term debt	$	5,389

Interest expense totaled $209 million, $193 million, and $118 million for the years ended September 25, 2015, September 26, 2014, and September 27, 2013, respectively. Interest expense for fiscal years 2015, 2014, and 2013 primarily represents interest incurred on the Company’s unsecured notes.

See Note 1 for information on the fair value of the Company’s debt.

6. Income Taxes

Significant components of income before income taxes for fiscal years 2015, 2014, and 2013 are as follows ($ in millions):


	2015		2014		2013
United States	$	426	$	408	$	610
Non-U.S.		11		24		32

Income before income taxes	$	437	$	432	$	642

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Significant components of income tax expense for fiscal years 2015, 2014, and 2013 are as follows ($ in millions):


	2015			2014			2013
Current:
United States:
Federal	$	7		$	(17	)	$	7
State		2			7			1
Non-U.S.		8			15			6

Current income tax expense	$	17		$	5		$	14

Deferred:
United States:
Federal	$	110		$	110		$	172
State		16			20			33
Non-U.S.		(2	)		(7	)		2

Deferred income tax expense		124			123			207

Income tax expense	$	141		$	128		$	221

The reconciliations between the actual effective tax rate on continuing operations and the statutory U.S. federal income tax rate for fiscal years 2015, 2014, and 2013 are as follows:


	2015			2014			2013
Federal statutory tax rate		35.0	%		35.0	%		35.0	%
Increases (reductions) in taxes due to:
U.S. state income tax provision, net		2.7	%		4.2	%		3.5	%
Non-U.S. net earnings		(1.2	)%		(0.5	)%		(0.5	)%
Trademark amortization		(5.3	)%		(5.3	)%		(3.6	)%
Nondeductible charges		—	%		—	%		(1.0	)%
Resolution of unrecognized tax benefits		—	%		(6.5	)%		—	%
2005-2009 IRS adjustments		—	%		3.7	%		—	%
Other		1.1	%		(1.0	)%		1.0	%

Provision for income taxes		32.3	%		29.6	%		34.4	%

Deferred income taxes result from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes.

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The components of the Company’s net deferred income tax liability as of September 25, 2015 and September 26, 2014 are as follows ($ in millions):


	September 25, 2015			September 26, 2014
Deferred tax assets:
Accrued liabilities and reserves	$	61		$	35
Tax loss and credit carryforwards		959			1,023
Postretirement benefits		17			14
Deferred revenue		160			167
Other		21			13

`	$	1,218		$	1,252

Deferred tax liabilities:
Property and equipment		(29	)		(34	)
Subscriber system assets		(715	)		(633	)
Intangible assets		(1,097	)		(1,111	)
Other		(7	)		(10	)

	$	(1,848	)	$	(1,788	)

Net deferred tax liability before valuation allowance		(630	)		(536	)
Valuation allowance		(3	)		(2	)

Net deferred tax liability	$	(633	)	$	(538	)

The valuation allowance for deferred tax assets relates to the uncertainty of the utilization of certain state and U.S. deferred tax assets. The Company believes that it is more likely than not that it will generate sufficient future taxable income to realize the tax benefits related to its remaining deferred tax assets, including credit and net operating loss (“NOL”) carryforwards, on the Company’s Consolidated Balance Sheet. The valuation allowance for deferred tax assets as of September 25, 2015 and September 26, 2014 was not material.

As of September 25, 2015, the Company had approximately $2.5 billion of U.S. Federal NOL carryforwards, $1.2 billion of state NOL carryforwards and immaterial foreign NOL carryforwards. The U.S. Federal and state NOL carryforwards will expire between 2016 and 2033. Although future utilization will depend on the Company’s actual profitability and the result of income tax audits, the Company anticipates that its U.S. Federal NOL carryforwards will be fully utilized prior to expiration. Of the $2.5 billion U.S. Federal NOL carryforwards, $0.7 billion was generated prior to the Separation from Tyco and is subject to limitation as an “ownership change” is deemed to have occurred upon Separation from Tyco on September 28, 2012 pursuant to Internal Revenue Code (the “Code”) Section 382. The Company does not, however, expect that this limitation will impact its ability to utilize the tax attributes carried forward from pre-Separation from Tyco periods. The Company recognizes tax benefits associated with stock-based compensation directly to stockholders’ equity when realized. Accordingly, deferred tax assets are not recognized for net operating loss carryforwards resulting from windfall tax benefits. A windfall tax benefit occurs when tax deductions related to equity compensation are greater than compensation recognized for financial reporting. Stockholders’ equity will be increased by $17 million if and when such deferred tax assets are ultimately realized. The Company uses a tax law ordering approach to determine if the excess tax deductions associated with compensation costs have reduced income taxes payable.

Unrecognized Tax Benefits

As of September 25, 2015 and September 26, 2014, the Company had unrecognized tax benefits of $48 million and $49 million, respectively, of which $48 million and $49 million, if recognized, would affect the effective tax rate. The Company recognizes interest and penalties related to unrecognized tax benefits in income

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tax expense. Accrued interest and penalties related to the unrecognized tax benefits as of September 25, 2015 and September 26, 2014 were not material. All unrecognized tax benefits and related interest were presented as non-current in the Company’s Consolidated Balance Sheet as of September 25, 2015.

The impact to the income tax expense for interest and penalties related to unrecognized tax benefits was not material for fiscal years 2015, 2014, and 2013.

The following is a rollforward of unrecognized tax benefits for the years ended September 25, 2015, September 26, 2014, and September 27, 2013 ($ in millions):


	2015			2014			2013
Balance as of beginning of year:	$	49		$	87		$	88
Reductions related to lapse of statute of limitations		—			—			(1	)
Additions/(Reductions) based on tax positions related to prior years		1			(38	)		—
Increase related to acquisitions		—			15			—
Decrease due to reductions in the AMT payable		—			(18	)		—
Other changes not impacting the income statement		(2	)		3			—

Balance as of end of year	$	48		$	49		$	87

Based on the current status of its income tax audits, the Company believes that it is reasonably possible that an immaterial amount of unrecognized tax benefits may be resolved in the next 12 months.

Many of the Company’s uncertain tax positions relate to tax years that remain subject to audit by the taxing authorities in the U.S. federal, state and local, or foreign jurisdictions. Open tax years in significant jurisdictions are as follows:


Jurisdiction	Years Open To Audit
Canada		2008—2014
United States		1997—2014

Undistributed Earnings of Subsidiaries

The Company’s primary non-U.S. operations are located in Canada. The Company has not provided for U.S. income taxes and foreign withholding taxes on the undistributed earnings of its Canadian subsidiaries as of September 25, 2015, as earnings are expected to be permanently reinvested outside the U.S. If these foreign earnings were to be repatriated in the future, the related U.S. tax liability may be reduced by any foreign income taxes previously paid on these earnings. As of September 25, 2015, the cumulative amount of earnings upon which U.S. income taxes have not been provided is approximately $193 million. The Company does not know the time or manner in which it would repatriate those funds. Because the time or manner of repatriation is uncertain, the Company cannot determine the impact of local taxes, withholding taxes, and foreign tax credits associated with the future repatriation of such earnings and therefore cannot quantify the tax liability. The Company provides for deferred or current income taxes on earnings of international subsidiaries in the period that the Company determines it will remit those earnings.

Tax Sharing Agreement and Other Income Tax Matters

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(“Covidien”), and TE Connectivity Ltd. (“TE Connectivity”) entered into in 2007 (the “2007 Tax Sharing Agreement”). The 2012 Tax Sharing Agreement provides that ADT, Tyco, and Pentair will share (i) certain pre-Separation from Tyco income tax liabilities that arise from adjustments made by tax authorities to ADT’s, Tyco’s, and Pentair’s U.S. and certain non-U.S. income tax returns and (ii) payments required to be made by Tyco in respect to the 2007 Tax Sharing Agreement (collectively, “Shared Tax Liabilities”). Tyco will be responsible for the first $500 million of Shared Tax Liabilities. ADT and Pentair will share 58% and 42%, respectively, of the next $225 million of Shared Tax Liabilities. ADT, Tyco, and Pentair will share 27.5%, 52.5%, and 20.0%, respectively, of Shared Tax Liabilities above $725 million.

In addition, under the terms of the 2012 Tax Sharing Agreement, in the event the distribution of ADT’s common shares to the Tyco shareholders (the “Distribution”), the distribution of Pentair common shares to the Tyco shareholders (the “Pentair Distribution” and, together with the Distribution, the “Distributions”), or certain internal transactions undertaken in connection therewith were determined to be taxable as a result of actions taken by ADT, Pentair, or Tyco after the Distributions, the party responsible for such failure would be responsible for all taxes imposed on ADT, Pentair, or Tyco as a result thereof. Taxes resulting from the determination that the Distribution, the Pentair Distribution, or any internal transaction that were intended to be tax-free is taxable are referred to herein as “Distribution Taxes.” If such failure is not the result of actions taken after the Distributions by ADT, Pentair, or Tyco, then ADT, Pentair, and Tyco would be responsible for any Distribution Taxes imposed on ADT, Pentair, or Tyco as a result of such determination in the same manner and in the same proportions as the Shared Tax Liabilities. ADT has sole responsibility of any income tax liability arising as a result of Tyco’s acquisition of Broadview Security in May 2010, including any liability of Broadview Security under the tax sharing agreement between Broadview Security and The Brink’s Company dated October 31, 2008 (collectively, “Broadview Tax Liabilities”). Costs and expenses associated with the management of Shared Tax Liabilities, Distribution Taxes, and Broadview Tax Liabilities will generally be shared 20.0% by Pentair, 27.5% by ADT, and 52.5% by Tyco. ADT is responsible for all of its own taxes that are not shared pursuant to the 2012 Tax Sharing Agreement’s sharing formulae. In addition, Tyco, and Pentair are responsible for their tax liabilities that are not subject to the 2012 Tax Sharing Agreement’s sharing formulae.

The 2012 Tax Sharing Agreement also provides that, if any party defaults in its obligation to another party to pay its share of the distribution taxes that arise as a result of no party’s fault, each non-defaulting party is required to pay, equally with any other non-defaulting party, the amounts in default. In addition, if another party to the 2012 Tax Sharing Agreement that is responsible for all or a portion of an income tax liability defaults in its payment of such liability to a taxing authority, ADT could be legally liable under applicable tax law for such liabilities and required to make additional tax payments. Accordingly, under certain circumstances, ADT may be obligated to pay amounts in excess of its agreed-upon share of its, Tyco’s, and Pentair’s tax liabilities.

The Company recorded a receivable from Tyco for certain tax liabilities incurred by ADT but indemnified by Tyco under the 2012 Tax Sharing Agreement. This receivable totaled $41 million as of September 27, 2013, substantially all of which was released into other expense during fiscal year 2014. The actual amount that the Company may be entitled to receive could vary depending upon the outcome of certain unresolved tax matters, which may not be resolved for several years.

In conjunction with the Separation from Tyco, substantially all of Tyco’s outstanding equity awards were converted into like-kind awards of ADT, Tyco, and Pentair. Pursuant to the terms of the 2012 Separation from Tyco and Distribution Agreement, each of the three companies is responsible for issuing its own shares upon employee exercises of stock option awards or vesting of restricted stock units. However, the 2012 Tax Sharing Agreement provides that any allowable compensation tax deduction for such awards is to be claimed by the employee’s current employer. The 2012 Tax Sharing Agreement requires the employer claiming a tax deduction for shares issued by the other companies to pay a percentage of the allowable tax deduction to the company issuing the equity. During the year ended September 25, 2015, amounts recorded in connection with this arrangement were immaterial.

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7. Commitments and Contingencies

Lease Obligations

The Company has facility, vehicle, and equipment leases that expire at various dates through fiscal year 2026. Rental expense under these leases was $56 million, $58 million, and $50 million for fiscal years 2015, 2014, and 2013, respectively. Sublease income was immaterial for all years presented. In addition to operating leases, the Company has commitments under capital leases for certain facilities, which are not material to the Company’s Consolidated Financial Statements.

The following table provides a schedule of minimum lease payments for non-cancelable operating leases as of September 25, 2015 ($ in millions):


Fiscal 2016	$	58
Fiscal 2017		52
Fiscal 2018		45
Fiscal 2019		35
Fiscal 2020		28
Thereafter		46

		264
Less sublease income		20

Total	$	244

Purchase Obligations


Fiscal 2016	$	273
Fiscal 2017		182
Fiscal 2018		46
Fiscal 2019		1
Fiscal 2020		—
Thereafter		—

Total	$	502

The purchase obligations in the table above primarily relate to an agreement with one of the Company’s suppliers for the purchase of certain security system equipment and components. The agreement, which was amended during the third quarter of fiscal year 2015, provides that the Company meet minimum purchase requirements, which are subject to adjustments based on certain performance conditions for each of the calendar years 2015, 2016, and 2017. The agreement expires on December 31, 2017.

Legal Proceedings

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inquiries, the Company receives numerous requests, subpoenas, and orders for documents, testimony, and information in connection with various aspects of its activities. The Company has recorded accruals for losses that it believes are probable to occur and are reasonably estimable. While the ultimate outcome of these matters cannot be predicted with certainty, the Company believes that the resolution of any such proceedings (other than matters specifically identified below) will not have a material effect on its financial position, results of operations, or cash flows.

Environmental Matter

Securities Litigation

On April 28, 2014, the Company and certain of its current and former officers and directors were named as defendants in a lawsuit filed in the United States District Court for the Southern District of Florida. The plaintiff alleges violations of the Securities Exchange Act of 1934 and SEC Rule 10b-5, and seeks monetary damages, including interest, and class action status on behalf of all plaintiffs who purchased the Company’s common stock during the period between November 27, 2012 and January 29, 2014, inclusive. The claims focus primarily on the Company’s statements concerning its financial condition and future business prospects for fiscal 2013 and the first quarter of fiscal 2014, its stock repurchase program in 2012 and 2013, and the buyback of stock from Corvex Management LP (“Corvex”) in November 2013. On June 27, 2014, another plaintiff filed a similar action in the same court. On July 14, 2014, the Court entered an order consolidating the two actions under the caption Henningsen v. The ADT Corporation , Case No. 14-80566-CIV- DIMITROULEAS , and appointing IBEW Local 595 Pension and Money Purchase Pension Plans, Macomb County Employees’ Retirement System and KBC Asset Management NV as Lead Plaintiffs in the consolidated action. In addition to the Company, the defendants named in the action are Naren Gursahaney, Kathryn A. Mikells, Michael S. Geltzeiler, Keith A. Meister, and Corvex. On September 25, 2014, defendants moved to dismiss this action. On November 13, 2014, Mr. Geltzeiler was dismissed as a defendant without prejudice from this action. On June 4, 2015, the Court entered an order granting the motions to dismiss and dismissed plaintiffs’ complaint in its entirety. The Court granted plaintiffs leave to file an amended complaint on or before July 1, 2015. That deadline passed, and the Court dismissed the action with prejudice on July 8, 2015. Plaintiffs filed a notice of appeal on August 7, 2015. On August 21, 2015, defendants filed a motion to dismiss the appeal as untimely. The appeal and the motion to dismiss the appeal are pending before the United States Court of Appeals for the Eleventh Circuit.

On January 14, 2015, the SEC sent the Company a letter stating that it is investigating the matters at issue in the foregoing litigation and requesting that the Company voluntarily provide the information and documents set forth in the letter concerning the same litigation. The Company is cooperating fully with the SEC in its investigation.

Derivative Litigation

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caption In re The ADT Corporation Derivative Litigation , Lead Case No. 14-80570-CIV-DIMITROULEAS/SNOW, and on September 12, 2014, defendants moved to dismiss the consolidated action. The fourth derivative action, entitled Seidl v . Colligan , Case No. 2014CA007529, was filed in the Circuit Court of the 15th Judicial Circuit, Palm Beach County, Florida. The action is currently stayed pending the resolution of the appeal in the Ryan Action, described below. A fifth derivative action asserting similar claims, entitled Ryan v. Gursahaney , C.A. No. 9992-VCP (the “ Ryan Action”), was filed in the Delaware Court of Chancery on August 1, 2014, and defendants moved to dismiss that action. In response to defendants’ motion, plaintiff filed an amended complaint asserting similar claims and on October 13, 2014, defendants moved to dismiss the amended complaint. On April 28, 2015, the Court granted defendants’ motion to dismiss the Ryan Action for failure to make a litigation demand on ADT’s Board of Directors or to adequately plead that making such a demand would be futile. A sixth derivative action asserting similar claims against the same group of past and present officers and directors was filed in the Delaware Court of Chancery on January 27, 2015 under the caption entitled Binning v . Gursahaney , C.A. No. 10586-VCP (the “ Binning Action”). On February 18, 2015, the Delaware Court of Chancery entered an order staying the date for the defendants to respond to the Binning complaint until 45 days after its ruling on defendants’ motion to dismiss the Ryan Action. On May 15, 2015, plaintiffs in the consolidated derivative action in Florida federal court notified the Court that, in light of the Delaware Court of Chancery’s dismissal of the Ryan Action, they had made a demand on ADT’s Board of Directors to bring the claims that plaintiffs had asserted in that action. Following that notice, on May 20, 2015, the Florida federal court entered an order dismissing the consolidated derivative action. On May 27, 2015, plaintiff in the Ryan Action filed a notice of appeal to the Delaware Supreme Court. The appeal has been fully briefed and remains pending. On June 9, 2015, plaintiff in the Binning Action filed an amended complaint asserting claims similar to his initial complaint. Defendants moved to dismiss Binning’s amended complaint on July 7, 2015 and the motion is pending.

Income Tax Matters

In connection with the Separation from Tyco, the Company entered into the 2012 Tax Sharing Agreement with Tyco and Pentair Ltd. that governs the rights and obligations of the Company, Tyco, and Pentair, Ltd. for certain pre-Separation from Tyco tax liabilities, including Tyco’s obligations under the 2007 Tax Sharing Agreement among Tyco, Covidien, and TE Connectivity. The Company is responsible for all of its own taxes that are not shared pursuant to the 2012 Tax Sharing Agreement’s sharing formulae. Tyco and Pentair Ltd. are likewise responsible for their tax liabilities that are not subject to the 2012 Tax Sharing Agreement’s sharing formulae. Tyco has the right to administer, control, and settle all U.S. income tax audits for the periods prior to and including the Separation from Tyco.

With respect to years prior to and including the 2007 separation of Covidien and TE Connectivity by Tyco, tax authorities have raised issues and proposed tax adjustments that are generally subject to the sharing provisions of the 2007 Tax Sharing Agreement and which may require Tyco to make a payment to a taxing authority, Covidien, or TE Connectivity. Although Tyco has advised ADT that it has resolved a substantial number of these adjustments, a few significant items raised by the Internal Revenue Service (“IRS”) remain open with respect to the audits of the 1997 through 2007 tax years. On July 1, 2013, Tyco announced that the IRS issued Notices of Deficiency to Tyco primarily related to the treatment of certain intercompany debt transactions (the “Tyco IRS Notices”). These notices assert that additional taxes of $883 million plus penalties of $154 million are owed based on audits of the 1997 through 2000 tax years of Tyco and its subsidiaries, as they existed at that time. Further, Tyco reported receiving Final Partnership Administrative Adjustments (the “Partnership Notices”) for certain U.S. partnerships owned by its former U.S. subsidiaries, for which Tyco has indicated that it estimates an additional tax deficiency of approximately $30 million will be asserted. The additional tax assessments related to the Tyco IRS Notices and the Partnership Notices exclude interest and do not reflect the impact on subsequent periods if the IRS challenge to Tyco’s tax filings is proved correct. Tyco has filed petitions with the U.S. Tax Court to contest the IRS assessments. Consistent with its petitions filed with the U.S. Tax Court, Tyco has advised the Company that it strongly disagrees with the IRS position and believes (i) it has meritorious defenses for the respective tax filings, (ii) the IRS positions with regard to these matters are inconsistent with applicable tax laws and Treasury regulations, and (iii) the previously reported taxes for the

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years in question are appropriate. No payments with respect to the Tyco IRS Notices would be required until the dispute is resolved in the U.S. Tax Court. At the request of the IRS the trial start date was postponed and rescheduled for October 2016.

During fiscal year 2015, the IRS concluded its field examination of certain of Tyco’s U.S. federal income tax returns for the 2008 and 2009 tax years of Tyco and its subsidiaries. Tyco received anticipated Revenue Agents’ Reports (“RARs”) proposing adjustments to certain Tyco entities’ previously filed tax return positions, including the predecessor to ADT, relating primarily to certain intercompany debt. In response, Tyco filed a formal, written protest with the IRS Office of Appeals requesting review of the RARs. Tyco has advised the Company that it strongly disagrees with the IRS position and intends to vigorously defend its prior filed tax return positions and believes the previously reported taxes for the years in question are appropriate.

If the IRS should successfully assert its positions with respect to the matters described above, the Company’s share of the collective liability, if any, would be determined pursuant to the 2012 Tax Sharing Agreement. In accordance with the 2012 Tax Sharing Agreement, Tyco is responsible for the first $500 million of tax, interest, and penalty assessed against pre-2013 tax years, including its 27% share of the tax, interest, and penalty assessed for periods prior to Tyco’s 2007 spin transaction (“Pre-2007 Spin Periods”). In accordance with the 2012 Tax Sharing Agreement, the amount ultimately assessed against Pre-2007 Spin Periods with respect to the Tyco IRS Notices and the Partnership Notices would have to be in excess of $1.85 billion, including other assessments for unrelated historical tax matters Tyco has, or may settle in the future, before the Company would be required to pay any of the amounts assessed. In addition to the Company’s share of cash taxes pursuant to the 2012 Tax Sharing Agreement, the Company’s NOL and credit carryforwards may be significantly reduced or eliminated by audit adjustments to pre-2013 tax periods. NOL and credit carryforwards may be reduced prior to incurring any cash tax liability, and will not be compensated for under the tax sharing agreement. The Company believes that its income tax reserves and the liabilities recorded in the Consolidated Balance Sheet for the 2012 Tax Sharing Agreement continue to be appropriate. However, the ultimate resolution of these matters is uncertain, and if the IRS were to prevail, it could have a material adverse impact on the Company’s financial position, results of operations, and cash flows, potentially including a significant reduction in or the elimination of the Company’s available NOL and credit carryforwards. Further, to the extent ADT is responsible for any liability under the 2012 Tax Sharing Agreement, there could be a material impact on its financial position, results of operations, cash flows, or its effective tax rate in future reporting periods.

In fiscal year 2014, Tyco advised the Company of pending IRS settlements related to certain intercompany corporate expenses deducted on the U.S. income tax returns for the 2005 through 2009 tax years. The settlements reduced the Company’s NOL carryforwards, resulting in a decrease to the Company’s net deferred tax asset of approximately $17 million.

Other liabilities in the Company’s Consolidated Balance Sheets as of both September 25, 2015 and September 26, 2014 include $19 million for ADT’s obligations under certain tax-related agreements entered into in conjunction with the Separation from Tyco. The maximum amount of potential future payments is not determinable as they relate to unknown conditions and future events that cannot be predicted.

8. Retirement Plans

The Company measures its retirement plans as of its fiscal year end.

Defined Benefit Plans —The Company provides a defined benefit pension plan and certain other postretirement benefits to certain employees. These plans were frozen prior to Separation from Tyco and are not material to the Company’s financial statements. As of September 25, 2015 and September 26, 2014, the fair values of pension plan assets were $59 million and $62 million, respectively, and the fair values of projected benefit obligations in aggregate were $87 million and $84 million, respectively. As a result, the plans were underfunded by approximately $28 million and $22 million at September 25, 2015 and September 26, 2014,

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respectively, and were recorded as a net liability in the Consolidated Balance Sheets. Net periodic benefit cost was not material for fiscal years 2015, 2014, and 2013.

Defined Contribution Retirement Plans —The Company maintains several qualified defined contribution plans, which include 401(k) matching programs in the U.S., as well as similar matching programs outside the U.S. Expense for the defined contribution plans is computed as a percentage of participants’ compensation and was $25 million, $20 million, and $20 million for fiscal years 2015, 2014, and 2013, respectively.

Deferred Compensation Plan —The Company maintains a nonqualified Supplemental Savings and Retirement Plan (“SSRP”), which permits eligible employees to defer a portion of their compensation. A record keeping account is set up for each participant and the participant chooses from a variety of measurement funds for the deemed investment of their accounts. The measurement funds correspond to a number of funds in the Company’s 401(k) plan and the account balance fluctuates with the investment returns on those funds. Deferred compensation liabilities were $17 million as of September 25, 2015 and September 26, 2014. Deferred compensation expense was not material for fiscal years 2015, 2014, and 2013.

9. Share Plans

Stock Compensation Plans

Prior to the Separation from Tyco, the Company adopted The ADT Corporation 2012 Stock Incentive Plan (the “Plan”). The Plan provides for the award of stock options, stock appreciation rights, annual performance bonuses, long-term performance awards, restricted units, restricted stock, deferred stock units, promissory stock, and other stock-based awards (collectively, “Awards”). In addition to the incentive equity awards converted from Tyco awards, the Plan provides for a maximum of eight million common shares to be issued as Awards, subject to adjustment as provided under the terms of the Plan.

Stock-based compensation expense is included in selling, general and administrative expenses in the Consolidated Statements of Operations. The stock-based compensation expense recognized and the associated tax benefit for fiscal years 2015, 2014, and 2013 are as follows ($ in millions):


	2015		2014		2013
Stock-based compensation expense recognized	$	23	$	20	$	19
Tax benefit associated with stock-based compensation		9		8		7

Stock Options— Options are granted to purchase common shares at prices that are equal to the fair market value of the common shares on the date the option is granted. Conditions of vesting are determined at the time of grant under the Plan. Options granted under the Plan generally vest in equal annual installments over a period of four years and generally expire 10 years after the date of grant. The grant-date fair value of each option grant is estimated using the Black-Scholes option pricing model and amortized on a straight-line basis over the requisite service period of the awards, which is generally the vesting period. The compensation expense recognized is net of estimated forfeitures. Forfeitures are estimated based on expected termination behavior, as well as an analysis of actual option forfeitures.

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Use of a valuation model requires management to make certain assumptions with respect to selected model inputs. Expected volatility for fiscal year 2015 is calculated based on a weighted average of ADT’s own historical and implied volatility. Fiscal 2014 and 2013 volatility is calculated based on an analysis of historic and implied volatility measures for a set of peer companies. The average expected life is based on the contractual term of the option and expected employee exercise and post-vesting employment termination behavior. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life assumed at the date of grant. The assumptions used in the Black-Scholes option pricing model for fiscal years 2015, 2014, and 2013 are as follows:


	2015	2014	2013
Risk-free interest rate	1.73-1.87%	1.73-2.10%	0.81-1.62%
Expected life of options (years)	6	6	5.75-6.00
Expected annual dividend yield	2.23%	1.95%	1.09%
Expected stock price volatility	29%	41%	33%

The weighted-average grant-date fair value of options granted during fiscal years 2015, 2014, and 2013 was $8.41, $14.20 and $13.06, respectively, and the intrinsic value of options exercised during fiscal years 2015, 2014, and 2013 was $10 million, $8 million, and $59 million, respectively.

The following table summarizes the stock option activity for fiscal year 2015:


	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value ($ in millions)
Outstanding as of September 26, 2014		4,820,964		$	31.77
Granted		796,660			35.99
Exercised		(971,503	)		27.52
Canceled		(277,472	)		41.33

Outstanding as of September 25, 2015		4,368,649		$	32.88		5.54	$	13
Shares expected to vest as of September 25, 2015 ⁽¹⁾		1,413,712		$	38.71		8.30	$	—
Exercisable as of September 25, 2015		2,828,424		$	29.73		4.01	$	12

(1)	Shares expected to vest includes an estimate of expected forfeitures.

As of September 25, 2015, total unrecognized compensation cost related to non-vested stock options granted under the Company’s share option plan was approximately $10 million. This expense, net of forfeitures, is expected to be recognized over a weighted-average period of 2.4 years.

Restricted Stock Units— Restricted stock units are granted subject to certain restrictions. Conditions of vesting are determined at the time of grant under the Plan. Restrictions on the award generally lapse upon normal retirement, if more than 12 months from the grant date, and death or disability of the employee. Recipients of restricted stock units have no voting rights and receive dividend equivalent units. Dividend equivalent units are subject to forfeiture if the underlying awards do not vest.

The fair market value of restricted stock units, both time vesting and those subject to specific performance criteria, are expensed over the period of vesting. Restricted stock units that vest based upon passage of time generally vest over a period of four years. Restricted stock units that vest dependent upon attainment of various levels of performance (“performance share awards”) generally vest in their entirety three years from the grant date. The fair value of restricted stock units is generally determined based on the closing market price of the underlying stock on the grant date.

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The following table summarizes the restricted stock unit activity, including performance share awards, for fiscal year 2015:


	Shares			Weighted-Average Grant-Date Fair Value
Non-vested as of September 26, 2014		1,112,692		$	39.39
Granted		766,508			34.53
Vested		(315,484	)		33.00
Canceled		(133,539	)		39.53

Non-vested as of September 25, 2015		1,430,177			38.16

The weighted-average grant-date fair value of restricted stock units granted during fiscal years 2015, 2014, and 2013 was $34.53, $40.57, and $45.91, respectively. The total fair value of restricted stock units that vested during fiscal years 2015, 2014, and 2013 was $10 million, $15 million, and $32 million, respectively. No performance share awards vested during fiscal year 2015.

As of September 25, 2015, total unrecognized compensation cost related to non-vested restricted stock units was approximately $25 million. This expense, net of forfeitures, is expected to be recognized over a weighted-average period of 2.2 years.

10. Equity

Common Stock Shares Authorized and Outstanding —As of September 25, 2015, the Company had 1,000,000,000 shares of $0.01 par value common stock authorized, of which 165,850,306 shares were outstanding.

Dividends —Holders of shares of the Company’s common stock are entitled to receive dividends when, as, and if declared by its Board of Directors out of funds legally available for that purpose. Future dividends are dependent on the Company’s financial condition and results of operations, the capital requirements of its business, covenants associated with debt obligations, legal requirements, regulatory constraints, industry practice, and other factors deemed relevant by its Board of Directors.

During fiscal years 2015, 2014, and 2013, the Company’s Board of Directors declared the following dividends on ADT’s common stock:


Declaration Date	Dividend per Share		Record Date	Payment Date
July 17, 2015	$	0.21	July 29, 2015	August 19, 2015
March 17, 2015	$	0.21	April 29, 2015	May 20, 2015
January 8, 2015	$	0.21	January 28, 2015	February 18, 2015

September 19, 2014	$	0.20	October 29, 2014	November 19, 2014
July 18, 2014	$	0.20	July 30, 2014	August 20, 2014
March 13, 2014	$	0.20	April 30, 2014	May 21, 2014
January 9, 2014	$	0.20	January 29, 2014	February 19, 2014

September 20, 2013	$	0.125	October 30, 2013	November 20, 2013
July 19, 2013	$	0.125	July 31, 2013	August 21, 2013
March 14, 2013	$	0.125	April 24, 2013	May 15, 2013
January 10, 2013	$	0.125	January 30, 2013	February 20, 2013
November 26, 2012	$	0.125	December 10, 2012	December 18, 2012

Voting Rights —The holders of the Company’s common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders.

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Other Rights —Subject to any preferential liquidation rights of holders of preferred stock that may be outstanding, upon the Company’s liquidation, dissolution, or winding-up, the holders of ADT’s common stock are entitled to share ratably in the Company’s assets legally available for distribution to its stockholders.

Fully Paid —The issued and outstanding shares of the Company’s common stock are fully paid and non-assessable. Any additional shares of common stock that the Company may issue in the future will also be fully paid and non-assessable.

The holders of the Company’s common stock do not have preemptive rights or preferential rights to subscribe for shares of its capital stock.

Preferred Stock

The Company’s certificate of incorporation authorizes its Board of Directors to designate and issue from time to time one or more series of preferred stock without stockholder approval. The Board of Directors may fix and determine the preferences, limitations, and relative rights of each series of preferred stock. As of September 25, 2015, there were 50,000,000 shares of $0.01 par value preferred stock authorized of which none were outstanding. The Company does not currently plan to issue any shares of preferred stock.

Share Repurchase Programs

On November 26, 2012, the Company’s Board of Directors approved a $2 billion, three-year share repurchase program (“FY2013 Share Repurchase Program”) expiring November 26, 2015. Pursuant to this approval, the Company may enter into accelerated share repurchase plans as well as repurchase shares on the open market. During fiscal year 2013, the Company made open market repurchases of 15.5 million shares of ADT’s common stock at an average price of $43.01 per share. The total cost of open market repurchases for fiscal year 2013 was approximately $668 million, of which $635 million was paid during fiscal year 2013.

On January 29, 2013, the Company entered into an accelerated share repurchase agreement under which it repurchased 12.6 million shares of ADT’s common stock for $600 million at an average price of $47.60 per share. This accelerated share repurchase program, which was funded with proceeds from the January 2013 Debt Offering, was completed on April 2, 2013.

On November 18, 2013, the Company’s Board of Directors authorized a $1 billion increase to the previously approved, $2 billion authorized repurchases under the FY2013 Share Repurchase Program expiring November 26, 2015. During fiscal year 2014, the Company made open market repurchases of 14 million shares of ADT’s common stock at an average price of $35.72 per share under the FY2013 Share Repurchase Program. The total cost of open market repurchases for fiscal year 2014 was $500 million, all of which was paid during fiscal year 2014.

On November 19, 2013, the Company entered into an accelerated share repurchase agreement under which it paid $400 million for an initial delivery of approximately 8 million shares of ADT’s common stock. This accelerated share repurchase program was completed on February 25, 2014. In total during fiscal year 2014, the Company repurchased 10.9 million shares of ADT’s common stock at an average price of $36.86 per share under this accelerated share repurchase agreement in accordance with the previously approved repurchase program.

On November 24, 2013, the Company entered into a Share Repurchase Agreement (“Share Repurchase Agreement”) with Corvex. Pursuant to the Share Repurchase Agreement, the Company repurchased 10.2 million shares from Corvex for a price per share equal to $44.01, resulting in $451 million of cash paid during fiscal year 2014. This repurchase was completed on November 29, 2013.

During fiscal year 2015, the Company made open market repurchases of 9.8 million shares of ADT’s common stock at an average price of $33.16 per share. The total cost of open market repurchases for fiscal year 2015 was $324 million, all of which was paid during fiscal year 2015.

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Open market share repurchases during fiscal years 2015, 2014, and 2013, including shares repurchased from Corvex and shares repurchased under the accelerated share repurchase agreement, were made in accordance with the FY2013 Share Repurchase Program. As of September 25, 2015, $57 million remains authorized for repurchase under the FY2013 Share Repurchase Program.

On July 17, 2015, the Company’s Board of Directors approved a new, three-year share repurchase program (“FY2015 Share Repurchase Program”) authorizing the Company to purchase up to $1 billion of its common stock. Pursuant to this approval, the Company may enter into accelerated share repurchase plans, as well as repurchase shares on the open market pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, in private transactions or otherwise. The FY2015 Share Repurchase Program expires on July 17, 2018 and may be terminated at any time. The FY2015 Share Repurchase Program authorized amount of $1 billion is incremental to the remaining $57 million authorized to be repurchased under the FY2013 Share Repurchase Program noted above. As of September 25, 2015, no shares have been repurchased under the approved FY2015 Share Repurchase Program.

All of the Company’s repurchases were treated as effective retirements of the purchased shares and therefore reduced reported shares issued and outstanding by the number of shares repurchased. In addition, the Company recorded the excess of the purchase price over the par value of the common stock as a reduction to additional paid-in capital.

Accumulated Other Comprehensive (Loss) Income

The components of accumulated other comprehensive (loss) income reflected on the Consolidated Balance Sheets are as follows ($ in millions):


	Currency Translation Adjustments			Deferred Pension Losses ⁽¹⁾			Accumulated Other Comprehensive (Loss) Income
Balance as of September 28, 2012	$	117		$	(24	)	$	93
Pre-tax current period change		(19	)		10			(9	)
Income tax expense		—			(4	)		(4	)

Balance as of September 27, 2013		98			(18	)		80
Pre-tax current period change		(41	)		(1	)		(42	)
Income tax benefit		—			—			—

Balance as of September 26, 2014		57			(19	)		38
Pre-tax current period change		(123	)		(9	)		(132	)
Income tax benefit		—			4			4

Balance as of September 25, 2015	$	(66	)	$	(24	)	$	(90	)

(1)	The balances of deferred pension losses as of September 25, 2015, September 26, 2014, and September 27, 2013 are reflected net of tax benefit of $16 million, $12 million, and $11 million, respectively.

Other

During fiscal year 2013, the Company made adjustments to additional paid-in capital, which primarily resulted from the receipt of $61 million in cash from Tyco and Pentair related to the allocation of funds in accordance with the 2012 Separation and Distribution Agreement.

11. Earnings Per Share

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dilution of securities that could participate in earnings, but not securities that are anti-dilutive. The computation of basic and diluted earnings per share for fiscal years 2015, 2014 and 2013 are as follows:


	2015		2014		2013
(in millions, except per share amounts)
Basic Earnings Per Share
Numerator:
Net income	$	296	$	304	$	421
Denominator:
Basic weighted-average shares outstanding		171		182		222
Basic earnings per share	$	1.73	$	1.67	$	1.90


	2015		2014		2013
Diluted Earnings Per Share
Numerator:
Net income	$	296	$	304	$	421
Denominator:
Basic weighted-average shares outstanding		171		182		222
Effect of dilutive securities:
Stock options		1		1		1
Restricted stock		—		—		1

Diluted weighted-average shares outstanding		172		183		224
Diluted earnings per share	$	1.72	$	1.66	$	1.88

The computation of diluted earnings per share excludes potentially dilutive securities whose effect would have been anti-dilutive in the amount of 2.3 million shares for fiscal year 2015, 1.7 million shares for fiscal year 2014, and 0.8 million shares for fiscal year 2013.

12. Segment Data

As discussed in Note 1, during the fourth quarter of fiscal year 2015, the manner in which the CODM evaluates performance and makes decisions about how to allocate resources changed, resulting in the reorganization of the Company’s operating segments. The Company now has two reportable segments, which are the Company’s operating segments, United States and Canada. This change provides greater clarity and transparency regarding the markets, financial performance and business model of the United States and Canada businesses. All discussions and amounts reported below are based on the new segment structure.

The United States segment includes sales, installation and monitoring for residential, business, and health customers in the United States and Puerto Rico, as well as corporate expenses and other operating costs associated with support functions in the United States.

The Canada segment includes sales, installation and monitoring for residential, business, and health customers in Canada as well as operating expenses associated with certain support functions in Canada.

The accounting policies of the Company’s reportable segments are the same as those described in Note 1.

The Company’s CODM evaluates segment performance based on several factors, of which the primary financial measures is on the basis of revenue and Adjusted EBITDA. Revenues are attributed to individual countries based upon the operating entity that records the transaction. Adjusted EBITDA is defined as net income adjusted for interest, taxes, and certain non-cash items which include depreciation of subscriber system assets and other fixed assets, amortization of deferred costs and deferred revenue associated with customer acquisitions,

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and amortization of dealer and other intangible assets. Adjusted EBITDA is also adjusted to exclude charges and gains related to acquisitions, restructurings, impairments, and other income or charges. Such items are excluded to eliminate the impact of items that management does not consider indicative of the Company’s core operating performance and/or business trends of the Company.

Segment results for the years ended September 25, 2015, September 26, 2014 and September 27, 2013 are as follows ($ in millions):


	2015		2014		2013
Revenue:
United States	$	3,294	$	3,206	$	3,123
Canada		280		202		186

Total	$	3,574	$	3,408	$	3,309


	2015		2014		2013
Adjusted EBITDA:
United States	$	1,685	$	1,671	$	1,592
Canada		123		96		98

Total	$	1,808	$	1,767	$	1,690


	2015		2014		2013
Depreciation and Amortization:
United States	$	1,176	$	1,104	$	1,004
Canada		89		67		61

Total	$	1,265	$	1,171	$	1,065

The Company’s CODM does not evaluate the performance of the Company’s assets on a segment basis for internal management reporting and, therefore, such information is not presented.

The following table sets forth a reconciliation of segment Adjusted EBITDA to the Company’s consolidated income before income taxes ($ in millions):


	2015			2014			2013
Income before income taxes	$	437		$	432		$	642
Interest expense, net		205			192			117
Depreciation and intangible asset amortization		1,124			1,040			942
Amortization of deferred subscriber acquisition costs		141			131			123
Amortization of deferred subscriber acquisition revenue		(163	)		(151	)		(135	)
Restructuring and other, net		6			17			(1	)
Acquisition and integration costs		4			7			2
Radio conversion costs		55			44			—
Separation costs		—			17			23
Separation related other (income) expense		(1	)		38			(23	)

Adjusted EBITDA	$	1,808		$	1,767		$	1,690

Entity-Wide Disclosure

Long-lived assets, which comprise subscriber system assets, net and property and equipment, net, located in the United States approximate 95% and 94% of total long-lived assets as of September 25, 2015 and September 26, 2014, respectively, with the remainder residing in Canada.

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13. Quarterly Financial Data (Unaudited)

Summarized quarterly financial data for fiscal years 2015 and 2014 are as follows ($ in millions, except per share data):


	2015
	December 26, 2014		March 27, 2015		June 26, 2015		September 25, 2015
Revenue	$	887	$	890	$	898	$	899
Operating income		158		148		163		170
Net income		72		68		75		81
Net income per share:
Basic	$	0.41	$	0.40	$	0.44	$	0.48
Diluted	$	0.41	$	0.40	$	0.44	$	0.48


	2014
	December 27, 2013		March 28, 2014		June 27, 2014		September 26, 2014
Revenue	$	839	$	837	$	849	$	883
Operating income		165		164		169		161
Net income		77		63		82		82
Net income per share:
Basic	$	0.39	$	0.35	$	0.47	$	0.47
Diluted	$	0.39	$	0.34	$	0.47	$	0.47

During the fourth quarter of fiscal year 2014, the Company acquired Protectron. The operating results of Protectron have been included from the date of the acquisition and impact quarter over quarter and year over year comparability. See Note 2 for details about this acquisition.

14. Subsequent Events

Dividend

On October 14, 2015, the Company’s Board of Directors declared a quarterly dividend on ADT’s common stock of $0.21 per share. This dividend will be paid on November 18, 2015 to stockholders of record on October 28, 2015.

Calendar Month Change

On October 14, 2015, the Company’s Board of Directors approved a change to the Company’s fiscal year end from the last Friday in September to September 30 of each year, and thereafter the end of each fiscal quarter will be the last day of the calendar month end. The fiscal year change is effective beginning with the Company’s 2016 fiscal year, which began on September 26, 2015, the day after the last day of the Company’s 2015 fiscal year, and will end on September 30, 2016. This change better aligns the Company’s external reporting with the monthly recurring nature of revenues and expenses associated with the Company’s customer base.

Share Repurchases

Subsequent to September 25, 2015, the Company repurchased 985 thousand shares of its common stock at an average price of $30.01 per share under the FY2013 Share Repurchase Program. The total cost of these share repurchases was approximately $29.6 million.

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REPORT OF INDEPENDENT AUDITORS

The Board of Managers and Members

Alarm Security Holdings LLC and Subsidiaries

We have audited the accompanying consolidated financial statements of Alarm Security Holdings LLC and subsidiaries, which comprise the consolidated balance sheet as of June 30, 2015, and the related consolidated statements of operations, members’ deficit, and cash flows for the six-month period ended June 30, 2015, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in conformity with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provides a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Alarm Security Holdings LLC and subsidiaries at June 30, 2015, and the consolidated results of their operations and their cash flows for the six-month period ended June 30, 2015, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

October 23, 2015

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ALARM SECURITY HOLDINGS LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Units)


	June 30, 2015
Assets
Current assets:
Cash	$	1,124
Accounts receivable, net of allowance of $583		11,810
Revenues in excess of billings on uncompleted contracts		2,834
Inventories		6,383
Prepaid expenses and other current assets		1,098

Total current assets		23,249
Property and equipment, net		5,169
Customer acquisition costs, net		92,800
Purchased accounts, net		94,805
Goodwill		31,388
Other long-term assets		618

Total assets	$	248,029

Liabilities and members’ deficit
Current liabilities:
Accounts payable and accrued expenses	$	19,413
Deferred revenue		28,341
Due to former shareholders of acquired businesses		410
Long-term debt, current portion		306,565
Equity compensation plan liability		5,017
Deferred tax liability		158
Other current liabilities		2,014

Total current liabilities		361,918
Long-term liabilities:
Deferred tax liability		5,511
Long-term debt, net of current portion		1,190
Deferred revenue		33,372
Other long-term liabilities		710

Total liabilities		402,701

Members’ deficit:
Class A—Preferred Shares		84,055
Common Units		1
Class Y Units		1
Class Z Units		1
Accumulated deficit		(238,730	)

Total members’ deficit		(154,672	)

Total liabilities and members’ deficit	$	248,029

See accompanying notes.

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ALARM SECURITY HOLDINGS LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(In Thousands)


	For the Six-Month Period Ended June 30, 2015
Revenues:
Monitoring and service	$	59,697
Installation		12,064

Total revenues		71,761
Expenses:
Cost of services		37,714
Selling expenses		13,488
General and administrative expenses		13,485
Depreciation and amortization		20,351
Change in equity compensation plan expense		(1,694	)

Total expenses		83,344

Operating loss		(11,583	)

Other expenses:
Interest expense		10,489

Total other expenses		10,489

Loss before income taxes		(22,072	)
Income tax expense		(584	)

Net loss	$	(22,656	)

See accompanying notes.

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ALARM SECURITY HOLDINGS LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF MEMBERS’ DEFICIT

(In Thousands, Except Units)


	Class A Shares				Common Shares				Class Y Shares				Class Z Shares				Accumulated Deficit
	Units		Amount		Units		Amount		Units		Amount		Units		Amount		Accumulated Deficit			Total
Balance at December 31, 2014		78,838	$	84,055		8,961	$	1		6,605	$	1		6,605	$	1	$	(216,074	)	$	(132,016	)
Net loss for the six-month period June 30, 2015		—		—		—		—		—		—		—		—		(22,656	)		(22,656	)

Balance at June 30, 2015		78,838	$	84,055		8,961	$	1		6,605	$	1		6,605	$	1	$	(238,730	)	$	(154,672	)

See accompanying notes.

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ALARM SECURITY HOLDINGS LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(In Thousands)


	For the Six-Month Period Ended June 30, 2015
Operating activities:
Net Loss	$	(22,656	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		19,996
Amortization of deferred financing fees		355
Amortization of deferred customer acquisition costs and revenue		5,178
Gain on sale of property and equipment		(53	)
Change in deferred executive compensation plan expense		(1,694	)
Interest applied to debt		4,587
Deferred income taxes		464
Changes in assets and liabilities, net of acquisitions:
Accounts receivable, net		987
Inventories		2,057
Prepaid expenses and other current assets		342
Accounts payable and accrued expenses		2,225
Other liabilities		126
Deferred revenue		(249	)

Net cash provided by operating activities		11,665
Investing activities:
Payments for acquisitions of purchased accounts		(9,726	)
Deferred customer acquisition costs		(15,399	)
Deferred customer acquisition revenue		6,964
Purchases of property and equipment		(736	)

Net cash used in investing activities		(18,897	)
Financing activities:
Payments on capital leases		(535	)
Proceeds from debt		11,324
Payments on debt		(2,128	)
Payment of financing fees		(39	)
Payments to former shareholders of acquired businesses		(793	)

Net cash provided by financing activities		7,829

Net change in cash		597
Cash at beginning of period		527

Cash at end of period	$	1,124

Supplemental disclosure of cash flow information
Cash paid for interest	$	5,630

Cash paid for income taxes	$	342

See accompanying notes.

F-135

ALARM SECURITY HOLDINGS LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Units)

1. Organization and Description of Business

The accompanying consolidated financial statements include the accounts of Alarm Security Holdings LLC (“Holdings” or the “Company”) and its wholly owned subsidiaries, ASG Intermediate Holding Corporation (“Intermediate Holdco”), ASG Holdings LLC (“ASG Holdings”), Alarm Security Group LLC, Brinkman Security Inc., ABC Security Corporation, and Nolan’s Protection Systems, Inc. (collectively, the “Company”). Alarm Security Group LLC is the primary operating entity of the Company.

The Company is a single-member Delaware limited liability corporation and provides alarm monitoring services, which includes the sale, installation, monitoring, and related servicing of security alarm systems for commercial and residential customers in the United States.

ASG Holdings was formed on May 16, 2007, for the sole purpose of acquiring Alarm Security Group LLC. On October 26, 2007, Intermediate Holdco, a Delaware corporation, purchased all of the outstanding equity of ASG Holdings. Intermediate Holdco’s sole shareholder is Holdings. Intermediate Holdco was formed on August 29, 2007 for the purpose of acquiring ASG Holdings.

The Company’s fiscal year has historically been the 12 months ended December 31. In connection with the acquisition of the Company on July 1, 2015 (see Note 13), these financial statements as of and for the six months ended June 30, 2015, were prepared.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the balances and results of operations of the Company and its wholly owned subsidiaries and have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). All intercompany transactions have been eliminated in consolidation.

Basis of Presentation and Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual amounts could differ from these estimates.

Fair Value of Financial Instruments

The carrying amounts of financial instruments, including cash, accounts receivable, accounts payable, and accrued expenses, approximate fair value given the short-term nature of these instruments.

Cash and Cash Equivalents

All highly liquid investments with original maturities of three months or less from the time of purchase are considered to be cash equivalents.

Accounts Receivable

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for doubtful accounts. The allowance is used to reduce accounts receivable to their expected net realizable value. The Company estimates the amount of the required allowance by reviewing the status of significant receivables and historical collection experience.

Other Assets

Other assets include security deposits and capitalized financing costs.

Inventories

Inventories, which primarily comprise alarm systems and parts, are stated at the lower of cost or market. The cost of inventories is based on the first-in, first-out method for raw materials and project-specific identification for work in process. Work in process inventory represents accumulated costs for installation projects accounted for under the percentage of completion method which are in process as of period end. Summarized inventory data is shown in the following table:


	June 30, 2015
Raw materials	$	4,370
Work-in-process		2,013

Total inventory	$	6,383

Property and Equipment

Property and equipment are recorded at cost. Expenditures for maintenance and repairs are charged to operations as incurred. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are as follows:


Leasehold improvements		Shorter of the lease term or 5 years
Furniture and equipment		5 years
Computer equipment		3 years
Monitoring software		3 years
Vehicles		5 years

Business Combinations, Accounting for Goodwill, and Other Intangibles

The Company accounts for business combinations, goodwill, and other intangibles in accordance with Accounting Standards Codification (ASC) 805, Business Combinations and ASC 350, Intangibles-Goodwill and Other . Accordingly, the operating results of acquisitions treated as a business combination are included in the Company’s consolidated financial statements since the date of each respective acquisition. Goodwill is recorded when the purchase price for an acquisition exceeds the estimated fair value of the net tangible and identified intangible assets acquired. Under ASC 805, goodwill is not amortized, but is subject to an impairment test on an annual basis, or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Other definite-lived intangible assets are amortized over their estimated useful lives.

ASC 805-10, Business Combinations , requires the acquirer of a business to recognize and measure the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired business at fair value. ASC 805-10 also requires transaction costs related to the business combination to be expensed as incurred. Acquisitions that do not meet the criteria for a business combination are accounted for as an asset acquisition under the guidance ASC 805-50.

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The Company performed its annual impairment test in the fourth quarter of 2014 by applying a market multiple of recurring monthly revenue to Company-specific recurring monthly revenue. The Company then considered the implied valuation of the Company based on the July 1, 2015 acquisition of the Alarm Security Holdings LLC (described in the Subsequent Events footnote, Note 13). No impairment was present upon performing the annual impairment test or upon considering the implied value of the Company using the July 1, 2015 transaction price.

Customer Acquisition Costs

The direct costs of acquiring customer-monitoring contracts is capitalized and amortized over the estimated useful life of the customer relationship, which is estimated to be eight years. Costs capitalized as part of customer acquisition costs include security system equipment and materials used in the installation process, direct labor required to install the equipment at subscriber sites, and certain other costs associated with the installation and sales process. These other costs include the cost of vehicles used for installation purposes, miscellaneous tools, and supplies used during the installation, and sales commissions directly associated with the sale. In addition to the capitalization of these costs, all revenues generated from the installation of systems installed at subscriber locations are also deferred and amortized over the estimated useful life of the customer relationship, which is eight years (see Note 6).

Purchased Accounts

Intangible assets, principally purchased accounts, resulting from the acquisition of blocks of customer-monitoring agreements which the Company concluded should be accounted for as asset acquisitions have been included in the Company’s consolidated financial statements in accordance with ASC 805 and ASC 350 (see Note 5).

Impairment of Long-Lived Assets

In accordance with ASC 360, Long-Lived Assets , assets subject to depreciation or amortization such as property and equipment, purchased intangibles, and customer acquisition costs, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset group’s estimated fair value. If the carrying amount of an asset group exceeds its estimated fair value, an impairment charge is recognized for the amount that the carrying amount of the asset group exceeds the fair value of the asset group.

Revenue Recognition

The Company has two streams of revenues: monitoring and maintenance services and installation, that are realized through three sales channels, including residential, small business, and commercial.

Monitoring and service maintenance revenue is recognized when services are provided. Residential and small business customers generally require standard alarm installations with monitoring services to be provided thereafter, along with equipment maintenance, as necessary. In accordance with ASC 605-20, Services , system installation revenue, sales revenue on equipment upgrades, and direct and incremental costs of installation and sales (customer acquisition costs) are deferred for residential and small business customers with monitoring service contracts. Deferred revenue and related customer acquisition costs are recognized using the straight-line method over the eight-year estimated life of the customer relationship. The Company bases the estimated life of the customer relationship on its ongoing annual analysis of subscriber and site retention. The Company has adopted this policy because the deferred costs and revenue are integral to the future revenue generated by the monitoring and extended service contracts. See “Customer Acquisition Costs” within this footnote for additional details.

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Commercial customers are large projects that require custom installation services and typically have installation contracts that are unaffected by accompanying service or monitoring agreements. However, commercial contracts may include multiple service deliverables, such as equipment installation, monitoring services, and maintenance agreements. Revenues earned from fixed-price contracts for commercial projects are accounted for using the percentage-of-completion method in accordance with ASC 605-35, Construction-Type and Production-Type Contracts . Revenue related to these contracts is measured based on the efforts-expended method in accordance with ASC 605-35, which is the total efforts expended as a percentage of the estimated efforts at the completion of the contract. These contracts generally allow for monthly billing or billing upon achieving certain specified milestones. Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as supplies, tools, repairs, and travel costs. Selling, general and administrative costs are charged to expense as incurred. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions and final contract settlements, may result in revisions to costs and revenue and are recognized in the period in which the revisions are determined. Sales of security monitoring systems may include multiple service deliverables, such as installation, monitoring services, and maintenance/service agreements. The Company assesses its revenue arrangements to determine the appropriate units of accounting. In accordance with ASC 605-25, Multiple-Element Arrangements , amounts assigned to each unit of accounting are based on an allocation of the total arrangement consideration using a hierarchy of the estimated selling price for the deliverables. The selling price used for each deliverable is based on the best estimate of the selling price if such items were to be sold separately as neither vendor-specific objective evidence (“VSOE”) nor third-party evidence (“TPE”) is available. The delivery of the installation project to the customer is upon completion of the installation. The delivery of the monitoring and maintenance components is generally over a three-year-average initial term upon the completion of the installation component. Generally, the selling prices of each component are based on company-prepared pricing schedules by market that are used to determine fees charged. For residential and small business projects, the general timing of the revenue recognition for the installation component is eight years. For commercial projects, the general timing of the revenue recognition for the installation component is based upon the percentage-of-completion method in accordance with ASC 605-35. For commercial projects, revenue recognized for installation is limited to the lesser of its allocated amount under the estimated selling price hierarchy or the noncontingent, up-front consideration received at the time of installation, since collection of future amounts under the arrangement with the customer can be contingent upon the delivery of monitoring and maintenance services. The general timing of the revenue recognition for the monitoring and service maintenance components for residential, small business, and commercial lines is monthly straight-line recognition over the term of the specific contracts.

Deferred Revenue

Deferred revenue arises from three sources. The first results from customers billed for monitoring and extended service protection services in advance of the period in which such services are provided. These billings generally take place on a monthly, quarterly, or annual basis. The second form of deferred revenue results from the acquisition of customer accounts. These amounts are recorded at fair value as part of the allocation of the purchase price and are recognized in income during the period in which service is provided. Lastly, residential and small business installation revenue, which has been deferred in accordance with ASC 605-20, as described in the revenue recognition section above, is also included in the deferred revenue balance. Costs of providing monitoring and maintenance services are charged to income in the period incurred. Contracts for monitoring and maintenance services are typically for an initial noncancelable term of three years.

Advertising Costs

Advertising costs are expensed the first time the advertising takes place and are included in selling expenses. Advertising expense totaled $1,171 for the six-month period ended June 30, 2015.

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Equity Compensation Plan

The Company accounts for employee stock compensation using the intrinsic-value method in accordance with ASC 718, Compensation-Stock Compensation . Changes in the intrinsic value of a liability incurred under a share-based payment arrangement that occur during the requisite service period are recognized as compensation cost over that period. The percentage of the intrinsic value that is accrued as compensation cost at the end of each period is equal to the percentage of the requisite service that has been rendered at that date. Changes in the intrinsic value of a liability that occur after the end of the requisite service period are compensation costs of the period in which the changes occur. Any difference between the amount for which a liability award is settled and its fair value at the settlement date as estimated in accordance with the provisions of ASC 718 is an adjustment of compensation cost in the period of settlement.

In October 2007 and in January 2011, Holdings entered into Executive Securities Agreements (the “Agreements”) with certain of its key employees of the Company, in which it issued and sold these employees Common Units, Class Y Units, and Class Z Units of Holdings (“Management Units”). Pursuant to terms of these Agreements, select key employees also acquired Class A-Preferred Units of Holdings at fair value on the date of acquisition. The Common Units and Class Z Units vest over five years with 20% vesting on each anniversary of the date of grant, provided that if the employment of such key employee is terminated by the Company without cause or by such key employee for good reason prior to a vesting date, a pro rata portion will be deemed vested. Additionally, the vesting is accelerated upon a sale of Holdings in certain circumstances (e.g., if the key employee remains employed through such sale of Holdings and Holdings’ investors receive full cash liquidity on at least 75% of their units). The Class Y Units also have a “return threshold” that requires Holdings’ controlling investor to receive a two and one-quarter times cash return on its investment before the Class Y Units will participate in any distributions. The Class Y Units shall become vested as of the date of and immediately prior to the consummation of the sale of the Company if, and only if, the employee has been continuously employed by the Company from the effective date of the grant through, and including, such date. In the event that the employee’s employment with the Company is terminated for any reason prior to the date of the consummation of a sale of the Company, none of the Class Y Units shall become vested, and the Class Y Units shall be subject to repurchase. The Class A Preferred Units receive a 10% annual return through January 28, 2011, and a 5% annual return thereafter, compounded quarterly, on their investment prior to any distributions made to other classes of shareholders upon a sale of the Company. The accumulated value of the Class A Preferred Units, par plus accumulated yield, is $138,050 as of June 30, 2015. The Class Z Units also have a “return threshold” that requires Holdings’ controlling investor to receive a three-times cash return on its investment before the Class Z Units will participate in any distributions, other than in respect of the initial capital contribution made in respect of such units. Unvested Common Units and Class Z Units will not participate in distributions other than tax distributions at the time of such distributions, but amounts will be held back in respect of such units to be distributed at such time, if any, such units subsequently vest. The Company is accounting for the Management Units under the liability method and will record expense, if any, associated with these awards in its consolidated financial statements because its employees are the beneficiaries of the awards. The Company recorded a benefit of $1,694 related to the Management Units during the six-month period ended June 30, 2015, as a result in a reduction in the associated liability compared to December 31, 2014. As of June 30, 2015, the Company had recorded an equity compensation plan liability of $5,017, which represents the final payout based on the implied fair value of the Company as determined by the July 1, 2015, acquisition.

Income Taxes

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tax assets and liabilities of a change in tax laws is recognized in the results of the Company’s operations during the period that includes the enactment date. Valuation allowances are recorded to reduce deferred tax assets when it is determined that it is more likely than not that some or all of the deferred tax assets will not be realized.

Recent Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board issued guidance on the presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The new guidance requires that an unrecognized tax benefit be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except for a situation in which some or all of such net operating loss carryforward, a similar loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable tax jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose; the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In January 2014, the FASB issued guidance on the accounting for goodwill by private companies. The new guidance allows private companies to elect an accounting alternative to amortize goodwill on a straight-line basis over 10 years or less. Furthermore, instead of performing an annual impairment assessment, goodwill should be tested for impairment only when a triggering event occurs that indicates that the fair value of an entity or a reporting unit may be below its carrying amount. The accounting alternative, if elected, may be applied for annual periods beginning after December 15, 2014. The Company did not elect this accounting alternative and as a result continues to perform the tests for impairment on an annual basis.

3. Acquisitions

During the six-month period ending June 30, 2015, the Company acquired certain assets and liabilities from multiple companies that provide alarm monitoring services for commercial and residential customers. All acquisitions were accounted for as asset acquisitions. The results of each acquisition are included in the financial statements since the effective date of each transaction.

Under the terms of most acquisitions, the Company withholds a portion of the purchase price as a reserve to offset qualifying losses of the acquired customer accounts for a specified period and as a reserve for purchase price settlements of assets acquired and liabilities assumed. Any reduction in a holdback liability from its original amount is recorded as an adjustment to the portion of the purchase price assigned to the purchased accounts.

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The following table summarizes the estimated fair values of the assets acquired, liabilities assumed, and holdback liabilities from the acquisitions made during the six-month period ended June 30, 2015.


	Acadian Protection Systems, LLC		TriStar Security Services, LLC		FPS, Inc.		Campbell Security Systems, LLC		Total
Acquisition date Operating region		Various Louisiana		January 20 Louisiana		February 12 Tennessee		March 20 Texas

Current assets	$	—	$	—	$	—	$	—	$	—
Property and equipment		—		—		324		24		348
Purchased accounts		226		395		7,662		924		9,207

Total assets acquired		226		395		7,986		948		9,555

Deferred tax liability		—		—		—		—		—
Current liabilities assumed		20		41		464		55		580

Net assets acquired	$	206	$	354	$	7,522	$	893	$	8,975

Holdback liability for 2015 acquisitions at June 30, 2015	$	—	$	39	$	—	$	92	$	131

4. Property and Equipment

Property and equipment consisted of the following:


	June 30, 2015
Leasehold improvements	$	540
Furniture and equipment		1,398
Computer equipment		1,479
Software		1,663
Vehicles and trucks		8,121

		13,201
Less: accumulated depreciation and amortization		(8,032	)

Property and equipment, net	$	5,169

Depreciation and amortization expense related to property and equipment for the six-months ended June 30, 2015 was $952. During the six-months ended June 30, 2015, the Company sold $288 of assets for which related accumulated depreciation was $162 and recognized a gain on the sale of assets of $53.

5. Purchased Accounts

The gross carrying value of purchased accounts and the accumulated amortization are as follows:


	June 30, 2015
Purchased accounts	$	305,451
Less accumulated amortization		(210,646	)

Total	$	94,805

Intangible asset amortization expense related to purchased accounts for the six-months ended June 30, 2015 was $19,044. The weighted-average amortization period for purchased accounts was 8.0 years for the period.

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Amortization expense on purchased accounts for the next five years is expected to be (12-month periods ended June 30):


2016	$	25,325
2017		17,549
2018		14,905
2019		13,607
2020		10,602

Total	$	81,988

6. Customer Acquisition Costs

The gross carrying value of customer acquisition costs and the accumulated amortization are as follows:


	June 30, 2015
Customer Acquisition Costs	$	148,082
Less Accumulated Amortization	$	(55,282	)

	$	92,800

Intangible asset amortization expense related to customer acquisition costs for the six-months ended June 30, 2015 was $8,849. The weighted-average amortization period for customer acquisition costs was 8.0 years for the period. Amortization expense on customer acquisition costs for the next five years is expected to be (12-month periods ended June 30):


2016	$	18,229
2017		17,021
2018		15,580
2019		13,899
2020		11,807

Total	$	76,536

7. Fair Value Measurements

Financial and nonfinancial assets and liabilities are measured at fair value on a recurring basis under the provisions of ASC 820, Fair Value Measurements and Disclosures . ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The fair value hierarchy requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The fair value hierarchy is as follows:


Level 1	—	Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
Level 2	—	Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly through corroboration with market data at the measurement date.
Level 3	—	Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

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The following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such instruments pursuant to the valuation hierarchy. Equity Compensation Plan Liability : This balance is measured based on the enterprise fair value of the Company. The enterprise fair value of the Company was determined based on the implied value of the July 1, 2015 transaction (as described in Note 13). This liability of $5,017 is considered a Level 2 fair value measurement as of June 30, 2015. Prior to June 30, 2015, this was considered a Level 3 investment based on the fact that the fair value of the Company was estimated by management utilizing an RMR multiple; however, as of June 30, 2015, management considered the implied fair value of the July 1, 2015 transaction an observable input and thus a Level 2 fair value measurement.

The following is a reconciliation of the Level 3 liability beginning and ending liability recorded related to the Equity Compensation Plan:


	June 30, 2015
Beginning balance	$	6,711
Transfer to Level 2		(6,711	)

Ending balance	$	—

The benefit included in earnings for the period attributable to the change in the Equity Compensation Plan liability still held at the reporting date was $1,694 for the six-month period ended June 30, 2015. This amount was recorded in the consolidated statement of operations as change in equity compensation plan expense for the six-months ended June 30, 2015.

Certain assets and liabilities are measured at fair value on a nonrecurring basis using Level 3 inputs as defined in ASC 820. These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. Included in this category are goodwill, customer acquisition costs, net, and purchased accounts, net that are written down to fair value when they are determined to be impaired. The Company concluded that these assets were not impaired at June 30, 2015, and, therefore, were reported at carrying value as opposed to fair value.

The carrying value of the Company’s long-term debt instruments reasonably approximates fair value due to the stated interest rates approximating current market interest rates of debt with similar terms to that of the Company’s arrangements. The information used to determine fair value of the Company’s long-term debt is considered Level 2 inputs under the fair value hierarchy.

8. Long-Term Debt

On October 26, 2007, the Company (through Intermediate Holdco) entered into a credit agreement with CapitalSource Finance LLC as agent. As of December 31, 2014, the total capacity on the original Credit Facility was $302,500 and comprised a $248,000 revolver and $54,500 term loan. As of December 31, 2014, the Company had $238,233 and $53,700 outstanding on the revolver and term loans, respectively.

On January 23, 2015, the Company entered into a Commitment Increase Agreement to add $15,000 of borrowing capacity under its revolving line of credit. This increased the Company’s total borrowing capacity under the Amended and Restated Credit Facility to $317,500. Other than this change, the Commitment Increase Agreement did not alter any terms of the original agreement.

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bear interest that is based on the prime rate plus a specified margin that is due monthly. When the fixed-rate contracts expire, principal and accrued interest may be rolled into a new contract at the current applicable rate or rolled into the principal balance that accrues interest at prime plus the specified margin.

As of June 30, 2015, the Company was not in compliance with all of its financial covenants; however, based upon the fact that all of the outstanding debt was paid off as of July 1, 2015 in conjunction with the transaction described in Note 13, there was no financial statement impact as a result of this violation.

As of June 30, 2015, the Company had $249,234 and $56,700 outstanding on the revolver and term loans, respectively. The annualized interest rates for the outstanding loans as of June 30, 2015, were 6% per annum on the revolving line of credit and 10.25% on the term loan. The Company paid financing fees of $39 in conjunction with the financing transactions that took place during the six months ended June 30, 2015. These fees are included in other assets and are being amortized over the term of the loan using the level-yield method and are recorded as additional interest expense. The facility also requires the Company to pay a commitment fee equal to 0.625% of the unutilized portion of the loan facility. All borrowings under this Amended and Restated Credit Facility were collateralized by all of the assets of the Company.

In connection with the Company’s acquisition of the assets of Texana in December 2011, the Company entered into subordinated promissory note agreements with two prior note holders of Texana. One promissory note is to Logan, Inc. (“Logan Note”) for $2,125 at an interest rate of 7.0% per annum with interest and principal payments made quarterly. The aggregate unpaid principal balance of the Logan Note was due to mature on December 1, 2016. The second promissory note is to Smith Investments RGV, Inc. (“Smith Note”) for $1,400 at an interest rate of 7.0% per annum with interest and principal payments made quarterly. The aggregate unpaid principal balance of the Smith Note was due to mature on December 1, 2016.

A summary of the Company’s outstanding debt balances as of June 30, 2015, is as follows:


	June 30, 2015
Credit facility	$	305,934
Logan Note		984
Smith Note		837

Total		307,755
Less: current portion		(306,565	)

Long-term debt	$	1,190

Future scheduled minimum principal payments of debt as of June 30, 2015, prior to the payoff on July 1, 2015 were as follows:


12-months ending June 30:
2016	$	306,565
2017		1,190

Total	$	307,755

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9. Operating and Capital Leases

The Company has various operating leases for office space in facilities located throughout the Mid-Atlantic region, Massachusetts, North Carolina, Tennessee, Florida, Louisiana, Oklahoma, and Texas, which expire through 2020. Most of these leases generally have a renewal option. As of June 30, 2015, future minimum lease payments for noncancelable leases are as follows (12-month periods ended June 30):


2016	$	1,387
2017		1,062
2018		774
2019		429
2020		127

Total	$	3,779

Rent expense for the six-month period ended June 30, 2015 was $1,145.

The Company has assets under a three-year, noncancelable capital lease for vehicles, which had a gross carrying value of $3,394 at June 30, 2015.

Future minimum payments under these leases as of carrying value of $3,394 at June 30, 2015, are as follows:


Twelve months ending June 30:
2016	$	1,049
2017		496
2018		111

Total	$	1,656

Capital lease amortization expense for the six-month period ended June 30, 2015 was $491.

10. Income Taxes

The Company accounts for income taxes using the asset and liability method, in accordance with ASC 740, Income Taxes . Under this method, the Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and for operating loss and tax credit carryforwards. The Company measures deferred tax assets and liabilities using the enacted tax laws expected to apply to taxable income in the years in which it is expected that those temporary differences will be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax laws is recognized in the results of the Company’s operations during the period that includes the enactment date. Valuation allowances are recorded to reduce deferred tax assets when it is determined that it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company files a consolidated income tax return for federal tax purposes. Alarm Security Group LLC is the primary operating entity within the consolidated return. Current-period income tax expense and deferred income taxes are reflected in the accompanying consolidated financial statements.

ASC 740-10, Accounting for Uncertainty in Income Taxes , provides guidance on accounting for uncertainty in income taxes. The guidance clarifies the accounting for income taxes by prescribing a minimum recognition threshold, which all income tax positions must achieve before being recognized in the financial statements. The guidance requires companies to determine whether it is “more likely than not” that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the tax benefit can be

F-146

recorded in the financial statements. It also provides guidance on the recognition, measurement, and classification of income tax uncertainties, along with any related interest and penalties. Previously recorded income tax benefits that no longer meet this standard are required to be charged to earnings in the period that such determination is made. In addition, the guidance requires expanded annual disclosures, including a roll forward of the beginning and ending aggregate unrecognized tax benefits, as well as specific detail related to tax uncertainties for which it is reasonably possible the amount of the unrecognized tax benefit will significantly increase or decrease within 12 months. There were no amounts recorded as uncertain tax positions as of June 30, 2015. The Company elected to classify interest and penalties related to unrecognized tax benefits as a component of income tax expense; however, no amounts were recorded during the period. The Company’s federal income tax returns have not been examined by the Internal Revenue Service during open or closed years. The federal statute of limitations remains open for the year ended December 31, 2012, and later years. Most state jurisdictions have statutes of limitation generally ranging from three to five years. The Company is not currently under examination with any state jurisdictions. Therefore, the Company does not believe that it is reasonably possible that the gross unrecognized tax benefit may change materially within the next 12 months. The components of the Company’s income tax provision are as follows:


	Six-Month Period Ended June 30, 2015
Current income tax expense:
Federal	$	—
State		171

Total current		171
Deferred income tax expense:
Federal		312
State		101

Total deferred		413

Total income tax expense	$	584

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities calculated for financial reporting purposes and the amounts calculated for preparing income tax returns in accordance with tax regulations and the net tax effects of operating loss and tax credit carryforwards. As of June 30, 2015, a valuation allowance of approximately $90,654 was recorded against the Company’s deferred tax assets, with the exception of state tax credits of $577.

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Components of deferred taxes are as follows:


	June 30, 2015
Deferred tax assets:
State tax credit carryforwards	$	577
Net operating loss carryforwards		54,233
Depreciation and amortization		35,881
Other		1,971

Total		92,662
Valuation allowance		(90,654	)

Net deferred tax assets		2,008


	June 30, 2015
Deferred tax liabilities:
Indefinite-lived intangibles		(6,247	)
Depreciation and amortization		(661	)
Purchase contracts		(516	)
Other		(253	)

Total deferred tax liabilities		(7,677	)

Net deferred tax assets (liabilities)	$	(5,669	)

As of June 30, 2015, the Company has applied a full valuation allowance against its net deferred tax assets with the exception of its Texas Margin Tax Credits. The Company also does not consider deferred tax liabilities related to indefinite-lived intangibles in evaluating the realizability of its deferred tax assets as the timing of their reversal cannot be determined. The Company recorded the valuation allowance due to its current cumulative losses and the uncertainty of future taxable income.

In 2006, Texas transitioned its tax system from a franchise tax to a gross margin tax. This transition generated a temporary credit for business loss carryforwards. This credit allows companies to receive a tax benefit from historical franchise tax net operating losses that would be otherwise lost. The credit is available over a 20-year period. The gross margin tax is based on revenue with limited adjustments and is not dependent upon taxable income. As a result, the Company will derive a benefit from the tax credits against its Texas Margin Tax in future years in the amount of $577, as of June 30, 2015.

The Company has a federal net operating loss carryforward totaling $141,641 as of June 30, 2015, which expires over a 20-year period through 2035. The gross amount of the state net operating loss is equal to or less than the federal net operating loss carryforward and expires over various periods based on individual state tax law. The utilization of net operating losses to offset income in future periods may be limited.

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A reconciliation of the U.S. federal statutory income tax rate to the Company’s actual income tax rate is provided below.


	June 30, 2015
Tax benefit at federal statutory rate	$	(7,507	)	34.00	%
State, net of federal benefit		(902	)	4.08
Tax credits		16		(0.07	)
Deferred compensation		(576	)	2.61
Other permanent differences		151		(0.69	)
Impact of adjusting effective rate		(510	)	2.31
Change in valuation allowance		9,902		(44.84	)
Other		10		(0.04	)

Recorded tax expense	$	584		(2.64	)%

11. Members’ Deficit

The Company has four classes of economic units outstanding as of June 30, 2015:


	Class A Units		Common Units		Class Y Units		Class Z Units
Authorized		78,838		8,961		6,605		6,605
Issued		78,838		8,961		6,605		6,605
Outstanding		78,838		8,961		6,605		6,605

Other than in respect of tax distributions, distributions shall be made to shareholders in the following order or priority:

First, to the holders of Class A Preferred Units (ratably among such holders based upon their aggregate unreturned capital), an amount equal to the unreturned capital in respect of the Class A Units;

Second, to the holders of Class A Preferred Units (ratably among such holders based on their aggregate unpaid yield), an amount equal to the accrued and unpaid yield of 10% per year compounded quarterly through January 28, 2011, and 5% per year compounded quarterly thereafter, in respect of the Class A Units;

Third, to the holders of Class A Preferred Units and vested Common Units (ratably among such holders based on the number of such Units held by each such holder immediately prior to such distribution) until certain return thresholds are achieved;

Fourth, 50% to the holders of the Class Y Units (ratably among such holders based on the number of such Units held by each such holder immediately prior to such distribution) and 50% to the holders of the Class A Units and Common Units (ratably among such holders based on the number of such Units held by each such holder immediately prior to such distribution), up to a specified amount; and

Fifth, to the holders of the Class A Preferred Units and Class Z Units, provided, however, that the holders of Class Y Units and Class Z Units shall only be entitled to distributions in the event that their return thresholds (see Note 2) are satisfied.

Upon a liquidation of the Company, all members receive a distribution in proportion to their respective capital accounts.

12. Related-Party Transactions

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investors in Holdings, which is the parent of ASG Intermediate Holdco. As of June 30, 2015, $221 is reflected as an expense within general and administrative expenses in the accompanying consolidated financial statements and no amounts are outstanding.

In connection with the Company’s acquisition of the assets of Texana in December 2011, the Company entered into a subordinated promissory note agreement with Smith Investments RGV, Inc. for $1,400 at an interest rate of 7.0% per annum with interest and principal payments made quarterly, and the aggregate unpaid principal balance due to mature on December 1, 2016. A principal of Smith Investments RGV, Inc. is a former employee of the Company.

13. Subsequent Events

The Company has evaluated subsequent events that have occurred for recognition or disclosure through October 23, 2015, the date the financial statements were available to be issued.

On July 1, 2015, all of the outstanding shares of ASG Intermediate Holding Corporation were sold to Apollo Security Services Borrower LLC. In conjunction with the transaction, all of the outstanding indebtedness of Alarm Security Holdings LLC was paid off as of that date.

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REPORT OF INDEPENDENT AUDITORS

The Board of Managers and Members

Alarm Security Holdings LLC and Subsidiaries

We have audited the accompanying consolidated financial statements of Alarm Security Holdings LLC and subsidiaries, which comprise the consolidated balance sheet as of December 31, 2014, and the related consolidated statements of operations, members’ deficit, and cash flows for the year then ended, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in conformity with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free of material misstatement, whether due to fraud or error.

Auditor’s Responsibility

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Alarm Security Holdings LLC and subsidiaries at December 31, 2014, and the consolidated results of their operations and their cash flows for the year then ended in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

April 30, 2015

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ALARM SECURITY HOLDINGS LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(In Thousands, Except Units)


	December, 31 2014
Assets
Current assets:
Cash	$	527
Short-term investments		—
Accounts receivable, net of allowance of $583		12,177
Revenues in excess of billings on uncompleted contracts		3,454
Inventories		8,440
Prepaid expenses and other current assets		1,439

Total current assets		26,037
Property and equipment, net		5,331
Customer acquisition costs, net		86,250
Purchased accounts, net		104,765
Goodwill		31,388
Other long-term assets		934

Total assets	$	254,705

Liabilities and members’ deficit
Current liabilities:
Accounts payable and accrued expenses	$	17,188
Deferred revenue		27,803
Due to former shareholders of acquired businesses		1,845
Long-term debt, current portion		563
Deferred tax liability		387
Other current liabilities		2,171

Total current liabilities		49,957
Long-term liabilities:
Deferred tax liability		4,818
Long-term debt, net of current portion		293,409
Deferred revenue		30,865
Equity compensation plan liability		6,711
Other long-term liabilities		961

Total liabilities		386,721
Members’ deficit:
Class A—Preferred Shares		84,055
Common Units		1
Class Y Units		1
Class Z Units		1
Accumulated deficit		(216,074	)

Total members’ deficit		(132,016	)

Total liabilities and members’ deficit	$	254,705

See accompanying notes.

F-152

ALARM SECURITY HOLDINGS LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(In Thousands)


	Year Ended December 31, 2014
Revenues:
Monitoring and service	$	109,946
Installation		24,258

Total revenue		134,204
Expenses:
Cost of services		70,754
Selling expenses		26,372
General and administrative expenses		24,510
Depreciation and amortization		38,671
Equity compensation plan expense		1,954

Total expenses		162,261

Operating loss		(28,057	)
Other expenses:
Interest expense		19,467
Debt modification expense		—

Total other expenses		19,467

Loss before income taxes		(47,524	)
Income tax benefit (expense)		1,292

Net loss	$	(46,232	)

See accompanying notes.

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ALARM SECURITY HOLDINGS LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF MEMBERS’ DEFICIT

(In Thousands, Except Units)


	Class A Shares				Common Shares				Class Y Shares				Class Z Shares				Accumulated
	Units		Amount		Units		Amount		Units		Amount		Units		Amount		Deficit			Total
December 31, 2013		77,424		80,555		8,961	$	1		6,605	$	1		6,605	$	1	$	(169,842	)	$	(89,284	)
Net loss		—		—		—		—		—		—		—		—		(46,232	)		(46,232	)
Issuance of additional shares		1,414		3,500		—		—		—		—		—		—		—			3,500

December 31, 2014		78,838	$	84,055		8,961	$	1		6,605	$	1		6,605	$	1	$	(216,074	)	$	(132,016	)

See accompanying notes.

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ALARM SECURITY HOLDINGS LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(In Thousands)


	Year Ended December 31, 2014
Operating activities:
Net loss	$	(46,232	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		37,365
Amortization of deferred financing fees		1,306
Amortization of deferred customer acquisition costs and revenue		8,873
Gain on sale of property and equipment		(5	)
Deferred executive compensation plan expense		1,954
Interest applied to long-term debt		15,955
Deferred income taxes		(1,644	)
Changes in assets and liabilities, net of acquisitions:
Accounts receivable, net		(617	)
Inventories		(610	)
Prepaid expenses and other current assets		(30	)
Other long-term assets		(8	)
Accounts payable and accrued expenses		(1,541	)
Other liabilities		1,312
Deferred revenue		3,317

Net cash provided by operating activities		19,395
Investing activities:
Proceeds from short-term investment		56
Payments for acquisitions		(24,505	)
Deferred customer acquisition costs		(29,896	)
Deferred customer acquisition revenue		15,899
Purchases of property and equipment		(2,563	)

Net cash used in investing activities		(41,009	)
Financing activities:
Payments on capital leases		(952	)
Proceeds from long-term debt		26,952
Payments on long-term debt		(6,778	)
Payment of financing fees		(498	)
Payments to former shareholders of acquired businesses		(208	)
Proceeds from issuance of Class A shares		3,500

Net cash provided by financing activities		22,016

Net change in cash		402
Cash at beginning of year		125

Cash at end of year	$	527

Supplemental disclosure of cash flow information
Cash paid for interest	$	3,229

See accompanying notes.

F-155

ALARM SECURITY HOLDINGS LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Units)

December 31, 2014

1. Organization and Description of Business

2. Summary of Significant Accounting Policies

Principles of Consolidation

Basis of Presentation and Use of Estimates

Fair Value of Financial Instruments

The carrying amounts of financial instruments, including cash, short-term investments, accounts receivable, accounts payable, and accrued expenses, approximate fair value given the short-term nature of these instruments.

Cash and Cash Equivalents

All highly liquid investments with original maturities of three months or less from the time of purchase are considered to be cash equivalents.

Short-Term Investments

The Company’s short-term investments consisted of a certificate of deposit with a maturity greater than three months. This deposit had been pledged as collateral with its primary financial institution for the Company’s automated clearinghouse processing obligation with the financial institution. The certificate of deposit was closed on December 18, 2014.

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Accounts Receivable

The Company grants credit to its customers in the normal course of business. Substantially all of the Company’s accounts receivable are due within 30 days. The Company uses estimates to determine the allowance for doubtful accounts. The allowance is used to reduce accounts receivable to their expected net realizable value. The Company estimates the amount of the required allowance by reviewing the status of significant receivables.

Other Assets

Other assets include security deposits and capitalized financing costs.

Inventories

Inventories, primarily comprised of alarm systems and parts, are stated at the lower of cost or market. The cost of inventories is based on the first-in, first-out method for raw materials and project-specific identification for work in process. Summarized inventory data is shown in the following table:


	December 31, 2014
Raw materials	$	4,094
Work in process		4,346

Total inventory	$	8,440

Property and Equipment

Property and equipment are recorded at cost. Expenditures for maintenance and repairs are charged to operations as incurred.

Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are as follows:


Leasehold improvements		Shorter of the lease term or 5 years
Furniture and equipment		5 years
Computer equipment		3 years
Monitoring software		3 years
Vehicles		5 years

Business Combinations, Accounting for Goodwill, and Other Intangibles

The Company accounts for business combinations, goodwill, and other intangibles in accordance with Accounting Standards Codification (ASC) 805, Business Combinations ; ASC 350, Intangibles-Goodwill and Other ; and ASC 360, Property, Plant, and Equipment . Accordingly, the operating results of acquisitions treated as a business combination are included in the Company’s consolidated financial statements since the date of each respective acquisition. Goodwill is recorded when the purchase price for an acquisition exceeds the estimated fair value of the net tangible and identified intangible assets acquired. Under ASC 805, goodwill is not amortized, but is subject to an impairment test on an annual basis, or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Other definite-lived intangible assets are amortized over their estimated useful lives.

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The Company performed its annual impairment test in the fourth quarter of 2014. The Company estimates the recordable amounts of its reporting unit by applying market multiples of recurring monthly revenue to Company-specific recurring monthly revenue. No impairment was present upon performing these impairment tests. The Company cannot predict the occurrence of certain events that might adversely affect the reported value of goodwill. Such events may include, but are not limited to, strategic decisions made in response to economic and competitive conditions or the impact of the economic environment on the Company’s customer base.

Customer Acquisition Costs

For security systems installed at subscriber locations, costs are capitalized and amortized over the estimated useful life of the customer relationship (monitoring contract), which is eight years. Costs capitalized as part of security systems include equipment and materials used in the installation process, direct labor required to install the equipment at subscriber sites, and certain other costs associated with the installation and sales process. These other costs include the cost of vehicles used for installation purposes, miscellaneous tools and supplies used during the installation, and sales commissions directly associated with the sale. In addition to the capitalization of these costs, all revenues generated from the installation of systems installed at subscriber locations are also deferred and amortized over the estimated useful life of the customer relationship, which is eight years (see Note 6).

Purchased Accounts

Intangible assets, principally purchased accounts, resulting from the acquisition of blocks of customer-monitoring agreements for which the Company concluded should be accounted for as asset acquisitions have been included in the Company’s consolidated financial statements in accordance with ASC 805 and ASC 350 (see Note 5).

Impairment of Long-Lived Assets

In accordance with ASC 360, Long-Lived Assets , assets such as property and equipment, purchased intangibles, and customer acquisition costs subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset group’s estimated fair value. If the carrying amount of an asset exceeds its estimated fair value, an impairment charge is recognized for the amount that the carrying amount of the asset group exceeds the fair value of the asset group.

Revenue Recognition

The Company has two streams of revenues: monitoring and maintenance services and installation, that are realized through three sales channels, including residential, small business, and commercial. Monitoring and service maintenance revenue is recognized when services are provided. Residential and small business customers generally require standard alarm installations with monitoring services to be provided thereafter, along with equipment maintenance, as necessary. In accordance with ASC 605-20, Services , system installation revenue, sales revenue on equipment upgrades, and direct and incremental costs of installation and sales are deferred for residential and small business customers with monitoring service contracts. Deferred revenue and related direct costs of installations are recognized using the straight-line method over the eight-year estimated life of the subscriber relationship. The Company bases the estimated life of the customer relationship on its ongoing annual analysis of subscriber and site retention. The Company has adopted this policy because the deferred costs and revenue are integral to the future revenue generated by the monitoring and extended service contracts. See “Customer Acquisition Costs” within this footnote for additional details.

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commercial contracts may include multiple service deliverables, such as equipment installation, monitoring services, and maintenance agreements. Revenues earned from fixed-price contracts for commercial projects are accounted for using the percentage-of-completion method in accordance with ASC 605-35, Construction-Type and Production-Type Contracts . Revenue related to these contracts is measured based on the efforts-expended method in accordance with ASC 605-35, which is the total efforts expended as a percentage of the estimated efforts at the completion of the contract. These contracts generally allow for monthly billing or billing upon achieving certain specified milestones. Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as supplies, tools, repairs, and travel costs. Selling, general and administrative costs are charged to expense as incurred. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions and final contract settlements, may result in revisions to costs and revenue and are recognized in the period in which the revisions are determined.

Sales of security monitoring systems may include multiple service deliverables, such as installation, monitoring services, and maintenance/service agreements. The Company assesses its revenue arrangements to determine the appropriate units of accounting. In accordance with ASC 605-25, Multiple-Element Arrangements , amounts assigned to each unit of accounting are based on an allocation of the total arrangement consideration using a hierarchy of the estimated selling price for the deliverables. The selling price used for each deliverable is based on the best estimate of the selling price if such items were to be sold separately as neither vendor-specific objective evidence (“VSOE”) nor third-party evidence (“TPE”) is available. The delivery of the installation project to the customer is upon completion of the installation. The delivery of the monitoring and maintenance components is generally over a three-year-average initial term upon the completion of the installation component. Generally, the selling prices of each component are based on company-prepared pricing schedules by market that are used to determine fees charged. For residential and small business projects, the general timing of the revenue recognition for the installation component is eight years. For commercial projects, the general timing of the revenue recognition for the installation component is based upon the percentage-of-completion method in accordance with ASC 605-35. For commercial projects, revenue recognized for installation is limited to the lesser of its allocated amount under the estimated selling price hierarchy or the noncontingent, up-front consideration received at the time of installation, since collection of future amounts under the arrangement with the customer can be contingent upon the delivery of monitoring and maintenance services. The general timing of the revenue recognition for the monitoring and service maintenance components for residential, small business, and commercial lines is monthly straight-line recognition over the term of the specific contracts.

Deferred Revenue

Costs of providing monitoring and maintenance services are charged to income in the period incurred. Contracts for monitoring and maintenance services are typically for an initial noncancelable term of three years.

Advertising Costs

Advertising costs are expensed the first time the advertising takes place and are included in selling expenses. Advertising expense totaled $2,548 for the year ended December 31, 2014.

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Equity Compensation Plan

In October 2007 and in January 2011, Holdings entered into Executive Securities Agreements (the “Agreements”) with certain of its key employees of the Company, in which it issued and sold these employees Common Units, Class Y Units, and Class Z Units of Holdings (“Management Units”). Pursuant to terms of these Agreements, select key employees also acquired Class A-Preferred Units of Holdings at fair value on the date of acquisition. The Common Units and Class Z Units vest over five years with 20% vesting on each anniversary of the date of grant, provided that if the employment of such key employee is terminated by the Company without cause or by such key employee for good reason prior to a vesting date, a pro rata portion will be deemed vested. Additionally, the vesting is accelerated upon a sale of Holdings in certain circumstances (e.g., if the key employee remains employed through such sale of Holdings and Holdings’ investors receive full cash liquidity on at least 75% of their units). The Class Y Units also have a “return threshold” that requires Holdings’ controlling investor to receive a two and one-quarter times cash return on its investment before the Class Y Units will participate in any distributions. The Class Y Units shall become vested as of the date of and immediately prior to the consummation of the sale of the Company if, and only if, the employee has been continuously employed by the Company from the effective date of the grant through, and including, such date. In the event that the employee’s employment with the Company is terminated for any reason prior to the date of the consummation of a sale of the Company, none of the Class Y Units shall become vested, and the Class Y Units shall be subject to repurchase. The Class A Preferred Units receive a 10% annual return through January 28, 2011, and a 5% annual return thereafter, compounded quarterly, on their investment prior to any distributions made to other classes of shareholders upon a sale of the Company. The accumulated value of the Class A Preferred Units, par plus accumulated yield, is $134,409 as of December 31, 2014. The Class Z Units also have a “return threshold” that requires Holdings’ controlling investor to receive a three-times cash return on its investment before the Class Z Units will participate in any distributions, other than in respect of the initial capital contribution made in respect of such units. Unvested Common Units and Class Z Units will not participate in distributions other than tax distributions at the time of such distributions, but amounts will be held back in respect of such units to be distributed at such time, if any, such units subsequently vest. The Company is accounting for the Management Units under the liability method and will record expense, if any, associated with these awards in its consolidated financial statements because its employees are the beneficiaries of the awards. The Company recorded compensation expense related to the Management Units in the amount of $1,954 during the year ended December 31, 2014. As of December 31, 2014, the Company had recorded an equity compensation plan liability of $6,711.

Income Taxes

The Company accounts for income taxes using the asset and liability method, in accordance with ASC 740, Income Taxes. Under this method, the Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and for operating loss and tax credit carryforwards. The Company measures deferred tax assets and liabilities using the enacted tax laws expected to apply to taxable income in the years in which it is expected that those temporary differences will be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax laws is recognized in the results of the Company’s operations during

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the period that includes the enactment date. Valuation allowances are recorded to reduce deferred tax assets when it is determined that it is more likely than not that some or all of the deferred tax assets will not be realized.

Liquidity and Capital Resources

Since its inception, the Company has experienced significant growth as a result of acquiring customer contracts and businesses from third parties, as well as through its own internal sales efforts. This growth has been financed by debt and member equity contributions. In order to continue this strategy, the Company may require additional member contributions and increased borrowing capacity.

The Company continually projects its anticipated cash needs, which include its operating needs, capital requirements, and principal and interest payments on its indebtedness. Management believes the Company can meet its liquidity needs through the end of fiscal year 2015 with cash and cash equivalents on hand, projected cash flows from operations, and, to the extent necessary, through its available borrowing capacity under the credit facility (“Credit Facility”) (see Note 8), which was $3,889 at December 31, 2014. The Company’s projected cash flows from operations include achieving specific revenue and earnings before interest, taxes, depreciation, and amortization (“EBITDA”) growth targets. Based on these projections, management also believes the Company will be in compliance with its debt covenants through the end of fiscal year 2015. Management considered the risks that the current economic conditions may have on its liquidity projections, as well as the Company’s ability to meet its debt covenant requirements. If economic conditions deteriorate unexpectedly to an extent that the Company could not meet liquidity needs or it appears that noncompliance with debt covenants is likely to result, the Company would implement several remedial measures, which could include further operating cost and capital expenditure reductions. Additionally, the Credit Facility provides a cure option whereby any person having an equity interest in the Company may make additional equity investments in the Company in such amounts as would be necessary to cure any breach of the debt service coverage ratio within 10 days of the reporting due date of the compliance certificate that contains such breach. Utilization of the cure option is limited to three times per annual period. If these measures are not successful in maintaining compliance with the Company’s debt covenants, the Company would attempt to negotiate for relief through an amendment with its lender or waivers of covenant noncompliance, which could result in higher interest costs, additional fees, and reduced borrowing limits. There is no assurance that the Company would be successful in obtaining relief from its debt covenant requirements in these circumstances. In addition to unexpected economic condition declines, management’s failure to meet its plan for any other reason would also have an adverse effect on its ability to comply with its debt covenants. Failure to comply with debt covenants and a corresponding failure to negotiate a favorable amendment or waivers with the Company’s lenders could result in the acceleration of the maturity of all the Company’s outstanding debt, which would have a material adverse effect on the Company’s consolidated financial statements.

Recent Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board (“FASB”) issued guidance on the presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The new guidance requires that an unrecognized tax benefit be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except for a situation in which some or all of such net operating loss carryforward, a similar loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable tax jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose; the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The adoption of this guidance will not have a material impact on the Company’s consolidated financial statements.

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over 10 years or less. Furthermore, instead of performing an annual impairment assessment, goodwill should be tested for impairment only when a triggering event occurs that indicates that the fair value of an entity or a reporting unit may be below its carrying amount. The accounting alternative, if elected, may be applied for annual periods beginning after December 15, 2014. The Company does not currently expect to adopt the accounting alternative and as a result would continue to perform the tests for impairment on an annual basis.

In May 2014, the FASB issued a new revenue recognition standard that supersedes existing revenue guidance under GAAP. The new standard requires that an entity should recognize revenue to coincide with the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard provides a five-step model to assist entities in making this evaluation. Furthermore, expanded qualitative and quantitative disclosures will be required to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The implementation of this new standard will be effective for reporting periods beginning after December 15, 2016 and December 15, 2017 for public and private entities, respectively. Entities will be required to implement this new standard on either a retrospective or a prospective basis. The Company is still assessing the impact that the adoption of this guidance will have on the Company’s consolidated financial statements.

In August 2014, the FASB issued a new standard which will require management to explicitly assess an entity’s ability to continue as a going concern, and to provide related footnote disclosures in certain circumstances. Although similar disclosures have been required under the current standards, management did not have specific guidance on when and how to assess or disclose going concern uncertainties, which are now included in this new standard. The implementation of this new standard will be effective for all entities for reporting annual and interim periods ending after December 15, 2016. The Company is still assessing the impact that the adoption of this guidance will have, but anticipates it may not have a significant impact on its consolidated financial statements or disclosures.

There were no other new accounting pronouncements issued during the year ended December 31, 2014 that had or are expected to have material impact on the Company’s financial statements.

3. Acquisitions

During 2014, the Company acquired certain assets and liabilities from multiple companies that provide alarm monitoring services for commercial and residential customers. All acquisitions were accounted for as asset acquisitions. The results of each acquisition are included in the financial statements since the effective date of each transaction.

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The following table summarizes the estimated fair values of the assets acquired, liabilities assumed, and holdback liabilities from the acquisitions made during the year ended December 31, 2014.


	National Alarm Systems, Inc.		Amsafe of Miami, Inc.		Alarm Detection Systems, Inc.		Laredo Alarm Systems, Inc.		Home Technologies, Inc.		Selectronics, Inc.		Nolan’s Protection Systems, Inc.		ABV Security Corporation		Acadian Protection Systems, LLC		Titanium, LLC		Other Acquisitions		Total
2014 Acquisitions
2014 Acquisition date		January 31		March 31		April 14		June 27		July 17		September 4		September 16		September 30		December 18		December 23		Various
Operating region		Florida		Florida		Louisiana		Texas		Connecticut		North Carolina		Texas		North Carolina		Louisiana		Pennsylvania		Various
Current assets	$	—	$	—	$	20	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	20
Property and equipment		55		—		38		18		38		—		68		—		—		—		—		217
Purchased accounts		11,960		548		1,840		3,665		1,597		453		6,123		497		739		1,223		704		29,349

Total assets acquired		12,015		548		1,898		3,683		1,635		453		6,191		497		739		1,223		704		29,586

Deferred tax liability		—		—		—		—		—		—		2,187		—		—		—		—		2,187
Current liabilities assumed		264		24		299		21		290		52		181		55		84		47		43		1,360

Net assets acquired	$	11,751	$	524	$	1,599	$	3,662	$	1,345	$	401	$	3,823	$	442	$	655	$	1,176	$	661	$	26,039

Holdback liability for 2014 Acquisitions at December 31, 2014	$	240	$	55	$	185	$	351	$	164	$	45	$	320	$	50	$	74	$	183	$	70	$	1,737

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4. Property and Equipment

Property and equipment consisted of the following:


	December 31, 2014
Leasehold improvements	$	522
Furniture and equipment		1,350
Computer equipment		1,412
Software		1,639
Vehicles and trucks		7,651

		12,574
Less: accumulated depreciation and amortization		(7,243	)

Property and equipment, net	$	5,331

Depreciation and amortization expense related to property and equipment for the year ended December 31, 2014 was $1,881. In 2014, the Company sold $551 of assets for which related accumulated depreciation was $430, and recognized a gain on the sale of assets of $5.

5. Purchased Accounts

The gross carrying value of purchased accounts and the accumulated amortization are as follows:


	December 31, 2014
Purchased accounts	$	296,368
Less accumulated amortization		(191,603	)

	$	104,765

Intangible asset amortization expense related to purchased accounts for the year ended December 31, 2014 was $35,484. The weighted-average amortization period for purchased accounts was 8.0 years for 2014. Amortization expense on purchased accounts for the next five years is expected to be:


Year ending December 31:
2015	$	33,830
2016		17,399
2017		14,762
2018		13,303
2019		11,348

Total	$	90,642

6. Customer Acquisition Costs

As of December 31, 2014, the gross carrying value of customer acquisition costs and the accumulated amortization are as follows:


Customer acquisition costs	$	132,683
Less accumulated amortization		(46,433	)

	$	86,250

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Intangible asset amortization expense related to customer acquisition costs for the year ended December 31, 2014 was $14,816. The weighted-average amortization period for customer acquisition costs was 8.0 years for 2014. Amortization expense on customer acquisition costs for the next five years is expected to be:


Year ending December 31:
2015	$	16,564
2016		15,751
2017		14,390
2018		12,857
2019		11,008

Total	$	70,570

7. Fair Value Measurements

Financial and nonfinancial assets and liabilities are measured at fair value on a recurring basis under the provisions of ASC 820, Fair Value Measurements and Disclosures. ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

Equity Compensation Plan Liability : This balance is measured based on the enterprise fair value of the Company. The enterprise fair value of the Company is calculated using recurring monthly revenue (“RMR”) as of year-end multiplied by an RMR multiple. The RMR multiple is derived based on a combination of market transactions and Company estimates. The significant unobservable input used in the fair value measurement of the Equity Compensation Plan liability, a Level 3 liability measured at fair value on a recurring basis, was the estimate of the RMR multiple, which was determined by management to be 50.0x as of December 31, 2014. Any significant increases or decreases in the estimate of the RMR multiple could result in a significantly higher or lower fair value measurement.

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The following table summarizes fair value measurements by level for assets and liabilities measured at fair value on a recurring basis as of December 31, 2014.


	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Liabilities subject to fair value measurement:
Equity Compensation Plan liability	$	—	$	—	$	6,711	$	6,711

Total	$	—	$	—	$	6,711	$	6,711

The following is a reconciliation of the beginning and ending liability recorded related to the Equity Compensation Plan:


	December 31, 2014
Beginning balance	$	4,757
Increase due to change in estimated fair value of the Company		1,954

Ending balance	$	6,711

The amount of total cost for the period included in earnings attributable to the change in the Equity Compensation Plan liability still held at the reporting date was $1,954 for the year ended December 31, 2014. This amount was recorded in the consolidated statement of operations as equity compensation plan expense for the year ended December 31, 2014.

Certain assets and liabilities are measured at fair value on a nonrecurring basis using Level 3 inputs as defined in ASC 820. These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. Included in this category are goodwill, customer acquisition costs, net, and purchased accounts, net that are written down to fair value when they are determined to be impaired. The Company concluded that these assets were not impaired at December 31, 2014, and, therefore, were reported at carrying value as opposed to fair value.

8. Long-Term Debt

On October 26, 2007, the Company (through Intermediate Holdco) entered into a credit agreement with CapitalSource Finance LLC as agent. The total original Credit Facility was $165,000 and comprised a $137,000 revolver and a $28,000 term loan.

On December 12, 2008, the Company amended its Credit Facility to add an additional $25,000 of borrowing capacity under its revolving line of credit. This brought the Company’s total borrowing capacity under the Credit Facility to $190,000. The amendment also increased the margin the Company will be charged for interest in addition to the London Interbank Offered Rate (“LIBOR”) by 0.50% and adjusted the debt service coverage ratio covenant requirement. Other than these changes, the amendment to the Credit Facility did not alter any terms of the original agreement.

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On January 28, 2011, the Company amended and restated its Credit Facility (“Amended and Restated Credit Facility”) to add an additional $40,000 of borrowing capacity under its revolving line of credit. This brought the Company’s total borrowing capacity to $230,000. The most significant changes to the terms of the Credit Facility were an adjustment to the margin the Company will be charged for interest in addition to LIBOR, the extension of the maturity date from October 26, 2012 to October 25, 2014, and a change in the formula under which the Company may borrow funds.

On December 19, 2011, the Company entered into a Limited Waiver, Consent and First Amendment to the Amended and Restated Credit Facility, which, among other things, provided consent for the Texana Security, LLC (“Texana”) acquisition and amended the definition of Eligible RMR.

In connection with the Company’s acquisition of the assets of Texana in December 2011, the Company entered into subordinated promissory note agreements with two prior note holders of Texana. One promissory note is to Logan, Inc. (“Logan Note”) for $2,125 at an interest rate of 7.0% per annum with interest and principal payments made quarterly. The aggregate unpaid principal balance of the Logan Note is originally due to mature on December 1, 2015. The second promissory note is to Smith Investments RGV, Inc. (“Smith Note”) for $1,400 at an interest rate of 7.0% per annum with interest and principal payments made quarterly. The aggregate unpaid principal balance of the Smith Note is originally due to mature on December 1, 2015.

On March 2, 2012, the Company entered into a Limited Waiver and Second Amendment to its Amended and Restated Credit Facility to add an additional $20,000 of borrowing capacity under its revolving line of credit. This brought the Company’s total borrowing capacity under the Credit Facility to $250,000. The amendment also adjusted the debt service capital ratio covenant requirement. Other than these changes, the second amendment to the Credit Facility did not alter any terms of the original agreement.

On March 22, 2013, the Company entered into a Limited Waiver and Third Amendment to the Amended and Restated Credit Facility to extend the maturity from October 25, 2014, to January 25, 2016, reduce the interest rate by 0.50%, and add $20,000 of borrowing capacity under its revolving line of credit. This increased the Company’s total borrowing capacity under the Amended and Restated Credit Facility to $270,000. The amendment also adjusted the debt service coverage ratio and leverage covenant requirements and waived the covenant violation that had occurred in January 2013. Other than these changes, the amendment to the Credit Facility did not alter any terms of the original agreement.

On January 17, 2014, the Company entered into a Limited Waiver and Fourth Amendment to the Amended and Restated Credit Facility to reduce the interest rate by 0.50%, and add $30,000 of borrowing capacity under its revolving line of credit. This increased the Company’s total borrowing capacity under the Amended and Restated Credit Facility to $300,000. The amendment also extended the maturity dates of the Logan Note and Smith Note from December 1, 2015 to December 1, 2016, and from December 31, 2015 to December 1, 2016, respectively. The amendment also adjusted the debt service coverage ratio and leverage covenant requirements. Other than these changes, the amendment to the Credit Facility did not alter any terms of the original agreement.

On May 30, 2014, the Company entered into a Limited Waiver and Fifth Amendment to the Amended and Restated Credit Facility to adjust the capital expenditures financial covenant and waive the December 2013, debt service coverage covenant violation related to capital lease payments. Other than these changes, the amendment to the Credit Facility did not alter any terms of the original agreement.

On September 16, 2014, the Company entered into a Sixth Amendment to the Amended and Restated Credit Facility to consent to the purchase of all issued and outstanding shares of stock of Nolan’s Protection Systems, Inc., a Texas Corporation. The amendment also added $2,500 of borrowing capacity under its revolving line of credit. This increased the Company’s total borrowing capacity under the Amended and Restated Credit Facility to $302,500. Other than these changes, the amendment to the Credit Facility did not alter any terms of the original agreement.

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The Company may borrow funds under the Amended and Restated Credit Facility using a formula based on qualified recurring monthly revenue and commercial accounts receivable. Draws under the revolver and term loan that are not rolled into fixed-rate contracts, which accrue interest at LIBOR plus a specified margin, will bear interest that is based on the prime rate plus a specified margin that is due monthly. When the fixed-rate contracts expire, principal and accrued interest may be rolled into a new contract at the current applicable rate or rolled into the principal balance that accrues interest at prime plus the specified margin.

As of December 31, 2014, the Company had $3,889 of available capacity due to covenant restrictions and was in compliance with all financial covenants. The covenants include debt service and leverage ratios, a capital expenditure limitation, a requirement to have a minimum percentage of customer payments deposited into the Company’s lockbox, and a customer revenue attrition covenant.

As of December 31, 2014, the Company had $238,223 and $53,700 outstanding on the revolver and term loans, respectively. The annualized interest rates for the outstanding loans as of December 31, 2014, were 6% per annum on the revolving line of credit and 10.25% on the term loan. The Company paid financing fees of $498 in conjunction with the financing transactions that took place in 2014. These fees are included in other assets and are being amortized over the term of the loan using the level-yield method and are recorded as additional interest expense. The facility also requires the Company to pay a commitment fee equal to 0.625% of the unutilized portion of the loan facility. All borrowings under this Amended and Restated Credit Facility are collateralized by all of the assets of the Company.

A summary of the Company’s outstanding debt balances as of December 31, 2014 is as follows:


	December 31, 2014
Credit facility	$	291,923
Logan Note		1,163
Smith Note		886
Other		—

Total		293,972
Less: current portion		(563	)

Long-term debt	$	293,409

Future scheduled minimum principal payments of debt as of December 31, 2014, are as follows:


Year ending December 31:
2015	$	563
2016		293,409

Total	$	293,972

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9. Operating and Capital Leases

The Company has various operating leases for office space in facilities located throughout the Mid-Atlantic region, Massachusetts, North Carolina, Florida, Louisiana, Oklahoma, and Texas, which expire through 2020. Most of these leases generally have a renewal option. As of December 31, 2014, future minimum lease payments for noncancelable leases are as follows:


Year ending December 31:
2015	$	1,459
2016		1,070
2017		866
2018		555
2019		270
Thereafter		38

Total	$	4,258

Rent expense for the year ended December 31, 2014 was $2,095.

The Company has assets under a three-year, noncancelable capital lease for vehicles, which had a gross carrying value of $3,151 at December 31, 2014.

Future minimum payments under these leases as of December 31, 2014, are as follows:


Year ending December 31:
2015	$	1,053
2016		704
2017		120

Total	$	1,877

Capital lease amortization expense for the year ended December 31, 2014 was $832.

10. Income Taxes

As a limited liability company, the Company’s taxable income or loss is allocated to members in accordance with their respective percentage ownership. Intermediate Holdco and subsidiaries are taxed as corporations. Alarm Security Group LLC is the primary operating entity within the consolidated return. Current-period income tax expense and deferred income taxes are reflected in the accompanying consolidated financial statements.

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guidance requires companies to determine whether it is “more likely than not” that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the tax benefit can be recorded in the financial statements. It also provides guidance on the recognition, measurement, and classification of income tax uncertainties, along with any related interest and penalties. Previously recorded income tax benefits that no longer meet this standard are required to be charged to earnings in the period that such determination is made. In addition, the guidance requires expanded annual disclosures, including a rollforward of the beginning and ending aggregate unrecognized tax benefits, as well as specific detail related to tax uncertainties for which it is reasonably possible the amount of the unrecognized tax benefit will significantly increase or decrease within 12 months. There were no amounts recorded as uncertain tax positions as of December 31, 2014. The Company elected to classify interest and penalties related to unrecognized tax benefits as a component of income tax expense; however, no amounts were recorded during 2014. The Company’s federal income tax returns have not been examined by the Internal Revenue Service during open or closed years. The federal statute of limitations remains open for the year ended December 31, 2011, and later years. Most state jurisdictions have statutes of limitation generally ranging from three to five years. During 2014, the Company was audited by the state of New York for the periods from 2010 through 2012. The examination is currently ongoing, however, the Company anticipates no material changes to the tax returns as filed. Therefore, the Company does not believe that it is reasonably possible that the gross unrecognized tax benefit may change materially within the next 12 months.

The components of the Company’s income tax provision are as follows:


	Year Ended December 31, 2014
Current income tax expense:
Federal	$	—
State		350

Total current		350
Deferred income tax (benefit) expense:
Federal		(1,461	)
State		(181	)

Total deferred		(1,642	)

Total income tax (benefit) expense	$	(1,292	)

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities calculated for financial reporting purposes and the amounts calculated for preparing income tax returns in accordance with tax regulations and the net tax effects of operating loss and tax credit carryforwards. As of December 31, 2014, valuation allowances of approximately $80,752 were recorded against the Company’s deferred tax assets, with the exception of state tax credits of $594.

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Components of deferred taxes are as follows:


	December 31, 2014
Deferred tax assets:
State tax credit carryforwards	$	594
Net operating loss carryforwards		48,620
Depreciation and amortization		32,063
Other		1,817

Total		83,094
Valuation allowance		(80,752	)

Net deferred tax assets		2,342
Deferred tax liabilities:
Indefinite-lived intangibles		(5,799	)
Depreciation and amortization		(765	)
Purchase contracts		(516	)
Other		(468	)

Total deferred tax liabilities		(7,548	)

Net deferred tax assets	$	(5,206	)

As of December 31, 2014, the Company has applied a full valuation allowance against its net deferred tax assets with the exception of its Texas Margin Tax Credits. The Company does not consider deferred tax liabilities related to indefinite-lived intangibles in evaluating the realizability of its deferred tax assets as the timing of their reversal cannot be determined. The Company recorded the valuation allowance due to its current cumulative losses and the uncertainty of future taxable income.

The Company has a federal net operating loss carryforward totaling $127,843 as of December 31, 2014, which expires over a 20-year period through 2034. The gross amount of the state net operating loss is equal to or less than the federal net operating loss carryforward and expires over various periods based on individual state tax law.

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A reconciliation of the U.S. federal statutory income tax rate to the Company’s actual income tax rate is provided below.


	December 31, 2014
Tax at federal statutory rate	$	(16,162	)	34.00	%
State, net of federal benefit		(1,603	)	3.37
Tax credits		16		(0.03	)
Deferred compensation		664		(1.40	)
Other permanent differences		98		(0.21	)
Impact of adjusting effective rate		302		(0.63	)
Valuation allowance		15,388		(32.37	)
Other		5		(0.01	)

Recorded tax (benefit) expense	$	(1,292	)	(2.72	)%

11. Members’ Deficit

The Company has four classes of economic units:


	Class A Units		Common Units		Class Y Units		Class Z Units
December 31, 2014
Authorized		78,838		8,961		6,605		6,605
Issued		78,838		8,961		6,605		6,605
Outstanding		78,838		8,961		6,605		6,605

Other than in respect of tax distributions, distributions shall be made to shareholders in the following order or priority:

First, to the holders of Class A Preferred Units (ratably among such holders based upon their aggregate unreturned capital), an amount equal to the unreturned capital in respect of the Class A Units;

Upon a liquidation of the Company, all members receive a distribution in proportion to their respective capital accounts.

F-172

12. Related-Party Transactions

The Company is party to an arrangement to pay a quarterly fee equal to 0.7% of the amount invested by Parthenon, an investor in Holdings, to PCap, L.P. for business advisory services. PCap, L.P. is an affiliate of the investors in Holdings, which is the parent of ASG Intermediate Holdco. For the year ended December 31, 2014, $441 was reflected as an expense within general and administrative expenses in the accompanying consolidated financial statements and no amounts are outstanding.

13. Subsequent Events

The Company has evaluated subsequent events that have occurred for recognition or disclosure through April 30, 2015, the date the financial statements were available to be issued.

Through April 30, 2015, the Company acquired certain assets and assumed certain liabilities from six alarm service companies providing both commercial and residential services. The Company paid total cash consideration of $8,116, with the majority of the acquisitions being funded through draws against the Credit Facility. The most significant asset recorded related to the purchased accounts has a total value assigned of $7,958. Additionally, the transactions had holdback provisions totaling $783.

F-173

Through and including , 2018 (the 25th day after the date of this prospectus), all dealers effecting transactions in the common stock, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

Shares

LOGO

ADT Inc.

Common Stock

PROSPECTUS

, 2018

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

Set forth below is a table of the registration fee for the Securities and Exchange Commission (the “SEC”) and estimates of all other expenses to be paid by the registrant in connection with the issuance and distribution of the securities described in the registration statement:


SEC registration fee	$	12,450.00
Stock exchange listing fee			*
Financial Industry Regulatory Authority filing fee		15,500.00
Printing expenses			*
Legal fees and expenses			*
Accounting fees and expenses			*
Blue Sky fees and expenses			*
Transfer agent and registrar fees			*
Miscellaneous			*

Total	$		*

*	To be completed by amendment.

Item 14. Indemnification of Directors and Officers

Section 145 of the Delaware General Corporation Law (the “DGCL”) provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys’ fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending, or completed actions, suits, or proceedings in which such person is made a party by reason of such person being or having been a director, officer, employee or agent to the registrant. The DGCL provides that Section 145 is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of stockholders, or disinterested directors or otherwise. The registrant’s amended and restated bylaws provide for indemnification by the registrant of its directors, officers, and employees to the fullest extent permitted by the DGCL.

Section 102(b)(7) of the DGCL permits a corporation to provide in its amended and restated certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for unlawful payments of dividends or unlawful stock repurchases, redemptions, or other distributions, or (iv) for any transaction from which the director derived an improper personal benefit. The registrant’s amended and restated certificate of incorporation provides for such limitation of liability.

The registrant maintains standard policies of insurance under which coverage is provided (a) to its directors and officers against loss rising from claims made by reason of breach of duty or other wrongful act and (b) to the registrant with respect to payments which may be made by the registrant to such officers and directors pursuant to the above indemnification provision or otherwise as a matter of law.

The proposed form of underwriting agreement we enter into in connection with the sale of common stock being registered will provide for indemnification of directors and officers of the registrant by the underwriters against certain liabilities.

II-1

We expect to enter into customary indemnification agreements with our executive officers and directors that provide them, in general, with customary indemnification in connection with their service to us or on our behalf.

Item 15. Recent Sales of Unregistered Securities

Set forth below is information regarding securities sold or granted by us within the past three years that were not registered under the Securities Act of 1933, as amended (the “Securities Act”). Also included is the consideration, if any, received by us for such securities and information relating to the section of the Securities Act, or rule of the SEC, under which exemption from registration was claimed for such sales and grants. Such information is rounded to the nearest whole number.

Options

•

On November 21, 2016, we issued 1,850,000 options to acquire shares of our common stock to certain employees pursuant to our 2016 Equity Incentive Plan.

•

On December 22, 2016, we issued 61,111 options to acquire shares of our common stock to certain employees pursuant to our 2016 Equity Incentive Plan.

•

On March 27, 2017, we issued 855,556 options to acquire shares of our common stock to certain employees pursuant to our 2016 Equity Incentive Plan.

•

On June 29, 2017, we issued 279,253 options to acquire shares of our common stock to certain employees pursuant to our 2016 Equity Incentive Plan.

•

On August 21, 2017, we issued 50,000 options to acquire shares of our common stock to certain employees pursuant to our 2016 Equity Incentive Plan.

Common Stock

•

On May 15, 2015, in connection with the Formation Transactions, we issued 100 shares of our common stock, par value $0.01 per share, to Prime Security Services TopCo Parent, L.P. for total proceeds of $1.00.

•

On May 2, 2016, in connection with the ADT Acquisition, we effected a stock split whereby the 100 shares of our common stock issued and outstanding as of such date where reclassified as 950,000 shares of our common stock.

•

On November 7, 2016, we effected a stock split whereby the 950,000 shares of our common stock issued and outstanding as of such date where reclassified as 381,155,769 shares of our common stock.

•

On December 30, 2016, we issued 192,814 shares of our common stock to Prime Security Services TopCo Parent, L.P. for total proceeds of approximately $2.5 million.

•

On June 28, 2017, we issued 24,217 shares of our common stock to Prime Security Services TopCo Parent, L.P. for total proceeds of approximately $290,000.

•

On October 17, 2017, we issued 3,771 shares of our common stock to Prime Security Services TopCo Parent, L.P.

•

On October 18, 2017, we issued 1,111 shares of our common stock to a former employee upon such former employee’s exercise of his vested options.

•

On October 27, 2017, we issued 12,108 shares of our common stock to Prime Security Services TopCo Parent, L.P. for total proceeds of approximately $200,000.

II-2

•

On November 3, 2017, we issued 1,389 shares of our common stock to a former employee upon such former employee’s exercise of his vested options.

Preferred Securities

•

On May 2, 2016, in connection with the ADT Acquisition, we issued 750,000 shares of Series A Preferred Securities, par value $0.01 per share, to an affiliate of Koch Industries, Inc. for total proceeds of approximately $659 million.

Except as otherwise noted above, these transactions were exempt from registration pursuant to Section 4(a)(2) of the Securities Act, as they were transactions by an issuer that did not involve a public offering of securities.

Item 16. Exhibits and Financial Statement Schedules

(a) Exhibits


Exhibit Number		Exhibit Description

1.1*		Form of Underwriting Agreement

3.1		Form of Amended and Restated Certificate of Incorporation of ADT Inc.

3.2		Form of Amended and Restated Bylaws of ADT Inc.

3.3		Form of Certificate of Designation for Koch Preferred Securities

4.1		Indenture, dated as of July 5, 2012, by and between The ADT Corporation and Wells Fargo Bank, National Association

4.2		First Supplemental Indenture, dated as of July 5, 2012, by and among The ADT Corporation, Tyco International Ltd. and Wells Fargo Bank, National Association

4.3		Second Supplemental Indenture, dated as of July 5, 2012, by and among The ADT Corporation, Tyco International Ltd. and Wells Fargo Bank, National Association

4.4		Third Supplemental Indenture, dated as of July 5, 2012, by and among The ADT Corporation, Tyco International Ltd. and Wells Fargo Bank, National Association

4.5		Fourth Supplemental Indenture, dated as of January 14, 2013, by and between The ADT Corporation and Wells Fargo Bank, National Association

4.6		Fifth Supplemental Indenture, dated as of October 1, 2013, by and between The ADT Corporation and Wells Fargo Bank, National Association

4.7		Sixth Supplemental Indenture, dated as of April 8, 2016, under 2012 Base Indenture, by and among The ADT Corporation, the guarantors party thereto and the Wells Fargo Bank, National Association

4.8		Seventh Supplemental Indenture, dated as of April 22, 2016, under 2012 Base Indenture, by and among The ADT Corporation, the guarantors party thereto and the Wells Fargo Bank, National Association

4.9		Eighth Supplemental Indenture, dated as of May 2, 2016, under 2012 Base Indenture, by and among Prime Finance, Inc., The ADT Corporation and the Wells Fargo Bank, National Association

4.10		Indenture, dated as of March 19, 2014, by and between The ADT Corporation and Wells Fargo Bank, National Association

II-3


Exhibit Number		Exhibit Description

4.11		Officer’s Certificate, dated as of December 18, 2014, of The ADT Corporation, establishing the terms of its 5.250% Senior Notes due 2020 (including form Note)

4.12		First Supplemental Indenture, dated as of April 8, 2016 under 2014 Base Indenture, by and among The ADT Corporation, the guarantors party thereto and the Wells Fargo Bank, National Association

4.13		Second Supplemental Indenture, dated as of May 2, 2016, under 2014 Base Indenture, by and among Prime Finance, Inc., The ADT Corporation and the Wells Fargo Bank, National Association

4.14		Indenture, dated as of May 2, 2016, by and between Prime Security One MS, Inc. and the Wells Fargo Bank, National Association

4.15		First Supplemental Indenture, dated as of May 2, 2016, by and among The ADT Corporation, the guarantors party thereto and the Wells Fargo Bank, National Association

4.16		Second Lien Notes Indenture, dated as of May 2, 2016, by and among Prime Security Services Borrower, LLC, Prime Finance, Inc., Prime Guarantors and Wells Fargo Bank, National Association

4.17		Second Lien Notes Supplemental Indenture, dated as of May 2, 2016, by and among Prime Security Services Borrower, LLC, Prime Finance, Inc., Prime Guarantors and Wells Fargo Bank, National Association

4.18		Second Supplemental Indenture, dated as of August 9, 2016, by and between The ADT Corporation, the Notes Guarantors and Wells Fargo Bank, National Association

5.1*		Opinion of Paul, Weiss, Rifkind, Wharton & Garrison LLP as to the validity of the securities being offered

10.1		Fifth Amended and Restated First Lien Credit Agreement, dated July 1, 2015, as amended and restated as of May 2, 2016, as further amended and restated as of June 23, 2016, December 28, 2016, February 13, 2017 and June 29, 2017, among Prime Security Services Holdings, LLC, as Holdings, Prime Security Services Borrower, LLC, as Borrower, the Lenders Party thereto and Barclays Bank PLC, as Administrative Agent

10.2		Subsidiary Guarantee Agreement (First Lien), dated July 1, 2015, among the Subsidiaries of Prime Security Services Borrower, LLC named therein and Credit Suisse AG, Cayman Islands Branch, as Collateral Agent

10.3		Supplement No. 1, dated as of May 2, 2016, to the Collateral Agreement (First Lien) dated as of July 1, 2015 by Prime Security Services Borrower, LLC and Barclays Bank PLC, as Collateral Agent

10.4		Holdings Guarantee and Pledge Agreement (First Lien), dated and effective as of July 1, 2015, between Prime Security Services Holdings, LLC, as Holdings, and Credit Suisse AG, Cayman Islands Branch, as Collateral Agent

10.5		Collateral Agreement (First Lien), dated as of July 1, 2015 among Prime Security Services Borrower, LLC, each Subsidiary of Prime Security Services Borrower, LLC from time to time identified therein as a party and Barclays Bank PLC, as Collateral Agent

10.6		Supplement No. 1, dated as of May 2, 2016, to the Subsidiary Guarantee Agreement (First Lien) dated as of July 1, 2015, by each subsidiary of Prime Securities Services Borrower, LLC and Barclays Bank PLC, as Collateral Agent

10.7		Collateral Agreement (Second Lien), dated as of May 2, 2016, among Prime Security Services Borrower, LLC, as Issuer, Prime Finance Inc., as Co-Issuer, each Subsidiary Guarantor party thereto and Wells Fargo Bank, National Association, as Collateral Agent

II-4


Exhibit Number		Exhibit Description

10.8		First Lien/First Lien Intercreditor Agreement, dated as of May 2, 2016 among Barclays Bank PLC, as Collateral Agent, Barclays Bank PLC, as Authorized Representative under the Credit Agreement, Wells Fargo Bank, National Association, as the Initial Other Authorized Representative, and each additional Authorized Representative from time to time party hereto relating to Prime Security Services Borrower, LLC

10.9		First Lien/Second Lien Intercreditor Agreement, dated as of July 1, 2015, between Credit Suisse AG, Cayman Islands Branch, as First Lien Facility Agent and Applicable First Lien Agent, and Credit Suisse AG, Cayman Islands Branch, as Second Lien Facility Agent and Applicable Second Lien Agent relating to Prime Security Services Borrower, LLC

10.10		Acknowledgement of and Consent to First Lien/Second Lien Intercreditor Agreement, dated as of July 1, 2015, by the pledgers party thereto

10.11		Consent and Acknowledgment (Other First Lien Obligations) (March 2014 Indenture), dated as of May 2, 2016, by Wells Fargo Bank, National Association, as an Other First Lien Obligations Agent

10.12		Consent and Acknowledgment (Other First Lien Obligations) (July 2012 Indenture), dated as of May 2, 2016, by Wells Fargo Bank, National Association, as an Other First Lien Obligations Agent

10.13		Consent and Acknowledgment (Other First Lien Obligations) (2032 Notes), dated as of May 2, 2016, by Wells Fargo Bank, National Association, as an Other First Lien Obligations Agent

10.14		Consent and Acknowledgment (Other Second Lien Obligations), dated as of May 2, 2016, by Wells Fargo Bank, National Association, as an Other Second Lien Obligations Agent

10.15		Consent of Grantors (First Lien/First Lien Intercreditor Agreement), dated as of May 2, 2016, by the grantors party thereto

10.16		Acknowledgment of and Consent to First Lien/Second Lien Intercreditor Agreement by the pledgors party thereto

10.17		Tax Sharing Agreement, dated as of September 28, 2012, by and among Pentair Ltd., Tyco International Ltd., Tyco International Finance S.A., and The ADT Corporation

10.18		Non-Income Tax Sharing Agreement dated as of September 28, 2012, by and among Tyco International Ltd., Tyco International Finance S.A., and The ADT Corporation

10.19		Trademark Agreement, dated as of September 25, 2012, by and among ADT Services GmbH, ADT US Holdings, Inc., Tyco International Ltd. and The ADT Corporation

10.20		Patent Agreement, dated as of September 26, 2012, by and between Tyco International Ltd. and The ADT Corporation

10.21		Separation and Distribution Agreement, dated September 26, 2012 by and among Tyco International Ltd., Tyco International Finance S.A., The ADT Corporation and ADT LLC

10.22		ADT LLC Supplemental Savings and Retirement Plan, effective as of April 1, 2017

10.23		Form of Stockholders Agreement by and between the ADT Inc. and Prime Securities Services TopCo, LP

10.24*		Form of Registration Rights Agreement by and between the ADT Inc. and Prime Securities Services TopCo, LP

10.25		Amended and Restated Employment Agreement, dated December 19, 2017, between The ADT Security Corporation (together with any of its subsidiaries and Affiliates) and Donald Young

II-5


Exhibit Number		Exhibit Description

10.26		Amended and Restated Employment Agreement, dated December 19, 2017, between The ADT Security Corporation (together with any of its subsidiaries and Affiliates) and Jamie Haenggi

10.27		Amended and Restated Employment Agreement, dated December 19, 2017, between The ADT Security Corporation (together with any of its subsidiaries and Affiliates) and P. Gray Finney

10.28		Amended and Restated Employment Agreement, dated December 19, 2017, between The ADT Security Corporation (together with any of its subsidiaries and Affiliates) and Daniel M. Bresingham

10.29		Amended and Restated Employment Agreement, dated December 19, 2017, between The ADT Security Corporation (together with any of its subsidiaries and Affiliates) and Timothy J. Whall

10.30		Amended and Restated Employment Agreement, dated December 19, 2017, between ADT LLC, (together with any of its subsidiaries and Affiliates) and James D. DeVries

10.31		Amended and Restated Employment Agreement, dated December 19, 2017, between ADT LLC, (together with any of its subsidiaries and Affiliates) and Jeffrey Likosar

10.32*		ADT Inc. 2018 Omnibus Incentive Plan

10.33*		Form of RSU Award Agreement for use under the ADT Inc. 2018 Omnibus Incentive Plan

10.34*		Form of Nonqualified Option Agreement for use under the ADT Inc. 2018 Omnibus Incentive Plan

10.35		Form of Investor Rights Agreement of Koch Preferred Securities

10.36		Form of Consent of Preferred Majority Holder of Koch Preferred Securities

10.37		Form of Amended and Restated Management Investor Rights Agreement

21.1		Subsidiaries of ADT Inc.

23.1		Consent of PricewaterhouseCoopers LLP, independent registered certified public accounting firm

23.2		Consent of Ernst & Young LLP, Independent Auditors

23.3		Consent of Deloitte & Touche LLP, independent registered public accounting firm

23.4*		Consent of Paul, Weiss, Rifkind, Wharton & Garrison LLP (included in Exhibit 5.1)

24.1		Powers of Attorney (included in signature page)

*	To be filed by amendment.

(b) Financial Statement Schedule

See the Index to the consolidated financial statements included on page F-1 for a list of the financial statements included in this registration statement. All schedules not identified above have been omitted because they are not required, are inapplicable, or the information is included in the consolidated financial statements or notes contained in this registration statement.

Item 17. Undertakings

The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

II-6

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable . In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1)

For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2)

For purposes of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-7

EXHIBIT INDEX


Exhibit Number		Exhibit Description

1.1*		Form of Underwriting Agreement

3.1		Form of Amended and Restated Certificate of Incorporation of ADT Inc.

3.2		Form of Amended and Restated Bylaws of ADT Inc.

3.3		Form of Certificate of Designation for Koch Preferred Securities

4.1		Indenture, dated as of July 5, 2012, by and between The ADT Corporation and Wells Fargo Bank, National Association

4.2		First Supplemental Indenture, dated as of July 5, 2012, by and among The ADT Corporation, Tyco International Ltd. and Wells Fargo Bank, National Association

4.3		Second Supplemental Indenture, dated as of July 5, 2012, by and among The ADT Corporation, Tyco International Ltd. and Wells Fargo Bank, National Association

4.4		Third Supplemental Indenture, dated as of July 5, 2012, by and among The ADT Corporation, Tyco International Ltd. and Wells Fargo Bank, National Association

4.5		Fourth Supplemental Indenture, dated as of January 14, 2013, by and between The ADT Corporation and Wells Fargo Bank, National Association

4.6		Fifth Supplemental Indenture, dated as of October 1, 2013, by and between The ADT Corporation and Wells Fargo Bank, National Association

4.7		Sixth Supplemental Indenture, dated as of April 8, 2016, under 2012 Base Indenture, by and among The ADT Corporation, the guarantors party thereto and the Wells Fargo Bank, National Association

4.8		Seventh Supplemental Indenture, dated as of April 22, 2016, under 2012 Base Indenture, by and among The ADT Corporation, the guarantors party thereto and the Wells Fargo Bank, National Association

4.9		Eighth Supplemental Indenture, dated as of May 2, 2016, under 2012 Base Indenture, by and among Prime Finance, Inc., The ADT Corporation and the Wells Fargo Bank, National Association

4.10		Indenture, dated as of March 19, 2014, by and between The ADT Corporation and Wells Fargo Bank, National Association

4.11		Officer’s Certificate, dated as of December 18, 2014, of The ADT Corporation, establishing the terms of its 5.250% Senior Notes due 2020 (including form Note)

4.12		First Supplemental Indenture, dated as of April 8, 2016 under 2014 Base Indenture, by and among The ADT Corporation, the guarantors party thereto and the Wells Fargo Bank, National Association

4.13		Second Supplemental Indenture, dated as of May 2, 2016, under 2014 Base Indenture, by and among Prime Finance, Inc., The ADT Corporation and the Wells Fargo Bank, National Association

4.14		Indenture, dated as of May 2, 2016, by and between Prime Security One MS, Inc. and the Wells Fargo Bank, National Association

4.15		First Supplemental Indenture, dated as of May 2, 2016, by and among The ADT Corporation, the guarantors party thereto and the Wells Fargo Bank, National Association

4.16		Second Lien Notes Indenture, dated as of May 2, 2016, by and among Prime Security Services Borrower, LLC, Prime Finance, Inc., Prime Guarantors and Wells Fargo Bank, National Association

4.17		Second Lien Notes Supplemental Indenture, dated as of May 2, 2016, by and among Prime Security Services Borrower, LLC, Prime Finance, Inc., Prime Guarantors and Wells Fargo Bank, National Association

4.18		Second Supplemental Indenture, dated as of August 9, 2016, by and between The ADT Corporation, the Notes Guarantors and Wells Fargo Bank, National Association


Exhibit Number		Exhibit Description

5.1*		Opinion of Paul, Weiss, Rifkind, Wharton & Garrison LLP as to the validity of the securities being offered

10.1		Fifth Amended and Restated First Lien Credit Agreement, dated July 1, 2015, as amended and restated as of May 2, 2016, as further amended and restated as of June 23, 2016, December 28, 2016, February 13, 2017 and June 29, 2017, among Prime Security Services Holdings, LLC, as Holdings, Prime Security Services Borrower, LLC, as Borrower, the Lenders Party thereto and Barclays Bank PLC, as Administrative Agent

10.2		Subsidiary Guarantee Agreement (First Lien), dated July 1, 2015, among the Subsidiaries of Prime Security Services Borrower, LLC named therein and Credit Suisse AG, Cayman Islands Branch, as Collateral Agent

10.3		Supplement No. 1, dated as of May 2, 2016, to the Collateral Agreement (First Lien) dated as of July 1, 2015 by Prime Security Services Borrower, LLC and Barclays Bank PLC, as Collateral Agent

10.4		Holdings Guarantee and Pledge Agreement (First Lien), dated and effective as of July 1, 2015, between Prime Security Services Holdings, LLC, as Holdings, and Credit Suisse AG, Cayman Islands Branch, as Collateral Agent

10.5		Collateral Agreement (First Lien), dated as of July 1, 2015 among Prime Security Services Borrower, LLC, each Subsidiary of Prime Security Services Borrower, LLC from time to time identified therein as a party and Barclays Bank PLC, as Collateral Agent

10.6		Supplement No. 1, dated as of May 2, 2016, to the Subsidiary Guarantee Agreement (First Lien) dated as of July 1, 2015, by each subsidiary of Prime Securities Services Borrower, LLC and Barclays Bank PLC, as Collateral Agent

10.7		Collateral Agreement (Second Lien), dated as of May 2, 2016, among Prime Security Services Borrower, LLC, as Issuer, Prime Finance Inc., as Co-Issuer, each Subsidiary Guarantor party thereto and Wells Fargo Bank, National Association, as Collateral Agent

10.8		First Lien/First Lien Intercreditor Agreement, dated as of May 2, 2016 among Barclays Bank PLC, as Collateral Agent, Barclays Bank PLC, as Authorized Representative under the Credit Agreement, Wells Fargo Bank, National Association, as the Initial Other Authorized Representative, and each additional Authorized Representative from time to time party hereto relating to Prime Security Services Borrower, LLC

10.9		First Lien/Second Lien Intercreditor Agreement, dated as of July 1, 2015, between Credit Suisse AG, Cayman Islands Branch, as First Lien Facility Agent and Applicable First Lien Agent, and Credit Suisse AG, Cayman Islands Branch, as Second Lien Facility Agent and Applicable Second Lien Agent relating to Prime Security Services Borrower, LLC

10.10		Acknowledgement of and Consent to First Lien/Second Lien Intercreditor Agreement, dated as of July 1, 2015, by the pledgers party thereto

10.11		Consent and Acknowledgment (Other First Lien Obligations) (March 2014 Indenture), dated as of May 2, 2016, by Wells Fargo Bank, National Association, as an Other First Lien Obligations Agent

10.12		Consent and Acknowledgment (Other First Lien Obligations) (July 2012 Indenture), dated as of May 2, 2016, by Wells Fargo Bank, National Association, as an Other First Lien Obligations Agent

10.13		Consent and Acknowledgment (Other First Lien Obligations) (2032 Notes), dated as of May 2, 2016, by Wells Fargo Bank, National Association, as an Other First Lien Obligations Agent

10.14		Consent and Acknowledgment (Other Second Lien Obligations), dated as of May 2, 2016, by Wells Fargo Bank, National Association, as an Other Second Lien Obligations Agent


Exhibit Number		Exhibit Description

10.15		Consent of Grantors (First Lien/First Lien Intercreditor Agreement), dated as of May 2, 2016, by the grantors party thereto

10.16		Acknowledgment of and Consent to First Lien/Second Lien Intercreditor Agreement by the pledgors party thereto

10.17		Tax Sharing Agreement, dated as of September 28, 2012, by and among Pentair Ltd., Tyco International Ltd., Tyco International Finance S.A., and The ADT Corporation

10.18		Non-Income Tax Sharing Agreement dated as of September 28, 2012, by and among Tyco International Ltd., Tyco International Finance S.A., and The ADT Corporation

10.19		Trademark Agreement, dated as of September 25, 2012, by and among ADT Services GmbH, ADT US Holdings, Inc., Tyco International Ltd. and The ADT Corporation

10.20		Patent Agreement, dated as of September 26, 2012, by and between Tyco International Ltd. and The ADT Corporation

10.21		Separation and Distribution Agreement, dated September 26, 2012 by and among Tyco International Ltd., Tyco International Finance S.A., The ADT Corporation and ADT LLC

10.22		ADT LLC Supplemental Savings and Retirement Plan, effective as of April 1, 2017

10.23		Form of Stockholders Agreement by and between the ADT Inc. and Prime Securities Services TopCo, LP

10.24*		Form of Registration Rights Agreement by and between the ADT Inc. and Prime Securities Services TopCo, LP

10.25		Amended and Restated Employment Agreement, dated December 19, 2017, between The ADT Security Corporation (together with any of its subsidiaries and Affiliates) and Donald Young

10.26		Amended and Restated Employment Agreement, dated December 19, 2017, between The ADT Security Corporation (together with any of its subsidiaries and Affiliates) and Jamie Haenggi

10.27		Amended and Restated Employment Agreement, dated December 19, 2017, between The ADT Security Corporation (together with any of its subsidiaries and Affiliates) and P. Gray Finney

10.28		Amended and Restated Employment Agreement, dated December 19, 2017, between The ADT Security Corporation (together with any of its subsidiaries and Affiliates) and Daniel M. Bresingham

10.29		Amended and Restated Employment Agreement, dated December 19, 2017, between The ADT Security Corporation (together with any of its subsidiaries and Affiliates) and Timothy J. Whall

10.30		Amended and Restated Employment Agreement, dated December 19, 2017, between ADT LLC, (together with any of its subsidiaries and Affiliates) and James D. DeVries

10.31		Amended and Restated Employment Agreement, dated December 19, 2017, between ADT LLC, (together with any of its subsidiaries and Affiliates) and Jeffrey Likosar

10.32*		ADT Inc. 2018 Omnibus Incentive Plan

10.33*		Form of RSU Award Agreement for use under the ADT Inc. 2018 Omnibus Incentive Plan

10.34*		Form of Nonqualified Option Agreement for use under the ADT Inc. 2018 Omnibus Incentive Plan

10.35		Form of Investor Rights Agreement of Koch Preferred Securities

10.36		Form of Consent of Preferred Majority Holder of Koch Preferred Securities

10.37		Form of Amended and Restated Management Investor Rights Agreement

21.1		Subsidiaries of ADT Inc.

23.1		Consent of PricewaterhouseCoopers LLP, independent registered certified public accounting firm

23.2		Consent of Ernst & Young LLP, Independent Auditors


Exhibit Number		Exhibit Description

23.3		Consent of Deloitte & Touche LLP, independent registered public accounting firm

23.4*		Consent of Paul, Weiss, Rifkind, Wharton & Garrison LLP (included in Exhibit 5.1)

24.1		Powers of Attorney (included in signature page)

*	To be filed by amendment.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Boca Raton, Florida, on the 21 ^st day of December, 2017.


ADT Inc.

By:		/s/ Timothy J. Whall
		Timothy J. Whall
		Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose signature appears below hereby constitutes and appoints P. Gray Finney and Jeffrey Likosar, his or her true and lawful agent, proxy and attorney-in-fact, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and all amendments (including post-effective amendments) to this registration statement together with all schedules and exhibits thereto and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith, (iii) act on and file any supplement to any prospectus included in this registration statement or any such amendment or any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and (iv) take any and all actions which may be necessary or appropriate in connection therewith, granting unto such agents, proxies and attorneys-in-fact, and each of them, full power and authority to do and perform each and every act and thing necessary or appropriate to be done, as fully for all intents and purposes as he or she might or could do in person, hereby approving, ratifying and confirming all that such agents, proxies and attorneys-in-fact or any of their substitutes may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.


Signature	Title	Date

/s/ Timothy J. Whall Timothy J. Whall	Chief Executive Officer and Director (Principal Executive Officer)	December 21, 2017

/s/ Jeffrey Likosar Jeffrey Likosar	Chief Financial Officer (Principal Financial and Accounting Officer)	December 21, 2017

/s/ Marc E. Becker Marc E. Becker	Director	December 21, 2017

/s/ Reed. B. Rayman Reed. B. Rayman	Director	December 21, 2017

/s/ Matthew H. Nord Matthew H. Nord	Director	December 21, 2017


Signature	Title	Date

/s/ Andrew D. Africk Andrew D. Africk	Director	December 21, 2017

/s/ Eric L. Press Eric L. Press	Director	December 21, 2017

/s/ Lee J. Solomon Lee J. Solomon	Director	December 21, 2017

/s/ Stephanie Drescher Stephanie Drescher	Director	December 21, 2017

/s/ Brett Watson Brett Watson	Director	December 21, 2017

/s/ David Ryan David Ryan	Director	December 21, 2017

Exhibit 3.1

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION OF

ADT INC.

ADT Inc. is a corporation organized and existing under the laws of the State of Delaware (the “ Corporation ”). The original certificate of incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on May 15, 2015, under the name “Apollo Security Services Parent, Inc.” This Amended and Restated Certificate of Incorporation of the Corporation (as the same may be further amended and/or restated, this “ Amended and Restated Certificate of Incorporation ”), which further amends and restates the Certificate of Incorporation of the Corporation, as heretofore amended, in its entirety, has been duly adopted by all necessary action of the board of directors of the Corporation (the “ Board ”) and the stockholders of the Corporation, pursuant to Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware, as the same now exists or may hereafter be amended and/or supplemented from time to time (the “ DGCL ”), to read as follows:

ARTICLE I

The name of the corporation (hereinafter the “ Corporation ”) is ADT Inc.

ARTICLE II

The address of the Corporation’s registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of New Castle, Delaware 19801. The name of the Corporation’s registered agent at such address is The Corporation Trust Company.

ARTICLE III

The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “ DGCL ”).

ARTICLE IV

Section 4.01 Authorized Capital Stock . The total number of shares of all classes of capital stock that the Corporation is authorized to issue is [ ] ([ ]) shares of capital stock, of which [ ] shares shall be common stock, par value $0.01 per share (the “ Common Stock ”), and [ ] shares shall be preferred stock, par value $0.01 per share (the “ Preferred Stock ”). Subject to the rights of the holders of any series of Preferred Stock then outstanding, the number of authorized shares of any of the Common Stock or Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority in voting power of the stock of the Corporation entitled to vote thereon irrespective of the provisions of Section 242(b)(2) of the DGCL or any successor provision thereof, and no vote of the holders of any of the Common Stock or Preferred Stock voting separately as a class shall be required therefor.

Section 4.02 Common Stock . The terms of the Common Stock set forth below shall be subject to the express terms of any series of Preferred Stock then outstanding.

(a) Voting Rights . Except as otherwise required by applicable law or this Amended and Restated Certificate of Incorporation, the holders of Common Stock, as such, shall be entitled to one vote per share on all matters submitted to a vote of the Corporation’s stockholders generally.

(b) Dividends . Subject to applicable law and the rights, if any, of the holders of any outstanding series of Preferred Stock or any class or series of stock having a preference over or the right to participate with the Common Stock with respect to the payment of dividends or distributions, the holders of Common Stock shall be entitled to receive, as, if and when declared by the Board out of the funds of the Corporation legally available therefor, such dividends (payable in cash, shares of stock of the Corporation, property or assets of the Corporation or otherwise) as the Board may from time to time in its sole discretion determine.

(c) Liquidation . In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, after the payment or provision for the payment of any debts and other liabilities of the Corporation, and subject to the rights, if any, of the holders of any outstanding series of Preferred Stock or other class or series of stock having a preference over or the right to participate with the Common Stock with respect to the distribution of assets upon any such liquidation, dissolution or winding up, the remaining assets of the Corporation available for distribution to stockholders shall be distributed among and paid to the holders of Common Stock ratably in proportion to the number of shares of Common Stock held by them respectively.

Section 4.03 Preferred Stock . The Board is authorized, by resolution or resolutions, to provide, out of the authorized but unissued shares of Preferred Stock, for the issuance from time to time of shares of Preferred Stock in one or more series and, by filing a certificate of designation (a “ Preferred Stock Certificate of Designation ”) pursuant to the applicable provisions of the DGCL, to establish from time to time the number of shares to be included in each such series, with such powers (including voting powers, if any), designations, preferences and relative, participating, optional or other rights, if any, and qualifications, limitations or restrictions thereof, if any, as are stated and expressed in the resolution or resolutions providing for the issuance thereof adopted by the Board, including, but not limited to, determination of any of the following:

(a) the distinctive designation of the series, whether by number, letter or title, and the number of shares which will constitute the series;

(b) the dividend rate, if any, and the times of payment of dividends, if any, on the shares of the series, whether such dividends will be cumulative and, if so, from what date or dates, and the relation which such dividends, if any, shall bear to the dividends payable on any other class or classes or series of stock;

(c) the price or prices at which, and the terms and conditions on which, the shares of the series may be redeemed at the option of the Corporation or the holder thereof or upon the happening of a specified event;

(d) whether or not the shares of the series will be entitled to the benefit of a retirement or sinking fund to be applied to the purchase or redemption of such shares and, if so entitled, the amount of such fund and the terms and provisions relative to the operation thereof;

(e) the amounts payable on, and the preferences, if any, of the shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation or upon the happening of any other specified event;

(f) whether or not the shares of the series will be convertible into, or exchangeable for, at the option of either the holder or the Corporation or upon the happening of a specified event, shares of any other class or classes or series of stock of the Corporation and, if so convertible or exchangeable, the conversion price or prices, or the rates of exchange, and any adjustments thereof, at which such conversion or exchange may be made, and any other terms and conditions of such conversion or exchange;

(g) whether or not the shares of the series will have priority over or be on a parity with or be junior to the shares of any other class or classes or series of stock of the Corporation in any respect, or will be entitled to the benefit of limitations restricting the issuance of shares of any other class or classes or series of stock of the Corporation, restricting the payment of dividends on or the making of other distributions in respect of shares of any other class or classes or series of stock of the Corporation ranking junior to the shares of the series as to dividends or distributions, or restricting the purchase or redemption of the shares of any such junior class or classes or series of stock of the Corporation, and the terms of any such restriction;

(h) whether or not the shares of the series will have voting rights or powers and, if so, the terms of such voting rights and powers; and

(i) any other powers, preferences and rights, and qualifications, limitations and restrictions thereof, of the series.

Except as otherwise required by law, holders of any series of Preferred Stock shall be entitled to only such voting rights and powers, if any, as shall expressly be granted thereto by this Amended and Restated Certificate of Incorporation. Except as otherwise expressly provided in this Amended and Restated Certificate of Incorporation, no vote of the holders of shares of Preferred Stock or Common Stock shall be a prerequisite to the issuance of any shares of any series of the Preferred Stock so authorized in accordance with this Amended and Restated Certificate of Incorporation. Except as otherwise required by law, holders of Common Stock shall not be entitled to vote on any amendment to this Amended and Restated Certificate of Incorporation that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately as a class or together with the holders of one or more other such series as a separate class, to vote thereon pursuant to this Amended and Restated Certificate of Incorporation or pursuant to the DGCL. Unless otherwise provided by the Amended and Restated Certificate of Incorporation, the Board may, by resolution or resolutions,

increase or decrease (but not below the number of shares of such series then outstanding) the number of shares of any series of Preferred Stock established by a Preferred Stock Certificate of Designation pursuant to this Article IV and the DGCL and, if the number of shares of such series shall be so decreased, the shares constituting such decrease shall resume the status that they had prior to the adoption of the resolution originally fixing the number of shares of such series.

ARTICLE V

Section 5.01 General Powers . Except as otherwise provided by applicable law or this Amended and Restated Certificate of Incorporation, the business and affairs of the Corporation shall be managed by or under the direction of the Board.

Section 5.02 Number of Directors . Except as otherwise provided for or fixed pursuant to Article IV and this Article V (relating to the rights of any series of Preferred Stock to elect additional directors), and subject to the terms of the Stockholders Agreement, dated on or about the date of the effectiveness of the filing of this Amended and Restated Certificate of Incorporation, by and among the Corporation and certain affiliates of Apollo (as defined in Article VII hereof) and the other parties thereto (as the same may be amended, supplemented, restated or otherwise modified from time to time, the “ Stockholders Agreement ”), the total number of directors shall be as determined from time to time exclusively by the Board; provided, that in no event shall the total number of directors be more than fifteen (15). Election of directors need not be by written ballot unless the Bylaws (as defined below) shall so require.

Section 5.03 Classified Board; Term of Office . The directors (other than those directors elected by the holders of any series of Preferred Stock, voting separately as a series or together with one or more other such series, as the case may be) shall be divided into three classes designated Class I, Class II and Class III. Each class shall consist, as nearly as possible, of one-third of the total number of such directors. Class I directors shall initially serve for a term expiring at the first annual meeting of stockholders following the date the Common Stock is first publicly traded (the “ IPO Date ”), Class II directors shall initially serve for a term expiring at the second annual meeting of stockholders following the IPO Date and Class III directors shall initially serve for a term expiring at the third annual meeting of stockholders following the IPO Date. At each succeeding annual meeting, successors to the class of directors whose term expires at that annual meeting shall be elected for a term expiring at the third succeeding annual meeting of stockholders. If the number of such directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any such additional director of any class elected to fill a newly created directorship resulting from an increase in such class shall hold office for a term that shall coincide with the remaining term of that class, but in no case shall a decrease in the number of directors remove or shorten the term of any incumbent director. Each director shall hold office until the annual meeting at which his or her term expires and until his or her successor shall be elected and qualified, subject, however, to such director’s earlier death, resignation, retirement, removal or disqualification. The Board is authorized to assign members of the Board already in office to their respective class.

Section 5.04 Quorum . Notwithstanding anything to the contrary set forth in this Amended and Restated Certificate of Incorporation, the Bylaws or applicable law, but in addition to any requirements set forth in this Amended and Restated Certificate of Incorporation, the Bylaws and applicable law, if Apollo owns, beneficially or of record, any shares of stock of the Corporation and there is at least one member of the Board who is an Apollo Designee (as defined in the Stockholders Agreement), a quorum for the transaction of business at any meeting of the Board shall include at least one Apollo Designee unless each Apollo Designee provides notice in writing or by electronic transmission to the remaining members of the Board waiving his or her right to be included in the quorum at such meeting. Notwithstanding anything to the contrary set forth herein, but in addition to any other vote required by this Amended and Restated Certificate of Incorporation, the Bylaws or applicable law, at any time that Apollo owns, beneficially or of record, any shares of stock of the Corporation, the Corporation shall not (directly or indirectly, by merger, consolidation or otherwise) amend, alter or repeal this Section 5.04, or adopt any provision inconsistent herewith, without the prior written consent of Apollo.

Section 5.05 Vacancies . Except as otherwise provided by this Amended and Restated Certificate of Incorporation, and subject to the terms of the Stockholders Agreement, any vacancy resulting from the death, resignation, removal or disqualification of a director or other cause, or any newly created directorship in the Board, shall be filled only by a majority of the directors then in office, although less than a quorum, or by the sole remaining director, and shall not be filled by the stockholders of the Corporation; provided, that, (i) for so long as Apollo owns, beneficially or of record, any shares of stock of the Corporation, any vacancy resulting from the death, resignation, removal, disqualification or other cause in respect of any Apollo Designee shall be filled only by (x) a majority of the Apollo Designees then in office or (y) if there are no Apollo Designees then in office, Apollo, (ii) for so long as the Co-Invest Condition (as defined in the Stockholders Agreement) is satisfied, any vacancy resulting from the death, resignation, removal, disqualification or other cause in respect of such Co-Invest Designee (as defined in the Stockholders Agreement) shall be filled as set forth in the Stockholders Agreement, and (iii) for so long as the Koch Condition (as defined in the Stockholders Agreement) is satisfied, any vacancy resulting from the death, resignation, removal, disqualification or other cause in respect of the Koch Designee (as defined in the Stockholders Agreement) shall be filled as set forth in the Stockholders Agreement. Except as otherwise provided by this Amended and Restated Certificate of Incorporation, a director elected to fill a vacancy or newly created directorship shall hold office until the annual meeting of stockholders for the election of directors of the class to which he or she has been appointed and until his or her successor has been duly elected and qualified, subject, however, to such director’s earlier death, resignation, retirement, removal or disqualification.

Section 5.06 Removal of Directors . Except as otherwise provided by law, the Stockholders Agreement or this Amended and Restated Certificate of Incorporation, directors may be removed with or without cause by the affirmative vote of the holders of a majority in voting power of the outstanding shares of the stock of the Corporation entitled to vote in an election of such directors; provided, however, that, from and after the Trigger Event (as defined below) any such director or all such directors may be removed only for cause and only by the affirmative vote of the holders of at least 66 ^2/3 % in voting power of all the then-outstanding shares of stock of the Corporation entitled to vote thereon, voting together as a single class. Notwithstanding the foregoing, (i) in the event the Co-Invest Condition is no longer satisfied, any Co-Invest Designee then in office shall thereupon automatically cease to be qualified and shall cease to be a director, and (ii) in the event the Koch Condition is no longer satisfied, the Koch Designee shall thereupon automatically cease to be qualified and shall cease to be a director.

Section 5.07 Voting Rights of Preferred Stock . Notwithstanding the foregoing, whenever the holders of any one or more series of Preferred Stock shall have the right, voting separately as a series or separately as a class with one or more such other series of Preferred Stock, to elect directors, the election, term of office, removal, filling of vacancies (including filling any newly created directorships) any and other features of such directorships shall be governed by the terms of the other provisions of this Amended and Restated Certificate of Incorporation (including any Preferred Stock Certificate of Designation). During any period when the holders of any series of Preferred Stock have the right to elect additional directors, then upon commencement and for the duration of the period during which such right continues: (i) the then otherwise total number of directors of the Corporation shall automatically be increased by such specified number of directors, and the holders of such Preferred Stock shall be entitled to elect the additional directors so provided for or fixed pursuant to such provisions, and (ii) each such additional director shall serve until such director’s successor shall have been duly elected and qualified, or until such director’s right to hold such office terminates pursuant to such provisions, whichever occurs earlier, subject to his or her earlier death, resignation, retirement, removal or disqualification. Except as otherwise provided by the Board in the resolution or resolutions establishing such series, whenever the holders of any series of Preferred Stock having such right to elect additional directors are divested of such right pursuant to the provisions of such stock, the terms of office of all such additional directors elected by the holders of such stock, or elected to fill any vacancies resulting from the death, resignation, retirement, removal or disqualification of such additional directors, shall forthwith terminate and the total authorized number of directors of the Corporation shall be reduced accordingly.

ARTICLE VI

In furtherance and not in limitation of the rights, powers, privileges and discretionary authority granted or conferred by the DGCL or other statutes or laws of the State of Delaware, the Board is expressly authorized to make, alter, amend or repeal the bylaws of the Corporation (as the same may be amended and/or restated from time to time, the “ Bylaws ”), without any action on the part of the stockholders.

ARTICLE VII

Except as otherwise required by law, and subject to the rights of the holders of any series of Preferred Stock, special meetings of the stockholders of the Corporation may be called only by (x) the Chairman of the Board or (y) the Secretary of the Corporation at the direction of a majority of the directors then in office, and special meetings may not be called by any other person or persons. Notwithstanding the foregoing, until such time as Apollo Management VIII, L.P. and any of its Affiliates (as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended) (collectively, “ Apollo ”) ceases to beneficially own at least 50.1% of the outstanding shares of Common Stock (the “ Trigger Event ”), special meetings of the stockholders of the Corporation shall be called by the Secretary of the Corporation at the written request of the holders of a majority of the voting power of the then outstanding Common Stock. Business transacted at any special meeting of stockholders shall be limited to the purpose or purposes stated in the notice.

ARTICLE VIII

To the fullest extent permitted by the DGCL, as it now exists or may hereafter be amended, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty owed to the Corporation or its stockholders. Any repeal or amendment or modification of this Article VIII (including by changes in applicable law), or the adoption of any provision of this Amended and Restated Certificate of Incorporation inconsistent with this Article VIII, shall, to the extent permitted by applicable law, be prospective only (except to the extent such amendment or change in applicable law permits the Corporation to provide a broader limitation on a retroactive basis than permitted prior thereto), and shall not adversely affect any limitation on the personal liability of any director of the Corporation with respect to acts or omissions occurring prior to the time of such repeal or amendment or modification or adoption of such inconsistent provision. If any provision of the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of directors shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended.

ARTICLE IX

Subject to the rights of the holders of one or more series of Preferred Stock then outstanding to act by written consent as provided in any Preferred Stock Certificate of Designation, any action required or permitted to be taken by stockholders must be effected at a duly called annual or special meeting of stockholders; provided, that prior to the Trigger Event, any action required or permitted to be taken at any annual or special meeting of stockholders of the Corporation may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, is signed by or on behalf of the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation in accordance with the DGCL.

ARTICLE X

Section 10.01 Indemnification . Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “ Proceeding ”), by reason of the fact that he or she or a person of whom he or she is the legal representative is or was, at any time during which this Amended and Restated Certificate of Incorporation is in effect (whether or not such person continues to serve in such capacity at the time any indemnification or payment of expenses pursuant hereto is sought or at the time any proceeding relating thereto exists or is brought), a director or officer of the Corporation or is or was at any such time serving at the request of the Corporation as a director, officer, trustee, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans maintained or sponsored by the Corporation (hereinafter, an “ Indemnitee ”), whether the basis of such Proceeding is alleged action in an official capacity as a

director, officer, trustee, employee or agent or in any other capacity while serving as a director, officer, trustee, employee or agent, shall be (and shall be deemed to have a contractual right to be) indemnified and held harmless by the Corporation (and any successor of the Corporation by merger or otherwise) to the fullest extent permitted by the DGCL as the same exists or may hereafter be amended or modified from time to time (but, in the case of any such amendment or modification, only to the extent that such amendment or modification permits the Corporation to provide greater indemnification rights than said law permitted the Corporation to provide prior to such amendment or modification), against all expense, liability and loss (including attorneys’ fees, judgments, fines, excise taxes or penalties arising under the Employee Retirement Income Security Act of 1974 and amounts paid or to be paid in settlement) incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, trustee, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that except as provided in Section 10.04 of this Article X, the Corporation shall indemnify any such person seeking indemnification in connection with a Proceeding (or part thereof) initiated by such person only if such Proceeding (or part thereof) was authorized in the first instance by the Board.

Section 10.02 Advancement of Expenses . The right to indemnification conferred upon Indemnitees in this Article X shall include the right, without the need for any action by the Board, to be paid by the Corporation (and any successor of the Corporation by merger or otherwise) the expenses incurred in defending any such proceeding in advance of its final disposition, such advances to be paid by the Corporation within twenty (20) days after the receipt by the Corporation of a statement or statements from the claimant requesting such advance or advances from time to time; provided, however, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter, the “ Undertaking ”) by or on behalf of such director or officer to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right of appeal (a “ Final Disposition ”) that such director or officer is not entitled to be indemnified for such expenses under this Article X or otherwise.

Section 10.03 Nature of Rights; Other Sources . The rights conferred upon Indemnitees in this Article X shall be contract rights between the Corporation and each Indemnitee to whom such rights are extended that vest at the commencement of such person’s service to or at the request of the Corporation and all such rights shall continue as to an Indemnitee who has ceased to be a director or officer of the Corporation or ceased to serve at the Corporation’s request as a director, officer, trustee, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, as described herein, and shall inure to the benefit of the Indemnitee’s heirs, executors and administrators. The Corporation hereby acknowledges that certain Indemnitees may have certain rights to indemnification, advancement of expenses and/or insurance (other than directors’ and officers’ liability insurance or similar insurance obtained or maintained by or on behalf of the Corporation, its affiliates or any of the foregoing’s respective subsidiaries) from persons or entities other than the Corporation (collectively, the “ Other Indemnitors ”). The Corporation hereby agrees (i) that it is the indemnitor of first resort of the Indemnitees (i.e., its obligations to an Indemnitee hereunder are primary and any obligation of the Other Indemnitors to advance expenses or to provide

indemnification for the same expenses or liabilities incurred by such Indemnitee are secondary), (ii) that it shall be required to advance the full amount of expenses incurred by an Indemnitee and shall be liable for the full amount of all losses, claims, damages, liabilities and expenses (including attorneys’ fees, judgments, fines, penalties and amounts paid in settlement) to the extent legally permitted and as required by the terms hereof, without regard to any rights an Indemnitee may have against the Other Indemnitors, and (iii) that it irrevocably waives, relinquishes and releases the Other Indemnitors from any and all claims against the Other Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. The Corporation further agrees that no advancement or payment by the Other Indemnitors on behalf of an Indemnitee with respect to any claim for which such Indemnitee has sought indemnification from the Corporation hereunder shall affect the foregoing and the Other Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of such Indemnitee against the Corporation. For the avoidance of doubt, no person or entity providing directors’ or officers’ liability insurance or similar insurance obtained or maintained by or on behalf of the Corporation, any of its affiliates or any of the foregoing’s respective subsidiaries, including any person or entity providing such insurance obtained or maintained as contemplated by Section 10.08, shall be an Other Indemnitor.

Section 10.04 Claims . To obtain indemnification under this Article X, a claimant shall submit to the Corporation a written request, including therein or therewith such documentation and information as is reasonably available to the claimant and is reasonably necessary to determine whether and to what extent the claimant is entitled to indemnification. Upon written request by a claimant for indemnification pursuant to the first sentence of this Section 10.04, a determination, if required by applicable law, with respect to the claimant’s entitlement thereto shall be made as follows: (i) if requested by the claimant, by Independent Counsel (as hereinafter defined), or (ii) if no request is made by the claimant for a determination by Independent Counsel, (a) by the a majority vote of Disinterested Directors (as hereinafter defined), even though less than a quorum, (b) if there are no such Disinterested Directors, or if a majority of the Disinterested Directors so directs, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to the claimant, or (c) if a majority of Disinterested Directors so directs, by a majority of the stockholders of the Corporation. In the event the determination of entitlement to indemnification is to be made by Independent Counsel, the Independent Counsel shall be selected by the Board. If it is so determined that the claimant is entitled to indemnification, payment to the claimant shall be made within ten (10) days after such determination.

Section 10.05 Enforcement . If a claim under Section 10.01 of this Article X is not paid in full by the Corporation within sixty (60) days after a written claim pursuant to Section 10.04 of this Article X has been received by the Corporation, or if a claim under Section 10.02 of this Article X is not paid in full by the Corporation within twenty (20) days after a written claim therefor has been made, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim to the fullest extent permitted by law. It shall be a defense to any such action that (x) in the case of a claim for indemnification, the claimant has not met the standard of conduct which makes it permissible under the DGCL for the Corporation to indemnify the claimant for the amount claimed or (y) in

the case of a claim for an advancement of expenses, that the claimant is not entitled to the requested advancement of expenses, but (except where the required Undertaking, if any, has not been tendered to the Corporation) the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board, Disinterested Directors, Independent Counsel or stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the DGCL, nor an actual determination by the Corporation (including its Board, Disinterested Directors, Independent Counsel or stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

Section 10.06 Procedures . If a determination shall have been made pursuant to Section 10.04 of this Article X that the claimant is entitled to indemnification, the Corporation shall be bound by such determination in any judicial proceeding commenced pursuant to Section 10.05 of this Article X. The Corporation shall be precluded from asserting in any judicial proceeding commenced pursuant to Section 10.05 of this Article X that the procedures and presumptions of this Article X are not valid, binding and enforceable and shall stipulate in such proceeding that the Corporation is bound by all the provisions of this Article X.

Section 10.07 Non-Exclusive Rights . The right to indemnification and the payment of expenses incurred in defending a Proceeding in advance of its final disposition conferred in this Article X: (i) shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of this Amended and Restated Certificate of Incorporation, Bylaws, agreement, vote of stockholders or Disinterested Directors or otherwise and (ii) cannot be terminated by the Corporation, the Board or the stockholders of the Corporation with respect to any act or omission that is the subject of the Proceeding for which indemnification or advancement of expenses is sought prior to the date of such termination. Any amendment, modification, alteration or repeal of this Article X (by merger, consolidation or otherwise) that in any way diminishes, limits, restricts, adversely affects or eliminates any right of an Indemnitee or his or her successors to indemnification, advancement of expenses or otherwise shall be prospective only and shall not, without the written consent of the Indemnitee, in any way diminish, limit, restrict, adversely affect or eliminate any such right with respect to any actual or alleged state of facts, occurrence, action or omission then or previously existing, or any action, suit or proceeding previously or thereafter brought or threatened based in whole or in part upon any such actual or alleged state of facts, occurrence, action or omission.

Section 10.08 Insurance . The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise, against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the DGCL.

Section 10.09 Additional Rights . The Board may grant rights to indemnification, and rights to be paid by the Corporation the expenses incurred in connection with any Proceeding in advance of its final disposition, to any current or former employee or agent of the Corporation to the fullest extent of the provisions of this Article X with respect to the indemnification and advancement of expenses of current or former directors and officers of the Corporation.

Section 10.10 Severability . If any provision or provisions of this Article X shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (i) the validity, legality and enforceability of the remaining provisions of this Article X (including, without limitation, each portion of any Section of this Article X containing any such provision held to be invalid, illegal or unenforceable, that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (ii) to the fullest extent possible, the provisions of this Article X (including, without limitation, each such portion of any Section of this Article X containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

Section 10.11 Definitions; Construction . For purposes of this Article X: “Disinterested Director” means a director of the Corporation who is not and was not a party to the Proceeding in respect of which indemnification is sought by the claimant; and “Independent Counsel” means a law firm, a member of a law firm, or an independent practitioner, that is experienced in matters of corporate law and shall include any person who, under the applicable standards of professional conduct then prevailing, would not have a conflict of interest in representing either the Corporation or the claimant in an action to determine the claimant’s rights under this Article X. Any reference to an officer of the Corporation in this Article X shall be deemed to refer exclusively to the officers appointed as such pursuant to the Bylaws by the Board or by an officer to whom the Board has delegated the power to appoint officers, and any reference to an officer of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be deemed to refer exclusively to an officer appointed by the board of directors (or equivalent governing body) of such other entity pursuant to the certificate of incorporation and bylaws (or equivalent organizational documents) of such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise. The fact that any person who is or was an employee of the Corporation or an employee of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise has been given or has used the title of “vice president” or any other title that could be construed to suggest or imply that such person is or may be an officer of the Corporation or of such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall not result in such person being constituted as, or being deemed to be, an officer of the Corporation or of such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise for purposes of this Article X.

Section 10.12 Notices . Any notice, request or other communication required or permitted to be given to the Corporation under this Article X shall be in writing and either delivered in person or sent by telecopy, fax, email, overnight mail or courier service, or certified or registered mail, postage prepaid, return receipt requested, to the Secretary of the Corporation and shall be effective only upon receipt by the Secretary.

ARTICLE XI

Section 11.01 Recognition of Corporate Opportunities . In recognition and anticipation that (i) certain directors, officers, principals, partners, members, managers, employees, agents and/or other representatives of Apollo, Koch, the Co-Investor and their respective Affiliates may serve as directors, officers or agents of the Corporation and its Affiliates, and (ii) Apollo, Koch, the Co-Investor and their respective Affiliates may now engage and may continue to engage in the same or similar activities or related lines of business as those in which the Corporation and Affiliates, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Corporation and its Affiliates, directly or indirectly, may engage, the provisions of this Article XI are set forth to regulate and define the conduct of certain affairs of the Corporation and its Affiliates with respect to certain classes or categories of business opportunities as they may involve Apollo, Koch, the Co-Investor and their respective Affiliates and any person or entity who, while a stockholder, director, officer or agent of the Corporation or any of its Affiliates, is a director, officer, principal, partner, member, manager, employee, agent and/or other representative of Apollo, Koch, the Co-Investor and their respective Affiliates (each, an “ Identified Person ”), on the one hand, and the powers, rights, duties and liabilities of the Corporation and its Affiliates and its and their respective stockholders, directors, officers, and agents in connection therewith, on the other. To the fullest extent permitted by law (including, without limitation, the DGCL), and notwithstanding any other duty (contractual, fiduciary or otherwise, whether at law or in equity), each Identified Person (i) shall have the right to, and shall have no duty (contractual, fiduciary or otherwise, whether at law or in equity) not to, directly or indirectly engage in and possess interests in other business ventures of every type and description, including those engaged in the same or similar business activities or lines of business as the Corporation or any of its Affiliates or deemed to be competing with the Corporation or any of its Affiliates, on its own account, or in partnership with, or as a direct or indirect equity holder, controlling person, stockholder, director, officer, employee, agent, Affiliate (including any portfolio company), member, financing source, investor, director or indirect manager, general or limited partner or assignee of any other person or entity with no obligation to offer to the Corporation or its subsidiaries or other Affiliates the right to participate therein and (ii) shall have the right to invest in, or provide services to, any person that is engaged in the same or similar business activities as the Corporation or its Affiliates or directly or indirectly competes with the Corporation or any of its Affiliates.

Section 11.02 Competitive Opportunities . In the event that any Identified Person acquires knowledge of a potential transaction or matter which may be an investment, corporate or business opportunity or prospective economic or competitive advantage in which the Corporation or its Affiliates could have an interest or expectancy (contractual, equitable or otherwise) (a “ Competitive Opportunity ”) or otherwise is then exploiting any Competitive Opportunity, to the fullest extent permitted under the DGCL and notwithstanding any other duty existing at law or in equity, the Corporation and its Affiliates will have no interest in, and no expectation (contractual, equitable or otherwise) that such Competitive Opportunity be offered to it. To the fullest extent permitted by law, any such interest or expectation (contractual, equitable or otherwise) is hereby renounced so that such Identified Person shall (i) have no duty to communicate or present such Competitive Opportunity to the Corporation or its Affiliates, (ii) have the right to either hold any such Competitive Opportunity for such Identified Person’s own account and benefit or the account of the former, current or future direct or indirect equity holders, controlling persons, stockholders, directors, officers, employees, agents, Affiliates, members, financing sources, investors, direct or indirect managers, general or limited partners or assignees of any Identified Person or to direct, recommend, assign or otherwise transfer such Competitive Opportunity to persons or entities other than the Corporation or any of its

subsidiaries, Affiliates or direct or indirect equity holders and (iii) notwithstanding any provision in this Amended and Restated Certificate of Incorporation to the contrary, not be obligated or liable to the Corporation, any stockholder, director or officer of the Corporation or any other person or entity by reason of the fact that such Identified Person, directly or indirectly, took any of the actions noted in the immediately preceding clause (ii), pursued or acquired such Competitive Opportunity for itself or any other person or entity or failed to communicate or present such Competitive Opportunity to the Corporation or its Affiliates.

Section 11.03 Acknowledgement . Any person or entity purchasing or otherwise acquiring or holding any interest in any shares of capital stock of the Corporation or any other interest in the Corporation shall be deemed to have notice of and to have consented to the provisions of this Article XI.

Section 11.04 Interpretation; Duties . In the event of a conflict or other inconsistency between this Article XI and any other Article or provision of this Amended and Restated Certificate of Incorporation, this Article XI shall prevail under all circumstances. Notwithstanding anything to the contrary herein, under no circumstances shall the provisions of this Article XI (other than this Section 11.04 of this Article XI) apply to (or result in or be deemed to result in a limitation or elimination of any duty (contractual, fiduciary or otherwise, whether at law or in equity)) owed by any employee of the Corporation or any of its subsidiaries, irrespective of whether such employee otherwise would be an Identified Person, and any Competitive Opportunity waived or renounced by any person or entity pursuant to such other provisions of this Article XI shall be expressly reserved and maintained by such person or entity, as applicable (and shall not be waived or renounced) as to any such employee.

Section 11.05 Section 122(17) of the DGCL . For the avoidance of doubt, subject to Section 11.04 of this Article XI, this Article XI is intended to constitute, with respect to the Identified Persons, a disclaimer and renunciation, to the fullest extent permitted under Section 122(17) of the DGCL, of any right of the Corporation or any of its Affiliates with respect to the matters set forth in this Article XI, and this Article XI shall be construed to effect such disclaimer and renunciation to the fullest extent permitted under the DGCL.

Section 11.06 Definitions . Solely for purposes of this Article XI, (i) “Affiliate” shall mean (a) with respect to Apollo, any person or entity that, directly or indirectly, is controlled by Apollo, controls Apollo, or is under common control with Apollo, (b) with respect to Koch, any person or entity that, directly or indirectly, is controlled by Koch, controls Koch, or is under common control with Koch, (c) with respect to the Co-Investor, any person or entity that, directly or indirectly, is controlled by the Co-Investor, controls the Co-Investor, or is under common control with the Co-Investor, but in each case in clauses (a) through (c), excluding (x) the Corporation, and (y) any entity that is controlled by the Corporation (including its direct and indirect subsidiaries), and (d) in respect of the Corporation, any person or entity that, directly or indirectly, is controlled by the Corporation; (ii) “Apollo” shall mean Apollo Management VIII, L.P.; (iii) “Koch” shall mean Koch SV Investments, LLC; and (iv) the “Co-Investor” shall mean the entity set forth on Exhibit A attached to the Stockholders Agreement.

ARTICLE XII

Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or stockholder of the Corporation, (c) any action asserting a claim arising pursuant to any provision of the DGCL or of this Amended and Restated Certificate of Incorporation or the Bylaws, or (d) any action asserting a claim against the Corporation or any director or officer of the Corporation governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and, to the fullest extent permitted by law, to have consented to the provisions of this Article XII.

ARTICLE XIII

Section 13.01 Section 203 of the DGCL . The Corporation hereby expressly elects not to be governed by Section 203 of the DGCL.

Section 13.02 Interested Stockholders . Notwithstanding the foregoing, the Corporation shall not engage in any business combination (as defined below), at any point in time at which the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, with any interested stockholder (as defined below) for a period of three (3) years following the time that such stockholder became an interested stockholder, unless:

(a) prior to such time, the Board approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder, or

(b) upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock (as defined below) of the Corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned (a) by persons who are directors and also officers and (b) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer, or

(c) at or subsequent to such time, the business combination is approved by the Board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock of the Corporation which is not owned by the interested stockholder.

Section 13.03 Definitions . For purposes of this Article XIII only, references to:

(a) “affiliate” means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another person.

(b) “Apollo” means Apollo Management VIII, L.P. and its affiliates.

(c) “Apollo Direct Transferee” means any person that acquires (other than in a registered public offering) directly from Apollo or any of its affiliates or successors or any “group”, or any member of any such group, of which such persons are a party under Rule 13d-5 of the Exchange Act, beneficial ownership of 15% or more of the then outstanding voting stock of the Corporation.

(d) “Apollo Indirect Transferee” means any person that acquires (other than in a registered public offering) directly from any Apollo Direct Transferee or any other Apollo Indirect Transferee beneficial ownership of 15% or more of the then outstanding voting stock of the Corporation.

(e) “associate”, when used to indicate a relationship with any person, means: (i) any corporation, partnership, unincorporated association or other entity of which such person is a director, officer or partner or is, directly or indirectly, the owner of 20% or more of any class of voting stock; (ii) any trust or other estate in which such person has at least a 20% beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity; and (iii) any relative or spouse of such person, or any relative of such spouse, who has the same residence as such person.

(f) “business combination”, when used in reference to the Corporation and any interested stockholder of the Corporation, means:

(i) any merger or consolidation of the Corporation or any direct or indirect majority-owned subsidiary of the Corporation (a) with the interested stockholder, or (b) with any other corporation, partnership, unincorporated association or other entity if the merger or consolidation is caused by the interested stockholder and as a result of such merger or consolidation Section 13.02 of this Article XIII is not applicable to the surviving entity;

(ii) (any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except proportionately as a stockholder of the Corporation, to or with the interested stockholder, whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation which assets have an aggregate market value equal to 10% or more of either the aggregate market value of all the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding stock of the Corporation;

(iii) any transaction which results in the issuance or transfer by the Corporation or by any direct or indirect majority-owned subsidiary of the Corporation of any stock of the Corporation or of such subsidiary to the interested stockholder, except: (a) pursuant to the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of the Corporation or any such subsidiary which securities were outstanding prior to the time that the interested stockholder became such; (b) pursuant to a merger under Section 251(g) of the DGCL; (c) pursuant to a dividend or distribution paid or made, or the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of the Corporation

or any such subsidiary which security is distributed, pro rata to all holders of a class or series of stock of the Corporation subsequent to the time the interested stockholder became such; (d) pursuant to an exchange offer by the Corporation to purchase stock made on the same terms to all holders of said stock; or (e) any issuance or transfer of stock by the Corporation; provided, however, that in no case under items (c)-(e) of this subsection (iii) shall there be an increase in the interested stockholder’s proportionate share of the stock of any class or series of the Corporation or of the voting stock of the Corporation (except as a result of immaterial changes due to fractional share adjustments);

(iv) any transaction involving the Corporation or any direct or indirect majority-owned subsidiary of the Corporation which has the effect, directly or indirectly, of increasing the proportionate share of the stock of any class or series, or securities convertible into the stock of any class or series, of the Corporation or of any such subsidiary which is owned by the interested stockholder, except as a result of immaterial changes due to fractional share adjustments or as a result of any purchase or redemption of any shares of stock not caused, directly or indirectly, by the interested stockholder; or

(v) any receipt by the interested stockholder of the benefit, directly or indirectly (except proportionately as a stockholder of the Corporation), of any loans, advances, guarantees, pledges, or other financial benefits (other than those expressly permitted in subsections (i)-(iv) above) provided by or through the Corporation or any direct or indirect majority-owned subsidiary.

(g) “control”, including the terms “controlling,” “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting stock, by contract, or otherwise. A person who is the owner of 20% or more of the outstanding voting stock of a corporation, partnership, unincorporated association or other entity shall be presumed to have control of such entity, in the absence of proof by a preponderance of the evidence to the contrary. Notwithstanding the foregoing, a presumption of control shall not apply where such person holds voting stock, in good faith and not for the purpose of circumventing this Section, as an agent, bank, broker, nominee, custodian or trustee for one or more owners who do not individually or as a group have control of such entity.

(h) “interested stockholder” means any person (other than the Corporation or any direct or indirect majority-owned subsidiary of the Corporation) that (i) is the owner of 15% or more of the outstanding voting stock of the Corporation, or (ii) is an affiliate or associate of the Corporation and was the owner of 15% or more of the outstanding voting stock of the Corporation at any time within the three (3) year period immediately prior to the date on which it is sought to be determined whether such person is an interested stockholder; and the affiliates and associates of such person; but “interested stockholder” shall not include (a) Apollo, any Apollo Direct Transferee, any Apollo Indirect Transferee or any of their respective affiliates or successors or any “group”, or any member of any such group, to which such persons are a party under Rule 13d-5 of the Exchange Act, or (b) any person whose ownership of shares in excess of the 15% limitation set forth herein is the result of any action taken solely by the Corporation, provided that such person shall be an interested stockholder if thereafter such person acquires

additional shares of voting stock of the Corporation, except as a result of further corporate action not caused, directly or indirectly, by such person. For the purpose of determining whether a person is an interested stockholder, the voting stock of the Corporation deemed to be outstanding shall include stock deemed to be owned by the person through application of the definition of “owner” below but shall not include any other unissued stock of the Corporation which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise.

(i) “owner,” including the terms “own” and “owned,” when used with respect to any stock, means a person that individually or with or through any of its affiliates or associates:

(j) beneficially owns such stock, directly or indirectly; or

(k) has (i) the right to acquire such stock (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; provided, however, that a person shall not be deemed the owner of stock tendered pursuant to a tender or exchange offer made by such person or any of such person’s affiliates or associates until such tendered stock is accepted for purchase or exchange; or (ii) the right to vote such stock pursuant to any agreement, arrangement or understanding; provided, however, that a person shall not be deemed the owner of any stock because of such person’s right to vote such stock if the agreement, arrangement or understanding to vote such stock arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to ten (10) or more persons; or

(l) has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in item (ii) of subsection (k) above), or disposing of such stock with any other person that beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, such stock.

(m) “person” means any individual, corporation, partnership, unincorporated association or other entity.

(n) “stock” means, with respect to any corporation, capital stock and, with respect to any other entity, any equity interest.

(o) “voting stock” means stock of any class or series entitled to vote generally in the election of directors.

ARTICLE XIV

If any provision or provisions of this Amended and Restated Certificate of Incorporation shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (i) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Amended and Restated Certificate of Incorporation (including, without limitation, each portion of any Article (or section or subsection

thereof) of this Amended and Restated Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (ii) to the fullest extent possible, the provisions of this Amended and Restated Certificate of Incorporation (including, without limitation, each such portion of any Article (or any section or subsection thereof) of this Amended and Restated Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its directors, officers, employees and agents from personal liability in respect of their good faith service to or for the benefit of the Corporation to the fullest extent permitted by law.

ARTICLE XV

The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Amended and Restated Certificate of Incorporation, in the manner now or hereafter prescribed by this Amended and Restated Certificate of Incorporation and the DGCL, and all rights, preferences and privileges herein conferred upon stockholders by and pursuant to this Amended and Restated Certificate of Incorporation in its current form or as hereafter amended are granted subject to the right reserved in this Article XV. Notwithstanding the foregoing, from and after the occurrence of the Trigger Event, notwithstanding any other provisions of this Amended and Restated Certificate of Incorporation or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to greater or additional vote or consent required hereunder (including any vote of the holders of any particular class or classes or series of stock required by law or by this Amended and Restated Certificate of Incorporation), the affirmative vote of the holders of at least 66 2/3% of the voting power of the outstanding shares of stock entitled to vote thereon, voting together as a single class, shall be required to alter, amend or repeal Section 4.03 of Article IV, Articles V, VI, VII, VIII, IX, X, XI, XII and XIII, and this Article XV.

B. From and after the occurrence of the Trigger Event, notwithstanding any other provisions of this Amended and Restated Certificate of Incorporation or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to any additional or greater vote or consent required hereunder (including any vote of the holders of any particular class or classes or series of stock required by law or by this Amended and Restated Certificate of Incorporation), the affirmative vote of the holders of at least 66 2/3% of the voting power of the outstanding shares of stock entitled to vote thereon, voting together as a single class, shall be required in order for the stockholders of the Corporation to alter, amend or repeal, in whole or in part, any provision of the Bylaws or to adopt any provision inconsistent therewith.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated Certificate of Incorporation to be signed by a duly authorized officer as of this date of , .


ADT INC.

By:
Name:
Title:

ADT INC. — A&R CERTIFICATE OF INCORPORATION

Exhibit 3.2

AMENDED AND RESTATED BYLAWS

ADT INC.

(Adopted as of )

ARTICLE I.

OFFICES

Section 1.01 Registered office . The address of the registered office of ADT Inc. (hereinafter the “ Corporation ”) in the State of Delaware, and the name of its registered agent at such address, shall be as set forth in the Amended and Restated Certificate of Incorporation of the Corporation, as the same may be amended and/or restated from time to time (the “ Certificate of Incorporation ”).

Section 1.02 Other Offices . The Corporation may have a principal or other office or offices at such other place or places, either within or without the State of Delaware, as the Board of Directors may from time to time determine or as shall be necessary or appropriate for the conduct of the business of the Corporation.

ARTICLE II.

STOCKHOLDERS

Section 2.01 Place of Meetings . All meetings of stockholders shall be held at the principal office of the Corporation or at such other place, if any, within or without the State of Delaware, or solely by means of remote communication in accordance with Section 2.13 of these Bylaws and applicable law, as may be designated by the Board of Directors and stated in the notice of the meeting.

Section 2.02 Annual Meetings . An annual meeting of stockholders for the election of directors and the transaction of such other business as may properly be brought before the meeting in accordance with Section 2.07 of these Bylaws shall be held on such day and at such hour, as shall be fixed by the Board of Directors and designated in the notice of meeting. The Board of Directors may postpone, reschedule or cancel any previously scheduled annual meeting of stockholders.

Section 2.03 Special Meetings . Special meetings of stockholders may only be called in the manner provided in the Certificate of Incorporation. Special meetings of stockholders shall be held on such day and at such hour, as shall be fixed by the Board of Directors and designated in the notice of meeting. Business transacted at any special meeting of stockholders shall be limited to the purpose or purposes stated in the notice of meeting. Except in the case of a special meeting of stockholders called at the request of the stockholders pursuant to the express terms of the Certificate of Incorporation, the Board of Directors may postpone, reschedule or cancel any previously scheduled special meeting of stockholders.

Section 2.04 Notice of Meetings . Except as otherwise provided by the Certificate of Incorporation or applicable law, notice, stating the place, if any, date and time of the meeting, the means of remote communication, if any, by which stockholders and proxyholders not physically present may be deemed to be present and vote at such meeting, the record date for determining the stockholders entitled to vote at the meeting, if such date is different from the record date for determining stockholders entitled to notice of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given not less than ten (10) days nor more than sixty (60) days before the date on which the meeting is to be held, to each stockholder entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting. Notice may be given either personally, by electronic transmission in the manner provided in Section 232 of the General Corporation Law of the State of Delaware or by mail. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail with postage thereon prepaid, addressed to the stockholder at such stockholder’s address as it appears on the stock transfer books of the Corporation. If notice is given by electronic transmission, such notice shall be deemed to be given at the times provided in the General Corporation Law of the State of Delaware. Such further notice shall be given as may be required by law.

Section 2.05 Quorum; Adjournment of Meetings . Except as otherwise provided by law or by the Certificate of Incorporation, the holders of a majority in voting power of the outstanding capital stock entitled to vote at the meeting, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders, except that when specified business is to be voted on by a class or series or classes or series of stock voting as a separate class, the holders of a majority in voting power of the shares of such class or series or classes or series shall constitute a quorum of such class or series or classes or series with respect to the vote on such business. The chairman of the meeting may adjourn the meeting from time to time, whether or not there is such a quorum. No notice of an adjourned meeting need be given except as required by law. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. The stockholders present at a duly called meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.

Section 2.06 Proxies . Each stockholder entitled to vote at a meeting of stockholders or to express consent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy in any manner provided by applicable law, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by delivering to the Secretary a revocation of the proxy or a new proxy bearing a later date.

Section 2.07 Notice of Stockholder Business and Nominations .

(a) Annual Meeting of Stockholders .

(i) At any annual meeting of the stockholders, only such nominations of persons for election to the Board of Directors and only other business shall be considered or conducted, as shall have been properly brought before the meeting. For nominations to be properly made at an annual meeting, and proposals of other business to be properly brought before an annual meeting, nominations and proposals of other business must be: (A) pursuant to the Corporation’s notice of meeting (or any supplement thereto) delivered pursuant to Section 2.04 of these Bylaws, (B) by or at the direction of the Board of Directors or any duly authorized committee thereof, (C) by any stockholder of the Corporation who (i) was a stockholder of record at the time of giving of notice provided for in this Bylaw and at the time of the annual meeting, (ii) is entitled to vote at the meeting and (iii) complies with the notice procedures set forth in this Bylaw as to such business or nomination or (D) as provided in the Stockholders Agreement (as defined in the Certificate of Incorporation). Subject to the Stockholders Agreement, clause (C) of this Section 2.07(a)(i) shall be the exclusive means for a stockholder to make nominations or submit other business (other than matters properly brought under Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) and included in the Corporation’s notice of meeting) before an annual meeting of stockholders.

(ii) Without qualification or limitation, for any nominations or any other business to be properly brought before an annual meeting by a stockholder pursuant to paragraph (a)(1)(C) of this Bylaw, the stockholder must have given timely notice thereof in writing to the Secretary and such other business must otherwise be a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the 120 ^th day and not later than the close of business on the 90 ^th day prior to the first anniversary of the preceding year’s annual meeting (which date shall, for purposes of the Corporation’s first annual meeting of stockholders after its shares of Common Stock are first publicly traded, be deemed to have occurred on , 2017); provided , however , that in the event that the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the 120 ^th day prior to the date of such annual meeting and not later than the close of business on the later of the 90 ^th day prior to the date of such annual meeting or, if the first public announcement of the date of such annual meeting is less than 100 days prior to the date of such annual meeting, the 10 ^th day following the day on which public announcement of the date of such meeting is first made by the Corporation. In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described above. In addition, to be timely, a stockholder’s notice shall further be updated and supplemented, if necessary, so that the information provided or required to be provided in such notice shall be true and correct as of the record date for the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or

postponement thereof, and such update and supplement shall be delivered to the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for the meeting in the case of the update and supplement required to be made as of the record date, and not later than eight (8) business days prior to the date for the meeting, any adjournment or postponement thereof in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof. To be in proper form, a stockholder’s notice (whether given pursuant to this paragraph (a)(ii) or paragraph (b)) to the Secretary must: (a) set forth, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, as they appear on the Corporation’s books and records, of such beneficial owner, if any, and of their respective affiliates or associates or others acting in concert therewith, (ii) (A) the class or series and number of shares of the Corporation which are, directly or indirectly, owned beneficially and of record by such stockholder, such beneficial owner, and of their respective affiliates or associates or others acting in concert therewith, (B) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the Corporation or with a value derived in whole or in part from the value of any class or series of shares of the Corporation, any derivative or synthetic arrangement having the characteristics of a long position in any class or series of shares of the Corporation, or any contract, derivative, swap or other transaction or series of transactions designed to produce economic benefits and risks that correspond substantially to the ownership of any class or series of shares of the Corporation, including due to the fact that the value of such contract, derivative, swap or other transaction or series of transactions is determined by reference to the price, value or volatility of any class or series of shares of the Corporation, whether or not such instrument, contract or right shall be subject to settlement in the underlying class or series of capital stock of the Corporation or otherwise, through the delivery of cash or other property, or otherwise, and without regard of whether the stockholder of record, the beneficial owner, if any, or any affiliates or associates or others acting in concert therewith, may have entered into transactions that hedge or mitigate the economic effect of such instrument, contract or right, or and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Corporation (any of the foregoing, a “ Derivative Instrument ”) directly or indirectly owned beneficially by such stockholder, the beneficial owner, if any, or any affiliates or associates or others acting in concert therewith, (C) any proxy, contract, arrangement, understanding, or relationship pursuant to which such stockholder has a right to vote any shares of any security of the Corporation, (D) any contract, arrangement, understanding, relationship or otherwise, including any repurchase or similar so-called “stock borrowing” agreement or arrangement, engaged in, directly or indirectly, by such stockholder, the purpose or effect of which is to mitigate loss to, reduce the economic risk (of ownership or otherwise) of any class or series of the shares of the Corporation by, manage the risk of share price changes for, or increase or decrease the voting power of, such stockholder with respect to any class or series of the shares of the Corporation, or which provides, directly or indirectly, the opportunity to profit or share in any profit derived from any decrease in the

price or value of any security of the Corporation (any of the foregoing, a “ Short Interest ”), (E) any rights to dividends on the shares of the Corporation owned beneficially by such stockholder that are separated or separable from the underlying shares of the Corporation, (F) any proportionate interest in shares of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such stockholder is a general partner or, directly or indirectly, beneficially owns an interest in a general partner of such general or limited partnership, (G) any performance-related fees (other than an asset-based fee) that such stockholder is entitled to based on any increase or decrease in the value of shares of the Corporation or Derivative Instruments, if any, as of the date of such notice, including without limitation any such interests held by members of such stockholder’s immediate family sharing the same household, (H) any significant equity interests or any Derivative Instruments or Short Interests in any principal competitor of the Corporation held by such stockholder, and (I) any direct or indirect interest of such stockholder in any contract with the Corporation, any affiliate of the Corporation or any principal competitor of the Corporation (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement), and (iii) any other information relating to such stockholder and beneficial owner, if any, that would be required to be disclosed in a proxy statement and form of proxy or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder; (b) if the notice relates to any business other than a nomination of a director or directors that the stockholder proposes to bring before the meeting, set forth (i) a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest of such stockholder and beneficial owner, if any, in such business, (ii) the text of the proposal or business (including the text of any resolutions proposed for consideration, and, in the event that such business includes a proposal to amend the Bylaws, the text of such proposed amendment) and (iii) a description of all agreements, arrangements and understandings between such stockholder and beneficial owner, if any, and any other person or persons (including their names) in connection with the proposal of such business by such stockholder; (c) set forth, as to each person, if any, whom the stockholder proposes to nominate for election or reelection to the Board of Directors (i) all information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder (including such person’s written consent to being named in the Corporation’s proxy statement as a nominee and to serving as a director if elected) and (ii) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three (3) years, and any other material relationships, between or among such stockholder and beneficial owner, if any, and their respective affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert therewith, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the stockholder making the

nomination and any beneficial owner on whose behalf the nomination is made, if any, or any affiliate or associate thereof or person acting in concert therewith, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant; and (d) with respect to each nominee for election or reelection to the Board of Directors, include a completed and signed questionnaire, representation and agreement required by Section 2.08 of these Bylaws. The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as an independent director of the Corporation or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee.

(iii) Notwithstanding anything in the second sentence of paragraph (a)(ii) of this Bylaw to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased and there is no public announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board of Directors at least 100 days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this Bylaw shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10 ^th day following the day on which such public announcement is first made by the Corporation.

(b) Special Meetings of Stockholders . Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (A) by or at the direction of the Board of Directors, (B) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who (i) is a stockholder of record at the time of giving of notice provided for in this Bylaw and at the time of the special meeting, (ii) is entitled to vote at the meeting, and (iii) complies with the notice procedures set forth in this Bylaw as to such nomination, or (C) as provided in the Stockholders Agreement. The immediately preceding sentence shall be the exclusive means for a stockholder to make nominations before a special meeting of stockholders at which directors are to be elected or appointed. In the event that the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, other than with respect to any nomination made in the manner provided in the Stockholders Agreement, any stockholder may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporation’s notice of meeting only if the stockholder’s notice required by paragraph (a)(ii) of this Bylaw with respect to any nomination (including the completed and signed questionnaire, representation and agreement required by Section 2.08 of these Bylaws) shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the 120 ^th day prior to the date of such special meeting and not later than the close of business on the later of the 90 ^th day prior to the date of such special meeting or, if the first public announcement of the date of such special meeting is less than 100 days prior to the date of such special meeting, the 10 ^th day following the day on which the Corporation first makes a public announcement of the date of the special meeting at which directors are to be

elected. In no event shall any adjournment or postponement of a special meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described in the immediately preceding sentence.

(i) Only such persons who are nominated in accordance with the procedures set forth in this Bylaw or in the Stockholders Agreement shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Bylaw. Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, the chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Bylaw and, if any proposed nomination or business is not in compliance with this Bylaw, to declare that such defective proposal or nomination shall be disregarded. Unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to make a nomination or present a proposal of other business, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Bylaw, to be considered a qualified representative of the stockholder, a person must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.

(ii) For purposes of this Bylaw, “public announcement” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act and the rules and regulations promulgated thereunder.

(iii) Notwithstanding the foregoing provisions of this Bylaw, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Bylaw; provided , however , that any references in these Bylaws to the Exchange Act or the rules promulgated thereunder are not intended to and shall not limit the requirements applicable to nominations or proposals as to any other business to be considered pursuant to paragraph (a)(i)(C) or paragraph (b) of this Bylaw. Nothing in this Bylaw shall be deemed to affect any rights (i) of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders of any series of Preferred Stock if and to the extent provided for under law, the Certificate of Incorporation or these Bylaws. Subject to Rule 14a-8 under the Exchange Act, nothing in these Bylaws shall be construed to permit any stockholder, or give any stockholder the right, to include or have disseminated or described in the Corporation’s proxy statement any nomination of director or directors or any other business proposal.

Section 2.08 Submission of Questionnaire, Representation and Agreement . To be eligible to be a nominee for election or reelection as a director of the Corporation and qualified to serve as a director, a person must deliver (such delivery to be made, in the case of a person nominated for election as a director of the Corporation pursuant to pursuant to paragraph (a)(1)(C) or paragraph (b) of Section 2.07 of these Bylaws, in accordance with the time periods prescribed for delivery of notice under Section 2.07 of these Bylaws) to the Secretary at the principal executive offices of the Corporation a written questionnaire with respect to the background and qualification of such person and the background of any other persons or entities on whose behalf the nomination is being made pursuant to paragraph (a)(1)(C) or paragraph (b) Section 2.07 of these Bylaws (which questionnaire shall be provided by the Secretary upon written request) and a written representation and agreement (in the form provided by the Secretary upon written request) that such person (A) is not and will not become a party to (1) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a “ Voting Commitment ”) that has not been disclosed to the Corporation or (2) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law, (B) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein and (C) in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the Corporation, and will comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation.

Section 2.09 Required Vote . Subject to the rights of the holders of any series of Preferred Stock to elect directors under specified circumstances, at all meetings of the stockholders at which directors are to be elected, a plurality of the votes cast by stockholders entitled to vote for the election of such directors shall be sufficient to elect such directors. Except as otherwise provided by applicable law, the Certificate of Incorporation, these Bylaws, the rules or regulations of any stock exchange applicable to the Corporation, or any regulation applicable to the Corporation or its stockholders, in all matters other than the election of directors, the affirmative vote of a majority in voting power of the shares present in person or represented by proxy at the meeting and entitled to vote on the matter shall be the act of the stockholders.

Section 2.10 Inspectors of Elections . The Corporation may, and to the extent required by applicable law, in advance of any meeting of stockholders, appoint one or more inspectors of election, which inspector or inspectors may include individuals who serve the Corporation in other capacities, including, without limitation, as officers, employees, agents or representatives, to act at the meetings of stockholders and make a written report thereof. One or more persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate has been appointed to act or is able to act at a meeting of stockholders, the chairman of the meeting shall appoint one or more inspectors to act at the

meeting. Each inspector, before discharging his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall have the duties prescribed by law.

Section 2.11 Action Without a Meeting . Unless prohibited by the Certificate of Incorporation, any action permitted or required to be taken at a meeting of stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by or on behalf of the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation in accordance with applicable law. Prompt notice of the taking of corporate action without a meeting by less than a unanimous written consent shall be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for notice of such meeting had been the date that written consents signed by a sufficient number of the holders to take the action were delivered to the Corporation

Section 2.12 Conduct of Meetings . The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the chairman of the meeting. The Board of Directors may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the chairman of any meeting of stockholders shall have the right and authority to convene and (for any or no reason) to recess and/or adjourn the meeting, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such presiding person, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders entitled to vote at the meeting, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. Unless and to the extent determined by the Board of Directors or the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

Section 2.13 Remote Meetings . If authorized by the Board of Directors in its sole discretion, and subject to such guidelines and procedures as the Board of Directors may adopt, stockholders and proxyholders not physically present at a meeting of stockholders may, by means of remote communication:

(a) participate in a meeting of stockholders; and

(b) be deemed present in person and vote at a meeting of stockholders whether such meeting is to be held at a designated place or solely by means of remote communication; provided , that (i) the Corporation shall implement reasonable measures to verify

that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxyholder, (ii) the Corporation shall implement reasonable measures to provide such stockholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings, and (iii) if any stockholder or proxyholder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the Corporation.

ARTICLE III.

BOARD OF DIRECTORS

Section 3.01 General Powers . Except as otherwise provided in the General Corporation Law of the State of Delaware or the Certificate of Incorporation, the business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.

Section 3.02 Number of Directors . The total number of directors shall be fixed from time to time in the manner provided by the Certificate of Incorporation. No decrease in the total number of directors shall shorten the term of any incumbent director.

Section 3.03 Quorum ; Required Vote . Except as otherwise provided by law or the Certificate of Incorporation, a majority of the total number of directors then in office shall constitute a quorum for the transaction of business at any meeting of the Board, but in no event shall less than one-third of the members of the total number of directors which the Corporation would have if there were no vacancies or unfilled newly created directorships constitute a quorum. Except as otherwise provided by law or the Certificate of Incorporation, the vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.

Section 3.04 Telephonic Participation . All or any one or more directors may participate in a meeting of the Board of Directors or of any committee thereof by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other and participation in a meeting pursuant to such communications equipment shall constitute presence in person at such meeting.

Section 3.05 Place of Meetings . The Board of Directors may hold its meetings at such place or places, if any, within or without the State of Delaware, as the Board may from time to time determine.

Section 3.06 Regular Meetings . Regular meetings of the Board of Directors may be held at such time and place, if any, within or without the State of Delaware, as shall from time to time be determined by the Board of Directors. After there has been such determination, and notice thereof has been given to each member of the Board of Directors, regular meetings may be held without further notice being given.

Section 3.07 Special Meetings . Subject to the notice requirements of Section 3.08, special meetings of the Board of Directors shall be held whenever called by the Chairman of the Board, if any, the Chief Executive Officer or by a majority of the directors.

Section 3.08 Notice . Notice of any special meeting of directors shall be given to each director at his or her business or residence in writing by hand delivery, overnight mail or courier service, facsimile or electronic transmission, or orally in person or by telephone. If by overnight mail or courier service, such notice shall be deemed adequately delivered when the notice is delivered to the overnight mail or courier service company at least twenty-four (24) hours before such meeting. If by facsimile or electronic transmission, such notice shall be deemed adequately delivered when the notice is transmitted at least twelve (12) hours before such meeting. If given orally in person or by telephone or by hand delivery, the notice shall be given at least twelve (12) hours prior to the time set for the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice of such meeting.

Section 3.09 Resignation . Any director of the Corporation may resign at any time by giving notice in writing or by electronic transmission thereof to the Corporation. The resignation of any director shall be effective when the resignation is delivered, unless the resignation specifies a later effective date or an effective date determined upon the happening of an event or events; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

Section 3.10 Vacancies on Board of Directors . Except as otherwise provided in the Certificate of Incorporation, and subject to the terms of the Stockholders Agreement, any vacancy resulting from the death, resignation, removal or disqualification of any director or other cause, or any newly created directorship resulting from any increase in the authorized number of directors, shall be filled exclusively by a majority of the directors then in office, although less than a quorum, or a sole remaining director. Each director so appointed shall hold office until the annual meeting of stockholders for the election of directors of the class to which such director shall have been appointed and until his or her successor has been duly elected qualified, subject, however, to such director’s earlier death, resignation, retirement, removal or disqualification.

Section 3.11 Executive and Other Committees . The Board of Directors may designate one or more committees of the Board of Directors, including an Executive Committee to exercise, subject to applicable provisions of law, all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation when the Board of Directors is not in session. The Executive Committee and each such other committee shall consist of two (2) or more directors of the Corporation and, subject to applicable law and any other law, rule or regulation applicable to the Corporation (including the rules and regulations of any securities exchange on the which the Corporation’s shares are listed), at least one Apollo Designee (as defined in the Stockholders Agreement); provided , however , that for so long as the Co-Investor Condition (as defined in the Stockholders Agreement) is satisfied with respect to a Co-Invest Designee (as defined in the Stockholders Agreement), such Co-Invest Designee shall have the right to designate one (1) member of each such committee. The Board of Directors may designate one (1) or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Except to the extent restricted

by law, the Certificate of Incorporation or these Bylaws, any such committee, to the extent provided by the General Corporation Law of the State of Delaware, these Bylaws or the designating resolution, shall have and may exercise all the powers and authority of the Board of Directors. In the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Each committee shall keep written minutes of its proceedings and shall report such proceedings to the Board of Directors when required.

Each committee of the Board of Directors may fix its own rules of procedure and shall hold its meetings as provided by such rules, except as may otherwise be provided by in these Bylaws or by resolution of the Board of Directors designating such committee. Notice of such meetings shall be given to each member of the committee in the manner provided for in Section 3.08 of these Bylaws. Each committee shall serve at the pleasure of the Board of Directors and the Board of Directors shall have power at any time to fill vacancies in, to change the membership of, or to dissolve any such committee. Unless otherwise provided in the Certificate of Incorporation, these Bylaws or the resolution of the Board of Directors designating the committee, a committee may create one or more subcommittees, each subcommittee to consist of one or more members of the committee, and delegate to a subcommittee any or all of the powers and authority of the committee. Except as otherwise expressly provided in these Bylaws or the by resolution of the Board of Directors designating such committee, every reference to a committee or to a member of a committee in these Bylaws shall apply to any subcommittee or member of a subcommittee mutatis mutandis .

Section 3.12 Action Without Meeting . Unless otherwise restricted by the Certificate of Incorporation, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board of Directors or any committee thereof, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes or proceedings of the Board of Directors or committee.

Section 3.13 Fees and Compensation . The Board of Directors shall have the authority to fix the compensation, including fees, reimbursement of expenses and equity compensation, of directors for services to the Corporation in any capacity, including for attendance of meetings of the Board of Directors or participation on any committees. Directors who are officers or employees of the Corporation may receive, if the Board desires, compensation for service as directors. Nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.

ARTICLE IV.

OFFICERS

Section 4.01 Officers . The elected officers of the Corporation shall be chosen by the Board of Directors and may include a Chairman of the Board, a Chief Executive Officer, one or more Presidents, a Chief Financial Officer, and a Secretary, all of whom shall be elected by the Board of Directors. The Chairman of the Board, if any, shall be chosen from among the directors. All officers elected by the Board of Directors shall each have such powers and duties as generally pertain to their respective offices, subject to the specific provisions of this ARTICLE IV. Such officers shall also have such powers and duties as from time to time may be conferred by the Board of Directors or by any committee thereof. In addition, the Board of Directors or any committee thereof may from time to time elect, or the Chief Executive Officer may appoint, such other officers (including one or more Vice Presidents, Assistant Secretaries, Treasurers and Controllers) and such agents, as may be necessary or desirable for the conduct of the business of the Corporation. Any number of offices may be held by the same person. Such other officers and agents shall have such duties and shall hold their offices for such terms as shall be provided in these Bylaws or as may be prescribed by the Board or such committee or by the Chief Executive Officer, as the case may be.

Section 4.02 Term of Office . The principal officers of the Corporation shall hold office until his or her successor shall have been duly chosen and shall qualify, or until his or her earlier death, resignation, retirement, removal or disqualification.

Section 4.03 Removal . Any officer may be removed, either with or without cause, at any time, by the Board of Directors. Any officer or agent appointed by the Chief Executive Officer may also be removed by him or her whenever, in his or her judgment, the best interests of the Corporation would be served thereby. No elected officer shall have any contractual rights against the Corporation for compensation by virtue of such election beyond the date of the election of his or her successor or his or her earlier death, resignation, removal or disqualification, whichever event shall first occur, except as otherwise provided in an employment contract or under an employee deferred compensation plan.

Section 4.04 Resignations . Any officer may resign at any time by giving notice in writing or by electronic transmission thereof to the Corporation. The resignation of any officer shall be effective when the resignation is delivered, unless the resignation specifies a later effective date or an effective date determined upon the happening of an event or events; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

Section 4.05 Vacancies . A vacancy in any office may be filled in the manner prescribed in these Bylaws for appointment to such office.

Section 4.06 Powers and Duties . Subject to the control of the Board of Directors, the officers shall each have such authority and perform such duties in the management of the Corporation as from time to time may be prescribed by the Board of Directors and as may be delegated by the Chief Executive Officer without limiting the foregoing:

(a) Chairman of the Board . The Chairman of the Board, if any, shall preside at all meetings of the Board of Directors and he or she shall have and perform such other duties as from time to time may be assigned to him or her by the Board of Directors.

(b) Chief Executive Officer . The Chief Executive Officer of the Corporation shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and officers of the Corporation. The Chief Executive Officer shall preside at all meetings of the stockholders and, in the absence of a Chairman of the Board, at all meetings of the Board of Directors. Unless there shall have been elected one or more Presidents of the Corporation, the Chief Executive Officer shall be the President of the Corporation.

(c) President . Each President shall have such general powers and duties of supervision and management as shall be assigned to him or her by the Board of Directors.

(d) Vice Presidents . Each Vice President, if any, shall have such powers and shall perform such duties as shall be assigned to him or her by the Board of Directors.

(e) Chief Financial Officer . The Chief Financial Officer shall have the custody of the corporate funds and securities and shall keep full and accurate account of receipts and disbursements in books belonging to the Corporation. He or she shall deposit all moneys and other valuables in the name and to the credit of the Corporation in such depositaries as may be designated by the Board of Directors. He or she shall disburse the funds of the Corporation as may be ordered by the Board of Directors, the Chairman of the Board, Chief Executive Officer or a President, taking proper vouchers for such disbursements. He or she shall render to the Chairman of the Board, Chief Executive Officer, each President and the Board of Directors at the regular meetings of the Board of Directors, or whenever they may request it, an account of all his or her transactions as Chief Financial Officer and of the financial condition of the Corporation. If required by the Board of Directors, he or she shall give the Corporation a bond for the faithful discharge of his or her duties in such amount and with such surety as the Board of Directors shall prescribe. The Chief Executive Officer may direct the Treasurer to assume and perform the duties of the Chief Financial Officer in the absence or disability of the Chief Financial Officer, and the Treasurer shall perform other duties commonly incident to his or her office and shall also perform such other duties and have such other powers as the Board of Directors or the Chief Executive Officer shall designate from time to time.

(f) Secretary . The Secretary, if present, shall act as secretary at all meetings of the Board of Directors or any committee thereof and of the stockholders and keep the minutes thereof in a book or books to be provided for that purpose. He or she shall see that all notices required to be given by the Corporation are duly given and served; he or she shall have charge of the stock records of the Corporation; he or she shall see that all reports, statements and other documents required by law are properly kept and filed; and in general, he or she shall perform all the duties incident to the office of Secretary and such other duties as from time to time may be assigned to him or her by the Chief Executive Officer or the Board of Directors.

Section 4.07 Salaries . The salaries of the principal officers shall be fixed from time to time by the Board of Directors or a committee thereof appointed for such purpose, and the salaries of any other officers may be fixed by the Chief Executive Officer.

ARTICLE V.

CAPITAL STOCK

Section 5.01 Certificated and Uncertificated Stock; Transfers .

(a) Subject to clause (d) below, the shares of stock of the Corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of the Corporation’s stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation.

(b) The shares of the stock of the Corporation shall be transferable in the manner prescribed by law and in these Bylaws. In the case of certificated shares of stock, transfers shall be made on the books of the Corporation only by the holder thereof or by such holder’s attorney duly authorized in writing, upon surrender for cancellation of certificate(s) for at least the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, with such proof of the authenticity of the signature as the Corporation or its agents may reasonably require. In the case of uncertificated shares of stock, transfers shall be made on the books of the Corporation only upon receipt of proper transfer instructions from the registered holder of the shares or by such person’s attorney duly authorized in writing, and upon compliance with appropriate procedures for transferring shares in uncertificated form. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing from and to whom transferred.

(c) Every holder of stock in the Corporation represented by certificates shall be entitled to have a certificate signed by, or in the name of the Corporation by any two authorized officers certifying the number and class of shares of stock of the Corporation owned by such holder. Unless the Board of Directors by resolution directs otherwise, the Chairman of the Board, the Vice Chairman of the Board, the President, a Vice President, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the Corporation shall be authorized to sign stock certificates. Any or all of the signatures on such certificates may be an electronic signature. In case any officer, transfer agent or registrar who has signed or whose electronic signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.

(d) Notwithstanding anything to the contrary in these Bylaws, at all times that the Corporation’s stock is listed on a stock exchange, the shares of the stock of the Corporation shall comply with all direct registration system eligibility requirements established by such exchange, including any requirement that shares of the Corporation’s stock be eligible for issue in uncertificated or book-entry form. All issuances and transfers of shares of the Corporation’s stock shall be entered on the books of the Corporation with all information necessary to comply with such direct registration system eligibility requirements, including the name and address of the person to whom the shares of stock are issued, the number of shares of stock issued and the date of issue. The Board of Directors shall have the power and authority to make such rules and regulations as it may deem necessary or proper concerning the issue, transfer and registration of shares of stock of the Corporation in both the certificated and uncertificated form.

Section 5.02 Last, Stolen, Mutilated or Destroyed Certificates . As a condition to the issue of a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued and alleged to have been lost, stolen, mutilated or destroyed, the Corporation may require the owner of any such certificate, or such owner’s legal representatives, to give the Corporation a bond in such sum and in such form as it may direct or to otherwise indemnify the Corporation against any claim that may be made against it on account of the alleged loss, theft, mutilation or destruction of any such certificate or the issuance of such new certificate or uncertificated shares. Proper evidence of such loss, theft, mutilation or destruction shall be procured for the Corporation, if required. The Corporation may authorize the issuance of such new certificate without any bond when in its judgment it is proper to do so.

Section 5.03 Record Owners . The stock ledger shall be the only evidence as to who are the stockholders of the Corporation and the Corporation shall be entitled to recognize the exclusive right of a person registered on its stock ledger as the owner of shares to receive dividends, to vote and to receive notice, and otherwise to exercise all of the rights and powers of an owner of such shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise required by law.

Section 5.04 Transfer and Registry Agents . The Corporation may from time to time maintain one or more transfer offices or agencies and registry offices or agencies at such place or places as may be determined from time to time by the Board of Directors.

Section 5.05 Record Date .

(a) In order that the Corporation may determine the stockholders entitled to notice of and to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted and which record date, unless otherwise required by law, shall not be more than 60 nor less than 10 days before the date of such meeting. If the Board of Directors so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board of Directors determines, at the time it fixes such record date, that a later date on or before the date of meeting shall be the date for making such determination. If no such record date is fixed by the Board of Directors, then the record date shall, unless otherwise required by law, be at the close of business on the day next preceding the day on which notice of such meeting is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.

(b) In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, of for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted and which record date shall not be more than 60 days prior to such action. If no such

record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

(c) In order that the Corporation may determine the stockholders entitled to express consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and which record date shall not be more than 10 days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date for determining stockholders entitled to express consent to corporate action in writing without a meeting has been fixed by the Board of Directors (i) when no prior action of the Board of Directors is required by law, the record date for such purpose shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation in accordance with applicable law, and (ii) if prior action by the Board of Directors is required by law, the record date for such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.

ARTICLE VI.

AMENDMENTS

Section 6.01 Amendments by Stockholders . These Bylaws may be altered, amended or repealed and new Bylaws may be added by the stockholders at any annual meeting of the stockholders or at any special meeting thereof if notice of the proposed alteration, amendment, repeal or addition is contained in the notice of such special meeting, (i) if prior to the Trigger Event (as defined in the Certificate of Incorporation), by the affirmative vote of the holders of a majority in voting power of the stock entitled to vote thereon and (ii) if after the Trigger Event, by the affirmative vote of the holders of at least 66 2/3% of the voting power of the stock entitled to vote thereon.

Section 6.02 Amendments by the Board of Directors . The Board of Directors may adopt, amend or repeal these Bylaws as provided in the Certificate of Incorporation.

ARTICLE VII.

MISCELLANEOUS PROVISIONS

Section 7.01 Fiscal Year . The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.

Section 7.02 Voting of Securities Owned by the Corporation . The Board of Directors may authorize any person on behalf of the Corporation to attend and vote at any meeting of security holders of any entity in which the Corporation holds securities and to exercise, on behalf of the Corporation, any and all of the rights and powers incident to the ownership of such securities, including the authority to execute and deliver proxies, powers of attorney and consents on behalf of the Corporation. Unless the Board of Directors directs otherwise, each of the Chairman, the Chief Executive Officer and President shall have the powers specified in the preceding provisions of this Section 7.02.

Section 7.03 Dividends . Subject to the provisions of the Certificate of Incorporation, the Board of Directors may, out of funds legally available therefor, declare dividends upon the capital stock of the Corporation as and when they deem expedient, in accordance with law. Before declaring any dividend there may be set apart out of any funds of the Corporation available for dividends such sum or sums as the directors from time to time in their discretion may deem proper for working capital or as a reserve fund to meet contingencies or for equalizing dividends or for such other purposes as the directors may deem conducive to the interests of the Corporation. The Board of Directors may abolish any such reserve at any time.

Section 7.04 Waiver of Notice . Whenever any notice is required to be given under the provisions of the General Corporation Law of the State of Delaware, the Certificate of Incorporation or these Bylaws, a written waiver, signed by the person or persons entitled to such notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any annual, regular or special meeting of the stockholders or the Board of Directors or committee thereof need be specified in any waiver of notice of such meeting.

Section 7.05 Contracts . Except as otherwise required by law, the Certificate of Incorporation or these Bylaws, any contracts or other instruments may be executed and delivered in the name and on the behalf of the Corporation by such officer or officers of the Corporation as the Board of Directors may from time to time direct. Such authority may be general or confined to specific instances as the Board of Directors may determine. The Chairman of the Board, the Chief Executive Officer, each President, the Chief Financial Officer or any Vice President may execute bonds, contracts, deeds, leases and other instruments to be made or executed for or on behalf of the Corporation. Subject to any restrictions imposed by the Board of Directors or the Chairman of the Board, the Chief Executive Officer, each President, the Chief Financial Officer or any Vice President of the Corporation may delegate contractual powers to others under his or her jurisdiction, it being understood, however, that any such delegation of power shall not relieve such officer of responsibility with respect to the exercise of such delegated power.

Exhibit 3.3

FORM OF

SECOND AMENDED AND RESTATED

CERTIFICATE OF DESIGNATION

SERIES A PREFERRED SECURITIES

ADT INC.

Pursuant to the General Corporation Law of the State of Delaware

Pursuant to the General Corporation Law of the State of Delaware (the “ DGCL ”), ADT Inc., a corporation duly organized and validly existing under the DGCL (the “ Company ”), in accordance with the provisions of Section 103 of the DGCL, does hereby certify the following:

The Board of Directors of the Company (the “ Board of Directors ”) adopted resolutions on May 2, 2016 designating a new series of 750,000 shares of preferred securities, par value $0.01 per share, of the Company designated as Series A Preferred Securities (as defined below);

WHEREAS, the Certificate of Incorporation of the Company (as amended, restated, supplemented or otherwise modified from time to time, in each case to the extent not prohibited by Section 10 , the “ Certificate of Incorporation ”) authorizes (a) the issuance of up to 1,000,000 shares of preferred securities, par value $0.01 per share, of the Company (the “ Preferred Securities ”) in one or more series and (b) the Board of Directors to (i) designate one or more series of the Preferred Securities and (ii) with respect to each such series, establish the number of shares and the rights, preferences, powers, and the qualifications, restrictions and limitations, of each such series; and

WHEREAS, it is the desire of the Board of Directors to amend and restate certain rights, preferences, powers, and the qualifications, restrictions and limitations, of the Series A Preferred Securities.

NOW, THEREFORE, BE IT RESOLVED that the Board of Directors does hereby amend and restate the rights, preferences, powers, and the qualifications, restrictions and limitations, of the Series A Preferred Securities as follows, and the Board of Directors directs this Second Amended and Restated Certificate of Designation of Series A Preferred Securities (this “ Second Amended and Restated Certificate of Designation ”) to be filed with the Secretary of State of the State of Delaware in accordance with Section 103 of the DGCL:

Definitions; Interpretation .

(a) As used in this Second Amended and Restated Certificate of Designation, the following terms shall have the meanings specified below:

“ Accrued Dividend Rate ” shall mean the Five-Year Treasury Yield plus 9.75% per annum; provided that the then-current Accrued Dividend Rate shall automatically increase by an additional 1.00% per annum on the fifth anniversary of the Closing Date and on each anniversary of the Closing Date thereafter; provided , further , that (a) if and for so long as any Event of Default (other than a Senior Debt Event of Default) occurs and is continuing or (b) if and for so long as a Senior Debt Event of Default occurs and is continuing, on the tenth Business Day following the occurrence of such Senior Debt Event of Default, then, in each case, the then-current Accrued Dividend Rate shall automatically increase by an additional 2.00% per annum.

“ Accumulated Stated Value ” shall mean, as of the relevant date, an amount per Share equal to (a) the Stated Value of such Share as of such date plus (b) any declared but unpaid Dividends on such Share for the most recent Dividend Period as of such date (to the extent not part of the Stated Value of such Share as of such date) plus (c) the amount of accumulated and unpaid Dividends on such Share from the last Dividend Payment Date to, but not including, such date (to the extent not part of the Stated Value of such Share as of such date).

“ ADTSC ” shall mean The ADT Security Corporation, a Delaware corporation.

“ Affiliate ” shall mean, when used with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified; provided that, with respect to any Covered Person, this definition shall include any parent, spouse, domestic partner or child (including those adopted) of such Covered Person and each custodian or guardian of any property of one or more of such Persons in the capacity as such custodian or guardian and trust, investment vehicle or other entity formed by such Covered Person for tax or estate planning purposes.

“ Affiliate Investment Transaction ” shall have the meaning assigned to such term in the definition of “Permitted Affiliate Transactions.”

“ Aggregate Accumulated Dividend ” shall mean, as of the relevant date, an amount per Share equal to the difference of (a) the Accumulated Stated Value of such Share as of such date minus (b) the Stated Value of such Share as of the Closing Date.

“ Amendment Date ” means [•], 2018.

“ Applicable Treasury Rate ” shall mean, as of the relevant date, the yield to maturity at the time of computation of U.S. Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) which has become publicly available at least two Business Days (but not more than five Business Days) prior to such date (or, if such statistical release is not so published or available, any publicly available source of similar market data reasonably selected by the Company)) most nearly equal to the period from such date to the First Call Date; provided that if the period from such date to

the First Call Date is not equal to the constant maturity of a U.S. Treasury security for which a weekly average yield is given, the Applicable Treasury Rate shall be obtained by linear interpolation (calculated to the nearest 1/12th of a year) from the weekly average yields of U.S. Treasury securities for which such yields are given, except that if the period from such date to the First Call Date is less than one year, the weekly average yield on actually traded U.S. Treasury securities adjusted to a constant maturity of one year shall be used.

“ Beneficially Own ” shall mean to possess beneficial ownership as determined pursuant to Rule 13d-3 and Rule 13d-5 of the Exchange Act.

“ Board of Directors ” shall have the meaning assigned to such term in the recitals hereof.

“ Board of Managers ” shall have the meaning assigned to such term in the LLC Agreement; provided that, if the Board of Managers is not the board of directors, board of managers or other governing body that is the primary functioning board of directors, board of managers or other governing body governing (or that is charged with the material governance authority with respect to) the business of the General Partner, Parent, the Company or any of its Subsidiaries, then the Board of Managers shall be deemed to refer to such primary functioning board of directors, board of managers or other governing body.

“ Borrower ” shall mean Prime Security Services Borrower, LLC, a Delaware limited liability company.

“ Business Day ” shall mean any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed.

“ Capitalized Lease Obligations ” shall mean, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) in accordance with GAAP; provided that obligations of the Company or any of its Subsidiaries, or of a special purpose or other entity not consolidated with the Company and its Subsidiaries, either existing on July 1, 2015 or created thereafter that (a) initially were not included on the consolidated balance sheet of the Company or any of its Subsidiaries as capital lease obligations and were subsequently recharacterized as capital lease obligations or, in the case of such a special purpose or other entity becoming consolidated with the Company and its Subsidiaries, were required to be characterized as capital lease obligations upon such consideration, in either case, due to a change in accounting treatment or otherwise, or (b) did not exist on July 1, 2015 and were required to be characterized as capital lease obligations but would not have been required to be treated as capital lease obligations on July 1, 2015 had they existed at that time, shall for all purposes not be treated as Capitalized Lease Obligations or Indebtedness.

“ Cash Dividend Rate ” shall mean the Five-Year Treasury Yield plus 9.00% per annum; provided that the then-current Cash Dividend Rate shall automatically increase by an additional 1.00% per annum on the fifth anniversary of the Closing Date and on each anniversary of the Closing Date thereafter; provided , further , that (a) if and for so long as any Event of

Default (other than a Senior Debt Event of Default) occurs and is continuing or (b) if and for so long as a Senior Debt Event of Default occurs and is continuing, on the tenth Business Day following the occurrence of such Senior Debt Event of Default, then, in each case, the then-current Cash Dividend Rate shall automatically increase by an additional 2.00% per annum.

“ Certificate of Incorporation ” shall have the meaning assigned to such term in the recitals hereof.

A “ Change in Control ” shall be deemed to occur if:

(a) the Member shall fail to Beneficially Own and own of record, directly or indirectly, 100% of the issued and outstanding Equity Interests of the General Partner; provided that no Change of Control shall be deemed to have occurred pursuant to this clause (a) if the Member transfers all or any portion of the issued and outstanding Equity Interests of the General Partner to the general partner of the Fund or an Affiliate controlled by such general partner so long as (i) the Member or its general partner determines in good faith that it is necessary or desirable to consummate such transfer for legal, tax, regulatory or similar technical reasons and (ii) such transfer does not adversely affect any of the rights, preferences, powers, or the qualifications, restrictions or limitations, or the value, of the Series A Preferred Securities;

(b) the General Partner shall fail to Beneficially Own and own of record, directly or indirectly, 100% of the general partnership interests in Parent;

(d) the Company shall fail to Beneficially Own and own of record, directly or indirectly, 100% of the issued and outstanding Equity Interests of Holdings or the Borrower;

(e) a “Change in Control” (as defined in (i) the First Lien Credit Agreement as in effect on the Closing Date, (ii) the Second Lien Credit Agreement as in effect on the Closing Date, (iii) the Second Priority Senior Secured Notes Indenture as in effect on the Closing Date, (iv) the indentures governing the Existing ADTSC Roll-Over Notes as in effect on the Closing Date, (v) any indenture or credit agreement in respect of Permitted Refinancing Indebtedness with respect to the Indebtedness referenced in clauses (i) through (iv) of this clause (e), in each case, constituting Material Indebtedness, or (vi) any indenture or credit agreement in respect of any Junior Financing constituting Material Indebtedness) shall have occurred; or

(f) a Fund Change in Control shall have occurred.

“ Closing Date ” shall mean May 2, 2016.

“ Code ” shall mean the Internal Revenue Code of 1986.

“ Common Stock ” shall mean the Company’s common stock, par value $0.01 per share.

“ Company ” shall have the meaning assigned to such term in the recitals hereof.

“ Company Insolvency Material Event ” shall have the meaning assigned to such term in Section 7(b)(i) .

“ Compensation Arrangement ” shall mean any management equity plan or stock option plan or any other management or employee benefit plan or other agreement or arrangement, including any employment arrangement or equity purchase agreement.

“ Compounded Dividends ” shall have the meaning assigned to such term in Section 5 .

“ Consolidated Total Assets ” shall mean, as of any date of determination, the total assets of the Borrower and its consolidated Subsidiaries without giving effect to any impairment or amortization of the amount of intangible assets since the Closing Date, determined on a consolidated basis in accordance with GAAP, as set forth on the consolidated balance sheet of the Borrower as of the last day of the fiscal quarter most recently ended for which financial statements have been (or were required to be) delivered pursuant to Section 4.1(f) of the Securities Purchase Agreement or Sections 1.2(b)(i) or 1.2(b)(ii) of the Second Amended and Restated Series A Investors Rights Agreement, as applicable, calculated on a Pro Forma Basis after giving effect to any acquisition or Disposition of a Person or assets that may have occurred on or after the last day of such fiscal quarter.

“ Control ” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and “ Controlling ” and “ Controlled ” shall have meanings correlative thereto.

“ Covered Person ” shall mean any future, present or former employee, director, manager, officer, member of management or consultant of the General Partner, Parent, the Company, or any of their respective Subsidiaries that is unaffiliated with the Fund and the Fund Affiliates.

“ Deemed Dividend Gross-Up Payment ” shall have the meaning assigned to such term in the Second Amended and Restated Series A Investors Rights Agreement.

“ DGCL ” shall have the meaning assigned to such term in the recitals hereof.

“ Dispose ” shall mean to convey, sell, lease, sell and leaseback, assign, farm-out, transfer or otherwise dispose of any property, business or asset (including the issuance of Equity Interests). The term “ Disposition ” shall have a correlative meaning to the foregoing.

“ Disqualified Stock ” shall mean, with respect to any Person, any Equity Interests of such Person that, by its terms (or by the terms of any security or other Equity Interests into which it is convertible or for which it is exchangeable), or upon the happening of any event or condition (a) matures or is mandatorily redeemable (other than solely for Qualified Equity Interests), pursuant to a sinking fund obligation or otherwise (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior redemption in full of all Shares in accordance with Section 6 and Section 7 ), (b) is redeemable at the option of the holder thereof

(other than solely for Qualified Equity Interests), in whole or in part, (c) provides for the scheduled payments of dividends in cash, or (d) is or becomes convertible into or exchangeable for Indebtedness or any other Equity Interests that would constitute Disqualified Stock, in each case, prior to the date that is 91 days after the Mandatory Redemption Date; provided that only the portion of the Equity Interests that so mature or are mandatorily redeemable, are so convertible or exchangeable or are so redeemable at the option of the holder thereof prior to such date shall be deemed to be Disqualified Stock. Notwithstanding the foregoing, (i) any Equity Interests issued to any employee or to any plan for the benefit of employees of the Company or any of its Subsidiaries or by any such plan to such employees shall not constitute Disqualified Stock solely because they may be required to be repurchased by the Company or any of its Subsidiaries in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability and (ii) any class of Equity Interests of such Person that by its terms authorizes such Person to satisfy its obligations thereunder by delivery of Equity Interests that are not Disqualified Stock shall not be deemed to be Disqualified Stock.

“ Dividend Payment Date ” shall mean March 31, June 30, September 30 and December 31 of each year, commencing on June 30, 2016; provided that, if any Dividend Payment Date is not a Business Day, the Dividend Payment Date shall be the immediately preceding Business Day.

“ Dividend Period ” shall mean the period commencing on and including a Dividend Payment Date that ends on, but does not include, the next Dividend Payment Date; provided that the initial Dividend Period shall commence on and include the Closing Date and end on, but not include, the first Dividend Payment Date.

“ Dividends ” shall have the meaning assigned to such term in Section 5 .

“ DRD Gross-Up Payments ” shall have the meaning assigned to such term in the Second Amended and Restated Series A Investors Rights Agreement.

“ EBITDA ” shall have the meaning assigned to such term in the First Lien Credit Agreement as in effect on the Closing Date.

“ Equity Interests ” of any Person shall mean any and all shares, interests, rights to purchase or otherwise acquire, warrants, options, participations or other equivalents of or interests in (however designated) equity or ownership of such Person, including any preferred stock, any preferred securities, any limited or general partnership interest, any limited liability company membership interest, any related stock appreciation rights or similar securities, and any securities or other rights or interests convertible into or exchangeable for any of the foregoing.

“ Equityholders Agreement ” shall mean the Equityholders Agreement, dated as of the Closing Date, by and among the Member, the General Partner, Parent, Prime Security Services GP, LLC, a Delaware limited liability company, Apollo Investment Fund VIII, L.P., a Delaware limited partnership, Apollo Overseas Partners (Delaware) VIII, L.P., a Delaware limited partnership, Apollo Overseas Partners (Delaware 892) VIII, L.P., a Delaware limited partnership, Apollo Overseas Partners VIII, L.P., a Cayman Islands exempted limited partnership, and the Purchaser.

“ ERISA ” shall mean the Employment Retirement Income Security Act of 1974.

“ ERISA Affiliate ” shall mean any trade or business (whether or not incorporated) that, together with Parent, the Company or any of its Subsidiaries, is treated as a single employer under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

“ ERISA Event ” shall mean (a) any Reportable Event or the requirements of Section 4043(b) of ERISA apply with respect to a Plan; (b) with respect to any Plan, the failure to satisfy the minimum funding standard under Section 412 of the Code or Section 302 of ERISA, whether or not waived; (c) a determination that any Plan is, or is expected to be, in “at-risk” status (as defined in Section 303(i)(4) of ERISA or Section 430(i)(4) of the Code); (d) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan, the failure to make by its due date a required installment under Section 430(j) of the Code with respect to any Plan or the failure to make any required contribution to a Multiemployer Plan; (e) the incurrence by Parent, the Company, any of its Subsidiaries or any ERISA Affiliate of any liability under Title IV of ERISA with respect to the termination of any Plan or Multiemployer Plan; (f) the receipt by Parent, the Company, any of its Subsidiaries or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or to appoint a trustee to administer any Plan under Section 4042 of ERISA; (g) the incurrence by Parent, the Company, any of its Subsidiaries or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; (h) the receipt by Parent, the Company, any of its Subsidiaries or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from Parent, the Company, any of its Subsidiaries or any ERISA Affiliate of any notice, concerning the impending imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA, or in “endangered” or “critical” status, within the meaning of Section 432 of the Code or Section 305 of ERISA; (i) the conditions for imposition of a Lien under Section 303(k) of ERISA shall have been met with respect to any Plan; or (j) the withdrawal of any of Parent, the Company, any of its Subsidiaries or any ERISA Affiliate from a Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA.

“ Event of Default ” shall mean the happening of any of the following events:

(a) any representation or warranty made or deemed made by Parent or the Company in the Securities Purchase Agreement or by Parent, the Company or any of its Subsidiaries in any other Related Agreement to which it is a party or any certificate or document delivered by it pursuant hereto or thereto shall prove to have been false or misleading in any material respect when so made or deemed made and such false or misleading representation or warranty (if curable) shall remain false or misleading for a period of 30 days after the earlier of notice thereof (i) from the Preferred Majority Holder to the Company and (ii) to the Holders pursuant to Section 1.2(c)(i) of the Second Amended and Restated Series A Investors Rights Agreement;

(b) the Company shall fail to declare or pay any Dividends in accordance with Section 5 or any failure or default shall be made in the payment or distribution on any Share (including pursuant to Section 5 , Section 6 or Section 7 of this Second Amended and Restated Certificate of Designation or Section 1.1 of the Second Amended and Restated Series A Investors Rights Agreement) or any other Preferred Securities, when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or by acceleration thereof or otherwise, in each case for any reason whatsoever and, solely with respect to any failure to declare or pay any Dividends in accordance with Section 5 , such failure shall continue unremedied for a period of five Business Days;

(c) any failure or default shall be made in the due observance or performance by the Company or any of its Subsidiaries of any covenant, condition or agreement contained in Section 9 of this Second Amended and Restated Certificate of Designation or by the Company or any of its Subsidiaries of any covenant, condition or agreement contained in Sections 1.2(a), 1.2(c) or 1.2(e) of the Second Amended and Restated Series A Investors Rights Agreement;

(d) any failure or default shall be made in the due observance or performance by the Member, the General Partner, Parent, the Company or any of its Subsidiaries of any covenant, condition or agreement contained herein or in any other Related Agreement to which it is a party (other than those specified in clauses (a), (b) and (c) above) and such failure or default shall continue unremedied for a period of 30 days after the earlier of notice thereof (i) from the Preferred Majority Holder to the Company and (ii) to the Holders pursuant to Section 1.2(c)(i) of the Second Amended and Restated Series A Investors Rights Agreement, in each case for any reason whatsoever;

(e) (i) any event or condition occurs that results in any Senior Debt becoming due prior to its scheduled maturity (a “ Senior Debt Acceleration ”), (ii) any event or condition occurs that (A) results in any Material Indebtedness becoming due prior to its scheduled maturity or (B) enables or permits (with all applicable grace periods having expired) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity, or (iii) Parent, the Company or any of its Subsidiaries shall fail to pay the principal of any Material Indebtedness at the stated final maturity thereof; provided that this clause (e) shall not apply to any secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness if such sale or transfer is permitted hereunder and under the documents providing for such Indebtedness;

(f) Parent, the Company or any of its Subsidiaries shall fail to (i) make any payment of principal, interest or other amount when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) in respect of any Senior Debt and such failure is not cured prior to the Business Day before the expiration of the applicable grace period under such Senior Debt (after giving effect to any written waiver or other written extension thereof) or (ii) observe or perform any other agreement set forth in any Senior Debt or contained in any instrument or agreement evidencing, securing or relating to such Senior Debt and such failure is not cured prior to the Business Day before the expiration of the applicable grace period under such Senior Debt (after giving effect to any written waiver or other written extension

thereof), which failure would enable or permit the holder or holders of such Senior Debt or any trustee or agent on its or their behalf to cause such Senior Debt to become due or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that, in each case, a forbearance with respect to any such failure shall not be deemed to eliminate such failure unless the requisite holders execute and deliver to Parent, the Company or any of its Subsidiaries, as applicable, an irrevocable extension or waiver under the terms of such Senior Debt with respect to such failure (any failure described in this clause (f), a “ Senior Debt Event of Default ”);

(g) there shall have occurred a Change in Control;

(h) there shall have occurred an Insolvency Event;

(i) the failure by Parent, the Company, Holdings, the Borrower or any of its Material Subsidiaries to pay one or more final judgments aggregating in excess of $84,000,000 (to the extent not covered by insurance), which judgments are not discharged or effectively waived or stayed for a period of 45 consecutive days, or any action shall be legally taken by a judgment creditor to levy upon assets or properties of Parent, the Company, Holdings, the Borrower or any of its Material Subsidiaries to enforce any such judgment;

(j) (i) an ERISA Event shall have occurred, (ii) the PBGC shall institute proceedings (including giving notice of intent thereof) to terminate any Plan or Plans, (iii) Parent, the Company or any of its Subsidiaries or any ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or is being terminated, within the meaning of Title IV of ERISA, or (iv) Parent, the Company or any of its Subsidiaries shall engage in any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan; and in each case in clauses (i) through (iv) above, such event or condition, together with all other such events or conditions, if any, would reasonably be expected to have a Material Adverse Effect; or

(k) this Second Amended and Restated Certificate of Designation or any other Related Agreement shall for any reason be asserted in writing by the Member, the General Partner, Parent, the Company or any of its Subsidiaries or any of their respective Affiliates not to be a legal, valid and binding obligation of any party thereto.

“ Exchange Act ” shall mean the Securities Exchange Act of 1934.

“ Existing ADTSC Roll-Over Notes ” shall mean, collectively, (a) the $1,000,000,000 in aggregate principal amount of the 3.50% Notes due 2022, (b) the $750,000,000 in aggregate principal amount of the 4.875% Notes due 2042 or 2032, as applicable, (c) the $700,000,000 in aggregate principal amount of the 4.125% Senior Notes due 2023, (d) the $1,000,000,000 in aggregate principal amount of the 6.25% Senior Notes due 2021 and (e) the $300,000,000 in aggregate principal amount of the 5.25% Senior Notes due 2020.

“ First Call Date ” shall mean May 2, 2019.

“ First Lien Credit Agreement ” shall mean the Amended and Restated First Lien Credit Agreement, dated as of the Closing Date, by and among Holdings, the Borrower, the lenders party thereto and Barclays Bank PLC, as administrative agent.

“ Five-Year Treasury Yield ” shall mean, as of the relevant date, the greater of (a) 1.25% per annum and (b) the yield (rounded upwards if necessary to the nearest 1/100th of 1.00%) on actively traded U.S. Treasury securities adjusted to a constant maturity of five years, as determined by reference to the 5-Year Constant Maturity Treasury Rate for such date published by the U.S. Department of the Treasury (currently located under the caption “Daily Treasury Yield Curve Rates” at http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx? data=yield), or, if such information is no longer published by the U.S. Department of the Treasury, by reference to comparable information contained in any other publicly available source of similar market data as reasonably determined in good faith by the Company.

“ Foreign Subsidiary ” shall mean any Subsidiary of the Borrower that is incorporated or organized under the laws of any jurisdiction other than the U.S., any state thereof or the District of Columbia.

“ Fund ” shall mean, collectively, Apollo Investment Fund VIII, L.P., a Delaware limited partnership, Apollo Overseas Partners (Delaware) VIII, L.P., a Delaware limited partnership, Apollo Overseas Partners (Delaware 892) VIII, L.P., a Delaware limited partnership, and Apollo Overseas Partners VIII, L.P., a Cayman Islands exempted limited partnership.

“ Fund Affiliate ” shall mean (a) each Affiliate of the Fund that is neither a “portfolio company” (which shall mean a company actively engaged in providing goods or services to unaffiliated customers), whether or not controlled, nor a company controlled by a “portfolio company” and (b) any individual who is a partner or employee of Apollo Management, L.P. or Apollo Management VIII, L.P.

A “ Fund Change in Control ” shall be deemed to occur if:

(a) the Fund ceases to have the ability or right to appoint, directly or indirectly, directors or managers constituting a majority of the voting power of the Board of Directors, the Board of Managers or the board of directors or board of managers or other governing body of the General Partner, Parent, the Company or any of its Subsidiaries;

(b) (i) the Fund ceases to Beneficially Own and own of record, directly or indirectly, 100% of the issued and outstanding Equity Interests of the General Partner or the Equity Interests of the other Person surviving or resulting from a Fund Change in Control relating to the General Partner, as applicable, (ii) the Fund ceases to Beneficially Own and own of record, directly or indirectly, at least 125,000,000 Units and/or Units representing at least 32.81% of the issued and outstanding Units or the equivalent Equity Interests of the other Person surviving or resulting from a Fund Change in Control relating to Parent, as applicable, or (iii) the Fund ceases to Beneficially Own and own of record, directly or indirectly, at least 311,649.94 shares of Common Stock and/or Common Stock representing at least 32.81% of the issued and outstanding Common Stock or the equivalent Equity Interests of the other Person surviving or

resulting from a Fund Change in Control relating to the Company, as applicable, in each case without giving effect to any adjustments in the event of any stock or securities dividend, stock or securities split, stock or securities distribution, recapitalization or combination; provided that the percentage calculations in clauses (ii) and (iii) shall be calculated without regard to any Equity Interests of Parent or the Company granted to or held by any Covered Person (or any Affiliate of such Covered Person), but only to the extent such Equity Interests comprise 5.50% or less of all Equity Interests of any such Person in the aggregate; or

(c) the General Partner, Parent or the Company (i) merges or consolidates with or into any other Person, another Person merges with or into the General Partner, Parent or the Company, or the General Partner, Parent or, except in connection with a Permitted Securitization Financing, the Company Disposes to another Person all or substantially all of the assets of the General Partner, Parent, the Company and its Subsidiaries, taken as a whole, whether directly or indirectly through the sale of assets of one or more of their respective Subsidiaries, or (ii) engages in any recapitalization, reclassification or other transaction unless, in the context of any such merger or consolidation referenced in the foregoing clause (i) or recapitalization, reclassification or other transaction referenced in the foregoing clause (ii), (A) the Fund continues to Beneficially Own and own of record, directly or indirectly, immediately after giving effect to such transaction, (I) 100% of the issued and outstanding Equity Interests of the General Partner, (II) at least 125,000,000 Units and/or 32.81% of the issued and outstanding Units and (III) at least 311,649.94 shares of Common Stock and/or 32.81% of the issued and outstanding Common Stock or, in each case, the equivalent Equity Interests of the other Person surviving or resulting from such transaction, in each case without giving effect to any adjustments in the event of any stock or securities dividend, stock or securities split, stock or securities distribution, recapitalization or combination and (B) no Shares are cancelled or converted into shares of any other class or series of capital stock of the Company or any Equity Interests of the Company or any other Person (or the right to receive any such Equity Interests), any property (including cash or the right to receive cash or other property) or any combination of the foregoing; provided that the percentage calculations in clauses (II) and (III) shall be calculated without regard to any Equity Interests of Parent or the Company granted to or held by any Covered Person (or any Affiliate of such Covered Person), but only to the extent such Equity Interests comprise 5.50% or less of all Equity Interests of any such Person in the aggregate.

“ GAAP ” shall mean generally accepted accounting principles in effect from time to time in the U.S., applied on a consistent basis, subject to the provisions of Section 1(b) ; provided that any reference to the application of GAAP in Sections 2.13(b) or 2.20 of the Securities Purchase Agreement or Section 1.2(d) of the Second Amended and Restated Series A Investors Rights Agreement to a Foreign Subsidiary (and not as a consolidated Subsidiary of the Borrower) shall mean generally accepted accounting principles in effect from time to time in the jurisdiction of organization of such Foreign Subsidiary.

“ General Partner ” shall mean Prime Security Services TopCo Parent GP, LLC, a Delaware limited liability company.

“ Guarantee ” of or by any Person (the “ guarantor ”) shall mean (a) any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other monetary obligation payable or performable by another Person (the “ primary obligor ”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (iv) entered into for the purpose of assuring in any other manner the holders of such Indebtedness or other obligation of the payment thereof or to protect such holders against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of the guarantor securing any Indebtedness or other obligation (or any existing right, contingent or otherwise, of the holder of Indebtedness or other obligation to be secured by such a Lien) of any other Person, whether or not such Indebtedness or other obligation is assumed by the guarantor; provided that the term “Guarantee” shall not include endorsements of instruments for deposit or collection in the ordinary course of business or customary and reasonable indemnity obligations in effect on the Closing Date or entered into in connection with any acquisition or Disposition of assets permitted by the Loan Documents and this Second Amended and Restated Certificate of Designation (other than such obligations with respect to Indebtedness). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the Indebtedness in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith.

“ Hedging Agreement ” shall mean any agreement with respect to any swap, forward, future or derivative transaction, or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value, or credit spread transaction, repurchase transaction, reserve repurchase transaction, securities lending transaction, weather index transaction, spot contracts, fixed price physical delivery contracts, or any similar transaction or any combination of these transactions, in each case of the foregoing, whether or not exchange traded; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of Parent, the Company or any of its Subsidiaries shall be a Hedging Agreement.

“ Holder ” shall mean, as of the relevant date, any Person that is the holder of record of at least one Share as of such date.

“ Holdings ” shall mean Prime Security Services Holdings, LLC, a Delaware limited liability company. Unless the context otherwise requires, “Holdings” shall also include any Intermediate Holding Company.

“ Immaterial Subsidiary ” shall mean any Subsidiary of the Borrower that (a) did not, as of the last day of the fiscal quarter of the Borrower most recently ended for which financial statements have been (or were required to be) delivered pursuant to Section 4.1(f) of the Securities Purchase Agreement or Sections 1.2(b)(i) or 1.2(b)(ii) of the Second Amended and Restated Series A Investors Rights Agreement, have assets with a value in excess of 5.00% of the Consolidated Total Assets or revenues representing in excess of 5.00% of total revenues of

the Borrower and its Subsidiaries on a consolidated basis as of such date, and (b) taken together with all Immaterial Subsidiaries as of such date, did not have assets with a value in excess of 10.0% of Consolidated Total Assets or revenues representing in excess of 10.0% of total revenues of the Borrower and its Subsidiaries on a consolidated basis as of such date; provided that the Company may elect in its sole discretion to exclude as an Immaterial Subsidiary any Subsidiary of the Borrower that would otherwise meet the definition of “Immaterial Subsidiary”. Each Immaterial Subsidiary as of the Amendment Date shall be set forth in Exhibit C to the Second Amended and Restated Series A Investors Rights Agreement and the Company shall update such Exhibit from time to time after the Amendment Date as necessary to reflect all Immaterial Subsidiaries at such time (the selection of Subsidiaries of the Borrower to be added to or removed from such Exhibit to be made as the Company may determine).

“ Incremental Assumption and Amendment Agreement ” shall mean the Incremental Assumption and Amendment Agreement, dated as of the Closing Date, by and among Holdings, the Borrower, the lenders party thereto, Barclays Bank PLC, as administrative agent, and the other parties thereto.

“ Indebtedness ” of any Person shall mean, if and to the extent (other than with respect to clause (i) of this definition) the same would constitute indebtedness or a liability on a balance sheet prepared in accordance with GAAP, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property or assets purchased by such Person, (d) all obligations of such Person issued or assumed as the deferred purchase price of property or services (other than such obligations accrued in the ordinary course), to the extent that the same would be required to be shown as a long term liability on a balance sheet prepared in accordance with GAAP, (e) all Capitalized Lease Obligations of such Person, (f) all net payments that such Person would have to make in the event of an early termination, on the date Indebtedness of such Person is being determined, in respect of outstanding Hedging Agreements, (g) the principal component of all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit, (h) the principal component of all obligations of such Person in respect of bankers’ acceptances, (i) all Guarantees by such Person of Indebtedness described in clauses (a) through (h) above and (j) the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock (excluding accrued dividends that have not increased the liquidation preference of such Disqualified Stock); provided that, in the case of the Borrower and its Subsidiaries, Indebtedness shall not include (A) trade and other ordinary-course payables, accrued expenses, and intercompany liabilities arising in the ordinary course of business, (B) prepaid or deferred revenue, (C) purchase price holdbacks arising in the ordinary course of business in respect of a portion of the purchase prices of an asset to satisfy unperformed obligations of the seller of such asset, (D) earn-out obligations until such obligations become a liability on the balance sheet of such Person in accordance with GAAP, (E) obligations in respect of Third Party Funds or (F): (I) all intercompany Indebtedness having a term not exceeding 364 days (inclusive of any roll-over or extensions of terms) and made in the ordinary course of business and (II) intercompany liabilities in connection with the cash management, tax and accounting operations of the Borrower and its Subsidiaries. The Indebtedness of any Person shall include the Indebtedness of any partnership in which such Person is a general partner, other than to the extent that the instrument or agreement evidencing such Indebtedness limits the liability of such Person in respect thereof. To the extent not otherwise included, Indebtedness shall include the amount of any Receivables Net Investment.

“ Initial Public Offering ” shall mean a consummated underwritten initial public offering of Common Stock.

“ Insolvency Event ” shall mean:

(a) any voluntary or involuntary liquidation, dissolution or winding up of the Member, the General Partner, Parent, the Company, Holdings, the Borrower or any of its Material Subsidiaries;

(b) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of the Member, the General Partner, Parent, the Company, Holdings, the Borrower or any of its Material Subsidiaries, or of a substantial part of the property or assets of the Member, the General Partner, Parent, the Company, Holdings, the Borrower or any of its Material Subsidiaries, under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law, (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Member, the General Partner, Parent, the Company, Holdings, the Borrower or any of its Material Subsidiaries or for a substantial part of the property or assets of the Member, the General Partner, Parent, the Company, Holdings, the Borrower or any of its Material Subsidiaries or (iii) the winding-up or liquidation of the Member, the General Partner, Parent, the Company, Holdings, the Borrower or any of its Material Subsidiaries (except, solely with respect to the Borrower or any of its Material Subsidiaries, in a transaction permitted under the Loan Documents), and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered; or

(c) the Member, the General Partner, Parent, the Company, Holdings, the Borrower or any of its Material Subsidiaries shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in clause (b) above, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Member, the General Partner, Parent, the Company, Holdings, the Borrower or any of its Material Subsidiaries or for a substantial part of the property or assets of the Member, the General Partner, Parent, the Company, Holdings, the Borrower or any of its Material Subsidiaries, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) become unable or admit in writing its inability or fail generally to pay its debts as they become due.

For purposes of this definition, “Material Subsidiary” shall mean any Subsidiary of the Borrower that would not be an Immaterial Subsidiary under clause (a) of the definition thereof.

“ Intermediate Holding Company ” shall have the meaning assigned to such term in Section 9(a)(iv) .

“ Junior Financing ” shall have the meaning assigned to such term in each of the First Lien Credit Agreement as in effect on the Closing Date and the Second Lien Credit Agreement as in effect on the Closing Date.

“ Junior Stock ” shall mean Common Stock, any other Preferred Securities and any other Equity Interest of the Company (other than the Series A Preferred Securities).

“ Lien ” shall mean, with respect to any asset, (a) any mortgage, deed of trust, lien, hypothecation, pledge, charge, security interest or similar monetary encumbrance in or on such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset; provided that in no event shall an operating lease or an agreement to sell be deemed to constitute a Lien.

“ LLC Agreement ” shall mean the Limited Liability Company Agreement of the General Partner dated as of the Closing Date.

“ Loan Documents ” shall have the meaning assigned to such term in each of the First Lien Credit Agreement as in effect on the Closing Date and the Second Lien Credit Agreement as in effect on the Closing Date.

“ LP Agreement ” shall mean the Third Amended and Restated Limited Partnership Agreement of Parent dated as of the Closing Date.

“ Make-Whole Amount ” shall mean, with respect to any Share as of any Redemption Date occurring prior to the First Call Date, the difference of (I) the present value as of such Redemption Date of the Series A Preference Amount as of the First Call Date of the Share being redeemed (i.e., the product of 105.50% multiplied by the Accumulated Stated Value as of the First Call Date of such Share being redeemed), assuming (a) that such Share were to remain outstanding through the First Call Date and then be redeemed on the First Call Date and (b) for purposes of determining the Accumulated Stated Value as of the First Call Date of such Share that (i) all the Dividends that would accumulate on such Share (based on the Accrued Dividend Rate as in effect as of such Redemption Date) from such Redemption Date to, but not including, the Dividend Payment Date immediately prior to the First Call Date (the “ Nearest Dividend Payment Date ”) would not be paid and would compound and increase the Stated Value of such Share on each Dividend Payment Date that would occur during the period from such date through the Nearest Dividend Payment Date with such Dividends in each case accumulating on the Stated Value of such Share as it so increased and (ii) all the Dividends that would accumulate on such Share (based on the Accrued Dividend Rate as in effect as of such Redemption Date and, for the avoidance of doubt, after giving effect to the increase to the Stated Value of such Share described in clause (i) of this definition) from the Nearest Dividend Payment Date (or, if such Redemption Date occurs after the Nearest Dividend Payment Date and prior to the First Call Date, from such Redemption Date (and in such case, without duplication of amounts in clause (i) already included in the Accumulated Stated Value)) to, but not including, the First Call Date

would not be paid and would compound and increase the Stated Value of such Share on the First Call Date, with such present value being computed using an annual discount rate (applied quarterly) equal to the Applicable Treasury Rate as of such Redemption Date plus 50 basis points, minus (II) the Accumulated Stated Value of the Share being redeemed as of such Redemption Date, provided that, with respect to any Share as of any Redemption Date occurring after June 30, 2018 and before the First Call Date, if the cash balance in the Segregated Account has been at all times prior to the Redemption Date at least equal to the Minimum Segregated Account Amount, then the Make-Whole Amount per Share shall be reduced by the Reduction Amount.

“ Manager ” shall have the meaning assigned to such term in the LLC Agreement.

“ Mandatory Redemption Date ” shall have the meaning assigned to such term in Section 6(a)(ii) .

“ Material Adverse Effect ” shall mean a material adverse effect on the business, property, operations or financial condition of the Company and its Subsidiaries, taken as a whole, or the validity or enforceability of this Second Amended and Restated Certificate of Designation or any other Related Agreement or the rights and remedies of the Purchaser and the Holders hereunder or thereunder.

“ Material Event ” shall have the meaning assigned to such term in Section 7(a) .

“ Material Event Offer ” shall have the meaning assigned to such term in Section 7(a) .

“ Material Event Offer Period ” shall have the meaning assigned to such term in Section 7(c)(i) .

“ Material Event Redemption ” shall have the meaning assigned to such term in Section 7(a) .

“ Material Event Redemption Date ” shall have the meaning assigned to such term in Section 7(a) .

“ Material Event Redemption Notice ” shall have the meaning assigned to such term in Section 7(c)(iii) .

“ Material Indebtedness ” shall mean (a) any Senior Debt and/or (b) any Indebtedness of any one or more of Parent, the Company or any of its Subsidiaries in an aggregate principal amount exceeding $84,000,000; provided that in no event shall any Permitted Securitization Financing be considered Material Indebtedness.

“ Material Subsidiary ” shall mean any Subsidiary other than an Immaterial Subsidiary.

“ Member ” shall mean AP VIII Prime Security Services Holdings, L.P., a Delaware limited partnership.

“ Merger ” shall have the meaning assigned to such term in the definition of “Merger Agreement”.

“ Merger Agreement ” shall mean the Agreement and Plan of Merger, dated as of February 14, 2016, by and among ADT, the Borrower, Merger Sub (as defined therein), the Company and, solely for the purposes of Article IX thereof, Parent, pursuant to which Merger Sub will merge with and into ADT, with ADT surviving as an indirect wholly owned subsidiary of the Borrower (the “ Merger ”).

“ Minimum Segregated Account Amount ” shall mean either (a) at any time following the consummation of an Initial Public Offering (but before the consummation of any subsequent Public Offering (a “ Subsequent Offering ”)), an amount in cash equal to at least $750,000,000, or (b) at any time following the consummation of a Subsequent Offering, an amount equal to at least the aggregate Redemption Price for all outstanding Series A Preferred Securities outstanding as of such time, (i) in the event such Subsequent Offering occurs on or prior to June 30, 2018, the aggregate Redemption Price shall be initially calculated assuming the Redemption Date was July 1, 2018 and for each calendar quarter ending after June 30, 2018, the aggregate Redemption Price shall be calculated assuming the Redemption Date was the last date of such calendar quarter and (ii) in the event such Subsequent Offering occurs after June 30, 2018, the aggregate Redemption Price shall be initially calculated assuming the Redemption Date was the last date of the calendar quarter during which such Subsequent Offering was consummated and for each calendar quarter thereafter the aggregate Redemption Price shall be calculated assuming the Redemption Date was the last date of such calendar quarter.

“ Multiemployer Plan ” shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which Parent, the Company or any of its Subsidiaries or any ERISA Affiliate (other than one considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Code Section 414) is making or accruing an obligation to make contributions, or has within any of the preceding six plan years made or accrued an obligation to make contributions.

“ Nearest Dividend Payment Date ” shall have the meaning assigned to such term in the definition of “Make-Whole Amount”.

“ Optional Redemption Date ” shall have the meaning assigned to such term in Section 6(a)(i) .

“ Parent ” shall mean Prime Security Services TopCo Parent, L.P., a Delaware limited partnership.

“ Parent Entity ” shall mean any direct or indirect controlling parent of the Company (excluding the Fund, the Fund Affiliates and their respective parent entities).

“ PBGC ” shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA.

“ Permitted Affiliate Transaction ” shall mean:

(a) other than Affiliate Investment Transactions, which are Permitted Affiliate Transactions only if satisfying clause (i) of this definition of “Permitted Affiliate Transaction”, any transaction (or series of related transactions) upon terms that are substantially no less favorable to the Company and any of its Subsidiaries that are party to such transaction (or series of related transactions) than would be obtained in a comparable arm’s-length transaction with a Person that is not an Affiliate, as determined by the Board of Managers in good faith;

(b) loans or advances to employees or consultants of the Company, any of the Company’s Subsidiaries or any Parent Entity that are, in each case, made in connection with recruiting or retaining such employees or consultants to operate or manage their respective businesses, as determined by the Board of Managers in good faith to be reasonably necessary to successfully recruit or retain such employees or consultants, and the payment and cancellation of such loans or advances;

(d) any agreement to pay, and the payment of, monitoring, consulting, management, transaction, advisory or similar fees payable to the Fund or any Fund Affiliate in an aggregate amount in any fiscal year for all such agreements and payments not to exceed the lesser of (i) 1.00% of EBITDA for such fiscal year and (ii) $20,000,000;

(e) any Permitted Restricted Payment;

(f) the payment of (i) reasonable out-of-pocket costs to any Covered Person, in each case relating to services performed for or on behalf of the Company and (ii) amounts arising out of the Company’s or any Parent Entity’s indemnification and advancement obligations to any Covered Person;

(g) (i) any Compensation Arrangement with any Covered Person and employment agreements entered into by the Company or any of its Subsidiaries in the ordinary course of business, (ii) any subscription agreement or similar agreement pertaining to the repurchase of Equity Interests pursuant to any Permitted Restricted Payment and (iii) any employee compensation, benefit plan or arrangement, any health, disability or similar insurance plan which covers bona fide employees of the Company and its Subsidiaries, and any reasonable employment contract and transactions pursuant thereto;

(h) any transaction in respect of which the Company delivers to the Holders a letter addressed to the Board of Managers from an independent accounting, appraisal or investment banking firm, in each case of nationally recognized standing that is in the good faith determination of the Company qualified to render such letter, which letter states that (i) (A) such transaction is on terms that are substantially no less favorable to the Company or such Subsidiary, as applicable, than would be obtained in a comparable arm’s-length transaction with a Person that is not an Affiliate or (B) such transaction is fair to the Company or such Subsidiary, as applicable, from a financial point of view and (ii) such transaction does not disproportionately affect the rights of the Holders or the value of the Shares;

(i) investments in securities of, or the extension of any debt or equity financing to, the Company or any of its Subsidiaries by the Fund or any Fund Affiliate (any such investment or financing, an “ Affiliate Investment Transaction ”) so long as (i) the investment is being offered generally to other investors (including the Holders) on the same or more favorable terms and (ii) the investment constitutes less than 5.00% of the outstanding issue amount of such class of securities; or

(j) transactions between the Company and any of its Subsidiaries and any Person, a director of which is also a director of the Company or any Parent Entity; provided that (i) such director abstains from voting as a director of the Company or such Parent Entity, as the case may be, on any matter involving such other Person and (ii) such Person is not an Affiliate of the Company for any other reason other than such director’s acting in such capacity.

“ Permitted Refinancing Indebtedness ” shall have the meaning assigned to such term in each of the First Lien Credit Agreement as in effect on the Closing Date and the Second Lien Credit Agreement as in effect on the Closing Date.

“ Permitted Restricted Payment ” shall mean:

(a) any Restricted Payment on account of any Share;

(b) [Reserved];

(d) any dividends, distributions or other payments made to Parent or the Company, in order to permit Parent or the Company to make payments in respect of (i) dividends, distributions or other payments on account of purchases or redemptions, or payments, dividends or distributions in respect of, Equity Interests held by a Covered Person or under any Compensation Arrangement or any shareholders agreement then in effect upon such Person’s death, disability, retirement or termination of employment or under the terms of any Compensation Arrangement and (ii) dividends, distributions or other payments (A) in respect of bona fide overhead, legal, accounting and other professional fees and expenses of the Company or any Parent Entity, (B) in respect of bona fide franchise and similar taxes and other fees and expenses in connection with the maintenance of the Company’s (or any Parent Entity’s) existence and the Company’s (or any Parent Entity’s indirect) ownership of its Subsidiaries, (C) Permitted Affiliate Transactions (other than pursuant to clause (a) or (h) of such definition), (D) to the Company (and, if applicable, any Parent Entity) in an amount not to exceed the amount of any U.S., federal, state, local or foreign taxes that the Company and/or its Subsidiaries, as applicable, would have paid if the Company and/or its Subsidiaries, as applicable, had been a stand-alone corporate taxpayer or stand-alone corporate group with respect to any taxable period during which (x) the Company and/or any of its Subsidiaries are members of a consolidated, combined, affiliated, unitary or similar tax group for U.S. federal and/or applicable state, local or foreign tax purposes and (y) the Company or any Parent Entity is the common parent of such group, or (E) in respect of bona fide non-cash repurchases of Equity Interests deemed to occur upon exercise of stock options if such Equity Interests represent a portion of the exercise price of such options; provided that, in the case of clauses (A) and (B) above, the amount of such Restricted Payments shall not exceed the portion of any amounts referred to in such clauses (A) and (B) that are allocable to Parent and its Subsidiaries (which shall be 100% at any

time that, as the case may be, (x) the Company owns no material assets other than the Equity Interests of Holdings and assets incidental to such equity ownership or (y) any Parent Entity owns, directly or indirectly, no material assets other than Equity Interests of the Company and any other Parent Entity and assets incidental to such equity ownership).

“ Permitted Securitization Documents ” shall mean all documents and agreements evidencing, relating to or otherwise governing a Permitted Securitization Financing.

“ Permitted Securitization Financing ” shall mean one or more transactions pursuant to which (i) Securitization Assets or interests therein are sold to or financed by one or more Special Purpose Securitization Subsidiaries, and (ii) such Special Purpose Securitization Subsidiaries finance their acquisition of such Securitization Assets or interests therein, or the financing thereof, by selling or borrowing against Securitization Assets and any Hedging Agreements entered into in connection with such Securitization Assets; provided that recourse to the Borrower or any of its Subsidiaries (other than the Special Purpose Securitization Subsidiaries) in connection with such transactions shall be limited to the extent customary (as determined by the Company in good faith in consultation with the Preferred Majority Holder) for similar transactions in the applicable jurisdictions (including, to the extent applicable, in a manner consistent with the delivery of a “true sale”/“absolute transfer” opinion with respect to any transfer by the Borrower or any of its Subsidiaries (other than a Special Purpose Securitization Subsidiary)).

“ Person ” shall mean any natural person, corporation, business trust, joint venture, association, company, partnership, limited liability company or government, individual or family trusts, or any agency or political subdivision thereof.

“ Plan ” shall mean any employee pension benefit plan (other than a Multiemployer Plan) that is (a) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, (b) sponsored or maintained (at the time of determination or at any time within the five years prior thereto) by Parent, the Company, any of its Subsidiaries or any ERISA Affiliate, and (c) in respect of which Parent, the Company, any of its Subsidiaries or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“ Preferred Majority Holder ” shall mean the Holder (together with its Affiliates) or the Holders (together with their respective Affiliates) of not less than a majority of the voting power and the aggregate Accumulated Stated Value of all Shares.

“ Preferred Securities ” shall have the meaning assigned to such term in the recitals hereof.

“ Pro Forma Basis ” shall have the meaning assigned to such term in each of the First Lien Credit Agreement as in effect on the Closing Date and the Second Lien Credit Agreement as in effect on the Closing Date.

“ Public Offering ” means an underwritten public offering of Common Stock.

“ Purchaser ” shall have the meaning assigned to such term in the Securities Purchase Agreement.

“ Qualified Equity Interests ” shall mean any Equity Interest other than Disqualified Stock.

“ Qualified IPO ” shall mean an Initial Public Offering that (a) generates gross cash proceeds of at least $750,000,000 and (b) on or prior to which the Company shall have deposited in a Segregated Account an amount in cash equal to at least $750,000,000.

“ Receivables Assets ” shall mean accounts receivable (including any bills of exchange) and related assets and property from time to time originated, acquired or otherwise owned by the Borrower or any of its Subsidiaries.

“ Receivables Net Investment ” shall mean the aggregate cash amount paid by the lenders or purchasers under any Permitted Securitization Financing in connection with their purchase of, or the making of loans secured by, Receivables Assets or interests therein, as the same may be reduced from time to time by collections with respect to such Receivables Assets or otherwise in accordance with the terms of the Permitted Securitization Documents (but excluding any such collections used to make payments of, with respect to any Person for any period, commissions, discounts, yield and other fees and charges incurred in connection with any Permitted Securitization Financing which are payable to any Person other than the Borrower or a Subsidiary, minus interest income for such period); provided that if all or any part of such Receivables Net Investment shall have been reduced by application of any distribution and thereafter such distribution is rescinded or must otherwise be returned for any reason, such Receivables Net Investment shall be increased by the amount of such distribution, all as though such distribution had not been made.

“ Redemption Date ” shall mean an Optional Redemption Date, a Mandatory Redemption Date or a Material Event Redemption Date, as applicable.

“ Redemption Percentage ” shall mean, as of the relevant date, the applicable percentage under the heading “Redemption Percentage” set forth in the table below:


Period In Which Such Date Occurs	Redemption Percentage
If such date occurs during the period from and including the First Call Date to, but not including, May 2, 2020		105.50	%
If such date occurs during the period from and including May 2, 2020 to, but not including, May 2, 2021		102.75	%
If such date occurs on or after May 2, 2021		100	%

“ Redemption Price ” shall have the meaning assigned to such term in Section 6(b)(ii) .

“ Reduction Amount ” shall mean an amount equal to the sum of (x) the difference between (A) the Make-Whole Amount per Share calculated on the basis of the Accumulated Stated Value assuming a redemption date of July 1, 2018 and (B) the Make-Whole Amount per Share calculated on the basis of an Accumulated Stated Value per share equal to $1,000 assuming a redemption date of July 1, 2018 (without regard to any Compounding Dividends with respect to such Share as of July 1, 2018), plus (y) the difference between (A) the Aggregate Accumulated Dividends assuming a redemption date of July 1, 2018 for purposes of Section 6(a)(i) and Section 6(b)(i)(A) and (B) the Aggregate Accumulated Dividends assuming a redemption date of July 1, 2018 for purposes of Section 6(a)(i) and Section 6(b)(i)(A) calculated assuming that (i) from June 30, 2017 to and including July 1, 2018, the Accrued Dividend Rate equaled the Five-Year Treasury plus 9.00% per annum and (ii) Dividends accrued on each date during such period accumulated on a daily basis in arrears on the Stated Value per Share, with the Stated Value per Share for such purposes being $1,000 (without regard to any Compounded Dividends with respect to such Share as of any date during such period).

“ Related Agreements ” shall mean the Certificate of Incorporation (including this Second Amended and Restated Certificate of Designation), the Second Amended and Restated Series A Investors Rights Agreement, the Securities Purchase Agreement, the Equityholders Agreement, the LLC Agreement, the LP Agreement and the Warrant.

“ Reportable Event ” shall mean any reportable event as defined in Section 4043(c) of ERISA or the regulations issued thereunder, other than those events as to which the 30-day notice period referred to in Section 4043(c) of ERISA has been waived, with respect to a Plan (other than a Plan maintained by an ERISA Affiliate that is considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Section 414 of the Code).

“ Restricted Payment ” shall mean (a) to declare or pay any dividend or make any other distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, with respect to any of the Equity Interests of the Company or any of its Subsidiaries (other than, in each case, to the Company or any direct or indirect Subsidiary of the Company which Equity Interests of such Subsidiary shall be at least 90.0% owned, directly or indirectly, by the Company) or (b) directly or indirectly redeem, purchase, retire or otherwise acquire for value (or permit any Person to purchase or acquire) any of the Equity Interests of the Company or set aside any amount for any such purpose. The amount of any Restricted Payment made other than in the form of cash or cash equivalents shall be the fair market value thereof (as determined by the Company in good faith).

“ Second Amended and Restated Certificate of Designation ” shall have the meaning assigned to such term in the recitals hereof.

“ Second Amended and Restated Series A Investors Rights Agreement ” shall mean the Second Amended and Restated Series A Investors Rights Agreement, dated as of the date hereof, by and among the Purchaser, the Holders party thereto, the Member, the General Partner, Parent and the Company.

“ Second Lien Credit Agreement ” shall mean the Second Lien Credit Agreement, dated as of July 1, 2015, by and among Holdings, the Borrower, the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent.

“ Second Priority Senior Secured Notes ” shall mean the $3,140,000,000 in aggregate principal amount of the 9.25% Second Priority Senior Secured Notes due 2023 issued pursuant to the Second Priority Senior Secured Notes Indenture.

“ Second Priority Senior Secured Notes Documents ” shall mean the Second Priority Senior Secured Notes, the Second Priority Senior Secured Notes Indenture, the “Second Lien Intercreditor Agreement” (as defined in the Second Priority Senior Secured Notes Indenture), the “First Lien/Second Lien Intercreditor Agreement” (as defined in the Second Priority Senior Secured Notes Indenture) and the “Security Documents” (as defined in the Second Priority Senior Secured Notes Indenture), each as in effect on the Closing Date.

“ Second Priority Senior Secured Notes Indenture ” shall mean the Indenture, dated as of the Closing Date, among the Borrower, Prime Finance Inc., a Delaware corporation, as co-issuer, the subsidiary guarantors party thereto and Wells Fargo Bank, National Association, as trustee.

“ Securities Act ” shall mean the Securities Act of 1933.

“ Securities Purchase Agreement ” shall mean the Securities Purchase Agreement, dated as of the Closing Date, by and among the Purchaser, Parent and the Company.

“ Securitization Assets ” shall mean any of the following assets (or interests therein) from time to time originated, acquired or otherwise owned by the Borrower or any of its Subsidiaries or in which the Borrower or any of its Subsidiaries has any rights or interests, in each case, without regard to where such assets or interests are located: (a) Receivables Assets, (b) franchise fee payments and other revenues related to franchise agreements, (c) royalty and other similar payments made related to the use of trade names and other intellectual property, business support, training and other services, (d) revenues related to distribution and merchandising of the products of the Borrower and its Subsidiaries, (e) rents, real estate taxes and other non-royalty amounts due from franchisees, (f) intellectual property rights relating to the generation of any of the foregoing types of assets, (g) parcels of or interests in real property, together with all easements, hereditaments and appurtenances thereto, all improvements and appurtenant fixtures and equipment, incidental to the ownership, lease or operation thereof, and (h) any other assets and property to the extent customarily included in securitization transactions of the relevant type in the applicable jurisdictions (as determined by the Company in good faith).

“ Segregated Account ” shall mean the deposit account established and owned by the Company solely for the purpose of holding the Minimum Segregated Account Amount, which Minimum Segregated Account Amount may only be used by the Company to redeem the Series A Preferred Securities, in whole or in part, from time to time, in each case, in accordance with Section 1.5 of the Second Amended and Restated Series A Investors Rights Agreement.

“ Senior Debt ” shall mean any Indebtedness incurred pursuant to any of (a) the Loan Documents, (b) the Second Priority Senior Secured Notes Documents and/or (c) the documents governing the Existing ADTSC Roll-Over Notes, in each case as amended, restated, supplemented, waived, replaced (whether or not upon termination, and whether with the original lenders, holders or otherwise), restructured, repaid, refunded, refinanced or otherwise modified from time to time, including any agreement or indenture extending the maturity thereof, refinancing, replacing or otherwise restructuring all or any portion of any Indebtedness under such agreement or agreements or indenture or indentures or any successor or replacement agreement or agreements or indenture or indentures or increasing the amount loaned or issued thereunder or altering the maturity thereof and whether or not such original Senior Debt remains outstanding.

“ Senior Debt Acceleration ” shall have the meaning assigned to such term in clause (e)(i) of the definition of “Event of Default”.

“ Senior Debt Event of Default ” shall have the meaning assigned to such term in clause (f) of the definition of “Event of Default”.

“ Series A Preference Amount ” shall mean, as of any date that is on or after the First Call Date, an amount per Share equal to the product of (a) the Redemption Percentage applicable as of such date multiplied by (b) the Accumulated Stated Value of such Share as of such date.

“ Series A Preferred Securities ” shall have the meaning assigned to such term in Section 2 .

“ Share ” shall mean, as of the relevant date, any issued and outstanding share of the Series A Preferred Securities as of such date.

“ Similar Business ” shall mean any business, the majority of whose revenues are derived from (a) business or activities conducted by the Company and its Subsidiaries on the Closing Date, (b) any business that is a natural outgrowth or reasonable extension, development or expansion of any such business or any business similar, reasonably related, incidental, complementary or ancillary to any of the foregoing or (c) any business that in the Company’s good faith business judgment constitutes a reasonable diversification of businesses conducted by the Company and its Subsidiaries.

“ Special Purpose Securitization Subsidiary ” shall mean (i) a direct or indirect Subsidiary of the Borrower established in connection with a Permitted Securitization Financing for the acquisition of Securitization Assets or interests therein, and which is organized in a manner (as determined by the Company in good faith) intended to reduce the likelihood that it would be substantively consolidated with Holdings (prior to a Qualified IPO (as defined in the First Lien Credit Agreement as in effect on the Closing Date)), the Borrower or any of its Subsidiaries (other than Special Purpose Securitization Subsidiaries) in the event Holdings (prior to a Qualified IPO (as defined in the First Lien Credit Agreement as in effect on the Closing Date)), the Borrower or any such Subsidiary becomes subject to a proceeding under the U.S. Bankruptcy Code (or other insolvency law) and (ii) any Subsidiary of a Special Purpose Securitization Subsidiary.

“ Stated Value ” shall mean, as of the relevant date and with respect to each Share, the sum of (a) $1,000 (adjusted as appropriate in the event of any stock or securities dividend, stock or securities split, stock or securities distribution, recapitalization or combination) plus (b) the aggregate Compounded Dividends with respect to such Share as of such date.

“ Subsidiary ” shall mean, with respect to any Person (in this definition referred to as the “ parent ”), any corporation, partnership, association or other business entity (a) of which securities or other ownership interests representing more than 50.0% of the equity or more than 50.0% of the ordinary voting power or more than 50.0% of the general partnership interests are, at the time any determination is being made, directly or indirectly, owned, Controlled or held, or (b) that is, at the time any determination is made, otherwise Controlled, by the parent or one or more Subsidiaries of the parent or by the parent and one or more Subsidiaries of the parent.

“ Third Party Funds ” shall mean any segregated accounts or funds, or any portion thereof, received by Borrower or any of its Subsidiaries as agent on behalf of third parties in accordance with a written agreement that imposes a duty upon Borrower or one or more of its Subsidiaries to collect and remit those funds to such third parties.

“ Units ” shall mean the limited partnership units of Parent.

“ U.S. ” shall mean the United States of America.

“ U.S. Bankruptcy Code ” shall mean Title 11 of the United States Code or any similar federal or state law for the relief of debtors.

“ Warrant ” shall mean the Warrant to Purchase Class A-1 Units, designated as Warrant No. 1, issued by Parent to the Purchaser on the Closing Date.

“ Wholly Owned Subsidiary ” of any Person shall mean a Subsidiary of such Person, all of the Equity Interests of which (other than directors’ qualifying shares or nominee or other similar shares required pursuant to applicable law) are owned by such Person or another Wholly Owned Subsidiary of such Person. Unless the context otherwise requires, “Wholly Owned Subsidiary” shall mean a Subsidiary of the Company that is a Wholly Owned Subsidiary of the Company.

“ Withdrawal Liability ” shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

(b) Interpretation . Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. The headings are for convenience only and shall not be given effect in interpreting this Second Amended and Restated Certificate of Designation. References herein to any Section shall be to a Section hereof unless otherwise specifically provided. References herein to any law shall mean such law, including all rules and regulations promulgated under or implementing such law, as amended from time to time and any successor law unless otherwise specifically provided. The words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Second Amended and Restated Certificate of Designation, refer to this Second Amended and Restated

Certificate of Designation as a whole and not to any particular provision of this Second Amended and Restated Certificate of Designation. The use of the masculine, feminine or neuter gender or the singular or plural form of words shall not limit any provisions of this Second Amended and Restated Certificate of Designation. The use herein of the word “include” or “including”, when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter. The word “will” shall be construed to have the same meaning as the word “shall”. With respect to the determination of any period of time, “from” shall mean “from and including”. The word “or” shall not be exclusive. The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”. The terms lease and license shall include sub-lease and sub-license, as applicable. All references to “$”, currency, monetary values and dollars set forth herein shall mean U.S. dollars. When the terms of this Second Amended and Restated Certificate of Designation refer to a specific agreement or other document or a decision by any body or Person that determines the meaning or operation of a provision hereof, the secretary of the Company shall maintain a copy of such agreement, document or decision at the principal executive offices of the Company and a copy thereof shall be provided free of charge to any Holder who makes a request therefor. Any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or modifications set forth herein or unless expressly provided herein or the context otherwise requires). Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Company notifies the Holders that the Company has requested an amendment to any provision hereof to eliminate the effect of any change occurring after the Closing Date in GAAP or in the application thereof on the operation of such provision, regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. Notwithstanding any changes in GAAP after the Closing Date, any lease of the Company or any of its Subsidiaries, or of a special purpose or other entity not consolidated with the Company and its Subsidiaries at the time of its incurrence of such lease, that would be characterized as an operating lease under GAAP in effect on the Closing Date (whether such lease is entered into before or after the Closing Date) shall not constitute Indebtedness or a Capitalized Lease Obligation of the Company or any of its Subsidiaries under this Second Amended and Restated Certificate of Designation as a result of such changes in GAAP. Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to any election under FASB Accounting Standards Codification 805, 810 or 825 (or any other part of FASB Accounting Standards Codification having a similar result or effect), to value any Indebtedness at “fair value”.

2. Designation . A total of 750,000 shares of the Preferred Securities are designated as a series known as Series A Preferred Securities, with each such share having an initial Stated Value of $1,000 per share (the “ Series A Preferred Securities ”).

3. Ranking . With respect to (a) payment of dividends and (b) distribution of assets upon, or in connection with, any redemption under Section 6 or Section 7 , the Series A Preferred Securities shall rank senior to all Junior Stock (except pursuant to any Permitted Restricted Payment).

4. Voting .

(a) Generally . The Holders have no voting rights with respect to the Shares except as set forth in this Second Amended and Restated Certificate of Designation, any other Related Agreement or as otherwise required by law.

(b) Voting Power . At the time of any vote or consent of the Holders under this Second Amended and Restated Certificate of Designation, any other Related Agreement or as otherwise required by law, the voting power of each Share, as a percentage of the aggregate voting power of all Shares, shall equal the product of (i) the quotient of (x) the Accumulated Stated Value of such Share as of such time divided by (y) the aggregate Accumulated Stated Value of all Shares as of such time multiplied by (ii) 100.

5. Dividends . From and after the Closing Date, preferential cumulative dividends (“ Dividends ”) shall accumulate on a daily basis in arrears during each Dividend Period at the Cash Dividend Rate (or, with respect to Dividends that become part of the Stated Value pursuant to this Section 5 , the Accrued Dividend Rate) in effect from time to time on the then-current Stated Value of each Share, whether or not Dividends are earned or declared by the Board of Directors or the Company is prohibited by law to pay Dividends, and, if declared, shall be due and payable on the Dividend Payment Date with respect to such Dividend Period in accordance with this Section 5 . To the extent not prohibited by law, Dividends may be paid in cash on each Dividend Payment Date, when, as and if declared by the Board of Directors. On each Dividend Payment Date related to a Dividend Period for which the Company does not for any reason (including because payment of any Dividend is prohibited by law) pay in cash all Dividends that accumulated during such Dividend Period, any such unpaid Dividends shall (whether or not earned or declared) become part of the Stated Value of such Share as of the applicable Dividend Payment Date (“ Compounded Dividends ”); provided that, unless the Board of Directors shall otherwise notify the Holders on or prior to the fifth Business Day prior to the applicable Dividend Period, any such unpaid Dividends shall (whether or not earned or declared) become part of the Stated Value of such Share as of the applicable Dividend Payment Date pursuant to this Section 5 . The Company may not declare or pay any Dividend in additional Shares. Dividends shall be calculated on the basis of actual days elapsed over a year of 360 days. All Dividends, including Compounded Dividends, are prior to and in preference over any dividend on any Junior Stock and shall be declared and fully paid before any dividends are declared and paid, or any other distributions or redemptions are made, on any Junior Stock (except pursuant to any Permitted Restricted Payment). Except as set forth in Section 7 , Dividends shall be payable to the Holders as they appear on the records of the Company on the record date for such Dividends, which, to the extent the Board of Directors determines to declare Dividends in respect

of any Dividend Period, shall be the date that is 15 days prior to the applicable Dividend Payment Date, and which record date and Dividend Payment Date, to the extent so determined, shall be declared by the Board of Directors during each Dividend Period on the date that is at least 20 days prior to the Dividend Payment Date and 5 days prior to the record date.

6. Redemption .

(a) Redemption Generally .

(i) Optional Redemption . At any time and from time to time, from and after the Closing Date, to the extent not prohibited by law, the Company may elect to redeem any or all Shares for an amount per Share equal to the Redemption Price paid in cash on the terms and subject to the conditions set forth in this Section 6 ; provided that the Shares to be redeemed shall have an aggregate Accumulated Stated Value of at least $50.0 million (unless the aggregate Accumulated Stated Value of all Shares is less than $50.0 million, in which case the Company shall be required to redeem all Shares). Any election by the Company pursuant to this Section 6(a)(i) shall be made by delivery to the Holders of (A) written notice of payment of the Aggregate Accumulated Dividends and the Make-Whole Amount described in Section 6(b)(i)(A) or the Aggregate Accumulated Dividends described in Section 6(b)(ii)(A) , as applicable, at least 15 days prior to the elected redemption date (each such date, an “ Optional Redemption Date ”), which notice shall indicate the amount of such Aggregate Accumulated Dividends (and, if applicable, such Make-Whole Amount), provide for the record date in accordance with Section 5 and set forth the date and time for payment of such Aggregate Accumulated Dividends (and, if applicable, such Make-Whole Amount), which shall occur on the Optional Redemption Date but prior to redemption of the applicable Shares, and (B) written notice of the Company’s election to redeem at least 15 days prior to the Optional Redemption Date, which notice shall indicate the number of Shares being redeemed, the Optional Redemption Date and the manner of and place designated for surrender (as set forth in Section 6(d) ) of certificates representing the Shares to be redeemed. Any redemption that is effected pursuant to this Section 6(a)(i) shall be made on a pro rata basis among the Holders in proportion to the aggregate Accumulated Stated Value of the Shares held by such Holders. For the avoidance of doubt, the Shares are not redeemable at the Company’s election except pursuant to this Section 6(a)(i) .

(ii) Mandatory Redemption . On May 2, 2030 (the “ Mandatory Redemption Date ”), to the extent not prohibited by law, the Company shall redeem all Shares for an amount per Share equal to the Redemption Price paid in cash on the terms and subject to the conditions set forth in this Section 6 . The redemption by the Company pursuant to this Section 6(a)(ii) shall be made by delivery to the Holders of (A) written notice of payment of the Aggregate Accumulated Dividends described in Section 6(b)(ii)(A) at least 15 days prior to the Mandatory Redemption Date, which notice shall indicate the amount of such Aggregate Accumulated Dividends, provide for the record date in accordance with Section 5 and set forth the date and time for payment of such Aggregate Accumulated Dividends, which shall occur on the Mandatory Redemption Date but prior to redemption of all Shares, and (B) written notice of the Company’s redemption at least 15 days prior to the Mandatory Redemption Date, which notice shall

indicate the number of all Shares being redeemed, the Mandatory Redemption Date and the manner of and place designated for surrender (as set forth in Section 6(d) ) of certificates representing all Shares to be redeemed. Any redemption that is effected pursuant to this Section 6(a)(ii) shall be made on a pro rata basis among the Holders in proportion to the aggregate Accumulated Stated Value of all Shares held by the Holders.

(b) Redemption Price . The total price for each Share redeemed pursuant to Section 6(a) or Section 7 (and as adjusted to take into account the prior separate payment of Aggregate Accumulated Dividends in cash as set forth below) shall be:

(i) with respect to any Redemption Date occurring prior to the First Call Date, an amount per Share equal to (A) the sum of (1) the Aggregate Accumulated Dividends as of such Redemption Date plus (2) the Make-Whole Amount as of such Redemption Date plus (3) the Deemed Dividend Gross-Up Payment (if any) (which shall, in each case, be declared separately and paid as a dividend in cash by or on behalf of the Company prior to payment of the amount set forth in Section 6(b)( i )(B) ) and (B) the sum of (1) 100% of the Stated Value of such Share as of the Closing Date and (2) any and all DRD Gross-Up Payments owing; and

(ii) with respect to any Redemption Date occurring on or after the First Call Date, an amount per Share equal to (A) the Aggregate Accumulated Dividends as of such Redemption Date (which shall be declared separately and paid as a dividend in cash by or on behalf of the Company prior to payment of the amount set forth in Section 6(b)(ii)(B) ) and (B) any and all DRD Gross-Up Payments owing and (C) an amount equal to the difference of (1) the Series A Preference Amount as of such Redemption Date minus (2) the Aggregate Accumulated Dividends as of such Redemption Date (such per Share aggregate price of the payment of cash dividends and the separate payments described in each of clauses (i)(A) and (i)(B) and (ii)(A) and (ii)(B) and (ii)(C), respectively, each, as applicable, the “ Redemption Price ”).

The applicable aggregate Redemption Price shall be due and payable, and paid in cash in immediately available funds, to the applicable Holders on the applicable Redemption Date.

(c) Rights After a Redemption Date . If any Shares are not redeemed on the applicable Redemption Date, for any reason, all such unredeemed Shares shall remain outstanding and entitled to all of the rights, preferences, powers, and the qualifications, restrictions and limitations, of the Series A Preferred Securities, including the right to accumulate and receive Dividends thereon as set forth in Section 5 until the date on which the Company actually redeems and pays in full the Redemption Price for such Shares.

(d) Surrender of Certificates . Each Holder of the Shares to be redeemed pursuant to this Section 6 shall surrender the certificates representing such Shares to the Company, duly assigned or endorsed for transfer to the Company (or accompanied by duly executed share powers relating thereto), or, in the event the certificates are lost, stolen, missing, destroyed or mutilated, shall deliver an affidavit of loss and customary indemnity in a form reasonably acceptable to the Company, at the principal executive office of the Company or such other place as the Company may from time to time designate by notice to the Holders, and each

surrendered certificate shall be canceled and retired and the Company shall thereafter make payment of the Redemption Price by certified check or wire transfer of immediately available funds; provided that, to the extent such certificates represent a greater number of Shares than the Shares actually redeemed, such Holder shall, in addition to receiving the payment of the Redemption Price for each redeemed Share, receive a new share certificate for the Shares not so redeemed.

(e) Redemption Preference . Any redemption under this Section 6 or Section 7 shall be in preference to and in priority over any dividend or other distribution upon any Junior Stock.

7. Material Event Redemption Offer .

(a) Material Event Offer . Upon any (x) Insolvency Event, (y) Fund Change in Control or (z) Senior Debt Acceleration (each, a “ Material Event ”), the Company shall make an irrevocable and unconditional offer (a “ Material Event Offer ”) to each Holder to redeem all of such Holder’s Shares (such redemption, a “ Material Event Redemption ”) on the applicable redemption date pursuant to Section 7(c) (the “ Material Event Redemption Date ”), for cash to the extent not prohibited by law, at a price per Share equal to the applicable Redemption Price. Each Holder shall be deemed to have accepted a Material Event Offer with respect to all of its Shares unless such Holder shall have delivered a written notice declining such Material Event Offer with respect to any or all of its Shares during the Material Event Offer Period; provided that, with respect to a Material Event Offer arising from a Senior Debt Acceleration, only the Purchaser or any of its Affiliates that own one or more Shares, on behalf of all Holders, shall have the right to decline such Material Event Offer with respect to any or all Shares. If, on the Material Event Redemption Date, the Company is prohibited by law to redeem all Shares held by Holders that have not declined to have their Shares redeemed, then the Company shall redeem such Shares to the fullest extent not so prohibited. Any Shares that are not redeemed pursuant to the immediately preceding sentence shall remain outstanding and entitled to all of the rights, preferences, powers, and the qualifications, restrictions and limitations, of the Series A Preferred Securities, including the right to continue to accumulate and receive Dividends thereon as set forth in Section 5 and, under such circumstances, the redemption requirements provided hereby shall be continuous, so that at any time thereafter when the Company is not prohibited by law to redeem such Shares, the Company shall immediately redeem such Shares at a price per Share equal to the Redemption Price as of the Material Event Redemption Date in accordance with Section 6 and this Section 7 , together with payment of an amount equal to the product of (i) the additional accumulated and unpaid Dividends following the Material Event Redemption Date multiplied by (ii) the Redemption Percentage applicable as of the Material Event Redemption Date.

(b) Company Insolvency Material Event . Notwithstanding anything to the contrary in this Section 7 :

(i) Upon an Insolvency Event with respect to the Company (a “ Company Insolvency Material Event ”), (A) a Material Event Offer for all Shares shall be deemed made by the Company prior to the occurrence of such Company Insolvency Material Event without any notice or other action on the part of the Company, (B) each

Holder of such Shares shall be deemed to have accepted such Material Event Offer immediately after such Material Event Offer is made pursuant to Section 7(b)(i)(A) and prior to the occurrence of such Company Insolvency Material Event without any action on the part of such Holder and (C) such Shares shall be redeemed on the date such Company Insolvency Material Event occurs immediately prior to the occurrence thereof without any action on the part of the Company or the Holder thereof and, with respect to such redemption, such date shall be the Material Event Redemption Date.

(ii) A redemption under Section 7(b)(i) shall be (A) for cash, to the extent not prohibited by law, (B) in preference to and in priority over any dividend or other distribution upon any Junior Stock and (C) effected at a price per Share equal to the Redemption Price. The Company shall pay or cause to be paid in full the aggregate Redemption Price as promptly as practicable and, in any event, before any payment, dividend or other distribution shall be made to the holders of Junior Stock by reason of their ownership thereof. Any such redemption shall occur without the requirement of notice or adherence to the procedures set forth Section 7(c) . If, upon such Company Insolvency Material Event, the assets of the Company available for distribution to its equity holders shall be insufficient to pay the Holders the full amount of the Redemption Price, the Holders of such Shares shall share ratably in any distribution of the assets available for distribution based on such Holder’s portion of the aggregate Accumulated Stated Value of such Shares.

(i) A Material Event Offer required to be made pursuant to Section 7(a) shall be commenced within five Business Days following a Material Event and shall remain open for exactly 15 Business Days, except to the extent that a longer period is required by law (the “ Material Event Offer Period ”).

(ii) On the fifth Business Day following the expiration of the Material Event Offer Period, the Company shall redeem all Shares (other than those Shares held by Holders that declined to have their Shares redeemed during the Material Event Offer Period) at a price per Share equal to the Redemption Price. If the Company is prohibited by law to redeem all Shares held by such Holders, then the Company shall redeem on a pro rata basis among such Holders in proportion to the aggregate Accumulated Stated Value of the Shares held by such Holders.

(iii) Prior to commencing a Material Event Offer, the Company shall send a notice (the “ Material Event Redemption Notice ”) to each Holder, which shall state:

(A) that a Material Event Offer is being made and that, unless such Holder provides written notice declining to have its Shares redeemed, all of such Holder’s Shares will be redeemed pursuant to this Section 7 ;

(B) (1) the Redemption Price (including the separate payment amount for the Aggregate Accumulated Dividends), (2) the bank or trust company with which the aggregate Redemption Price shall be deposited on or prior to the Material Event Redemption Date and (3) the Material Event Redemption Date;

(C) that Holders may decline such Material Event Offer by delivering a written notice of declination to the Company prior to the expiration of the Material Event Offer Period; and

(D) a reasonably detailed description of such Material Event.

(iv) On or before any Material Event Redemption Date, the Company shall deposit the amount of the applicable aggregate Redemption Price with a bank or trust company having an office in New York City irrevocably in trust for the benefit of such Holders. On the Material Event Redemption Date, the Company shall immediately cause to be paid the applicable Redemption Price for such Shares to such Holders. Upon such payment in full, such Shares will be deemed to have been redeemed, whether or not the certificates for such Shares have been surrendered for redemption and canceled, and Dividends with respect to such redeemed Shares shall cease to accumulate and all of the rights, preferences, powers, and the qualifications, restrictions and limitations, of such redeemed Shares shall forthwith terminate.

(v) In case fewer than all Shares represented by any certificate are redeemed in accordance with this Section 7 , new certificates shall be issued representing the unredeemed Shares without cost to the Holder thereof.

(vi) The Company shall comply, to the extent applicable, with the requirements of Section 14 of the Exchange Act and any other securities laws (or rules of any exchange on which any Shares are then listed) in connection with a redemption under this Section 7 . To the extent there is any conflict between the notice or other timing requirements of this Section 7 and the applicable requirements of Section 14 of the Exchange Act, Section 14 of the Exchange Act shall govern.

(d) Company Efforts . The Company shall take such actions as are necessary to give effect to the provisions of Section 6 and this Section 7 , including, in the event the Company is prohibited by law from redeeming or otherwise unable to redeem any Share in connection with any Material Event Redemption on the applicable Redemption Date, taking any action necessary or appropriate to remove as promptly as practicable any impediments to its ability to redeem such Share required to be so redeemed, including (i) to the extent not prohibited by law, reducing the stated capital of the Company or revaluing the assets of the Company to their fair market values under Section 154 of the DGCL if such revaluation would create surplus sufficient to make all or any portion of such Material Event Redemption and (ii) if the Company has sufficient surplus but insufficient cash to effect such Material Event Redemption, borrowing the cash necessary to make such Material Event Redemption to the extent it would not result in an Event of Default. In the event of any Fund Change in Control in which the Company is not the continuing or surviving corporation or entity, proper provision shall be made so that such continuing or surviving corporation or entity shall agree to carry out and observe the obligations of the Company under this Second Amended and Restated Certificate of Designation and the other Related Agreements.

8. Affirmative Covenants . The Company shall, and shall cause each of its Subsidiaries to, comply with Section 1.2 of the Second Amended and Restated Series A Investors Rights Agreement, unless the prior affirmative vote or written consent of the Preferred Majority Holder has been obtained.

9. Negative Covenants .

(a) Without the prior affirmative vote or written consent of the Preferred Majority Holder approving such action or omission, the Company shall not, and shall cause its Subsidiaries not to (either directly or indirectly, including by merger, consolidation, operation of law or otherwise):

(i) except pursuant to any Permitted Restricted Payment, make any Restricted Payment in respect of any Equity Interests of the Company or any of its Subsidiaries (including, for the avoidance of doubt, any Equity Interests issued pursuant to a Qualified IPO);

(ii) except in connection with an Initial Public Offering, issue any new, reclassify any existing Equity Interests into, or issue to any Person (other than a Wholly Owned Subsidiary) any Equity Interests or Indebtedness or debt securities, in each case convertible into, Equity Interests of any Subsidiary of the Company; provided , that the Company may issue Equity Interests of the Company in connection with any Public Offering;

(iii) issue any new, reclassify any existing Equity Interests into, or issue any Equity Interests or Indebtedness or debt securities, in each case convertible into, Equity Interests senior or pari passu to the Series A Preferred Securities;

(iv) except in connection with an Initial Public Offering, take any action, including forming a Subsidiary, or effect any recapitalization or reorganization, that results in any Person owning or holding any Equity Interests in (A) Holdings, other than the Company or a Wholly Owned Subsidiary, or (B) the Borrower, other than Holdings or any other Wholly Owned Subsidiary (any such Wholly Owned Subsidiary, an “ Intermediate Holding Company ”); provided , that the Company may issue Equity Interests of the Company in connection with any Public Offering;

(v) except pursuant to any Permitted Affiliate Transaction, sell or transfer any property or assets to, or purchase or acquire any property or assets from, or otherwise engage in any other transaction with, any of its Affiliates (including the Fund and the Fund Affiliates) (other than transactions between or among the Company and its Subsidiaries or any Person that becomes a Subsidiary of the Company as a result of such transaction);

(vi) settle or consent to any settlement, judgment or award in any litigation, arbitration or other proceeding if such settlement, judgment or award involves a guilty plea or any other acknowledgement of criminal wrongdoing that would reasonably be expected to have a Material Adverse Effect;

(vii) engage at any time in any material respect in any business or business activity substantially different from any business or business activity conducted by any of them on the Closing Date or any Similar Business, and in the case of a Special Purpose Securitization Subsidiary, Permitted Securitization Financings;

(viii) make any election, alter its legal structure or enter into any transaction, agreement or arrangement or take any other action, other than any action contemplated in the Related Agreements, that would reasonably be expected to result in the Shares being treated other than as preferred equity in an entity taxable as a corporation for U.S. federal, state and local income tax purposes (it being understood and agreed that any transaction, agreement or arrangement or action taken or entered into in the ordinary course of business of the Company and its Subsidiaries would not reasonably be expected to result in the Shares being treated other than as preferred equity in an entity taxable as a corporation for U.S. federal, state and local income tax purposes);

(ix) effect, permit the effectiveness of, approve or fail to contest any Insolvency Event;

(x) except in connection with a Public Offering, solely with respect to the Company, (A) incur, directly or indirectly, any Indebtedness or any other obligation or liability whatsoever other than the obligations under the Certificate of Incorporation (including this Second Amended and Restated Certificate of Designation), and the Second Amended and Restated Series A Investors Rights Agreement and the Securities Purchase Agreement, (B) create or suffer to exist any Lien upon any property or assets of the Company now owned or hereafter acquired, leased or licensed by it or (C) engage in any business or activity or own any assets other than (1) holding 100% of the Equity Interests of Holdings and (2) performing its obligations and activities incidental thereto under the Certificate of Incorporation (including this Second Amended and Restated Certificate of Designation), the Second Amended and Restated Series A Investors Rights Agreement and the Securities Purchase Agreement, in each case of clauses (A), (B) or (C) above, except for de minimis amounts related to maintaining its corporate existence and general overhead and corporate housekeeping matters; or

(xi) enter into any agreement to do or consent to any of the foregoing.

(b) Any of the actions or omissions prohibited by this Section 9 (if taken without the prior affirmative vote or written consent of the Preferred Majority Holder approving such action or omission) shall be ultra vires, null and void ab initio and of no force or effect. The Company shall not, and shall cause its Subsidiaries not to (either directly or indirectly, including by merger, consolidation, operation of law or otherwise), by amendment, modification, repeal, restatement, supplementation, termination or waiver of, or consent to any departure by the Company or any of its Subsidiaries from, any provision of this Second Amended and Restated Certificate of Designation or any other Related Agreement or through any Material Event, any Change in Control, any Disposition or any other reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, agreement or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed under this Second Amended and Restated Certificate of Designation or any other Related Agreement.

10. Waivers; Amendment .

(a) No failure or delay of any Holder in exercising any right or power hereunder or any other Related Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Holders hereunder or any other Related Agreement are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Second Amended and Restated Certificate of Designation or any other Related Agreement or any consent to any departure by the Company or any of its Subsidiaries therefrom shall in any event be effective unless the same shall not be prohibited by Section 10(b) , and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on the Company or any of its Subsidiaries in any case shall entitle such Person to any other or further notice or demand in similar or other circumstances.

(b) Any amendment, modification, repeal, restatement, supplementation, termination or waiver of, or consent to any departure by the Company or any of its Subsidiaries from, the Certificate of Incorporation (including this Second Amended and Restated Certificate of Designation), any other Related Agreement or the bylaws of the Company or any provision hereof or thereof in a manner that would adversely affect any of the rights, preferences, powers, or the qualifications, restrictions or limitations, of the Series A Preferred Securities (in each case, by merger, consolidation, operation of law or otherwise) shall be ultra vires, null and void ab initio and of no force or effect without (i) being in writing, (ii) the Company first having provided written notice of such proposed action to each Holder and (iii) the Company having obtained the affirmative vote or written consent of the Preferred Majority Holder.

(c) The various provisions set forth in this Second Amended and Restated Certificate of Designation are for the benefit of the Holders and shall be enforceable by them, including by one or more actions for specific performance.

11. Notice .

(a) Any notice or other communication required or permitted to be delivered under the Certificate of Incorporation (including this Second Amended and Restated Certificate of Designation), the bylaws or the DGCL shall be in writing and delivered by (i) personal delivery or electronic mail, (ii) overnight delivery via a national courier service or (iii) regular mail, with respect to any holder, at the email address or physical address on file with the Company.

(b) Notice or other communication pursuant to Section 11(a) shall be deemed to have been received (i) in the case of personal delivery or delivery by electronic mail, on the date of such delivery, (ii) in the case of dispatch by nationally recognized overnight courier, on the next Business Day following such dispatch and (iii) in the case of mailing, on the fifth Business Day after the posting thereof.

12. Cancellation; No Conversion Rights .

(a) No Share acquired by the Company by reason of redemption, purchase or otherwise shall be reissued or held in treasury for reissuance, and the Company shall take all necessary action to cause such Share to be canceled, retired and eliminated from the Shares which the Company shall be authorized to issue.

(b) The Holders have no rights to convert any Shares into any other Equity Interests of the Company.

13. Severability . In the event any one or more of the provisions contained in this Second Amended and Restated Certificate of Designation should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. The Company and the Holders shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

14. Effect of Amendment and Restatement . As of the date hereof, this Second Amended and Restated Certificate of Designation shall amend, and restate as amended, the Amended and Restated Certificate of Designation, but shall not constitute a novation thereof or in any way impair or otherwise affect the rights or obligations of the parties under the Amended and Restated Certificate of Designation except as such rights or obligations are amended and restated by this Second Amended and Restated Certificate of Designations. The Amended and Restated Certificate of Designation as amended and restated by this Second Amended and Restated Certificate of Designations shall be deemed to be a continuing agreement among the parties hereto and thereto, and all documents, instruments and agreements delivered pursuant to or in connection with the Amended and Restated Certificate of Designation not amended and restated in connection with the entry of the parties into this Second Amended and Restated Certificate of Designation shall remain in full force and effect, each in accordance with its terms, as of the date of delivery or such other date as contemplated by such document, instrument or agreement to the same extent as if the modifications to the Amended and Restated Certificate of Designation contained herein were set forth in an amendment to the Amended and Restated Certificate of Designation in a customary form, unless such document, instrument or agreement has otherwise been terminated or has expired in accordance with or pursuant to the terms of this Second Amended and Restated Certificate of Designation, the Amended and Restated Certificate of Designation or such document, instrument or agreement or as otherwise agreed by the required parties hereto or thereto.

IN WITNESS WHEREOF, the Company has caused this Second Amended and Restated Certificate of Designation to be signed by a duly authorized officer this day of , 2018.


ADT INC.

By:
Name:
Title:

[SIGNATURE PAGE TO SECOND AMENDED AND RESTATED SERIES A CERTIFICATE OF DESIGNATION]

Exhibit 4.1

EXECUTION VERSION

THE ADT CORPORATION,

as Issuer

AND

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee

INDENTURE

Dated as of July 5, 2012

UNSUBORDINATED DEBT SECURITIES

TABLE OF CONTENTS


		Page

ARTICLE I. DEFINITIONS		1
Section 1.01	Definitions of Terms .	1

ARTICLE II. ISSUE, DESCRIPTION, TERMS, EXECUTION, REGISTRATION AND EXCHANGE OF SECURITIES		8
Section 2.01	Designation and Terms of Securities .	8
Section 2.02	Form of Securities and Trustee’s Certificate .	11
Section 2.03	Denominations; Provisions for Payment .	13
Section 2.04	Execution and Authentications .	15
Section 2.05	Transfer and Exchange .	16
Section 2.06	Temporary Securities .	24
Section 2.07	Mutilated, Destroyed, Lost or Stolen Securities .	24
Section 2.08	Cancellation .	25
Section 2.09	Third Party Beneficiaries .	25
Section 2.10	Authenticating Agent .	26
Section 2.11	Global Securities .	26
Section 2.12	CUSIP Numbers .	27
Section 2.13	Securities Denominated in Foreign Currencies .	27
Section 2.14	Wire Transfers .	27
Section 2.15	Designated Currency .	27
Section 2.16	Form of Guarantee .	28

ARTICLE III. REDEMPTION OF SECURITIES AND SINKING FUND PROVISIONS		29
Section 3.01	Redemption .	29
Section 3.02	Notice of Redemption .	29
Section 3.03	Payment Upon Redemption .	30
Section 3.04	Sinking Fund .	31
Section 3.05	Satisfaction of Sinking Fund Payments with Securities .	31
Section 3.06	Redemption of Securities for Sinking Fund .	31

ARTICLE IV. CERTAIN COVENANTS		32
Section 4.01	Payment of Principal, Premium and Interest .	32
Section 4.02	Maintenance of Office or Agency .	32
Section 4.03	Paying Agents .	32
Section 4.04	Statement by Officers as to Default .	33
Section 4.05	Appointment to Fill Vacancy in Office of Trustee .	33

ARTICLE V. SECURITYHOLDERS’ LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE		34
Section 5.01	Company to Furnish Trustee Names and Addresses of Securityholders .	34
Section 5.02	Preservation of Information; Communications with Securityholders .	34
Section 5.03	Reports by the Company .	34
Section 5.04	Reports by the Trustee .	35


ARTICLE VI. REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT		35
Section 6.01	Events of Default .	35
Section 6.02	Collection of Indebtedness and Suits for Enforcement by Trustee .	37
Section 6.03	Application of Funds Collected .	38
Section 6.04	Limitation on Suits .	39
Section 6.05	Rights and Remedies Cumulative; Delay or Omission not Waiver .	39
Section 6.06	Control by Securityholders .	40
Section 6.07	Undertaking to Pay Costs .	41
Section 6.08	Waiver Of Usury, Stay Or Extension Laws .	41

ARTICLE VII. CONCERNING THE TRUSTEE		42
Section 7.01	Certain Duties and Responsibilities of Trustee .	42
Section 7.02	Certain Rights of Trustee .	43
Section 7.03	Trustee not Responsible for Recitals or Issuance of Securities .	44
Section 7.04	May Hold Securities .	44
Section 7.05	Funds Held in Trust .	45
Section 7.06	Compensation, Reimbursement and Indemnification .	45
Section 7.07	Reliance on Officer’s Certificate .	45
Section 7.08	Disqualification; Conflicting Interests .	46
Section 7.09	Corporate Trustee Required; Eligibility .	46
Section 7.10	Resignation and Removal; Appointment of Successor .	46
Section 7.11	Acceptance of Appointment By Successor .	48
Section 7.12	Merger, Conversion, Consolidation or Succession to Business .	49
Section 7.13	Preferential Collection of Claims Against the Company .	49

ARTICLE VIII. CONCERNING THE SECURITYHOLDERS		49
Section 8.01	Evidence of Action by Securityholders .	49
Section 8.02	Proof of Execution by Securityholders .	50
Section 8.03	Who May be Deemed Owners .	50
Section 8.04	Certain Securities Owned by Company Disregarded .	50
Section 8.05	Actions Binding on Future Securityholders .	51

ARTICLE IX. SUPPLEMENTAL INDENTURES		51
Section 9.01	Supplemental Indentures Without the Consent of Securityholders .	51
Section 9.02	Supplemental Indentures with Consent of Securityholders .	53
Section 9.03	Effect of Supplemental Indentures .	54
Section 9.04	Securities Affected by Supplemental Indentures .	54
Section 9.05	Execution of Supplemental Indentures .	54

ARTICLE X. SUCCESSOR		55
Section 10.01	Consolidation, Merger and Sale of Assets .	55
Section 10.02	Successor Person Substituted .	56


ARTICLE XI. SATISFACTION AND DISCHARGE		56
Section 11.01	Applicability of Article .	56
Section 11.02	Satisfaction and Discharge of Indenture .	56
Section 11.03	Defeasance and Discharge of Obligations; Covenant Defeasance .	57
Section 11.04	Deposited Funds to be Held in Trust .	59
Section 11.05	Payment of Funds Held by Paying Agents .	59
Section 11.06	Repayment to the Company or Guarantor .	59
Section 11.07	Reinstatement .	60

ARTICLE XII. IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS		60
Section 12.01	No Recourse .	60

ARTICLE XIII. MISCELLANEOUS PROVISIONS		61
Section 13.01	Effect on Successors and Assigns .	61
Section 13.02	Actions by Successor .	61
Section 13.03	Notices .	61
Section 13.04	Governing Law .	62
Section 13.05	Treatment of Securities as Debt .	63
Section 13.06	Compliance Certificates and Opinions .	63
Section 13.07	Payments on Business Days .	63
Section 13.08	Conflict with Trust Indenture Act .	63
Section 13.09	Counterparts .	64
Section 13.10	Separability .	64
Section 13.11	No Adverse Interpretation of Other Agreements .	64
Section 13.12	Table of Contents, Headings, Etc .	64
Section 13.13	Consent to Jurisdiction and Service of Process .	64
Section 13.14	Waiver of Jury Trial .	65
Section 13.15	USA Patriot Act .	65
Section 13.16	Force Majeure .	65

ARTICLE XIV. GUARANTEES		66
Section 14.01	Guarantee .	66
Section 14.02	Execution and Delivery of Guarantees .	67
Section 14.03	Release of Guarantee .	68

iii

Cross Reference Table*


Section of Trust Indenture Act of 1939, as amended		Section of Indenture

310(a)		7.09
310(b)		7.08
		7.10
310(c)		Inapplicable
311(a)		7.13
311(b)		7.13
311(c)		Inapplicable
312(a)		5.01
		5.02(a)
312(b)		5.02(b)
312(c)		5.02(b)
313(a)		5.04(a)
313(b)		5.04(b)
313(c)		5.04(b)
		5.04(c)
313(d)		5.04(c)
314(a)		5.03
314(b)		Inapplicable
314(c)		13.06
314(d)		Inapplicable
314(e)		13.06
314(f)		Inapplicable
315(a)		7.01
315(b)		6.01(c)
315(c)		7.01(a)
315(d)		7.01(b)
315(e)		6.07
316(a)		6.06, 8.04
316(b)		6.04
316(c)		8.01
317(a)		6.02
317(b)		4.03
318(a)		13.08

*	This Cross-Reference Table does not constitute part of the Indenture and shall not have any bearing on the interpretation of any of its terms or provisions.

THIS INDENTURE is dated as of July 5, 2012 among THE ADT CORPORATION, a Delaware company (the “ Company ”). and Wells Fargo Bank, National Association, a national banking association (the “ Trustee ”).

RECITALS

A. This Indenture provides for the issuance of unsecured debt securities (the “ Securities ”), in an unlimited aggregate principal amount to be issued from time to time in one or more series, to be authenticated by the certificate of the Trustee, and for guarantees of the Securities.

B. This Indenture is subject to the provisions of the Trust Indenture Act (as defined below) that are deemed to be incorporated into this Indenture and shall, to the extent applicable, be governed by such provisions.

C. All things necessary to make this Indenture a legal, valid and binding agreement, in accordance with its terms, have been done.

ARTICLE I.

DEFINITIONS

Section 1.01 Definitions of Terms .

The terms defined in this Section 1.01 (except as in this Indenture otherwise expressly provided or unless the context otherwise requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section 1.01 and shall include the plural as well as the singular. All other terms used in this Indenture that are defined in the Trust Indenture Act or that are by reference in the Trust Indenture Act defined in the Securities Act of 1933, as amended (the “ Securities Act ”) (except as herein otherwise expressly provided or unless the context otherwise requires), shall have the meanings assigned to such terms in the Trust Indenture Act and in the Securities Act as in force at the date of the execution of this instrument. All accounting terms used herein and not expressly defined shall have the meanings assigned to such terms in accordance with generally accepted accounting principles, and the term “generally accepted accounting principles” means such accounting principles as are generally accepted in the United States at the time of any computation.

“ 144A Global Security ”, with respect to any series of Securities, means one or more Global Securities bearing the Private Placement Legend that will be issued in an aggregate amount of denominations equal in total to the outstanding principal amount of the Securities of such series sold in global form in reliance on Rule 144A.

“ Affiliate ”, with respect to any specified Person, means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“ Applicable Procedures ”, with respect to any transfer or exchange of or for beneficial interests in any Global Security for a series of Securities, means the rules and procedures of the Depositary, Euroclear and Clearstream that apply to such transfer or exchange at the relevant time.

“ Authenticating Agent ” means an authenticating agent with respect to all or any of the series of Securities appointed with respect to all or any series of the Securities by the Trustee pursuant to Section 2.10.

“ Authentication Order ” has the meaning set forth in Section 2.04.

“ Board of Directors ” means the Board of Directors of the Company or a Guarantor, as applicable, or any duly authorized committee of such Board of Directors.

“ Board Resolution ” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company or a Guarantor, as applicable, to have been duly adopted by its Board of Directors and to be in full force and effect on the date of such certification.

“ Business Day ”, with respect to any series of Securities, means any day other than Saturday, Sunday or a day on which Federal or State banking institutions in the Borough of Manhattan, The City of New York, or in the city where the office or agency for payment on the Securities is maintained pursuant to Section 4.02, are authorized or obligated by law, executive order or regulation to close.

“ Capital Stock ” of any Person means any and all shares, interests, participations, rights in or other equivalents (however designated) of such Person’s capital stock, other equity interests whether now outstanding or issued after the date of this Indenture, partnership interests (whether general or limited), any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person and any rights (other than debt securities convertible into Capital Stock), warrants or options exchangeable for or convertible into such Capital Stock.

“ Clearstream ” means Clearstream Banking S.A., or its successors.

“ Commission ” means the Securities and Exchange Commission.

“ Company ” means The ADT Corporation until a successor entity shall have become such pursuant to Article X, and thereafter “Company” shall mean such successor entity.

“ Corporate Trust Office ” means the office of the Trustee at which, at any particular time, its corporate trust business shall be principally administered, which office at the date hereof

is located at Wells Fargo Bank, National Association, 7000 Central Parkway NE, Suite 550, Atlanta, GA 30328, Attention: Corporate Trust Services, or such other address as the Trustee may designate from time to time by notice to the Securityholders and the Company, or the principal corporate trust office of any successor Trustee (or such other address as such successor Trustee may designate from time to time by notice to the Securityholders and the Company).

“ Currency ” means Dollars or Foreign Currency.

“ Default ” means any event, act or condition that with notice or lapse of time, or both, would constitute an Event of Default.

“ Defaulted Interest ” has the meaning set forth in Section 2.03.

“ Definitive Security ” means a certificated Security registered in the name of the Securityholder thereof and issued in accordance with Section 2.05.

“ Depositary ”, with respect to Securities of any series which the Company shall determine will be issued in whole or in part as a Global Security, means The Depository Trust Company (“ DTC ”), New York, New York, another clearing agency, or any successor registered as a clearing agency under the Exchange Act, and any other applicable U.S. or foreign statute or regulation, which, in each case, shall be designated by the Company pursuant to Section 2.01.

“ Designated Currency ” has the meaning set forth in Section 2.15.

“ Distribution Compliance Period ” means the restricted period as defined in Rule 903(b)(3) under the Securities Act.

“ Dollar ” or “ $ ” means such currency of the United States as at the time of payment is legal tender for the payment of public and private debts.

“ Dollar Equivalent ” means, with respect to any monetary amount in a Foreign Currency, at any time for the determination thereof, the amount of Dollars obtained by converting such Foreign Currency involved in such computation into Dollars at the spot rate for the purchase of Dollars with the applicable Foreign Currency as quoted by JPMorgan Chase Bank, N.A. (unless another comparable financial institution is designated by the Company) in New York, New York, at approximately 11:00 a.m. (New York time) on the date two business days prior to such determination.

“ Euroclear ” means Euroclear Bank S.A./N.V., or its successor, as operator of the Euroclear System.

“ Event of Default ”, with respect to Securities of a particular series, means any event specified in Section 6.01, continued for the period of time, if any, therein designated.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

“ Foreign Currency ” means a currency, currency unit or composite currency, including the euro, issued by the government of one or more countries other than the United States or by

any recognized confederation or association of such governments or a composite currency the value of which is determined by reference to the values of the currencies of any group of countries.

“ Global Security ”, with respect to any series of Securities, means a Security executed by the Company and delivered by the Trustee to the Depositary or pursuant to the Depositary’s instruction, all in accordance with this Indenture, which shall be registered in the name of the Depositary or its nominee.

“ Governmental Obligations ” means securities that are (i) direct obligations of the United States for the payment of which its full faith and credit is pledged or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States, the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States that, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any such Governmental Obligation or a specific payment of principal of or interest on any such Governmental Obligation held by such custodian for the account of the holder of such depositary receipt; provided, however, that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the Governmental Obligation or the specific payment of principal of or interest on the Governmental Obligation evidenced by such depositary receipt.

“ Guarantee ” with respect to Securities of any series which the Company shall determine will be guaranteed by another Person, means the unconditional and unsubordinated guarantee by a Guarantor, as defined below, of the due and punctual payment of principal of and interest on the Securities of such series when and as the same shall become due and payable, whether at the stated maturity, by acceleration, call for redemption or otherwise in accordance with the terms of the Securities of such series and a Board Resolution or supplemental indenture to this Indenture providing for the issuance of the Securities of such series.

“ Guarantor ” shall mean any Person providing a Guarantee of the Securities of any series pursuant to Article XIV.

“ herein ,” “ hereof ” and “ hereunder ,” and other words of similar import, refer to this Indenture as a whole and not to any particular Article, Section or other subdivision.

“ including ” means including without limitation.

“ Indenture ” means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into in accordance with the terms hereof.

“ Indirect Participant ” means any entity that, with respect to DTC, clears through or maintains a direct or indirect, custodial relationship with a Participant.

“ Interest Payment Date, ” when used with respect to any installment of interest on a Security of a particular series, means the date specified herein, in such Security or in a Board Resolution or in an indenture supplemental hereto with respect to such series as the fixed date on which an installment of interest with respect to Securities of that series is due and payable.

“ Officer ” means any managing director, the chairman or any vice chairman of the Board of Directors, the chief executive officer, the president, the chief financial officer, any vice president, the treasurer, any assistant treasurer, the secretary or any assistant secretary of the Company or a Guarantor, as the case may be.

“ Officer’s Certificate ” means a certificate, signed by any managing director or by the chairman or any vice chairman of the Board of Directors, or the chief executive officer, president, chief financial officer or vice president or the secretary or any assistant secretary or the treasurer or any assistant treasurer of the Company or a Guarantor, as the case may be, that is delivered to the Trustee in accordance with the terms hereof. Each such certificate shall include the statements provided for in Section 13.06, if and to the extent required by the provisions thereof.

“ Opinion of Counsel ” means an opinion in writing of legal counsel, who may be an Officer or employee of or counsel for the Company or a Guarantor, as applicable, that is delivered to the Trustee in accordance with the terms hereof. Each such opinion shall include the statements provided for in Section 13.06, if and to the extent required by the provisions thereof.

“ Original Issue Discount Security ” means a Security that provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the maturity thereof pursuant to Section 6.01.

“ Outstanding ”, when used with reference to Securities of any series, subject to the provisions of Section 8.04, means, as of any particular time, all Securities of such series authenticated and delivered by the Trustee under this Indenture, except:

(a) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation;

(b) Securities, or portions thereof, for the payment or redemption of which funds in the necessary amount shall have been deposited in trust with the Trustee or with any paying agent other than the Company, or, if the Company shall act as its own paying agent, shall have been set aside, segregated and held in trust by the Company for the Holders of such Securities, provided that if such Securities, or portions thereof, are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as herein provided, or provision satisfactory to the Trustee shall have been made for giving such notice; and

(c) Securities in substitution for which other Securities shall have been authenticated and delivered, or which shall have been paid, pursuant to the terms of Section 2.07, except with respect to any such Security as to which proof satisfactory to the Trustee is presented that such Security is held by a person in whose hands such Security is a legal, valid and binding obligation of the Company.

In determining whether the holders of the requisite principal amount of Outstanding Securities of any series have given any request, demand, authorization, direction, notice, consent or waiver hereunder, the principal amount of an Original Issue Discount Security that shall be deemed to be Outstanding for such purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the maturity thereof pursuant to Section 6.01 and the principal amount of a Security denominated in one or more currencies that shall be deemed to be Outstanding for such purposes shall be based on the Dollar Equivalent, on the date of original issuance of such Security, of the principal amount of such Security.

“ Participant ”, with respect to the Depositary, Euroclear or Clearstream, means a Person who has an account with the Depositary, Euroclear or Clearstream, respectively (and, with respect to DTC, shall include Euroclear and Clearstream).

“ Periodic Offering ” means an offering of Securities of a series from time to time, during which any or all of the specific terms of the Securities, including the rate or rates of interest, if any, thereon, the maturity or maturities thereof and the redemption provisions, if any, with respect thereto, are to be determined by the Company or its agents upon the issuance of such Securities in accordance with the terms of the relevant Supplemental Indenture.

“ Person ” means any individual, corporation, limited liability company, partnership, joint venture, joint-stock company, unincorporated organization or government or any agency or political subdivision thereof.

“ Predecessor Security ” of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security. For the purposes of this definition, any Security authenticated and delivered under Section 2.07 in lieu of a lost, destroyed or stolen Security shall be deemed to evidence the same debt as the lost, destroyed or stolen Security.

“ Private Placement Legend ” means the legend set forth in Section 2.02(b) to be placed on all Restricted Securities issued under this Indenture or pursuant to a Board Resolution or an indenture supplemental hereto with respect to a series of Securities, except where specifically stated otherwise by the provisions of this Indenture, such Board Resolution or such supplemental indenture.

“ QIB ” means a “qualified institutional buyer” as defined in Rule 144A.

“ Regulation S Global Security ” means, with respect to any series of Securities, a Regulation S Temporary Global Security of such series, if required by Rule 903 of Regulation S, or a Regulation S Permanent Global Security of such series, as the case may be.

“ Regulation S Permanent Global Security ”, with respect to any series of Securities, means one or more permanent Global Securities bearing the Private Placement Legend, that will be issued in an aggregate amount of denominations equal in total to the outstanding principal amount of the Securities of such series initially sold or, if required by Rule 903 of Regulation S, of the Regulation S Temporary Global Security of such series upon expiration of the Distribution Compliance Period with respect to such series, as the case may be.

“ Regulation S Temporary Global Security ”, with respect to any series of Securities, means one or more temporary Global Securities, bearing the Private Placement Legend and the Regulation S Temporary Global Security Legend, issued in an aggregate amount of denominations equal in total to the outstanding principal amount of the Securities of such series initially sold, if required by Rule 903 of Regulation S.

“ Regulation S Temporary Global Security Legend ” means the legend set forth in Section 2.02(d), which is required to be placed on all Regulation S Temporary Global Securities issued under this Indenture.

“ Regulation S ” means Regulation S promulgated under the Securities Act, as it may be amended from time to time, and any successor provision thereto.

“ Responsible Officer ” means, when used with respect to the Trustee, any vice president, any trust officer, any assistant trust officer, any assistant vice president, any assistant treasurer, or any other officer of the Trustee customarily performing functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture.

“ Restricted Definitive Security ”, with respect to any series of Securities, means one or more Definitive Securities of such series bearing the Private Placement Legend issued under this Indenture.

“ Restricted Global Security ”, with respect to any series of Securities, means one or more Global Securities of such series bearing the Private Placement Legend, issued under this Indenture.

“ Restricted Security ”, with respect to any series of Securities, means a Security of such series, unless or until it has been (i) effectively registered under the Securities Act and disposed of in accordance with a registration statement with respect to such series or (ii) distributed to the public pursuant to Rule 144 under the Securities Act or any similar provision then in force.

“ Rule 144A ” means Rule 144A promulgated under the Securities Act, as it may be amended from time to time, and any successor provision thereto.

“ Securities ” means the securities authenticated and delivered under this Indenture.

“ Securityholder, ” “ Holder, ” “ holder of Securities, ” “ registered holder, ” or other similar term, means the Person or Persons in whose name or names a particular Security shall be registered on the books of the Company kept for that purpose in accordance with the terms of this Indenture.

“ Security Register ” has the meaning set forth in Section 2.05(a).

“ Security Registrar ” has the meaning set forth in Section 2.05(a).

“ Stated Maturity ”, with respect to any Security, means the date specified in such security as the fixed date on which the payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision, but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency beyond the control of the issuer unless such contingency has occurred.

“ Subsidiary ”, with respect to any Person, means any other Person of which at least a majority of the outstanding Voting Stock at the time is owned or controlled directly or indirectly by such Person or by one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person.

“ Trustee ” means Wells Fargo Bank, National Association and, subject to the provisions of Article VII, shall include its successors and assigns. The term “Trustee” as used with respect to a particular series of the Securities shall mean the Trustee with respect to that series.

“ Trust Indenture Act ” means the Trust Indenture Act of 1939, as amended, as in effect at the date of execution of this instrument subject to the provisions of Sections 9.01, 9.02, and 10.01.

“ Unrestricted Definitive Security ”, with respect to any series of Securities, means one or more Definitive Securities representing such series of Securities that do not bear and are not required to bear the Private Placement Legend, issued under this Indenture.

“ Unrestricted Global Security ”, with respect to any series of Securities, means one or more permanent Global Securities representing such series of Securities that do not bear and are not required to bear the Private Placement Legend, issued under this Indenture.

“ Unrestricted Securities ”, with respect to any series of Securities, means a Security (i) effectively registered under the Securities Act and disposed of in accordance with a registration statement with respect to such series or (ii) distributed to the public pursuant to Rule 144 under the Securities Act or any similar provision then in force.

“ Voting Stock ” of a Person means Capital Stock of such Person of the class or classes pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the board of directors, managers or trustees of such Person, irrespective of whether or not at the time Capital Stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency.

ARTICLE II.

ISSUE, DESCRIPTION, TERMS, EXECUTION, REGISTRATION AND

EXCHANGE OF SECURITIES

Section 2.01 Designation and Terms of Securities .

(a) The aggregate principal amount of Securities that may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more series

up to the aggregate principal amount of Securities of that series from time to time authorized by or pursuant to a Board Resolution of the Company or pursuant to one or more indentures supplemental hereto. Prior to the initial issuance of Securities of any series, there shall be established in or pursuant to a Board Resolution of the Company, and set forth in an Officer’s Certificate of the Company, or established in one or more indentures supplemental hereto, with respect to the Securities of the series:

(1) the title of the Security of the series, which shall distinguish the Securities of the series from all other Securities;

(2) any limit upon the aggregate principal amount of the Securities of that series that may be authenticated and delivered under this Indenture, except for Securities authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, other Securities of that series;

(3) the date or dates on which the principal and premium, if any, of the Securities of the series is payable;

(4) the rate or rates, which may be fixed or variable, at which the Securities of the series shall bear interest or the manner of calculation of such rate or rates, if any, including any procedures to vary or reset such rate or rates, and the basis upon which interest will be calculated if other than that of a 360 day year of twelve 30-day months;

(5) the date or dates from which such interest shall accrue, the Interest Payment Dates on which such interest will be payable or the manner of determination of such Interest Payment Dates, and the record date for the determination of holders to whom interest is payable on any such Interest Payment Dates;

(6) any trustees, authenticating agents or paying agents with respect to such series, if different from those set forth in this Indenture;

(7) the right, if any, to extend the interest payment periods or defer the payment of interest and the duration of such extension or deferral;

(8) the period or periods within which, the price or prices at which and the terms and conditions upon which, Securities of the series may be redeemed, in whole or in part, at the option of the Company;

(9) the obligation, if any, of the Company to redeem, purchase or repay Securities of the series pursuant to any sinking fund or analogous provisions, including payments made in cash in anticipation of future sinking fund obligations, or at the option of a holder thereof and the period or periods within which, the price or prices at which, and the terms and conditions upon which, Securities of the series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligation;

(10) the form of the Securities of the series including the form of the Trustee’s certificate of authentication for such series;

(11) if other than denominations of $2,000 or any integral multiple of $1,000 in excess thereof, the denominations in which the Securities of the series shall be issuable;

(12) the Currency or Currencies in which payment of the principal of, premium, if any, and interest on, Securities of the series shall be payable;

(13) if the principal amount payable at the Stated Maturity of Securities of the series will not be determinable as of any one or more dates prior to such Stated Maturity, the amount which will be deemed to be such principal amount as of any such date for any purpose, including the principal amount thereof that will be due and payable upon declaration of the maturity thereof pursuant to Section 6.01 or upon any maturity other than the Stated Maturity or that will be deemed to be Outstanding as of any such date, or, in any such case, the manner in which such deemed principal amount is to be determined;

(14) the terms of any repurchase or remarketing rights;

(15) if the Securities of the series shall be issued in whole or in part in the form of a Global Security or Securities, the type of Global Security to be issued; the terms and conditions, if different from those contained in this Indenture, upon which such Global Security or Securities may be exchanged in whole or in part for other individual Securities in definitive registered form; the Depositary for such Global Security or Securities; and the form of any legend or legends to be borne by any such Global Security or Securities in addition to or in lieu of the legends referred to in Section 2.02;

(16) whether the Securities of the series will be convertible into or exchangeable for other Securities, common shares or other securities of any kind of the Company or another obligor, and, if so, the terms and conditions upon which such Securities will be so convertible or exchangeable, including the initial conversion or exchange price or rate or the method of calculation, how and when the conversion price or exchange ratio may be adjusted, whether conversion or exchange is mandatory, at the option of the holder or at the Company’s option, the conversion or exchange period, and any other provision in addition to or in lieu of those described herein;

(17) any additional restrictive covenants or Events of Default that will apply to the Securities of the series, or any changes to the restrictive covenants set forth in Article IV or the Events of Default set forth in Section 6.01 that will apply to the Securities of the series, which may consist of establishing different terms or provisions from those set forth in Article IV or Section 6.01 or eliminating any such restrictive covenant or Event of Default with respect to the Securities of the series;

(18) any provisions granting special rights to holders when a specified event occurs;

(19) if the amount of principal of or any premium or interest on Securities of a series may be determined with reference to an index or pursuant to a formula, the manner in which such amounts will be determined;

(20) any special tax implications of the Securities, including provisions for original issue discount securities, if offered;

(21) whether and upon what terms Securities of a series may be defeased if different from the provisions set forth in this Indenture;

(22) with regard to the Securities of any series that do not bear interest, the dates for certain required reports to the Trustee;

(23) whether the Securities of the series will be issued as Unrestricted Securities or Restricted Securities, and, if issued as Restricted Securities, the rule or regulation promulgated under the Securities Act in reliance on which they will be sold;

(24) whether the Securities of the series shall be issued with Guarantees and, if so, the identity of the Guarantor and the terms, if any, of any Guarantee of the payment of principal and interest, if any, with respect to Securities of the series and any corresponding changes to the provisions of this Indenture as then in effect; and

(25) any and all additional, eliminated or changed terms that shall apply to the Securities of the series, including any terms that may be required by or advisable under United States laws or regulations, including the Securities Act and the rules and regulations promulgated thereunder, or advisable in connection with the marketing of Securities of that series.

(b) All Securities of any one series shall be substantially identical except that Securities of any particular series may be issued at various times, in different denominations, with different currency of payments due thereunder, with different dates on which the principal or any installment of principal is payable, with different rates of interest, if any, or different methods by which rates of interest may be determined, with different dates from which such interest may accrue or on which such interest may be payable, and with different redemption dates, and except as may otherwise be provided in or pursuant to any such Board Resolution or in any supplemental indenture. If any of the terms of the series are established by action taken pursuant to a Board Resolution of the Company, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officer’s Certificate of the Company setting forth the terms of the series. The terms of the Securities of any series may provide that such Securities shall be authenticated and delivered by the Trustee upon original issuance from time to time upon written order of persons designated in such Board Resolution or supplemental indenture and that such persons are authorized to determine, consistent with such Board Resolution or supplemental indenture, such terms and conditions of the Securities of such series.

Section 2.02 Form of Securities and Trustee’s Certificate .

(a) The Securities of any series and the Trustee’s certificate of authentication to be borne by such Securities shall be substantially of the tenor set forth in an indenture supplemental hereto or as provided in a Board Resolution of the Company and as set forth in an Officer’s Certificate of the Company and may have such letters, numbers or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Indenture, any Board Resolution or any indenture supplemental hereto, or as may be required to

comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which Securities of that series may be listed, or to conform to usage.

(b) Each Restricted Security (and all Restricted Securities issued in exchange therefor or substitution thereof) shall bear a Private Placement Legend in substantially the following form:

“THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE “SECURITIES ACT”). THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.”

(c) To the extent required by the Depositary for particular series of Securities, each Global Security of such series shall bear legends in substantially the following forms:

PURSUANT TO THE INDENTURE, (II) THIS GLOBAL SECURITY MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.05(C) OF THE INDENTURE, (III) THIS GLOBAL SECURITY MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO THE INDENTURE AND (IV) THIS GLOBAL SECURITY MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.”

“UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR TO ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF ANY ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT IS MADE TO SUCH ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF HAS AN INTEREST HEREIN.”

(d) To the extent required by the Depositary, each Regulation S Temporary Global Security shall bear a legend in substantially the following form:

“THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL SECURITY, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR DEFINITIVE SECURITIES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE HOLDER OF BENEFICIAL INTERESTS IN THIS REGULATION S TEMPORARY SECURITY SHALL BE ENTITLED TO RECEIVE CASH PAYMENTS OF INTEREST DURING THE PERIOD WHICH SUCH HOLDER HOLDS THIS SECURITY. NOTHING IN THIS LEGEND SHALL BE DEEMED TO PREVENT INTEREST FROM ACCRUING ON THIS SECURITY.”

Section 2.03 Denominations; Provisions for Payment .

Securities of any series, as well as any premium thereon in case of redemption thereof prior to maturity, shall be payable in Dollars except as otherwise specified pursuant to Section 2.01(a)(12), at the office or agency of the Company maintained for that purpose pursuant to Section 4.02. Each Security shall be dated the date of its authentication. Unless otherwise specified with respect to a series of Securities in accordance with the provisions of Section 2.01(a)(4), interest on the Securities shall be computed on the basis of a 360-day year composed of twelve 30-day months.

The interest installment on any Security that is payable, and is punctually paid or duly provided for, on any Interest Payment Date for Securities of that series shall be paid to the Person in whose name said Security (or one or more Predecessor Securities) is registered at the close of business on the regular record date for such interest installment. In the event that any Security of a particular series or portion thereof is called for redemption and the redemption date is subsequent to a regular record date with respect to any Interest Payment Date and prior to such Interest Payment Date, interest on such Security will be paid upon presentation and surrender of such Security as provided in Section 3.03.

Unless otherwise set forth in a Board Resolution or one or more indentures supplemental hereto establishing the terms of any series of any Securities pursuant to Section 2.01, the term “regular record date” as used in this Section 2.03 with respect to a series of Securities shall mean a date 15 days immediately preceding any Interest Payment Date, whether or not such day is a Business Day. Subject to the provisions of this Section 2.03, each Security of a series delivered under this Indenture upon registration of transfer or in exchange for or in lieu of any other Security of such series shall carry the rights to interest accrued and unpaid, and to accrue, that were carried by such other Security.

Unless otherwise specified with respect to a series of Securities in accordance with the provisions of Section 2.01, any interest on any Security that is payable, but is not punctually paid or duly provided for, on any Interest Payment Date for such Security (“ Defaulted Interest ”) shall forthwith cease to be payable to the registered holder on the relevant regular record date, and such Defaulted Interest shall be paid by the Company, at its election, as provided in clause (1) or clause (2) below.

The Trustee promptly shall notify the Company of such special record date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the special record date therefor to be mailed, first class postage prepaid, to each Securityholder at his or her address as it appears in the Security Register, not less than ten days prior to such special record date. Notice of the proposed payment of such Defaulted Interest and the special record date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names such Securities, or their respective Predecessor Securities, are registered on such special record date and shall not be payable pursuant to the following clause (2).

(2) The Company may make payment of any Defaulted Interest on any Securities in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by such exchange.

Section 2.04 Execution and Authentications .

The Securities shall be signed on behalf of the Company by any member of the Board of Directors of the Company or by both (a) its president, chief financial officer or vice president and (b) its secretary, any assistant secretary, its treasurer or any assistant treasurer. Signatures may be in the form of a manual or facsimile signature. In the case of Definitive Securities of any series, such signatures may be imprinted or otherwise reproduced on such Securities. The Securities may contain such notations, legends or endorsements required by law, stock exchange rule or usage. Each Security shall be dated the date of its authentication by the Trustee.

A Security shall not be valid until authenticated manually by an authorized signatory of the Trustee or by an Authenticating Agent. Such signature shall be conclusive evidence, and the only evidence, that the Security so authenticated has been duly authenticated and delivered hereunder. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company, with the form of Guarantee, if applicable, thereon executed by any Guarantor thereof, if applicable, to the Trustee for authentication, together with a written order of the Company for the authentication and delivery of such Securities, signed by an Officer (an “ Authentication Order ”), and the Trustee in accordance with such written order shall authenticate and deliver such Securities.

Notwithstanding the provisions of Section 2.01 and the preceding paragraph, in the case of Securities offered in a Periodic Offering, the Trustee shall authenticate and deliver such Securities from time to time in accordance with an Authentication Order or such other procedures acceptable to the Trustee as may be specified by or pursuant to a supplemental indenture or the written order of the Company delivered to the Trustee prior to the time of the first authentication of Securities of such series. With respect to Securities of a series subject to a Periodic Offering, the Trustee conclusively may rely and shall be fully protected in relying upon:

(a)

certificate, and if the terms and form of such Securities are established by an Officer’s Certificate pursuant to general authorization of the Board of Directors, such Officer’s Certificate;

(b)

an executed supplemental indenture, if any;

(c)

an Officer’s Certificate delivered in accordance with Section 13.06; and

(d)

an Opinion of Counsel which shall state:

(1) that the form of such Securities has been established by a supplemental indenture or by or pursuant to a resolution of the Board of Directors in accordance with Sections 2.01 and 2.02 and in conformity with the provisions of this Indenture;

(2) that the terms of such Securities have been established in accordance with Section 2.01 and in conformity with the other provisions of this Indenture; and

(3) that such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute legal, valid and binding obligations of the Company, enforceable in accordance with their terms, subject to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting the enforcement of creditors’ rights and to general equity principles.

The Trustee shall have the right to decline to authenticate and deliver any Securities under this Section if the Trustee, being advised by counsel, determines that such action may not lawfully be taken or if the Trustee in good faith shall determine that such action would expose the Trustee to personal liability to existing Securityholders.

Section 2.05 Transfer and Exchange .

(a) Registration of Transfer and Exchange . The Company shall keep, or cause to be kept, at its office or agency designated for such purpose as provided in Section 4.02, a register or registers (the “ Security Register ”) in which, subject to such reasonable regulations as it may prescribe, the Company shall register the Securities and the transfers of Securities as provided in this Article II and which at all reasonable times shall be open for inspection by the Trustee. The registrar for the purpose of registering Securities and the transfer of Securities as herein provided shall be appointed as authorized by Board Resolution (the “ Security Registrar ”). If the Company fails to appoint or maintain another entity as Security Registrar, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Security Registrar.

To permit registrations of transfers and exchanges, the Company shall execute a new Security or Securities of the same series as the Security presented for a like aggregate principal amount and in authorized denominations, and any Guarantor thereof, if applicable, shall execute the form of Guarantee or Guarantees thereon, and the Trustee shall authenticate and deliver such Security or Securities upon receipt of an Authentication Order. The Trustee shall not be required to register the transfer of or exchange any Security selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part.

All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company and any Guarantor thereof, if applicable, evidencing the same indebtedness as the Securities surrendered upon such registration of transfer or exchange. Prior to such due presentment for the registration of a transfer of any Security, the Trustee, the Company, any paying agent and the Security Registrar may deem and treat the Person in whose name any Security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of and interest on such Securities and for all other purposes, and none of the Trustee, the Company, the paying agent or the Security Registrar shall be affected by notice to the contrary.

All certifications, Officer’s Certificates and Opinions of Counsel required to be submitted to the Trustee pursuant to this Section 2.05 to effect a registration of transfer or exchange may be submitted by facsimile or sent electronically in PDF format, to be followed by delivery of the original document to Trustee within three (3) Business Days of delivery by facsimile or PDF transmission.

(b) Service Charge . No service charge shall be payable by a holder of a beneficial interest in a Global Security or by a Holder of a Definitive Security for any exchange or registration of transfer of Securities, or for any issue of new Securities in case of partial redemption of any series. The Company, however, may require payment of a sum sufficient to cover any tax or other governmental charge in relation thereto, other than any such taxes or other governmental charge payable upon exchange or registration of transfer pursuant to Sections 2.06, 3.03(b) and 9.04.

(c) Transfer and Exchange of Global Securities . A Global Security may not be transferred except as a whole by the Depositary for a series of the Securities to a nominee of such Depositary, by a nominee of such Depositary to such Depositary or to another nominee of such Depositary or by such Depositary or any such nominee to a successor Depositary for a series of the Securities or a nominee of such successor Depositary. If at any time the Depositary for a series of the Securities notifies the Company that it is unwilling or unable to continue as Depositary for such series or if at any time the Depositary for such series shall no longer be registered or in good standing under the Exchange Act or other applicable statute or regulation, and a successor Depositary for such series is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such condition, the provisions of Section 2.11 shall no longer be applicable to the Securities of such series. In addition, the Company may at any time determine that the Securities of any series shall no longer be represented by a Global Security and that the provisions of Section 2.11 shall no longer apply to the Securities of such series. In either such event the Company will execute the Definitive Securities of such series, in authorized denominations, and in an aggregate principal amount equal to the principal amount of the Global Security of such series, and any Guarantor thereof, if applicable, will execute the form of Guarantees thereon, and subject to this Section 2.05 the Trustee, upon receipt of an Officer’s Certificate evidencing such determination by the Company, if applicable, will authenticate and deliver such Definitive Securities in exchange for such Global Security. Upon the exchange of the Global Security of such series for such Definitive Securities of such series, the Global Security shall be canceled by the Trustee. Such Definitive Securities shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its Participants or Indirect Participants or otherwise, shall in writing instruct the Trustee. The Trustee shall deliver such Securities to the Depositary for delivery to the Persons in whose names such Securities are so registered.

Except as provided in Sections 2.06 and 2.07, a Global Security may not be exchanged for another Security other than as provided in this Section 2.05(c); however, beneficial interests in a Global Security may be transferred and exchanged as provided in Section 2.05(d) or (e). The provisions of this Section 2.05(c) are subject to Section 2.11.

(d) Transfer and Exchange of Beneficial Interests in the Global Securities . The transfer and exchange of beneficial interests in the Global Securities of a series shall be effected through the Depositary, in accordance with the provisions of this Indenture, any Board Resolution and any one or more indentures supplemental hereto, and the Applicable Procedures. Beneficial interests in the Restricted Global Securities of a series shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Securities also shall require compliance with either subparagraph (1) or (2) below, as applicable, as well as one or more of the other following subparagraphs, as applicable:

(1) Transfer of Beneficial Interests in the Same Global Security . Beneficial interests in any Restricted Global Security of a series may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Security in accordance with the transfer restrictions set forth in the Private Placement Legend. Beneficial interests in any Unrestricted Global Security of a series may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Security of such series. Subject to Section 2.05(e)(4), no written orders or instructions shall be required to be delivered to the Security Registrar to effect the transfers described in this Section 2.05(d)(1).

(2) All Other Transfers and Exchanges of Beneficial Interests in Global Securities . In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.05(d)(1) above, the transferor of such beneficial interest must deliver to the Security Registrar, as applicable, either:

(A) (1) an order from a Participant or an Indirect Participant given to the Depositary in accordance with the relevant Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Security of such series in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the relevant Applicable Procedures containing information regarding the Participant account to be credited with such increase; or

(B) (1) an order from a Participant or an Indirect Participant given to the Depositary in accordance with the relevant Applicable Procedures directing the Depositary to cause to be issued a Definitive Security of such series in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Security Registrar containing information regarding the Person in whose name such Definitive Security shall be registered to effect the transfer or exchange referred to in (B)(1) above;

provided that in no event shall Definitive Securities of a series be issued upon the transfer or exchange of beneficial interests in the Regulation S Temporary Global Security of such series prior to (y) the expiration of the relevant Distribution Compliance Period and (z) the receipt by the Security Registrar of any certificates identified by the Company or its counsel to be required pursuant to Rule 903 and Rule 904 under the Securities Act. Upon satisfaction of all the requirements for transfer and exchange of beneficial interests in Global Securities of a series contained in this Indenture, any Board Resolution, or one or more indentures supplemental hereto and the Securities of such series or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Security or Securities of such series pursuant to Section 2.05(h).

(3) Transfer of Beneficial Interests to Another Restricted Global Security . A beneficial interest in any Restricted Global Security of a series may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Security of the same series if the transfer complies with the requirements of Section 2.05(d)(2) and the Security Registrar receives a completed certificate in the form of Exhibit A.

(4) Transfer and Exchange of Beneficial Interests in a Restricted Global Security for Beneficial Interests in an Unrestricted Global Security . A beneficial interest in any Restricted Global Security of any series may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Security of such series or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Security of such series if the exchange or transfer complies with the requirements of Section 2.05(d)(2) above and the Security Registrar receives a completed certificate from such holder in the form of Exhibit A or Exhibit B, as applicable, and an opinion of counsel in form, and from legal counsel, reasonably acceptable to the Security Registrar and the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

If any such transfer is effected at a time when an Unrestricted Global Security of such series has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.04, the Trustee shall authenticate one or more Unrestricted Global Securities of such series in an aggregate principal amount equal to the aggregate principal amount of beneficial interests so transferred. Beneficial interests in an Unrestricted Global Security of a series cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Security of such series.

(e) Transfer or Exchange of Beneficial Interests for Definitive Securities .

(1) Beneficial Interests in Restricted Global Securities to Restricted Definitive Securities . If any holder of a beneficial interest in a Restricted Global Security of a series proposes to exchange such beneficial interest for a Restricted Definitive Security of such series or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Security of such series, then, upon receipt by the Security Registrar of a completed certificate from such holder in the form of Exhibit A or Exhibit B, as applicable, and certificates and opinions of counsel, if applicable, the Trustee, upon receipt of written instructions accompanied by an Officer’s Certificate and an Opinion of Counsel, shall cause the aggregate principal amount of the applicable Restricted Global Security of such series to be reduced accordingly pursuant to Section 2.05(h), and the Company shall execute a Restricted Definitive Security of such series in the appropriate principal amount, and any Guarantor thereof, if applicable, shall execute the form of Guarantee thereon, and, upon receipt of an Authentication Order pursuant to Section 2.04, the Trustee shall authenticate and deliver to the Person designated in the instructions such Restricted Definitive Security. Any Restricted Definitive Security of such series issued in exchange for a beneficial interest in a Restricted Global Security of such series pursuant to this Section 2.05(e) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Security Registrar through instructions from the Depositary for such series and the Participant or Indirect Participant. The Trustee shall deliver such Restricted Definitive Securities of such series to the Persons in whose names such Securities are so registered. Any Restricted Definitive Security of such series issued in exchange for a beneficial interest in a Restricted Global Security of such series pursuant to this Section 2.05(e)(1) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.

(2) Beneficial Interests in Restricted Global Securities to Unrestricted Definitive Securities . A holder of a beneficial interest in a Restricted Global Security of a series may exchange such beneficial interest for an Unrestricted Definitive Security of such series or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Security of such series only if the Security Registrar receives a completed certificate from such holder in the form of Exhibit A or Exhibit B, as applicable, and an opinion of counsel in form, and from legal counsel, reasonably acceptable to the Security Registrar and the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

Unrestricted Definitive Security of such series in the appropriate principal amount, and any Guarantor thereof, if applicable, shall execute the form of Guarantee thereon, and, upon receipt of an Authentication Order in accordance with Section 2.04, the Trustee shall authenticate and deliver to the Person designated in the instructions such Unrestricted Definitive Security. Any Unrestricted Definitive Security issued in exchange for a beneficial interest pursuant to this Section 2.05(e)(3) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Security Registrar through instructions from the Depositary for such series and the Participant or Indirect Participant. The Trustee shall deliver such Unrestricted Definitive Securities to the Persons in whose names such Securities are so registered. Any Unrestricted Definitive Security issued in exchange for a beneficial interest pursuant to this Section 2.05(e)(3) shall not bear the Private Placement Legend.

(4) Transfer or Exchange of Regulation S Temporary Global Securities. Notwithstanding the other provisions of this Section 2.05, a beneficial interest in the Regulation S Temporary Global Security of a series may not be (A) exchanged for a Definitive Security of such series prior to (y) the expiration of the Distribution Compliance Period with respect to such series, unless such exchange is effected by the Company, does not require an investment decision on the part of the Holder thereof and does not violate the provisions of Regulation S, and (z) the receipt by the Security Registrar of any certificates identified by the Company or its counsel to be required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act or (B) transferred to a U.S. person (as such term is defined in Regulation S) or for the account or benefit of a U.S. person, other than an initial purchaser of such Regulation S Temporary Global Security, or a Person who takes delivery thereof in the form of a Definitive Security of such series prior to the events set forth in clause (A) above or unless the transfer is pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or 904.

(f) Transfer and Exchange of Definitive Securities for Beneficial Interests .

(1) Restricted Definitive Securities to Beneficial Interests in Restricted Global Securities . If any Holder of a Restricted Definitive Security of a series proposes to exchange such Security for a beneficial interest in a Restricted Global Security of such series or to transfer such Restricted Definitive Securities of such series to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Security of such series, then, upon receipt by the Trustee of the following documentation:

(A) if the Holder of such Restricted Definitive Security of such series proposes to exchange such Security for a beneficial interest in a Restricted Global Security of such series, a completed certificate from such holder in the form of Exhibit B; or

(B) if such Restricted Definitive Security is being transferred to a QIB in accordance with Rule 144A under the Securities Act or to a non-U.S. person in an offshore transaction in accordance with Rule 903 or 904 under the Securities Act, a completed certificate to that effect set forth in Exhibit A,

the Trustee shall cancel the Restricted Definitive Security of such series, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Security of such series and, in the case of clause (B) above, the 144A Global Security of such series or the Regulation S Global Security of such series as applicable.

(2) Restricted Definitive Securities to Beneficial Interests in Unrestricted Global Securities . A Holder of a Restricted Definitive Security of a series may exchange such Security for a beneficial interest in an Unrestricted Global Security of such series or transfer such Restricted Definitive Security of such series to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Security of such series only if the Security Registrar receives a completed certificate from such Holder in the form of Exhibit A or Exhibit B, as applicable, and an opinion of counsel in form, and from legal counsel, reasonably acceptable to the Security Registrar and the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. Upon receipt of evidence of the satisfaction of the conditions of any of the subparagraphs in this Section 2.05(f)(2), the Trustee shall cancel the Restricted Definitive Securities of such series so transferred or exchanged and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Security of such series.

(3) Unrestricted Definitive Securities to Beneficial Interests in Unrestricted Global Securities . A Holder of an Unrestricted Definitive Security of a series may exchange such Security for a beneficial interest in an Unrestricted Global Security of such series or transfer such Definitive Securities of such series to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Security of such series at any time. Upon receipt of a written request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Security and increase or cause or be increased the aggregate principal amount of one of the Unrestricted Global Securities of such series. If any such exchange or transfer from a Definitive Security of a series to a beneficial interest is effected pursuant to subparagraphs (2) or (3) of this Section 2.05(f) at a time when an Unrestricted Global Security of such series has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.04, the Trustee shall authenticate one or more Unrestricted Global Securities of such series in an aggregate principal amount equal to the principal amount of Definitive Securities of such series so transferred.

(g) Transfer and Exchange of Definitive Securities for Definitive Securities . Upon written request by a Holder of Definitive Securities of a series and such Holder’s compliance with the provisions of this Section 2.05(g), the Trustee shall register the transfer or exchange of Definitive Securities of such series pursuant to the provisions of Section 2.05(a). In addition to the requirements set forth in Section 2.05(a), the requesting Holder shall provide any additional certifications, documents, and information, as applicable, required pursuant to the following provisions of this Section 2.05(g).

(1) Restricted Definitive Securities to Restricted Definitive Securities . Any Restricted Definitive Security of a series may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Security of such series if the Trustee receives a completed certificate in the form of Exhibit A, including the certifications, certificates and opinions of counsel required by item (3) thereof, if applicable.

(2) Restricted Definitive Securities to Unrestricted Definitive Securities . Any Restricted Definitive Security of a series may be exchanged by the Holder thereof for an Unrestricted Definitive Security of such series or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Security of such series if the Security Registrar receives a completed certificate from such Holder in the form of Exhibit A or Exhibit B, as applicable and an opinion of counsel in form, and from legal counsel, reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

(3) Unrestricted Definitive Securities to Unrestricted Definitive Securities . A Holder of Unrestricted Definitive Securities of a series may transfer such Securities to a Person who takes delivery thereof in the form of an Unrestricted Definitive Security of such series in accordance with Section 2.05(a). Upon receipt of a request to register such a transfer, the Security Registrar shall register the Unrestricted Definitive Securities of such series pursuant to the instructions from the Holder thereof.

(h) Cancellation and/or Adjustment of Global Securities . At such time as all beneficial interests in a particular Global Security of a series have been exchanged for Definitive Securities of such series or a particular Global Security of a series has been redeemed, repurchased or cancelled in whole and not in part, each such Global Security of such series shall be returned to or retained and cancelled by the Trustee in accordance with Section 2.08. At any time prior to such cancellation, if any beneficial interest in a Global Security of such series is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Security of such series or for Definitive Securities of such series, the principal amount of Securities of such series represented by such Global Security shall be reduced accordingly and an endorsement may be made on such Global Security by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Security of such series, such other Global Security shall be increased accordingly and an endorsement may be made on such Global Security by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.

(i) No Exchange or Transfer . The Company shall not be required (i) to issue, exchange or register the transfer of any Securities during a period beginning at the opening of

business 15 days before the day of the mailing of a notice of redemption of the Securities of the same series and ending at the close of business on the day of such mailing, (ii) to register the transfer of or exchange any Securities of any series or portions thereof called for redemption, or (iii) to register the transfer of or exchange a Security of any series between the applicable record date pursuant to Section 2.01(a)(5) and the next succeeding Interest Payment Date.

(j) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security (including any transfers between or among Depositary Participants or beneficial owners of interests in any Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

Section 2.06 Temporary Securities .

Pending the preparation of definitive Securities of any series, the Company may execute temporary Securities (printed, lithographed or typewritten) of any authorized denomination, and any Guarantor thereof, if applicable, shall execute the Guarantees thereon, and the Trustee, upon receipt of an Authentication Order, shall authenticate and deliver such Securities. Such temporary Securities shall be substantially in the form of the definitive Securities in lieu of which they are issued, but with such omissions, insertions and variations as may be appropriate for temporary Securities, all as may be determined by the Company. Every temporary Security of any series shall be executed by the Company, and, if applicable, with the form of Guarantee thereon executed by the Guarantor thereof, and be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with like effect, as the definitive Securities of such series. Without unnecessary delay the Company will execute, and if applicable, the Guarantor thereof will endorse, and will furnish definitive Securities of such series and thereupon any or all temporary Securities of such series may be surrendered in exchange therefor without charge to the holders, at the office or agency of the Company maintained pursuant to Section 4.02 for the purpose of exchanges of Securities of such series, and the Trustee, upon receipt of an Authentication Order, shall authenticate and such office or agency shall deliver in exchange for such temporary Securities an equal aggregate principal amount of definitive Securities of such series, unless the Company advises the Trustee to the effect that definitive Securities need not be executed and furnished until further notice from the Company. Until so exchanged, temporary Securities of any series shall in all respects be valid obligations under this Indenture.

Section 2.07 Mutilated, Destroyed, Lost or Stolen Securities .

succeeding sentence, upon receipt of an Authentication Order, shall authenticate and deliver such Security. In every case the applicant for a substituted Security shall furnish to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company and the Trustee evidence to their satisfaction of the destruction, loss or theft of the applicant’s Security and of the ownership thereof. The Trustee, upon receipt of an Authentication Order, shall authenticate any such substituted Security and deliver the same. Upon the issuance of any substituted Security, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses, including the fees and expenses of the Trustee, connected therewith. In case any Security that has matured or is about to mature shall become mutilated or be destroyed, lost or stolen, the Company, instead of issuing a substitute Security, may pay or authorize the payment of the same, without surrender thereof except in the case of a mutilated Security, if the applicant for such payment shall furnish to the Company and the Trustee such security or indemnity as they may require to save them harmless, and, in case of destruction, loss or theft, evidence to the satisfaction of the Company and the Trustee of the destruction, loss or theft of such Security and of the ownership thereof.

Every replacement Security issued pursuant to the provisions of this Section 2.07 shall constitute an additional contractual obligation of the Company whether or not the mutilated, destroyed, lost or stolen Security shall be found at any time, or be enforceable by anyone. All Securities shall be held and owned upon the express condition that the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities, and shall preclude, to the extent lawful, any and all other rights or remedies, notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender.

Section 2.08 Cancellation .

All Securities surrendered for the purpose of payment, redemption, exchange or registration of transfer, if surrendered to the Company or any paying agent, shall be delivered to the Trustee for cancellation, or, if surrendered to the Trustee, shall be cancelled by it, and no Securities shall be issued in lieu thereof except as expressly required or permitted by any of the provisions of this Indenture. On written request of the Company at the time of such surrender, the Trustee shall deliver to the Company evidence of the cancellation of Securities by the Trustee. If the Company shall otherwise acquire any of the Securities, however, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Securities unless and until the same are delivered to the Trustee for cancellation.

Section 2.09 Third Party Beneficiaries .

Nothing in this Indenture or in the Securities, express or implied, shall give or be construed to give to any Person, other than the parties hereto and the holders of the Securities, any legal or equitable right, remedy or claim under or in respect of this Indenture, or under any covenant, condition or provision contained herein.

Section 2.10 Authenticating Agent .

So long as any of the Securities of any series remain Outstanding, there may be an Authenticating Agent for any or all such series of Securities which either the Trustee or the Company shall have the right to appoint. The Authenticating Agent shall be authorized to act on behalf of the Trustee to authenticate Securities of such series, including Securities issued upon exchange, registration of transfer or partial redemption thereof, and Securities so authenticated shall be valid obligations for all purposes as if authenticated by the Trustee hereunder. All references in this Indenture to the authentication of Securities by the Trustee shall be deemed to include authentication by an Authenticating Agent for such series. Each Authenticating Agent shall be acceptable to the Company and shall be a corporation that has a combined capital and surplus, as most recently reported or determined by it, sufficient under the laws of any jurisdiction under which it is organized or in which it is doing business to conduct a trust business, and that is otherwise authorized under such laws to conduct such business and is subject to supervision or examination by Federal or State authorities. If at any time any Authenticating Agent shall cease to be eligible in accordance with these provisions, it shall resign immediately. Any Authenticating Agent may resign at any time by giving written notice of resignation to the Trustee and to the Company. The Trustee with the Consent of the Company at any time may, and upon written request by the Company shall, terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and to the Company. Upon resignation, termination or cessation of eligibility of any Authenticating Agent, either the Trustee or the Company may appoint an eligible successor Authenticating Agent acceptable to the Company. Any successor Authenticating Agent, upon acceptance of its appointment hereunder, shall become vested with all the rights, powers and duties of its predecessor hereunder as if originally named as an Authenticating Agent pursuant hereto.

Section 2.11 Global Securities .

(a) General . If the Company shall establish pursuant to Section 2.01 that the Securities of a particular series are to be issued as a Global Security, then the Company shall execute one or more Global Securities that (i) shall represent, and shall be denominated in an amount equal to the aggregate principal amount of, all of the Outstanding Securities of such series, (ii) shall be registered in the name of the Depositary or its nominee and (iii) shall be delivered to the Trustee as custodian for the Depositary or otherwise delivered pursuant to the Depositary’s instructions, and any Guarantor thereof, if applicable, shall execute the Guarantee or Guarantees thereon, and the Trustee in accordance with Section 2.04 shall authenticate such Global Security or Global Securities.

(b) Euroclear and Clearstream Procedures Applicable . The provisions of the “Operating Procedures of the Euroclear System” and the “Terms and Conditions Governing Use of Euroclear” and the “General Terms and Conditions” and “Customer Handbook” of Clearstream, respectively, in effect at the relevant time shall be applicable to transfers of beneficial interests in the Regulation S Global Securities of such series that are held by Participants through Euroclear or Clearstream.

(c) Neither the Trustee nor any agent shall have any responsibility or liability for any actions taken or not taken by the Depository.

Section 2.12 CUSIP Numbers .

The Company in issuing the Securities of a series may use “CUSIP” numbers if then generally in use, and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption as a convenience to Securityholders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee in writing of any change in the “CUSIP” numbers.

Section 2.13 Securities Denominated in Foreign Currencies .

Except as otherwise specified pursuant to Section 2.01 for Securities of any series, payment of the principal of, premium, if any, and interest on, Securities of such series denominated in any Foreign Currency will be made in such Foreign Currency.

In the event any Foreign Currency or Currencies in which any payment with respect to any series of Securities may be made ceases to be a freely convertible Currency on United States Currency markets, for any date thereafter on which payment of principal of, premium, if any, or interest on the Securities of a series is due, the Company shall select the Currency of payment for use on such date, all as provided in the Securities of such series, in a Board Resolution or in one or more indentures supplemental hereto. In such event, the Company shall notify the Trustee of the Currency which it has selected to constitute the funds necessary to meet the Company’s obligations on such payment date and of the amount of such Currency to be paid. Such amount shall be determined as provided in the Securities of such series, in a Board Resolution or in one or more indentures supplemental hereto. The payment with respect to such payment date shall be deposited with the Trustee by the Company solely in the Currency so selected.

Section 2.14 Wire Transfers .

Notwithstanding any other provision to the contrary in this Indenture, the Company may make any payment required to be deposited with the Trustee or any Paying Agent on account of principal of, premium, if any, or interest on, the Securities by any method of wire transfer to an account designated in writing by the Trustee or such Paying Agent such that funds are available on or before the date such payment is to be made to the Holders of the Securities in accordance with the terms hereof. If the Company is acting as its own Paying Agent with respect to Securities of any series that are represented by one or more Global Securities, the Company may make any such payment by wire transfer to an account designated in writing by the Depositary for such Securities.

Section 2.15 Designated Currency .

The Company may provide pursuant to Section 2.01 for Securities of any series that:

(a) the obligation, if any, of the Company to pay the principal of, premium, if any, and interest on the Securities of any series in a Foreign Currency or Dollars (the “ Designated Currency ”) as may be specified pursuant to Section 2.01(a)(12) is of the essence and agree that, to the fullest extent possible under applicable law, judgments in respect of Securities of such series shall be given in the Designated Currency;

(b) the obligation of the Company to make payments in the Designated Currency of the principal of, premium, if any, and interest on such Securities shall be discharged, notwithstanding any payment in any other Currency (whether pursuant to a judgment or otherwise), only to the extent of the amount in the Designated Currency that the Securityholder receiving such payment, in accordance with normal banking procedures, may purchase with the amount paid in such other Currency after any premium and cost of exchange on the business day in the country of issue of the Designated Currency or in the international banking community immediately following the day on which such Securityholder receives such payment;

(c) if the amount in the Designated Currency that may be so purchased for any reason falls short of the amount originally due, the Company shall pay such additional amounts as may be necessary to compensate for such shortfall; and

(d) any obligation of the Company not discharged by such payment shall be due as a separate and independent obligation and, until discharged as provided herein, shall continue in full force and effect.

Section 2.16 Form of Guarantee .

The form of any Guarantee shall be set forth on the applicable series of Securities substantially as follows:

GUARANTEE

For value received, the Guarantor hereby absolutely, unconditionally and irrevocably guarantees (i) to the holder of this Security the payment of principal of, premium, if any, and interest on, the Security upon which this Guarantee is set forth in the amounts and at the time when due and payable whether by declaration thereof, or otherwise, and interest on the overdue principal and interest, if any, of such Security, if lawful, to the holder of such Security and the Trustee on behalf of the Holders and (ii) all amounts owed to the Trustee under the Indenture, in each case in accordance with and subject to the terms and limitations of such Security and Article XIV of the Indenture. This Guarantee will not become effective until the Trustee or Authenticating Agent duly executes the certificate of authentication on this Security. This Guarantee shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of law principles thereof.

Dated:


[GUARANTOR]

By:
		Name:
		Title:

ARTICLE III.

REDEMPTION OF SECURITIES AND SINKING FUND PROVISIONS

Section 3.01 Redemption .

The Company may redeem the Securities of any series issued hereunder on and after the dates and in accordance with the terms established for such series pursuant to Section 2.01.

Section 3.02 Notice of Redemption .

(a) If the Company desires to exercise such right to redeem all or, as the case may be, a portion of the Securities of any series, the Company shall, or shall instruct the Trustee in writing to, give notice of such redemption to holders of the Securities of such series to be redeemed by mailing, first class postage prepaid, a notice of such redemption not less than 30 days and not more than 90 days before the date fixed for redemption of that series to the Trustee and such holders at their last addresses as they shall appear upon the Security Register, unless a shorter period is specified in the Securities to be redeemed. Any notice that is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the registered holder receives the notice. In any case, failure duly to give such notice to the holder of any Security of any series designated for redemption in whole or in part, or any defect in the notice, shall not affect the validity of the proceedings for the redemption of any other Securities of such series or any other series. In the case of any redemption of Securities prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officer’s Certificate evidencing compliance with any such restriction.

Each such notice of redemption shall specify the date fixed for redemption and the redemption price at which Securities of that series are to be redeemed and the CUSIP numbers of such series, and shall state that: (i) payment of the redemption price of such Securities to be redeemed will be made at the office or agency of the Company maintained for such purpose, or, if none, at the Corporate Trust Office of the Trustee, upon presentation and surrender of such Securities; (ii) interest accrued to the date fixed for redemption will be paid as specified in said notice; (iii) from and after said date interest will cease to accrue; and (iv) the redemption is for a sinking fund, if such is the case. If less than all the Securities of a series are to be redeemed, the notice to the holders of Securities of that series to be redeemed in whole or in part shall specify the particular Securities to be so redeemed. In case any Security is to be redeemed in part only, the notice that relates to such Security shall state the portion of the principal amount thereof to be redeemed, and shall state that on and after the redemption date, upon surrender of such Security, a new Security or Securities of such series in principal amount equal to the unredeemed portion thereof will be issued.

(b) The Company shall give the Trustee at least 45 days’ written notice, unless a shorter period shall be satisfactory to the Trustee, in advance of the date fixed for redemption as to the aggregate principal amount of Securities of the series to be redeemed. If less than all the Securities are to be redeemed, the Trustee thereupon shall select from Securities of such series Outstanding not previously called for redemption, in accordance with a method that complies with applicable legal requirements, the rules and procedures of DTC, if applicable, and the requirements, if any, of the Depository and of any stock exchange on which Securities are listed and that the Trustee considers fair and appropriate, which may include selection pro rata or by lot, and that may provide for the selection of a portion or portions equal to $1,000 or any integral multiple thereof of the principal amount of such Securities of such series of a denomination larger than $1,000, the Securities of such series to be redeemed. The Trustee promptly shall notify the Company in writing of the numbers of the Securities of such series to be redeemed, in whole or in part.

The Company, if and whenever it shall so elect, by delivery of an Officer’s Certificate, may instruct the Trustee or any paying agent to call all or any part of the Securities of a particular series for redemption and to give notice of redemption in the manner set forth in this Section 3.02, such notice to be in the name and at the expense of the Company or its own name, as the Trustee or such paying agent may deem advisable. In any case in which notice of redemption is to be given by the Trustee or any such paying agent, the Company shall deliver or cause to be delivered to, or permit to remain with, the Trustee or such paying agent, as the case may be, such Security Register, transfer books or other records, or suitable copies or extracts therefrom, sufficient to enable the Trustee or such paying agent to give any notice by mail that may be required under the provisions of this Section 3.02.

Section 3.03 Payment Upon Redemption .

(a) If the giving of notice of redemption shall have been completed as above provided, the Securities or portions of Securities of the series to be redeemed specified in such notice shall become due and payable on the date and at the place stated in such notice at the applicable redemption price, together with interest accrued to the date fixed for redemption, in each case as established pursuant to Section 2.01. Interest on such Securities or portions of Securities shall cease to accrue on and after the date fixed for redemption, unless the Company shall default in the payment of such redemption price and accrued interest with respect to any such Security or portion thereof. On presentation and surrender of such Securities on or after the date fixed for redemption at the place of payment specified in the notice, such Securities shall be paid and redeemed at the applicable redemption price for such series, together with interest accrued thereon to the date fixed for redemption (but if the date fixed for redemption is an Interest Payment Date, the interest installment payable on such date shall be payable to the registered holder at the close of business on the applicable record date pursuant to Section 2.01).

(b) Upon presentation of any Security of such series that is to be redeemed in part only, the Company shall execute a new Security of the same series and tenor of authorized denominations in principal amount equal to the unredeemed portion of the Security so presented,

and any Guarantor thereof, if applicable, shall execute the form of Guarantee thereon, and the Trustee, upon receipt of an Authentication Order, shall authenticate, and the office or agency where the Security is presented shall deliver to the holder thereof, at the expense of the Company, such new Security; except that if a Global Security is so surrendered, the Company shall execute a new Global Security of like tenor in a denomination equal to and in exchange for the unredeemed portion of the principal of the Global Security so surrendered, and any Guarantor thereof, if applicable, shall execute the form of Guarantee thereon, and, upon receipt of an Officer’s Certificate requesting authentication and delivery, the Trustee, upon receipt of an Authentication Order, shall authenticate and deliver to the Depositary for such Global Security, without service charge, such new Global Security.

Section 3.04 Sinking Fund .

The provisions of Sections 3.04, 3.05 and 3.06 shall be applicable to any sinking fund for the retirement of Securities of a series, except as otherwise specified as contemplated by Section 2.01 for Securities of such series.

The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is referred to as a “mandatory sinking fund payment,” and any payment in excess of such minimum amount provided for by the terms of Securities of any series is referred to as an “optional sinking fund payment.” If provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 3.05. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of Securities of such series.

Section 3.05 Satisfaction of Sinking Fund Payments with Securities .

The Company (i) may deliver Outstanding Securities of a series other than any Securities previously called for redemption and (ii) may apply as a credit Securities of a series that have been redeemed either at the election of the Company pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to the Securities of such series required to be made pursuant to the terms of such Securities, provided that such Securities have not been previously so credited. Such Securities shall be received and credited for such purpose by the Trustee at the redemption price specified in such Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly.

Section 3.06 Redemption of Securities for Sinking Fund .

Not less than 30 days prior to each sinking fund payment date for any series of Securities, the Company will deliver to the Trustee an Officer’s Certificate specifying the amount of the next ensuing sinking fund payment for that series pursuant to the terms of the series, the portion thereof, if any, that is to be satisfied by payment of cash in the Currency in which the Securities of such series are denominated (except as provided pursuant to Section 2.01), the portion thereof, if any, that is to be satisfied by delivering and crediting Securities of that series pursuant to Section 3.05 and the basis for such credit. Together with such Officer’s Certificate, the

Company will deliver to the Trustee any Securities to be so delivered. Not less than 30 days before each such sinking fund payment date the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 3.02 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 3.02. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Section 3.03.

ARTICLE IV.

CERTAIN COVENANTS

The following covenants shall apply to the Securities, except with respect to any series of Securities for which the supplemental indenture or resolution of the Board of Directors under which such series of Securities is issued or the form of Security for such series expressly provides that any such covenant shall not apply to such series of Securities:

Section 4.01 Payment of Principal, Premium and Interest .

The Company will duly and punctually pay or cause to be paid the principal of, premium, if any, and interest on the Securities of a series at the time and place and in the manner provided herein and established with respect to such Securities.

Section 4.02 Maintenance of Office or Agency .

So long as any series of the Securities remain Outstanding, the Company will maintain for such series an office or agency where Securities of such series may be presented or surrendered for payment, where Securities of such series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities of such series and this Indenture may be given or served. Such designation will continue with respect to each office or agency until the Company, by written notice signed by any Officer and delivered to the Trustee, shall designate some other office or agency for such purposes or any of them. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all presentations, surrenders, notices and demands. Unless otherwise specified in accordance with Section 2.01 with respect to a series of Securities, the Company initially designates the Wells Fargo Bank, National Association, 7000 Central Parkway NE, Suite 550, Atlanta, GA 30328, Attention: Corporate Trust Services, acting as the Company’s agent, as the office to be maintained by it for each such purpose.

Section 4.03 Paying Agents .

(a) The Company, upon written notice to the Trustee accompanied by an Officer’s Certificate, may appoint one or more paying agents, other than the Trustee, for all or any series of the Securities. If the Company fails to appoint or maintain another entity as paying agent, the Trustee shall act as such. The Company or any of its Subsidiaries, upon notice to the Trustee, may act as paying agent.

(b) The Company shall require each paying agent, other than the Company and the Trustee, to agree in writing with the Company, and the Company shall deliver a copy of such agreement to the Trustee, that the paying agent will hold in trust for the benefit of Securityholders or the Trustee all funds held by the paying agent for the payment of principal, premium, if any, or interest on the Securities, and will promptly notify the Trustee in writing of any default by the Company in making any such payment. While any such default continues, the Trustee may require a paying agent to pay all funds held by it to the Trustee. The Company at any time may require a paying agent to pay all funds held by it to the Trustee. Upon payment over to the Trustee, the paying agent, if other than the Company, shall have no further liability for the funds. If the Company acts as paying agent, it shall segregate and hold in a separate trust fund for the benefit of the Securityholders all funds held by it as paying agent.

(c) Notwithstanding anything in this Section 4.03 to the contrary, (i) the agreement to hold funds in trust as provided in this Section 4.03 is subject to the provisions of Section 11.06, and (ii) the Company at any time, for the purpose of obtaining the satisfaction and discharge or defeasance of this Indenture or for any other purpose, may pay, or direct any paying agent to pay, to the Trustee all funds held in trust by the Company or such paying agent, such funds to be held by the Trustee upon the same terms and conditions as those upon which such funds were held by the Company or such paying agent. Upon such payment by any paying agent to the Trustee, such paying agent shall be released from all further liability with respect to such funds.

Section 4.04 Statement by Officers as to Default .

So long as any of the Securities remain outstanding, the Company will furnish to the Trustee on or before March 31 in each year a certificate, which need not comply with Section 13.06, executed by the principal executive, financial or accounting officer of the Company as to his or her knowledge of the Company’s compliance with all covenants and agreements under this Indenture required to be complied with by the Company and the Guarantor, if applicable (such compliance to be determined without regard to any period of grace or requirement of notice provided under this Indenture). Such certificate need not include a reference to any non-compliance that has been fully cured prior to the date as of which such certificate speaks.

The Company shall provide written notice to the Trustee within 30 days of the occurrence of any Event of Default under Section 6.01.

Section 4.05 Appointment to Fill Vacancy in Office of Trustee .

The Company, whenever necessary to avoid or to fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 7.10, a Trustee, so that there shall be at all times a Trustee hereunder.

ARTICLE V.

SECURITYHOLDERS’ LISTS AND REPORTS BY THE COMPANY AND

THE TRUSTEE

Section 5.01 Company to Furnish Trustee Names and Addresses of Securityholders .

The Company will furnish or cause to be furnished to the Trustee (a) semi-annually at least seven Business Days before each Interest Payment Date for a series of Securities (and in all events at intervals of not more than six months) a list, in such form as the Trustee may reasonably require, of the names and addresses of the holders of each series of Securities as of such date, provided that the Company shall not be obligated to furnish or cause to furnish such list at any time that the list shall not differ in any respect from the most recent list furnished to the Trustee by the Company and (b) at such other times as the Trustee may require in writing within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; provided, however, that, in either case, no such list need be furnished for any series for which the Trustee shall be the Security Registrar.

Section 5.02 Preservation of Information; Communications with Securityholders .

(a) The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the holders of Securities contained in the most recent list furnished to it as provided in Section 5.01 and as to the names and addresses of holders of Securities received by the Trustee in its capacity as Security Registrar (if acting in such capacity).

(b) Securityholders may communicate as provided in Section 312(b) of the Trust Indenture Act with other Securityholders with respect to their rights under this Indenture or under the Securities. Each Securityholder, by receiving and holding a Security, agrees with the Company, any Guarantor thereof, if applicable, and the Trustee that none of the Company, any Guarantor or the Trustee or any agent of any of them shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders in accordance with this Section 5.02(b), regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under this Section 5.02(b).

Section 5.03 Reports by the Company .

(a) So long as any Securities are outstanding, the Company shall file with the Trustee, within 15 days after the Company files with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) that the Company files with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act. The Company shall be deemed to have complied with the previous sentence to the extent that such information, documents and reports are filed with the Commission via EDGAR (or any successor electronic delivery procedure); provided , however , that the trustee shall have no obligation whatsoever to determine whether or not such information, documents or reports have been filed pursuant to the EDGAR system (or its successor).

(b) Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officer’s Certificates).

Section 5.04 Reports by the Trustee .

(a) The Trustee shall transmit to Securityholders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto. If required by Section 313(a) of the Trust Indenture Act, the Trustee shall, within sixty days after each May 15 following the date of the initial issuance of Securities under this Indenture deliver to Securityholders a brief report, dated as of such May 15, which complies with the provisions of such Section 313(a).

(b) The Trustee shall comply with Section 313(b) and Section 313(c) of the Trust Indenture Act.

(c) A copy of each Trustee’s report shall, at the time of such transmission to Securityholders, be filed by the Trustee with the Company, with any stock exchange upon which any Securities are listed, if any, and with the Commission. The Company will promptly notify the Trustee in writing when any Securities become listed on any stock exchange or delisted therefrom.

ARTICLE VI.

REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON

EVENT OF DEFAULT

Section 6.01 Events of Default .

(a) Whenever used herein with respect to Securities of a particular series, “ Event of Default ” means any one or more of the following events that has occurred and is continuing, except with respect to any series of Securities for which the supplemental indenture or resolution of the Board of Directors under which such series of Securities is issued or the form of Security for such series expressly provides that any such Event of Default shall not apply to such series of Securities:

(1) default in the payment of any installment of interest upon any of the Securities of such series as and when the same shall become due and payable, and continuance of such default for a period of 30 days; or

(2) default in the payment of all or any part of the principal of or premium, if any, on any of the Securities of such series as and when the same shall become due and payable either at maturity, upon redemption, by declaration or otherwise; or

(3) default in the payment of any sinking fund installment as and when the same shall become due and payable by the terms of the Securities of such series; or

(4) default in the performance, or breach, of any covenant or agreement of the Company in respect of the Securities of such series and the related Guarantee (other than a default or breach that is specifically dealt with elsewhere in this Section 6.01), and continuance of such default or breach for a period of 90 days after the date on which there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of such series, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder; or

(5) a court having jurisdiction in the premises shall enter a decree or order for relief in respect of the Company in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee or sequestrator or similar official of the Company or for any substantial part of its property or ordering the winding up or liquidation of its affairs, and such decree or order shall remain unstayed and in effect for a period of 90 consecutive days; or

(6) the Company shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary case under any such law, or consent to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee or sequestrator or similar official of the Company or for any substantial part of its property, or make any general assignment for the benefit of creditors; or

(7) any other Event of Default provided in the supplemental indenture or resolution of the Board of Directors under which such series of Securities is issued or in the form of Security for such series.

(b) If an Event of Default shall have occurred and be continuing in respect of the Securities of a series, in each and every such case, unless the principal of all the Securities of that series shall have already become due and payable, either the Trustee or the holders of not less than 25% in aggregate principal amount of the Securities of that series then Outstanding hereunder, by notice in writing to the Company and any Guarantor thereof, if applicable, and, if given by such Securityholders, to the Trustee may declare the unpaid principal of all the Securities of that series to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, notwithstanding anything contained in this Indenture or in the Securities of that series or established with respect to that series pursuant to Section 2.01 to the contrary.

shall have been cured before the giving of such notice (the term “default” or “defaults” for the purposes of this Section 6.01(c) being hereby defined to mean any event or condition which is, or with notice or lapse of time or both would become, an Event of Default); provided that, except in the case of default in the payment of the principal of, premium, if any, or interest on any of the Securities of such series, or in the payment of any sinking or purchase fund installment with respect to the Securities of such series, the Trustee shall be protected in withholding such notice if and so long as it in good faith determines that the withholding of such notice is in the interests of the Securityholders of such series.

Section 6.02 Collection of Indebtedness and Suits for Enforcement by Trustee .

(a) The Company covenants that (i) in case it shall default in the payment of any installment of interest on any of the Securities of a series, or any payment required by any sinking or analogous fund established with respect to that series as and when the same shall have become due and payable, and such default shall have continued for a period of 30 days, or (ii) in case it shall default in the payment of the principal of, or premium, if any, on any of the Securities of a series when the same shall have become due and payable, whether upon maturity of the Securities of a series or upon redemption or upon declaration or otherwise, then, upon demand of the Trustee, the Company will pay to the Trustee, for the benefit of the holders of the Securities of that series, the whole amount that then shall have been become due and payable on all such Securities for principal, premium, if any, or interest, or both, with interest upon the overdue principal, premium, if any, and, to the extent that payment of such interest is enforceable under applicable law, upon overdue installments of interest at the rate expressed in the Securities of that series; and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, and the amount payable to the Trustee under Section 7.06.

(b) If the Company shall fail to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the amounts so due and unpaid, and may prosecute any such action or proceeding to judgment or final decree, and may enforce any such judgment or final decree against the Company or any Guarantor, if applicable, and collect the amounts adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any Guarantor, if applicable, wherever situated.

(c) In case of any receivership, insolvency, liquidation, bankruptcy, reorganization, readjustment, arrangement, composition or judicial proceedings affecting the Company or any Guarantor, if applicable, or their respective creditors or property, the Trustee shall have power to intervene in such proceedings and take any action therein that may be permitted by the court and, except as otherwise provided by law, shall be entitled to file such proofs of claim and other papers and documents as may be necessary or advisable in order to have the claims of the Trustee and of the holders of Securities of such series allowed for the entire amount due and payable by the Company under this Indenture at the date of institution of such proceedings and for any additional amount that may become due and payable by the Company after such date, and to collect and receive any funds or other property payable or deliverable on any such claim, and to distribute the same in accordance with Section 6.03. Any receiver, assignee or trustee in bankruptcy or reorganization is hereby authorized by each of the holders of Securities of such series to make such payments to the Trustee, and, in the event that the Trustee shall consent to the making of such payments directly to such Securityholders, to pay to the Trustee any amount due it under Section 7.06.

(d) All rights of action and of asserting claims under this Indenture, or under any of the terms established with respect to Securities of that series, may be enforced by the Trustee without the possession of any of such Securities, or the production thereof at any trial or other proceeding relative thereto. Any such suit or proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for payment to the Trustee of any amounts due under Section 7.06, be for the ratable benefit of the holders of the Securities of such series.

In case of an Event of Default, the Trustee in its discretion or in accordance with the direction of the holders of a majority in aggregate principal amount of the Securities of any series at the time Outstanding may proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law.

Nothing contained herein shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Securityholder any plan of reorganization, arrangement, adjustment or composition affecting the Securities of that series or the rights of any holder thereof or to authorize the Trustee to vote in respect of the claim of any Securityholder in any such proceeding.

Section 6.03 Application of Funds Collected .

Any funds collected by the Trustee pursuant to this Article VI with respect to a particular series of Securities shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such funds on account of principal, premium, if any, or interest, upon presentation of the Securities of that series, and notation thereon of the payment, if only partially paid, and upon surrender thereof if fully paid:

FIRST: To the payment of costs and expenses of collection and of all amounts payable to the Trustee under Section 7.06;

SECOND: To the payment of the amounts then due and unpaid upon Securities of such series for principal, premium, if any, and interest, in respect of which or for the benefit of which such funds have been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal, premium, if any, and interest, respectively; and

THIRD: To the Company.

Section 6.04 Limitation on Suits .

No holder of any Security of any series shall have any right by virtue or by availing of any provision of this Indenture to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Indenture or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (i) such holder previously shall have given to the Trustee written notice of an Event of Default and of the continuance thereof with respect to the Securities of such series specifying such Event of Default; (ii) the holders of not less than 25% in aggregate principal amount of the Securities of such series then Outstanding shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as trustee hereunder; (iii) such holder or holders shall have offered to the Trustee such indemnity and security reasonably satisfactory to it against the costs, expenses and liabilities to be incurred therein or thereby; (iv) the Trustee for 60 days after its receipt of such written notice, request and offer of indemnity and security reasonably satisfactory to it, shall have failed to institute any such action, suit or proceeding; and (v) during such 60 day period, the holders of a majority in principal amount of the Securities of that series do not give the Trustee a direction inconsistent with such request.

Notwithstanding anything contained herein to the contrary, any other provisions of this Indenture, the right of any holder of any Security to receive payment of the principal of, and premium, if any, and interest on such Security, as therein provided, on or after the respective due dates expressed in such Security or, in the case of redemption, on the redemption date, or to institute suit for the enforcement of any such payment on or after such respective dates or redemption date, shall not be impaired or affected without the consent of such holder. By accepting a Security hereunder it is expressly understood, intended and covenanted by the taker and holder of every Security of such series with every other such taker and holder and the Trustee, that no one or more holders of Securities of such series shall have any right in any manner whatsoever by virtue or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of the holders of any other of such Securities, or to obtain or seek to obtain priority over or preference to any other such holder, or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all holders of Securities of such series (it being understood that the Trustee does not have an affirmative duty to ascertain whether or not such actions or forbearances are unduly prejudicial to such holders). For the protection and enforcement of the provisions of this Section 6.04, each Securityholder and the Trustee shall be entitled to such relief as can be given either at law or in equity.

Section 6.05 Rights and Remedies Cumulative; Delay or Omission not Waiver .

(a) Except as otherwise provided in Section 2.07, all powers and remedies given by this Article VI to the Trustee or to the Securityholders, to the extent permitted by law, shall be deemed cumulative and not exclusive of any other powers and remedies available to the Trustee or the holders of the Securities, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements contained in this Indenture or otherwise established with respect to such Securities.

(b) No delay or omission of the Trustee or of any holder of any of the Securities to exercise any right or power accruing upon any Event of Default occurring and continuing shall impair any such right or power, or shall be construed to be a waiver of any such default or an acquiescence therein. Subject to the provisions of Section 6.04, every power and remedy given by this Article VI or by law to the Trustee or the Securityholders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Securityholders.

Section 6.06 Control by Securityholders .

(a) The holders of a majority in aggregate principal amount of the Securities of any series at the time Outstanding, determined in accordance with Section 8.04, shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to such series; provided, however, that such direction shall not be in conflict with any rule of law or with this Indenture or be unduly prejudicial to the rights of holders of Securities of any other series at the time Outstanding determined in accordance with Section 8.04. Subject to the provisions of Section 7.01, the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith, by a Responsible Officer or Responsible Officers of the Trustee, shall determine that the proceeding so directed would involve the Trustee in personal liability.

(b) In the case of an Event of Default with respect to a series of Securities, at any time before the principal of the Securities of that series shall have been declared due and payable, the holders of a majority in aggregate principal amount of the Securities of such series at the time Outstanding, determined in accordance with Section 8.04, on behalf of the holders of all of the Securities of such series, by written notice to the Company, any Guarantor thereof, if applicable, and the Trustee, may waive any existing default in the performance of any of the covenants contained herein or established pursuant to Section 2.01 with respect to such series and its consequences, except a default in the payment of the principal of, premium, if any, or interest on, any of the Securities of that series as and when the same shall become due by the terms of such Securities. Upon any such waiver, the default covered thereby and any Event of Default arising therefrom shall be deemed to be cured for all purposes of this Indenture and the Company, the Trustee and the holders of the Securities of such series shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.

(c) At any time after the principal of the Securities of that series shall have been declared due and payable, and before any judgment or decree for the payment of the amount due shall have been obtained or entered as hereinafter provided, the holders of a majority in aggregate principal amount of the Securities of that series at the time Outstanding hereunder, by written notice to the Company, any Guarantor thereof, if applicable, and the Trustee, may rescind and annul such declaration and its consequences if: (i) the Company has or has caused to be paid or deposited with the Trustee an amount sufficient to pay all matured installments of interest upon all the Securities of that series and the principal of and premium, if any, on any and all Securities of that series that shall have become due otherwise than by acceleration, with interest upon such principal and premium, if any, and, to the extent that such payment is enforceable under applicable law, upon overdue installments of interest, at the rate expressed in the Securities of that series to the date of such payment or deposit, and (ii) any and all Events of Default under

this Indenture with respect to such series, except non-payment of the principal of, premium, if any, or interest on, any of the Securities of that series as a result of such declaration, shall have been remedied or waived. No such rescission and annulment shall extend to or shall affect any subsequent default or impair any right consequent thereon.

(d) In case the Trustee shall have proceeded to enforce any right with respect to Securities of that series under this Indenture and such proceedings shall have been discontinued or abandoned because of such rescission or annulment or for any other reason or shall have been determined adversely to the Trustee, then and in every such case the Company, any Guarantor thereof, if applicable, and the Trustee shall be restored respectively to their former positions and rights hereunder, and all rights, remedies and powers of the Company and the Trustee shall continue as though no such proceedings had been taken.

Section 6.07 Undertaking to Pay Costs .

All parties to this Indenture agree, and each holder of any Securities by such holder’s acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 6.07 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholder, or group of Securityholders, holding more than 10% in aggregate principal amount of the Outstanding Securities of any series, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of, premium, if any, or interest on any Security of such series, on or after the respective due dates expressed in such Security or established pursuant to this Indenture.

Section 6.08 Waiver Of Usury, Stay Or Extension Laws .

Each of the Company and any Guarantor, if applicable, covenant, to the extent that it may lawfully do so, that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and each of the Company and any Guarantor, if applicable, to the extent that it may lawfully do so, hereby expressly waive all benefit or advantage of any such law and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

ARTICLE VII.

CONCERNING THE TRUSTEE

Section 7.01 Certain Duties and Responsibilities of Trustee .

(a) In case an Event of Default with respect to the Securities of a series has occurred (that has not been cured or waived), the Trustee shall exercise with respect to Securities of that series such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.

(b) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

(1) prior to the occurrence of an Event of Default with respect to the Securities of a series and after the curing or waiving of all such Events of Default with respect to that series that may have occurred:

(i) the duties and obligations of the Trustee shall with respect to the Securities of such series be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable with respect to the Securities of such series except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(ii) in the absence of bad faith on the part of the Trustee, the Trustee with respect to the Securities of such series may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical computations or other facts, statements and opinions stated therein);

(2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;

(3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the holders of not less than a majority in principal amount of the Securities of any series at the time Outstanding, determined as provided in Sections 1.01, 6.06, 8.01 and 11.03, relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture with respect to the Securities of that series; and

(4) none of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if there is reasonable ground for believing that the repayment of such funds or liability is not assured to it under the terms of this Indenture or indemnity and security reasonably satisfactory to it against such risk is not assured.

Section 7.02 Certain Rights of Trustee .

Except as otherwise provided in Section 7.01:

(a) The Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, approval, bond, security, other evidence of indebtedness or other paper or document (whether in its original or facsimile form) believed by it to be genuine and to have been signed or presented by the proper party or parties.

(b) Any request, direction, order, Authentication Order or demand of the Company mentioned herein shall be sufficiently evidenced by a Board Resolution or an instrument signed in the name of the Company by an Officer (unless other evidence in respect thereof is specifically prescribed herein).

(c) The Trustee may consult with counsel of its own selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or suffered or omitted hereunder in good faith and in reliance thereon.

(d) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Securityholders, pursuant to the provisions of this Indenture, unless such Securityholders shall have offered to the Trustee indemnity satisfactory to it against the costs, expenses and liabilities that may be incurred therein or thereby.

(e) The Trustee shall not be liable for any action taken, suffered or omitted to be taken by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture.

(f) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, approval, bond, security, other evidence of indebtedness or other papers or documents, but the Trustee, in its discretion, may make such further inquiry into such matters as it may see fit, and if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney at the sole cost of the Company and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.

(g) The Trustee shall not be deemed to have notice of any Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Securities and this Indenture.

(h) The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder.

(i) The rights, privileges, protections, benefits and immunities given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder.

(j) The Trustee may request that the Company deliver a certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture.

(k) In no event shall the Trustee be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

(l) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder.

Section 7.03 Trustee not Responsible for Recitals or Issuance of Securities .

(a) The recitals contained herein and in the Securities shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of the same.

(b) The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities.

(c) Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of any of the Securities or of the proceeds of such Securities, or for the use or application of any funds paid over by the Trustee in accordance with any provision of this Indenture or established pursuant to Section 2.01, or for the use or application of any funds received by any paying agent other than the Trustee.

Section 7.04 May Hold Securities .

Each of the Trustee, any Authenticating Agent, any paying agent and the Security Registrar, in its individual or any other capacity, may become the owner or pledgee of Securities with the same rights it would have if it were not Trustee, Authenticating Agent, paying agent or Security Registrar. However, the Trustee is subject to Sections 7.08 and 7.13.

Section 7.05 Funds Held in Trust .

Subject to the provisions of Section 11.06, all funds received by the Trustee, until used or applied as herein provided, shall be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any funds received by it hereunder except such as it may agree in writing with the Company to pay thereon.

Section 7.06 Compensation, Reimbursement and Indemnification .

(a) The Company shall pay to the Trustee, and the Trustee shall be entitled to be paid, such compensation, which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust, as the Company and the Trustee from time to time may agree in writing, for all services rendered by it in the execution of the trusts hereby created and in the exercise and performance of any of the powers and duties hereunder of the Trustee (which compensation will not be limited by any provision of law in regard to the compensation of a trustee of an express trust). Except as otherwise expressly provided herein, the Company will pay or reimburse the Trustee upon its request for all reasonable expenses and disbursements incurred or made by the Trustee in accordance with any of the provisions of this Indenture, including such compensation as has been agreed between the Trustee and the Company from time to time and the expenses and disbursements of its agents, counsel and of all Persons not regularly in its employ, except any such expense or disbursement as may arise from its own negligence or willful misconduct. The Company shall indemnify the Trustee or any predecessor Trustee (and their officers, agents, directors and employees) for, and shall hold them harmless against, any and all loss, liability, claim, damage or expense, including taxes, other than taxes based upon, measured by or determined by the income of the Trustee, reasonably incurred by the Trustee without negligence or willful misconduct on its part and arising out of or in connection with the acceptance or administration or enforcement of this trust, including the reasonable costs and expenses of defending itself against any claim of liability whether asserted by the Company, a Guarantor, any Holder or any other Person.

(b) The obligations of the Company under this Section 7.06 to compensate and indemnify the Trustee and to pay or reimburse the Trustee for expenses and disbursements shall: (i) be secured by a lien prior to that of the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the holders of particular Securities; and (ii) survive the termination of this Indenture and resignation or removal of the Trustee.

(c) Where the Trustee incurs expenses or renders services in connection with a bankruptcy event of default, such costs and expenses (including reasonable attorneys’ fees and expenses) and the compensation for the services are intended to constitute expenses of administration under applicable Federal or State, bankruptcy, insolvency or other law.

Section 7.07 Reliance on Officer’s Certificate .

Except as otherwise provided in Section 7.01, whenever in the administration of the provisions of this Indenture the Trustee shall deem it necessary or desirable that a matter be

proved or established prior to taking or suffering or omitting to take any action hereunder, such matter, unless other evidence in respect thereof be herein specifically prescribed, in the absence of negligence or willful misconduct on the part of the Trustee, may be deemed to be conclusively proved and established by an Officer’s Certificate delivered to the Trustee and such certificate, in the absence of negligence or willful misconduct on the part of the Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted to be taken by it under the provisions of this Indenture upon the faith thereof.

Section 7.08 Disqualification; Conflicting Interests .

If the Trustee has or shall acquire any “conflicting interest” within the meaning of Section 310(b) of the Trust Indenture Act, the Trustee and the Company shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act.

Section 7.09 Corporate Trustee Required; Eligibility .

There shall at all times be a Trustee with respect to the Securities issued hereunder which shall at all times be a corporation organized and doing business under the laws of the United States or any State or Territory thereof or of the District of Columbia, or a corporation or other Person permitted to act as trustee by the Commission, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $100,000,000, and subject to supervision or examination by Federal, State, Territorial, or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section 7.09 the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Company may not, nor may any Affiliate of the Company, serve as Trustee. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 7.09, the Trustee shall resign immediately in the manner and with the effect specified in Section 7.10.

Section 7.10 Resignation and Removal; Appointment of Successor .

(a) The Trustee or any successor hereafter appointed may resign at any time with respect to the Securities of one or more series by giving a written notice thereof to the Company and by transmitting notice of resignation by mail, first class postage prepaid, to the Securityholders of such series, as their names and addresses appear upon the Security Register. Upon receiving such notice of resignation, the Company promptly shall appoint a successor trustee with respect to Securities of such series. If no successor trustee shall have been so appointed and have accepted appointment within 30 days after the retiring Trustee resigns, the retiring Trustee, at the expense of the Company, or the Company may petition any court of competent jurisdiction for the appointment of a successor trustee with respect to Securities of such series, or any Securityholder of that series who has been a bona fide holder of a Security or Securities for at least six months may on behalf of himself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee.

(b) In case at any time any one of the following shall occur, the Company may remove the Trustee with respect to all or any series of Securities and appoint a successor trustee, or, unless the Trustee’s duty to resign is stayed as provided herein, any Securityholder who has been a bona fide holder of a Security or Securities for at least six months, on behalf of that holder and all others similarly situated, may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee if:

(1) the Trustee shall fail to comply with the provisions of Section 7.08 after written request therefor by the Company or by any Securityholder who has been a bona fide holder of a Security or Securities for at least six months; or

(2) the Trustee shall cease to be eligible in accordance with the provisions of Section 7.09 and shall fail to resign after written request therefor by the Company or by any such Securityholder; or

(3) the Trustee shall become incapable of acting, or shall be adjudged to be bankrupt or insolvent, or commences a voluntary bankruptcy proceeding, or a receiver of the Trustee or of its property shall be appointed or consented to, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation.

Such court may thereupon after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of removal, the Trustee being removed may petition, at the expense of the Company, any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.

(c) The holders of a majority in aggregate principal amount of the Securities of any series at the time Outstanding at any time may remove the Trustee with respect to such series by so notifying the Trustee and the Company and may appoint a successor Trustee for such series with the consent of the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of removal, the Trustee being removed may petition, at the expense of the Company, any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.

(d) Any resignation or removal of the Trustee and appointment of a successor trustee with respect to the Securities of a series pursuant to any of the provisions of this Section 7.10 shall become effective upon acceptance of appointment by the successor trustee as provided in Section 7.11.

(e) Any successor trustee appointed pursuant to this Section 7.10 may be appointed with respect to the Securities of one or more series or all of such series, and at any time there shall be only one Trustee with respect to the Securities of any particular series.

Section 7.11 Acceptance of Appointment By Successor .

(a) In case of the appointment hereunder of a successor trustee with respect to all Securities, every such successor trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee. On the written request of the Company or the successor trustee, such retiring Trustee, upon payment of its charges, shall execute and deliver an instrument transferring to such successor trustee all the rights, powers, and trusts of the retiring Trustee and shall assign, transfer and deliver to such successor trustee all property and funds held by such retiring Trustee hereunder.

(b) In case of the appointment hereunder of a successor trustee with respect to the Securities of one or more but not all series, the Company, the retiring Trustee and each successor trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor trustee shall accept such appointment and which: (i) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor trustee relates; (ii) shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee; and (iii) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust, that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee and that no Trustee shall be responsible for any act or failure to act on the part of any other Trustee hereunder. Upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein, and such retiring Trustee shall have no further responsibility with respect to the Securities of that or those series to which the appointment of such successor trustee relates for the exercise of rights and powers or for the performance of the duties and obligations vested in the Trustee under this Indenture. Each such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor trustee relates. On the written request of the Company or any successor trustee, such retiring Trustee shall assign, transfer and deliver to such successor trustee, to the extent contemplated by such supplemental indenture, the property and funds held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor trustee relates.

(c) Upon request of any such successor trustee, the Company may execute any and all instruments for more fully and certainly vesting in and confirming to such successor trustee all such rights, powers and trusts referred to in Section 7.11(a) or (b), as the case may be.

(d) No successor trustee shall accept its appointment unless at the time of such acceptance such successor trustee shall be qualified and eligible under this Article VII.

(e) Upon acceptance of appointment by a successor trustee as provided in this Section 7.11, the successor trustee shall cause a notice of its succession to be transmitted to Securityholders.

Section 7.12 Merger, Conversion, Consolidation or Succession to Business .

Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided that such corporation shall be qualified under the provisions of Section 7.08 and eligible under the provisions of Section 7.09, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities.

Section 7.13 Preferential Collection of Claims Against the Company .

The Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any creditor relationship described in Section 311(b) of the Trust Indenture Act. A Trustee who has resigned or been removed shall continue to be subject to Section 311(a) of the Trust Indenture Act.

ARTICLE VIII.

CONCERNING THE SECURITYHOLDERS

Section 8.01 Evidence of Action by Securityholders .

Whenever in this Indenture it is provided that the holders of a majority or specified percentage in aggregate principal amount of the Securities of a particular series may take any action (including the making of any demand or request, the giving of any notice, consent or waiver or the taking of any other action), the fact that at the time of taking any such action the holders of such majority or specified percentage of that series have joined therein may be evidenced by any instrument or any number of instruments of similar tenor executed by such holders of Securities of that series in Person or by agent or proxy appointed in writing.

waiver or other action may be given before or after the record date, but only the Securityholders of record at the close of business on the record date shall be deemed to be Securityholders for the purposes of determining whether Securityholders of the requisite proportion of Outstanding Securities of that series have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other action, and for that purpose the Outstanding Securities of that series shall be computed as of the record date; provided, however, that no such authorization, agreement or consent by such Securityholders on the record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than six months after the record date.

Section 8.02 Proof of Execution by Securityholders .

Subject to the provisions of Section 7.01, proof of the execution of any instrument by a Securityholder (such proof will not require notarization) or his agent or proxy and proof of the holding by any Person of any of the Securities shall be sufficient if made in the following manner:

(a) The fact and date of the execution by any such Person of any instrument may be proved in any reasonable manner acceptable to the Trustee.

(b) The ownership of Securities shall be proved by the Security Register of such Securities or by a certificate of the Security Registrar thereof.

(c) The Trustee may require such additional proof of any matter referred to in this Section 8.02 as it shall deem necessary.

Section 8.03 Who May be Deemed Owners .

Prior to the due presentment for registration of transfer of any Security, the Company, the Trustee, any paying agent and any Security Registrar may deem and treat the Person in whose name such Security shall be registered upon the books of the Company as the absolute owner of such Security, whether or not such Security shall be overdue and notwithstanding any notice of ownership or writing thereon made by anyone other than the Security Registrar, for the purpose of receiving payment of or on account of the principal of, premium, if any, and (subject to Section 2.03) interest on such Security and for all other purposes; and neither the Company nor the Trustee nor any paying agent nor any Security Registrar shall be affected by any notice to the contrary.

None of the Company, the Trustee, any paying agent or the Security Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial interests in a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial interests.

Section 8.04 Certain Securities Owned by Company Disregarded .

In determining whether the holders of the requisite aggregate principal amount of Securities of a particular series have concurred in any direction, consent of waiver under this Indenture, the Securities of that series that are owned by the Company or any other obligor on

the Securities of that series or by an Affiliate of the Company shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, except that for the purpose of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver, only Securities of such series that a Responsible Officer of the Trustee knows are so owned shall be so disregarded. The Securities so owned that have been pledged in good faith may be regarded as Outstanding for the purposes of this Section 8.04, if the pledgee shall establish to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Securities and that the pledgee is not an Affiliate. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. Upon request of the Trustee, the Company shall furnish to the Trustee promptly an Officer’s Certificate listing and identifying all Securities of a particular series, if any known by the Company to be owned or held by or for the account of any of the above described Persons and, subject to Sections 7.01 and 7.02, the Trustee shall be entitled to accept such Officer’s Certificate as conclusive evidence of the facts therein set forth and of the fact that all Securities of such particular series not listed therein are Outstanding for the purpose of any such determination.

Section 8.05 Actions Binding on Future Securityholders .

At any time prior to the evidencing to the Trustee, as provided in Section 8.01, of the taking of any action by the holders of the majority or percentage in aggregate principal amount of the Securities of a particular series specified in this Indenture in connection with such action, any holder of a Security of that series that is shown by the evidence to be included in the Securities the holders of which have consented to such action, by filing written notice with the Trustee, and upon proof of holding as provided in Section 8.02, may revoke such action so far as concerns such Security. Except as aforesaid any such action taken by the holder of any Security shall be conclusive and binding upon such holder and upon all future holders and owners of such Security, and of any Security issued in exchange therefor, on registration of transfer thereof or in place thereof, irrespective of whether or not any notation in regard thereto is made upon such Security. Any action taken by the holders of the majority or percentage in aggregate principal amount of the Securities of a particular series specified in this Indenture in connection with such action shall be conclusively binding upon the Company, the Trustee and the holders of all the Securities of that series.

ARTICLE IX.

SUPPLEMENTAL INDENTURES

Section 9.01 Supplemental Indentures Without the Consent of Securityholders .

In addition to any supplemental indenture otherwise authorized by this Indenture, the Company, any Guarantor of a series, if applicable, and the Trustee from time to time and at any time may enter into an indenture or indentures supplemental hereto which shall conform to the provisions of the Trust Indenture Act as then in effect, without the consent of the holders of any series of Securities, for one or more of the following purposes:

(a) to cure any ambiguity, defect, or inconsistency herein or in the Securities of any series, including making any such changes as are required for this Indenture to comply with the Trust Indenture Act;

(b) to add an additional obligor on the Securities or to add a Guarantor of any outstanding series of debt securities, or to evidence the succession of another Person to the Company or any such Guarantor, or successive successions, and the assumption by the successor Person of the covenants, agreements and obligations of the Company or any Guarantor, as the case may be, pursuant to Article X;

(d) to add to the covenants of the Company for the benefit of the holders of any outstanding series of Securities (and if such covenants are to be for the benefit of less than all outstanding series of Securities, stating that such covenants are expressly being included solely for the benefit of such series) or to surrender any of the Company’s or the Guarantor’s, if applicable, rights or powers herein conferred;

(e) to add any additional Events of Default for the benefit of the holders of any outstanding series of Securities (and if such Events of Default are to be applicable to less than all outstanding series, stating that such Events of Default are expressly being included solely to be applicable to such series);

(f) to change or eliminate any of the provisions of this Indenture, provided that any such change or elimination shall not become effective with respect to any outstanding Security of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision;

(g) to secure the Securities of any series;

(h) to make any other change that does not adversely affect the rights of any Securityholder of Outstanding Securities in any material respect;

(i) to provide for the issuance of and establish the form and terms and conditions of the Securities of any series as provided in Section 2.01, to provide which, if any, of the covenants of the Company shall apply to such series, to provide which of the Events of Default shall apply to such series of Securities, to name one or more Guarantors and provide for Guarantees of such series, to provide for the terms and conditions upon which any Guarantee of such series of Securities may be released or terminated, or to define the rights of the holders of such series of Securities;

(j) to issue additional Securities of any series; provided that such additional Securities have the same terms as, and be deemed part of the same series as, the applicable series of Securities issued hereunder to the extent required by Section 2.01(b); or

(k) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trust hereunder by more than one Trustee.

Upon the request of the Company, accompanied by Board Resolutions authorizing the execution of any such supplemental indenture, and upon receipt by the Trustee of the documents described in Section 9.05, the Trustee shall join with the Company and any Guarantor, if applicable, in the execution of any such supplemental indenture, and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into any such supplemental indenture that affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.

Any supplemental indenture authorized by the provisions of this Section 9.01 may be executed by the Company, any applicable Guarantor and the Trustee without the consent of the holders of any of the Securities at the time Outstanding, notwithstanding any of the provisions of Section 9.02.

Section 9.02 Supplemental Indentures with Consent of Securityholders .

With the consent (evidenced as provided in Section 8.01) of the holders of not less than a majority in aggregate principal amount of the Securities of each series at the time Outstanding affected by such supplemental indenture or indentures, the Company and a Guarantor, when authorized by Board Resolutions, and the Trustee from time to time and at any time may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner not covered by Section 9.01 the rights of the holders of the Securities of such series under this Indenture; provided, however, that no such supplemental indenture, without the consent of the holders of each Security of such series then Outstanding and affected thereby, shall: (i) extend a fixed maturity of or any installment of principal of any Securities of any series or reduce the principal amount thereof or reduce the amount of principal of any original issue discount security that would be due and payable upon declaration of acceleration of the maturity thereof; (ii) reduce the rate of or extend the time for payment of interest on any Security of any series; (iii) reduce the premium payable upon the redemption of any Security; (iv) make any Security payable in Currency other than that stated in the Security; (v) impair the right to institute suit for the enforcement of any payment on or after the fixed maturity thereof (or in the case of redemption, on or after the redemption date); or (vi) reduce the aforesaid percentage of Securities, the holders of which are required to consent to any such supplemental indenture or indentures.

A supplemental indenture that changes or eliminates any covenant, Event of Default or other provision of this Indenture that has been expressly included solely for the benefit of one or more particular series of Securities, if any, or which modifies the rights of the holders of Securities of such series with respect to such covenant, Event of Default or other provision, shall be deemed not to affect the rights under this Indenture of the holders of Securities of any other series.

It shall not be necessary for the consent of Securityholders of a series affected thereby under this Section 9.02 to approve the particular form of any proposed supplemental indenture, amendment or waiver, but it shall be sufficient if such consent shall approve the substance thereof.

Promptly after the execution by the Company, any applicable Guarantor and the Trustee of any supplemental indenture pursuant to the provisions of this Section 9.02, the Company shall mail or caused to be mailed a notice thereof by first class mail to the Holders of Securities of each series affected thereby at their addresses as they shall appear on the Security Register, setting forth in general terms the substance of such supplemental indenture. Any failure of the Company to mail such notice, or any defect therein, shall not in any way impair or affect the validity of any such supplemental indenture.

Section 9.03 Effect of Supplemental Indentures .

Upon the execution of any supplemental indenture pursuant to the provisions of this Article IX or Section 10.01, this Indenture shall be and be deemed to be modified and amended with respect to such series in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company, any applicable Guarantor and the holders of Securities of the series affected thereby shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

Section 9.04 Securities Affected by Supplemental Indentures .

Securities of any series affected by a supplemental indenture and authenticated and delivered after the execution of such supplemental indenture pursuant to the provisions of this Article or of Section 10.01 may bear a notation in form approved by the Company, provided such form meets the requirements of any exchange upon which such series may be listed, as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities of that series so modified as to conform, in the opinion of the Board of Directors of the Company, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Company, authenticated by the Trustee in accordance with the terms of this Indenture and delivered in exchange for the Securities of that series then Outstanding.

Section 9.05 Execution of Supplemental Indentures .

Upon the request of the Company, accompanied by Board Resolutions authorizing the execution of any such supplemental indenture, and, if applicable, upon the filing with the Trustee of evidence of the consent of Securityholders required to consent thereto as aforesaid, the Trustee shall join with the Company and any applicable Guarantor in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee in its discretion may but shall not be obligated to enter into such supplemental indenture. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article IX or the modification thereby of the trusts created by this Indenture, the Trustee shall receive, and shall be fully protected in relying upon, an Officer’s Certificate and an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture and that such supplemental indenture is the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.

Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to the provisions of this Section 9.05, the Trustee shall transmit by mail, first class postage prepaid, a notice, setting forth in general terms the substance of such supplemental indenture, to the Securityholders of all series affected thereby as their names and addresses appear upon the Security Register. Any failure of the Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.

ARTICLE X.

SUCCESSOR

Section 10.01 Consolidation, Merger and Sale of Assets .

The Company covenants that it will not merge or consolidate with any other Person or sell or convey all or substantially all of its assets to any Person, unless:

(i) the Company shall be the continuing entity, or the successor entity or the Person which acquires by sale or conveyance substantially all the assets of the Company (if other than the Company), (A) shall expressly assume all of the obligations of the Company under the Indenture and (B) is an entity treated as a “corporation” for United States tax purposes and obtains either (x) an opinion, in form and substance reasonably acceptable to the Trustee, of tax counsel of recognized standing reasonably acceptable to the Trustee, which counsel shall include Gibson, Dunn & Crutcher LLP, or (y) a ruling from the United States Internal Revenue Service, in either case to the effect that such merger or consolidation, or such sale or conveyance, will not result in an exchange of the Securities for new debt instruments for United States federal income tax purposes; and

(ii) no Event of Default and no event that, after notice or lapse of time or both, would become an Event of Default shall be continuing immediately after such merger or consolidation, or such sale or conveyance.

The Company shall deliver to the Trustee prior to the consummation of the proposed transaction an Officer’s Certificate to the foregoing effect and an Opinion of Counsel stating that the proposed transaction and such supplemental indenture comply with this Indenture.

To the extent that a Board Resolution or supplemental indenture pertaining to any series provides for different provisions relating to the subject matter of this Article X, the provisions in such Board Resolution or supplemental indenture shall govern for purposes of such series.

Section 10.02 Successor Person Substituted .

Upon any consolidation or merger, or any sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company or any Guarantor, if applicable, the successor Person formed by such consolidation or into or with which the Company or such Guarantor, as the case may be, is merged or to which such sale, lease, conveyance or other disposition is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company or such Guarantor, as the case may be, under this Indenture with the same effect as if such successor Person has been named as the Company herein. In the event of any such sale or conveyance (other than a conveyance by way of lease) the Company, any Guarantor, if applicable, or any successor entity of any of them which shall theretofore have become such in the manner described in this Article X, shall be discharged from all obligations and covenants under this Indenture, the Securities and the Guarantees and may be liquidated and dissolved.

ARTICLE XI.

SATISFACTION AND DISCHARGE

Section 11.01 Applicability of Article .

If the Securities of a series are denominated and payable only in Dollars (except as provided pursuant to Section 2.01), then the provisions of this Article XI relating to defeasance of Securities shall be applicable except as otherwise specified pursuant to Section 2.01 for Securities of such series. Defeasance provisions, if any, for Securities denominated in a Foreign Currency may be specified pursuant to Section 2.01.

Section 11.02 Satisfaction and Discharge of Indenture .

If at any time:

(a) the Company or any Guarantor, as applicable, shall have delivered or shall have caused to be delivered to the Trustee for cancellation all Securities of a series theretofore authenticated, other than any Securities that shall have been destroyed, lost or stolen and that shall have been replaced or paid as provided in Section 2.07, and Securities for whose payment funds or Governmental Obligations have theretofore been deposited in trust or segregated and held in trust by the Company or any Guarantor, as applicable, and thereupon repaid to the Company or such Guarantor, as applicable, or discharged from such trust, as provided in Section 11.06; or

such date of maturity or redemption date, as the case may be, and if in either case the Company or such Guarantor, as applicable, shall also pay or cause to be paid all other sums payable hereunder with respect to such series by the Company,

then this Indenture shall cease to be of further effect with respect to such series except for the provisions of Sections 2.03, 2.04, 2.05, 2.07, 4.01, 4.02, 4.03, 7.05 and 7.10, that shall survive until the date of maturity or redemption date, as the case may be, and Sections 7.06 and 11.06, that shall survive to such date and thereafter, and the Trustee, on demand of the Company and at the cost and expense of the Company shall execute proper instruments acknowledging satisfaction of and discharging this Indenture with respect to such series.

Section 11.03 Defeasance and Discharge of Obligations; Covenant Defeasance .

(a) If at any time:

(i) all such Securities of a particular series not heretofore delivered to the Trustee for cancellation or that have not become due and payable as described in Section 11.02 shall have been paid by the Company or any Guarantor, as applicable, by depositing irrevocably with the Trustee in trust funds or Governmental Obligations, or a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay at maturity or upon redemption all such Securities of that series not theretofore delivered to the Trustee for cancellation, including principal, premium, if any, and interest due or to become due to such date of maturity or date fixed for redemption, as the case may be, and

(ii) the Company or any Guarantor, as applicable, shall also pay or cause to be paid all other amounts payable hereunder by the Company with respect to such series,

then, subject to Section 11.03(c), after the date such funds or Governmental Obligations, as the case may be, are deposited with the Trustee, the obligations of the Company and any Guarantor, if applicable, under this Indenture with respect to such series shall cease to be of further effect except, to the extent applicable to each, for the provisions of Sections 2.03, 2.04, 2.05, 2.07, 4.01, 4.02, 4.03, 7.05 and 7.10 hereof that shall survive until such Securities shall mature and be paid. Thereafter, Sections 7.06 and 11.06 shall survive such satisfaction and discharge.

respect to the Outstanding Securities of a series, the Company and any Guarantor, as applicable, may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute an Event of Default under Section 6.01(a)(4) or otherwise, but except as specified in this Section 11.03(b), the remainder of the Company’s and any Guarantor’s obligations, as applicable, under the Securities of such series, this Indenture, and any indentures supplemental to this Indenture with respect to such series shall be unaffected thereby.

(c) The following shall be the conditions to the application of Section 11.03 to the Outstanding Securities of the applicable series:

(i) the Company or a Guarantor of such series irrevocably deposits in trust with the Trustee or, at the option of the Trustee, with a trustee satisfactory to the Trustee and the Company or Guarantor, as the case may be, under the terms of an irrevocable trust agreement in form and substance satisfactory to the Trustee, funds or Governmental Obligations sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay principal of, premium, if any, and interest on the Outstanding Securities of such series due or to become due to the date of maturity or date fixed for redemption, as the case may be, and to pay all other amounts payable by it hereunder with respect to the Outstanding Securities of such series, provided that (A) the trustee of the irrevocable trust shall have been irrevocably instructed to pay such funds or the proceeds of such Governmental Obligations to the Trustee and (B) the Trustee shall have been irrevocably instructed to apply such funds or the proceeds of such Governmental Obligations to the payment of said principal, premium, if any, and interest with respect to the Securities of such series;

(ii) the Company or Guarantor, as the case may be, delivers to the Trustee an Officer’s Certificate stating that all conditions precedent specified herein relating to defeasance or covenant defeasance, as the case may be, have been complied with, and an Opinion of Counsel to the same effect;

(iii) no Event of Default under clauses (1), (2), (3), (5), (6) or (7) of Section 6.01(a) shall have occurred and be continuing, and no event which with notice or lapse of time or both would become such an Event of Default shall have occurred and be continuing, on the date of such deposit;

(iv) the Company or Guarantor, as the case may be, shall have delivered to the Trustee an Opinion of Counsel or a ruling received from the Internal Revenue Service to the effect that the holders of the Securities of such series will not recognize income, gain or loss for Federal income tax purposes as a result of the Company’s or Guarantor’s exercise of either option under this Section 11.03 and will be subject to Federal income tax in the same amount and in the same manner and at the same times as would have been the case if such election had not been exercised;

(v) such defeasance or covenant defeasance shall not (i) cause the Trustee to have a conflicting interest for purposes of the Trust Indenture Act with respect to any Securities or (ii) result in the trust arising from such deposit to constitute, unless it is registered as such, a regulated investment company under the Investment Company Act of 1940; and

(vi) notwithstanding any other provisions of this Section 11.03, such covenant defeasance shall be effected in compliance with any additional or substitute terms, conditions or limitations which may be imposed on the Company or Guarantor pursuant to Section 2.01.

After such irrevocable deposit made pursuant to this Section 11.03 and satisfaction of the other conditions set forth herein, the Trustee upon written request shall acknowledge in writing the discharge of the Company’s and Guarantor’s obligations pursuant to this Section 11.03.

Section 11.04 Deposited Funds to be Held in Trust .

All funds or Governmental Obligations deposited with the Trustee pursuant to Sections 11.02 or 11.03 shall be held in trust and shall be available for payment as due, either directly or through any paying agent, including the Company or any Guarantor, as applicable, acting as its own paying agent, to the holders of the particular series of Securities for the payment or redemption of which such funds or Governmental Obligations have been deposited with the Trustee. The Company or Guarantor, as applicable, shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the Governmental Obligations deposited pursuant to Section 11.03 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Securityholders of Outstanding Securities.

Section 11.05 Payment of Funds Held by Paying Agents .

In connection with the provisions of Section 11.02 or 11.03, all funds or Governmental Obligations then held by any paying agent under the provisions of this Indenture shall, upon demand of the Company or any Guarantor, as applicable, be paid to the Trustee and thereupon such paying agent shall be released from all further liability with respect to such funds or Governmental Obligations. The Company or Guarantor, as applicable, shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the Governmental Obligations deposited pursuant to Section 11.03 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Securityholders of Outstanding Securities.

Section 11.06 Repayment to the Company or Guarantor .

held by the Company or any Guarantor, as applicable, shall be discharged from such trust; and thereafter, the paying agent and the Trustee shall be released from all further liability with respect to such funds or Governmental Obligations, and the holder of any of the Securities entitled to receive such payment shall thereafter, as an unsecured general creditor, look only to the Company or Guarantor for the payment thereof. Anything in this Article XI to the contrary notwithstanding, subject to Section 7.06, the Trustee shall deliver or pay to the Company or Guarantor, as applicable, from time to time upon written request by the Company or Guarantor, which shall be accompanied by an Officer’s Certificate, any funds or Governmental Obligations (or other property and any proceeds therefrom) held by it as provided in Sections 11.02 or 11.03 which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof that would then be required to be deposited to effect a defeasance or covenant defeasance, as the case may be, in accordance with this Article XI.

Section 11.07 Reinstatement .

If the Trustee or paying agent is unable to apply any funds or Governmental Obligations in accordance with Section 11.02 or 11.03 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company’s and any applicable Guarantor’s obligations under this Indenture, any indentures supplemental to this Indenture with respect to the applicable series of Securities and the Securities of such series shall be revived and reinstated as though no deposit had occurred pursuant to Section 11.02 or 11.03, as the case may be, until such time as the Trustee or paying agent is permitted to apply all such funds or Governmental Obligations in accordance with Section 11.02 or 11.03, as the case may be; provided, however, that if the Company or a Guarantor has made any payment of principal, premium, if any, or interest on any Securities of such series following the reinstatement of its obligations as aforesaid, the Company or such Guarantor, as applicable, shall be subrogated to the rights of the holders of such Securities of such series to receive such payment from the funds or Governmental Obligations held by the Trustee or paying agent.

ARTICLE XII.

IMMUNITY OF INCORPORATORS, STOCKHOLDERS,

OFFICERS AND DIRECTORS

Section 12.01 No Recourse .

Company or Guarantor or of any predecessor or successor corporation, or any of them, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Securities or implied therefrom; and that any and all such personal liability of every name and nature, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against, every such incorporator, shareholder, officer or director as such, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Securities or implied therefrom, are hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issuance of such Securities.

ARTICLE XIII.

MISCELLANEOUS PROVISIONS

Section 13.01 Effect on Successors and Assigns .

All the agreements of the Company and any Guarantor in this Indenture or the Securities shall bind their respective successors whether so expressed or not. All agreements of the Trustee in this Indenture shall bind its successor.

Section 13.02 Actions by Successor .

Any act or proceeding by any provision of this Indenture authorized or required to be done or performed by any board, committee or officer of the Company or any Guarantor shall and may be done and performed with like force and effect by the corresponding board, committee or officer of any corporation that shall at the time be the lawful sole successor of the Company or such Guarantor, as applicable.

Section 13.03 Notices .

Any notice or communication by the Company, a Guarantor or the Trustee to the others is duly given if in writing and delivered in person or mailed by first-class mail (registered or certified, return receipt requested), telecopier, electronic mail (in PDF format) or overnight air courier guaranteeing next day delivery, to the other’s address:


If to the Company:		The ADT Corporation
		1501 Yamato Road
		Boca Raton, FL 33431
		Attention: Treasury Department
		Facsimile No.: 561-988-3719

If to a Guarantor:		To the address specified in the documentation naming such Guarantor



In either case, with copies to:

		The ADT Corporation
		1501 Yamato Road
		Boca Raton, FL 33431
		Attention: General Counsel
		Facsimile No.: 561-988-3719

and

		Gibson, Dunn & Crutcher LLP
		200 Park Avenue
		New York, New York 10166
		Attention: Andrew Fabens
		Facsimile No.: (212) 351-4035

If to the Trustee:		Wells Fargo Bank, National Association 7000 Central Parkway NE, Suite 550 Atlanta, GA 30328
		Attention: Corporation Trust Services
		Facsimile No.: (770) 551-5118

The Company, any Guarantor or the Trustee by notice to the others may designate additional or different addresses for subsequent notices or communications.

All notices and communications, other than those sent to Securityholders, shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when sent, if electronically mailed in PDF format; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery.

Any notice or communication to a Securityholder shall be mailed by first-class mail, certified or registered, return receipt requested, to his address shown on the Security Register. Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders.

In the event of suspension of regular mail service or by reason of any other cause it shall be impracticable to give notice by mail, then such notification as shall be given with the approval of the Trustee shall constitute sufficient notice for every purpose hereunder.

If a notice or communication is mailed in the manner provided above within the time prescribed, it is conclusively presumed duly given, whether or not the addressee receives it.

Section 13.04 Governing Law .

This Indenture and each Security shall be deemed to be a contract made under the internal laws of the State of New York, and for all purposes shall be construed in accordance with the laws of said State without regard to conflicts of laws principles that would require the application of any other law. This Indenture is subject to the provisions of the Trust Indenture Act that are required to be part of this Indenture and shall, to the extent applicable, be governed by such provisions.

Section 13.05 Treatment of Securities as Debt .

It is intended that the Securities will be treated as indebtedness and not as equity for United States federal income tax purposes. The provisions of this Indenture shall be interpreted to further this intention.

Section 13.06 Compliance Certificates and Opinions .

(a) Upon any application or demand by the Company or a Guarantor to the Trustee to take any action under any of the provisions of this Indenture, the Company or such Guarantor shall furnish to the Trustee an Officer’s Certificate stating that, in the opinion of the signer, all conditions precedent provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically dealt with by any provision of this Indenture relating to such particular application or demand, no additional certificate or opinion need be furnished.

(b) Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant in this Indenture shall include: (1) a statement that the Person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such Person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with.

Section 13.07 Payments on Business Days .

Except as provided pursuant to Section 2.01 pursuant to a Board Resolution, and as set forth in an Officer’s Certificate or established in one or more indentures supplemental to this Indenture, in any case where the date of maturity of interest or principal of any Security or the date of redemption of any Security shall not be a Business Day, then payment of principal, premium, if any, or interest or principal and premium, if any, may be made on the next succeeding Business Day with the same force and effect as if made on the nominal date of maturity or redemption, and no interest shall accrue for the period after such nominal date.

Section 13.08 Conflict with Trust Indenture Act .

If and to the extent that any provision of this Indenture limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control.

Section 13.09 Counterparts .

This Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. The exchange of copies of this Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

Section 13.10 Separability .

In case any one or more of the provisions contained in this Indenture or in the Securities of any series shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Indenture or of such Securities, but this Indenture and such Securities shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein or therein.

Section 13.11 No Adverse Interpretation of Other Agreements .

This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company, a Guarantor or a Subsidiary. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.

Section 13.12 Table of Contents, Headings, Etc .

The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof and shall in no way modify or restrict any of the terms or provisions hereof.

Section 13.13 Consent to Jurisdiction and Service of Process .

The Company and any Guarantor, if applicable, agrees that any legal suit, action or proceeding brought by any party to enforce any rights under or with respect to this Indenture, any Security and any Guarantee or any other document or the transactions contemplated hereby or thereby may be instituted in any state or federal court in The City of New York, State of New York, United States of America, irrevocably waives to the fullest extent permitted by law any objection which it may now or hereafter have to the laying of venue of any such suit, action or proceeding, irrevocably waives to the fullest extent permitted by law any claim that and agrees not to claim or plead in any court that any such action, suit or proceeding brought in such court has been brought in an inconvenient forum and irrevocably submits to the non-exclusive jurisdiction of any such court in any such suit, action or proceeding or for recognition and enforcement of any judgment in respect thereof.

deemed in every respect effective service of process upon the Company in any such suit, action or proceeding and shall be taken and held to be valid personal service upon the Company or such Guarantor, as the case may be. Said designation and appointment shall be irrevocable. Nothing in this Section 13.13 shall affect the right of the Holders to serve process in any manner permitted by law or limit the right of the Holders to bring proceedings against the Company or any Guarantor in the courts of any jurisdiction or jurisdictions. Each of the Company and any Guarantor, if applicable, further agrees to take any and all action, including the execution and filing of any and all such documents and instruments, as may be necessary to continue such designation and appointment of CT Corporation in full force and effect so long as the Securities are outstanding. Each of the Company and any Guarantor, if applicable, hereby irrevocably and unconditionally authorizes and directs CT Corporation to accept such service on its behalf. If for any reason CT Corporation ceases to be available to act as such, each of the Company and such Guarantor agrees to designate a new agent in New York City.

To the extent that the Company or a Guarantor, if applicable, has or hereafter may acquire any immunity from jurisdiction of any court (including any court in the United States, the State of New York or other jurisdiction in which the Company or such Guarantor, or any successor thereof, may be organized or any political subdivisions thereof) or from any legal process (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property or assets, this Indenture, the Securities, the Guarantees or any other documents or actions to enforce judgments in respect of any thereof, then each of the Company and such Guarantor hereby irrevocably waives such immunity, and any defense based on such immunity, in respect of its obligations under the above-referenced documents and the transactions contemplated thereby, to the extent permitted by law.

Section 13.14 Waiver of Jury Trial .

EACH OF THE COMPANY AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE SECURITIES OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 13.15 USA Patriot Act .

The parties hereto acknowledge that in accordance with Section 326 of the USA Patriot Act the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee. The parties to this Indenture agree that they will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements of the USA Patriot Act.

Section 13.16 Force Majeure .

In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces

beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

ARTICLE XIV.

GUARANTEES

Section 14.01 Guarantee .

Unless otherwise specified in the terms of a Guarantee of a series of Securities under this Indenture, each person named as a Guarantor of a series of Securities under this Indenture, by being named as a Guarantor of such series of Securities, fully and unconditionally guarantees (i) (A) to each Holder of each Security that is authenticated and delivered by the Trustee and (B) to the Trustee on behalf of such Holder, the due and punctual payment of the principal of, premium, if any, and interest on such Security when and as the same shall become due and payable, whether at the stated maturity, by acceleration, call for redemption or otherwise and (ii) to the Trustee on its behalf all amounts owed to the Trustee under the Indenture, in each case in accordance with the terms of such Security and of this Indenture. In case of the failure of the Company punctually to make any such payment, each such Guarantor agrees to cause such payment to be made punctually when and as the same shall become due and payable, whether at the stated maturity or by acceleration, call for redemption or otherwise, and as if such payment were made by the Company.

Each Guarantor, by being named as a Guarantor of any series of Securities under this Indenture, agrees that its obligations hereunder shall be absolute and unconditional, irrespective of, and shall be unaffected by, the validity, regularity or enforceability of such Security or this Indenture, the absence of any action to enforce the same or any release, amendment, waiver or indulgence granted to the Company or any such Guarantor or any consent to departure from any requirement of any other guarantee of all or any of the Securities or any other circumstances which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor. Each such Guarantor hereby waives the benefits of diligence, presentment, demand for payment, any requirement that the Trustee or any of the Holders protect, secure, perfect or insure any security interest in or other lien on any property subject thereto or exhaust any right or take any action against the Company or any other Person or any collateral, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest or notice with respect to such Security or the indebtedness evidenced thereby and all demands whatsoever, and covenants that this Guarantee will not be discharged in respect of such Security except by complete performance of the obligations contained in such Security and in such Guarantee. Each such Guarantor agrees that if, after the occurrence and during the continuance of an Event of Default, the Trustee or any of the Holders of the applicable series of Securities are prevented by applicable law from exercising their respective rights to accelerate the maturity of such Securities, to collect interest on such Securities, or to enforce or exercise any other right or remedy with respect to such Securities,

such Guarantor agrees to the Trustee for the account of such Holders, upon demand therefor, the amount that would otherwise have been due and payable had such rights and remedies been permitted to be exercised by the Trustee or any of such Holders.

Any such Guarantor shall be subrogated to all rights of the holders of the Securities against the Company in respect of any amounts paid by such Guarantor on account of such Security pursuant to the provisions of its Guarantee or this Indenture; provided, however, that such Guarantor shall not be entitled to enforce or to receive any payment arising out of, or based upon, such right of subrogation until the principal of and interest on all Securities of such series issued hereunder shall have been paid in full.

Each Guarantee shall remain in full force and effect and continue to be effective should any petition be filed by or against the Company for liquidation or reorganization, should the Company become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any part of the Company’s assets, and shall, to the fullest extent permitted by law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of such Securities, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any holder of such Securities, whether as a “voidable preference,” “fraudulent transfer,” or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, such Securities shall, to the fullest extent permitted by law, be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

Any term or provision of a Guarantee to the contrary notwithstanding, the aggregate amount of the obligations guaranteed hereunder shall be reduced to the extent necessary to prevent such Guarantee from violating or becoming voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally.

Section 14.02 Execution and Delivery of Guarantees .

Unless otherwise specified in the terms of a Guarantee of a series of Securities under this Indenture, each Guarantee shall include the terms of the Guarantee set forth in Section 14.01 and shall be substantially in the form established pursuant to Section 2.16. Each Guarantor of any such series hereby agrees to execute its Guarantee, in a form established pursuant to Section 2.16, on each Security authenticated and delivered by the Trustee.

Each such Guarantee shall be executed on behalf of each such Guarantor by any one of its chairman of the Board of Directors, president, vice presidents or other person duly authorized by the Board of Directors of such Guarantor. The signature of any or all of these persons on a Guarantee may be manual or facsimile.

A Guarantee bearing the manual or facsimile signature of individuals who were at any time the proper officers of such Guarantor shall bind such Guarantor, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of any Security or did not hold such offices at the date of such Guarantee.

The delivery of any Security by the Trustee, after the authentication thereof, shall constitute due delivery of the Guarantee on behalf of a Guarantor and shall bind such Guarantor notwithstanding the fact that the Guarantee does not bear the signature of such Guarantor. Every Guarantor agrees that its Guarantee set forth in Section 14.01 and in the form of Guarantee established pursuant to Section 2.16 shall remain in full force and effect notwithstanding any failure to execute a Guarantee on any such Security.

Section 14.03 Release of Guarantee .

Notwithstanding anything in this Article XIV to the contrary, concurrently with the payment in full of the principal of, premium, if any, and interest on Securities of a series, every Guarantor shall be released from and relieved of its obligations under this Article XIV with respect to the Securities of such series. Upon the delivery by the Company to the Trustee of an Officer’s Certificate and an Opinion of Counsel to the effect that the transaction giving rise to the release of this Guarantee was made by the Company in accordance with the provisions of this Indenture and the Securities, the Trustee shall execute any documents reasonably required in order to evidence the release of each Guarantor from its obligations under this Guarantee. If any of the obligations to pay the principal of, premium, if any, and interest on such Securities and all other obligations of the Company are revived and reinstated after the termination of this Guarantee, then all of the obligations of each Guarantor under this Guarantee shall be revived and reinstated as if this Guarantee had not been terminated until such time as the principal of, premium, if any, and interest on such Securities are paid in full, and each Guarantor shall enter into an amendment to this Guarantee, reasonably satisfactory to the Trustee, evidencing such revival and reinstatement.

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed all as of the day and year first above written.


THE ADT CORPORATION

By:	/s/ Ravi Tulsyan
	Name:	Ravi Tulsyan
	Title:	Vice President and Treasurer

WELLS FARGO BANK, NATIONAL ASSOCIATION
as Trustee

By:	/s/ Stefan Victory
	Name:	Stefan Victory
	Title:	Vice President

EXHIBIT A

FORM OF CERTIFICATE OF TRANSFER

The ADT Corporation

1501 Yamato Road

Boca Raton, FL 33431

Attention: Treasury Department

Wells Fargo Bank, National Association

DAPS Reorg

MAC N9303-121

608 – 2 ^nd Avenue South

Minneapolis, MN 55479

Email: DAPSReorg@wellsfargo.com

Attention: Corporate Trust Services

Re: [insert description of Securities]

Ladies and Gentlemen,

Reference is hereby made to the Indenture, dated as of , among The ADT Corporation, a Delaware company (the “ Company ”), and Wells Fargo Bank, National Association, a New York banking corporation, as trustee (the “ Trustee ”), [as supplemented by that certain supplemental indenture dated as of ][and the Board Resolution adopted ] (together, the “ Indenture ”). Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. (the “ Transferor ”) owns and proposes to transfer the Security or Securities or interest[s] in such Security or Securities specified in Annex A hereto, in the principal amount of $ in such Security or Securities or interest[s] (the “ Transfer ”), to (the “ Transferee ”), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that:

[CHECK ALL THAT APPLY

1. ☐ Check if Transferee will take delivery of a beneficial interest in the 144A Global Security or a Definitive Security Pursuant to Rule 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the “ Securities Act ”), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Security is being transferred to a Person that the Transferor reasonably believed and believes is purchasing the beneficial interest or Definitive Security for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a “qualified institutional buyer” within the meaning of Rule 144A (a “ QIB ”) in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any State of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Security will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Security and/or the Definitive Security and in the Indenture and the Securities Act.

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2. ☐ Check if Transferee will take delivery of a beneficial interest in the Regulation S Global Security or a Definitive Security pursuant to Regulation S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a person in the United States and (y) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (z) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904 (b) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed Transfer is being made prior to the expiration of the Distribution Compliance Period, the Transfer is not being made to a U.S. person (as such is defined in Regulation S) or for the account or benefit of a U.S. person (other than an initial purchaser of the Securities) and the interest transferred will be held immediately thereafter through Euroclear or Clearstream. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Security will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Regulation S Global Security and/or the Definitive Security and in the Indenture and the Securities Act.

3. ☐ Check and complete if Transferee will take delivery of a beneficial interest in a Definitive Security pursuant to any provision of the Securities Act other than Rule 144A or Regulation S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Securities and Restricted Definitive Securities and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any State of the United States, and accordingly the Transferor hereby further certifies that (check one):

(a) ☐ Such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act; or

(b) ☐ Such Transfer is being effected to the Company or a subsidiary thereof; or

(c) ☐ Such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act.

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4. ☐ Check if Transferee will take delivery of a beneficial interest in an Unrestricted Global Security or of an Unrestricted Definitive Security.

(a) ☐ Check if Transfer is pursuant to Rule 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Security will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Securities, on Restricted Definitive Securities and in the Indenture and the Securities Act.

(b) ☐ Check if Transfer is Pursuant to Regulation S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Security will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Securities, on Restricted Definitive Securities and in the Indenture and the Securities Act.

(c) ☐ Check if Transfer is Pursuant to Other Exemption. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Security will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Securities or Restricted Definitive Securities and in the Indenture.

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This certificate and the statements contained herein are made for your benefit and the benefit of the Company.


		Dated:


[Insert Name of Transferor]

By:
	Name:
	Title:

A-4

ANNEX A TO CERTIFICATE OF TRANSFER


1.	The Transferor owns and proposed to transfer the following:

[CHECK ONE OF (a) OR (b)]

	(a)	☐	a beneficial interest in the:

		(i)	☐	144A Global Security (CUSIP ), or

		(ii)	☐	Regulation S Global Security (CUSIP ), or

	(b)	☐	a Restricted Definitive Security.

2.	After the transfer the Transferee will hold:

	(a)	☐	a beneficial interest in the:

		(i)	☐	144A Global Security (CUSIP ), or

		(ii)	☐	Regulation S Global Security (CUSIP ), or

		(iii)	☐	Unrestricted Global Security (CUSIP ); or

	(b)	☐	a Restricted Definitive Security; or

	(c)	☐	an Unrestricted Definitive Security,

in accordance with the terms of the Indenture.

A-5

EXHIBIT B

FORM OF CERTIFICATE OF EXCHANGE

The ADT Corporation

1501 Yamato Road

Boca Raton, FL 33431

Attention: Treasury Department

Wells Fargo Bank, National Association

DAPS Reorg

MAC N9303-121

608 – 2 ^nd Avenue South

Minneapolis, MN 55479

Email: DAPSReorg@wellsfargo.com

Attention: Corporate Trust Services

Attention: Corporation Trust Services

Re: [insert description of the Securities]

Ladies and Gentlemen,

Reference is hereby made to the Indenture, dated as of , among The ADT Corporation, a Delaware company (the “ Company ”), and Wells Fargo Bank, National Association, as trustee (the “ Trustee ”) [as supplemented by that certain supplemental indenture dated as of ][and the Board Resolution adopted ] (together, the “ Indenture ”). Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

, (the “ Owner ”) owns and proposes to transfer the Security or Securities or interest[s] in such Security or Securities specified herein, in the principal amount of $ in such Security or Securities or interest[s] (the “ Exchange ”). In connection with the Transfer, the Transferor hereby certifies that:

1. Exchange of Restricted Definitive Securities or Beneficial Interests in a Restricted Global Security for Unrestricted Definitive Securities or Beneficial Interests in an Unrestricted Global Security.

(a) ☐ Check if Exchange is from beneficial interest in a Restricted Global Security to beneficial interest in an Unrestricted Global Security. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Security for a beneficial interest in an Unrestricted Global Security in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Securities and pursuant to and in accordance with the United States Securities Act of

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1933, as amended (the “ Securities Act ”), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Security is being acquired in compliance with any applicable blue sky securities laws of any State of the United States.

(b) ☐ Check if Exchange is from beneficial interest in a Restricted Global Security to Unrestricted Definitive Security. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Security for an Unrestricted Definitive Security in an equal principal amount, the Owner hereby certifies (i) the Definitive Security is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Securities and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Security is being acquired in compliance with any applicable blue sky securities laws of any State of the United States.

(c) ☐ Check if Exchange is from Restricted Definitive Security to beneficial interest in an Unrestricted Global Security. In connection with the Owner’s Exchange of a Restricted Definitive Security for a beneficial interest in an Unrestricted Global Security, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Securities and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Security is being acquired in compliance with any applicable blue sky securities laws of any State of the United States.

(d) ☐ Check if Exchange is from Restricted Definitive Security to Unrestricted Definitive Security. In connection with the Owner’s Exchange of a Restricted Definitive Security for an Unrestricted Definitive Security, the Owner hereby certifies (i) the Unrestricted Definitive Security is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Securities and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Security is being acquired in compliance with any applicable blue sky securities laws of any State of the United States.

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2. Exchange of Restricted Definitive Securities or Beneficial Interests in Restricted Global Securities for Restricted Definitive Securities or Beneficial Interests in Restricted Global Securities.

(a) ☐ Check if Exchange is from beneficial interest in a Restricted Global Security to Restricted Definitive Security. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Security for a Restricted Definitive Security with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Security is being acquired for the Owner’s own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Security issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Security and in the Indenture and the Securities Act.

(b) ☐ Check if Exchange is from Restricted Definitive Security to beneficial interest in a Restricted Global Security. In connection with the Exchange of the Owner’s Restricted Definitive Security for a beneficial interest in the: [CHECK ONE] ☐ 144A Global Security or ☐ Regulation S Global Security with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Global Securities and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any State of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Security and in the Indenture and the Securities Act.

C-3

This certificate and the statements contained herein are made for your benefit and the benefit of the Company.



[Insert Name of Owner]

By:
		Name:
		Title:

Dated:

C-4

Exhibit 4.2

EXECUTION VERSION

THE ADT CORPORATION,

as Issuer

AND

TYCO INTERNATIONAL LTD.

as Guarantor

AND

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee

FIRST SUPPLEMENTAL INDENTURE

Dated as of July 5, 2012

$750,000,000 of 2.250% Notes due 2017

THIS FIRST SUPPLEMENTAL INDENTURE is dated as of July 5, 2012 among THE ADT CORPORATION, a Delaware corporation (the “ Company ”), TYCO INTERNATIONAL LTD., a Swiss corporation (“ Guarantor ”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association (the “ Trustee ”).

RECITALS

A. The Company and the Trustee executed and delivered an Indenture, dated as of July 5, 2012 (the “ Base Indenture ”), to provide for the issuance by the Company from time to time of unsubordinated debt securities evidencing its unsecured indebtedness.

B. Pursuant to resolutions of a duly authorized Pricing Committee of the Board of Directors, the Company has authorized the issuance of $750,000,000 principal amount of 2.250% Notes due 2017 (the “ Offered Securities ”).

C. The entry into this First Supplemental Indenture by the parties hereto is in all respects authorized by the provisions of the Base Indenture.

D. The Guarantor and the Company desire to enter into this First Supplemental Indenture pursuant to Section 9.01 of the Base Indenture to establish the terms of the Offered Securities in accordance with Section 2.01 of the Base Indenture and to establish the form of the Offered Securities in accordance with Section 2.02 of the Base Indenture.

E. All things necessary to make this First Supplemental Indenture a legal, valid and binding indenture and agreement according to its terms have been done.

NOW, THEREFORE, for and in consideration of the foregoing premises, the Guarantor, the Company and the Trustee mutually covenant and agree for the equal and proportionate benefit of the respective holders from time to time of the Offered Securities as follows:

ARTICLE I

Section 1.1. Terms of Offered Securities .

The following terms relate to the Offered Securities:

(1) The Offered Securities constitute a series of securities having the title “2.250% Notes due 2017”.

(2) The initial aggregate principal amount of the Offered Securities that may be authenticated and delivered under the Base Indenture (except for Offered Securities authenticated and delivered upon registration of, transfer of, or in exchange for, or in lieu of, other Offered Securities pursuant to Section 2.05, 2.06, 2.07, 2.11, or 3.03) is $750,000,000.

(3) The entire Outstanding principal of the Offered Securities shall be payable on July 15, 2017.

First Supplemental Indenture

(4) The rate at which the Offered Securities shall bear interest shall be 2.250% per year. The date from which interest shall accrue on the Offered Securities shall be July 5, 2012, or the most recent Interest Payment Date to which interest has been paid or provided for. The Interest Payment Dates for the Offered Securities shall be January 15 and July 15 of each year, beginning January 15, 2013. Interest shall be payable on each Interest Payment Date to the Holders of record at the close of business on the January 1 and July 1 prior to each Interest Payment Date (a “ regular record date ”). The basis upon which interest shall be calculated shall be that of a 360-day year consisting of twelve 30-day months.

(5) The Offered Securities shall be issuable in whole in the registered form of one or more Global Securities, and the Depository for such Global Securities shall be The Depository Trust Company, New York, New York. The Offered Securities shall be substantially in the form attached hereto as Exhibit A the terms of which are herein incorporated by reference. The Offered Securities shall be issuable in denominations of $2,000 or any integral multiple of $1,000 in excess thereof.

(6) (A) The Offered Securities will be subject to redemption at the Company’s option on any date (a “ Redemption Date ”) prior to the maturity date, in whole or from time to time in part, in $1,000 increments ( provided that any remaining principal amount thereof shall be at least the minimum authorized denomination thereof). The Offered Securities will be redeemable at a redemption price equal to the greater of (i) 100% of the principal amount of the Offered Securities to be redeemed and (ii) as determined by the Quotation Agent and delivered to the Trustee in writing, the sum of the present values of the remaining scheduled payments of principal and interest thereon due on any date after the Redemption Date (excluding the portion of interest that will be accrued and unpaid to and including the Redemption Date) discounted from their scheduled date of payment to the Redemption Date (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Redemption Treasury Rate plus 25 basis points, plus accrued and unpaid interest, if any, thereon to the Redemption Date.

(B) As used herein:

“ Adjusted Redemption Treasury Rate ”, with respect to any Redemption Date, means the rate equal to the semiannual equivalent yield to maturity or interpolated (on a 30/360 day count basis) yield to maturity of the Comparable Redemption Treasury Issue, assuming a price for the Comparable Redemption Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Redemption Treasury Price for such Redemption Date.

“ Comparable Redemption Treasury Issue ” means the United States Treasury security selected by the Quotation Agent as being the most recently issued United States Treasury note or bond as displayed by Bloomberg LP (or any successor service) on screens PXI through PX8 (or any other screens as may replace such screens on such service) that has a remaining term comparable to the remaining term of the Offered Securities to be redeemed.

First Supplemental Indenture

one such highest and/or lowest quotation shall be excluded), or (ii) if the Quotation Agent obtains fewer than four such Redemption Reference Treasury Dealer Quotations, the average of all such Redemption Reference Treasury Dealer Quotations.

“ Quotation Agent ” means a Redemption Reference Treasury Dealer appointed as such agent by the Company.

“ Redemption Reference Treasury Dealer ” means four primary U.S. Government securities dealers in the United States selected by the Company.

“ Redemption Reference Treasury Dealer Quotations ”, with respect to each Redemption Reference Treasury Dealer and any Redemption Date, means the average, as determined by the Quotation Agent, of the bid and offer prices at 11:00 a.m., New York City time, for the Comparable Redemption Treasury Issue (expressed in each case as a percentage of its principal amount) for settlement on the Redemption Date quoted in writing to the Quotation Agent by such Redemption Reference Treasury Dealer on the third Business Day preceding such Redemption Date.

(7) If the Distribution has not occurred on or prior to March 31, 2013 or if the Board of Directors of the Guarantor determines that the Distribution Date will not occur by March 31, 2013, the Company may elect to redeem the Offered Securities by issuing a special redemption notice (the “ Special Redemption Notice ”) on or prior to June 30, 2013. The Special Redemption Notice will specify a redemption date for the notes (the “Special Redemption Date”), which will be no earlier than ten days and no later than 30 days after the date of the Special Redemption Notice. In connection with such redemption, the Offered Securities will be redeemable at a redemption price equal to 101% of the principal amount of the Offered Securities being redeemed, plus accrued and unpaid interest, if any, thereon to the Special Redemption Date.

(8) Except as provided herein, the Offered Securities shall not be subject to redemption, repurchase or repayment at the option of any Holder thereof, upon the occurrence of any particular circumstances or otherwise. The Offered Securities will not have the benefit of any sinking fund.

(9) Except as provided herein, the Holders of the Offered Securities shall have no special rights in addition to those provided in the Base Indenture upon the occurrence of any particular events.

(10) The Offered Securities will be general unsecured and unsubordinated obligations of the Company and will be ranked equally among themselves.

(11) To the extent set forth in Section 1.7, the Guarantor shall be a “Guarantor” of the Offered Securities and shall be subject to all of the rights and obligations of a Guarantor under the Indenture with respect to the Offered Securities.

(12) The Offered Securities are not convertible into shares of common stock or other securities of the Company or the Guarantor.

First Supplemental Indenture

(13) The additional and replacement Events of Default and restrictive covenants set forth in Sections 1.3, 1.4 and 1.5 shall be applicable only to the Offered Securities.

(14) The additional provisions set forth in Sections 1.6 and 1.7 shall be applicable only to the Offered Securities.

Section 1.2 Additional Defined Terms .

As used herein, the following defined terms shall have the following meanings with respect to the Offered Securities only:

“ Attributable Debt ”, in connection with a Sale and Lease-Back Transaction, as of any particular time, means the aggregate of present values (discounted at a rate that, at the inception of the lease, represents the effective interest rate that the lessee would have incurred to borrow over a similar term the funds necessary to purchase the leased assets) of the obligations of the Company or any Restricted Subsidiary for net rental payments during the remaining term of the applicable lease, including any period for which such lease has been extended or, at the option of the lessor, may be extended. The term “net rental payments” under any lease of any period shall mean the sum of the rental and other payments required to be paid in such period by the lessee thereunder, not including any amounts required to be paid by such lessee, whether or not designated as rental or additional rental, on account of maintenance and repairs, reconstruction, insurance, taxes, assessments, water rates or similar charges required to be paid by such lessee thereunder or any amounts required to be paid by such lessee thereunder contingent upon the amount of sales, maintenance and repairs, reconstruction, insurance, taxes, assessments, water rates or similar charges.

“ Change of Control ” means the occurrence of any of the following: (1) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or more series of related transactions, of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, to any person other than the Company or a direct or indirect wholly-owned subsidiary of the Company (excluding the internal reorganization and other transactions contemplated by the Spin-Off); (2) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any person becomes the “beneficial owner” (as defined in Rules 13(d)(3) and 13(d)(5) under the Exchange Act), directly or indirectly, of more than 50% of the Company’s outstanding Voting Stock or other Voting Stock into which the Company’s Voting Stock is reclassified, consolidated, exchanged or changed, measured by voting power rather than number of shares; (3) the Company consolidates with, or merges with or into, any person, or any person consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction in which any of the Company’s outstanding Voting Stock or the Voting Stock of such other person is converted into or exchanged for cash, securities or other property, other than any such transaction where the shares of the Company’s Voting Stock outstanding immediately prior to such transaction constitute, or are converted into or exchanged for, a majority of the Voting Stock of the surviving person or any direct or indirect parent company of the surviving person immediately after giving effect to such transaction; (4) the first day on which a majority of the members of the Company’s Board of Directors are not Continuing Directors or (5) the adoption of a plan relating to the Company’s liquidation or dissolution. Notwithstanding the foregoing, a

First Supplemental Indenture

transaction shall not be deemed to involve a Change of Control under clause (1), (2) or (5) above if: (i) the Company becomes a direct or indirect wholly-owned subsidiary of a holding company or a holding company becomes the successor to the Company under Section 8.2 of the Indenture pursuant to a transaction that is permitted under Section 8.1 of the Indenture and (ii) the direct or indirect holders of the Voting Stock of such holding company immediately following that transaction (or a series of related transactions) are substantially the same (and hold in the same proportions) as the holders of the Company’s Voting Stock immediately prior to that transaction. The term “person,” as used in this definition, means any Person and any two or more Persons as provided in Section 13(d)(3) of the Exchange Act.

“ Change of Control Triggering Event ” means the occurrence of both a Change of Control and a Rating Event.

“ Consolidated Net Worth ” at any date means total assets less total liabilities, in each case appearing on the most recently prepared consolidated balance sheet of the Company and its subsidiaries as of the end of a fiscal quarter of the Company, prepared in accordance with United States generally accepted accounting principles as in effect on the date of the consolidated balance sheet.

“ Consolidated Tangible Assets ” at any date means total assets less all Intangible Assets appearing on the most recently prepared consolidated balance sheet of the Company and its subsidiaries as of the end of a fiscal quarter of the Company, prepared in accordance with United States generally accepted accounting principles as in effect on the date of the consolidated balance sheet. “Intangible Assets” means the amount (if any) stated under the heading “Goodwill and Other Intangible assets, net” or under any other heading of intangible assets separately listed, in each case on the face of such consolidated balance sheet.

“ Continuing Director ” means, as of any date of determination, any member of the Company’s Board of Directors who:

(1) was a member of such Board of Directors on the date hereof;

(2) became a member of such Board of Directors immediately following the Distribution; or

(3) was nominated for election, elected or appointed to such Board of Directors pursuant to a proposal by a majority of the Continuing Directors who were members of such board of directors at the time of such nomination, election or appointment (either by a specific vote or by approval of the Company’s proxy statement in which such member was named as a nominee for election as a director, without objection to such nomination).

“ Distribution ” refers to the pro-rata distribution of all of the outstanding common stock of the Company to the Guarantor’s shareholders in the form of a special dividend.

“ Fitch ” means Fitch Inc., and its successors.

“ Funded Indebtedness ” means any Indebtedness maturing by its terms more than one year from the date of the determination thereof, including any Indebtedness renewable or extendible at the option of the obligor to a date later than one year from the date of the determination thereof.

First Supplemental Indenture

“ Indebtedness ” means, without duplication, the principal amount (such amount being the face amount or, with respect to original issue discount bonds or zero coupon notes, bonds or debentures or similar securities, determined based on the accreted amount as of the date of the most recently prepared consolidated balance sheet of the Company and its Subsidiaries or, prior to the Distribution, the Guarantor and its Subsidiaries, as applicable, as of the end of a fiscal quarter of the Company or the Guarantor, as applicable, prepared in accordance with United States generally accepted accounting principles as in effect on the date of such consolidated balance sheet) of (i) all obligations for borrowed money, (ii) all obligations evidenced by debentures, notes or other similar instruments, (iii) all obligations in respect of letters of credit or bankers acceptances or similar instruments or reimbursement obligations with respect thereto (such instruments to constitute Indebtedness only to the extent that the outstanding reimbursement obligations in respect thereof are collateralized by cash or cash equivalents reflected as assets on a balance sheet prepared in accordance with United States generally accepted accounting principles), (iv) all obligations to pay the deferred purchase price of property or services, except (A) trade and similar accounts payable and accrued expenses, (B) employee compensation, deferred compensation and pension obligations, and other obligations arising from employee benefit programs and agreements or other similar employment arrangements, (C) obligations in respect of customer advances received and (D) obligations in connection with earnout and holdback agreements, in each case in the ordinary course of business, (v) all obligations as lessee to the extent capitalized in accordance with United States generally accepted accounting principles and (vi) all Indebtedness of others consolidated in such balance sheet that is guaranteed by the Company or, prior to the Distribution, the Guarantor, as applicable, or any of their respective subsidiaries or for which the Company or, prior to the Distribution, the Guarantor, as applicable, or any of their respective subsidiaries are legally responsible or liable (whether by agreement to purchase indebtedness of, or to supply funds or to invest in, others).

“ Investment Grade Rating ” means a rating equal to or higher than BBB- (or the equivalent) by Fitch, Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P, and the equivalent investment grade credit rating from any replacement rating agency or rating agencies selected by the Company.

“ Moody’s ” means Moody’s Investors Service, Inc., and its successors.

“ Non-Recourse Indebtedness ” means Indebtedness upon the enforcement of which recourse may be had by the holder(s) thereof only to identified assets of the Company or, prior to the Distribution, the Guarantor or any of their respective Subsidiaries and, in each case, not to such entity personally (subject to, for the avoidance of doubt, customary exceptions contained in non-recourse financings to the non-recourse nature of the obligations thereunder).

First Supplemental Indenture

the date hereof, or (C) is acquired after the date hereof, in each case, other than any such plants, facilities, warehouses or portions thereof, that in the opinion of the Board of Directors of the Company, are not collectively of material importance to the total business conducted by the Company and its subsidiaries as an entirety, or that has a net book value (excluding any capitalized interest expense), on the date hereof in the case of clause (A) of this definition, on the date of completion of the initial construction in the case of clause (B) of this definition or on the date of acquisition in the case of clause (C) of this definition, of less than 2.0% of Consolidated Tangible Assets on the consolidated balance sheet of the Company and its Subsidiaries as of the applicable date.

“ Rating Agencies ” means (1) each of Fitch, Moody’s and S&P; and (2) if any of Fitch, Moody’s or S&P ceases to rate the Offered Securities or fails to make a rating of the Offered Securities publicly available for reasons outside of the Company’s control, a “nationally recognized statistical rating organization” within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act, selected by the Company (as certified by a resolution of the Company’s Board of Directors) as a replacement agency for Fitch, Moody’s or S&P, or all of them, as the case may be.

“ Rating Event ” means the rating on the Offered Securities is lowered by at least two of the three Rating Agencies and such Offered Securities are rated below an Investment Grade Rating by at least two of the three Rating Agencies on any day during the period (which period shall be extended so long as the rating of such Offered Securities is under publicly announced consideration for a possible downgrade by any of the Rating Agencies) commencing 60 days prior to the first public notice of the occurrence of a Change of Control or the Company’s intention to effect a Change of Control and ending 60 days following consummation of such Change of Control.

“ Restricted Subsidiary ” means any Subsidiary of the Company that owns or leases a Principal Property.

“ Sale and Lease-Back Transaction ” means an arrangement with any Person providing for the leasing by the Company or a Restricted Subsidiary of any Principal Property whereby such Principal Property has been or is to be sold or transferred by the Company or a Restricted Subsidiary to such Person other than the Company or any of its Subsidiaries; provided, however, that the foregoing shall not apply to any such arrangement involving a lease for a term, including renewal rights, for not more than three years.

“ Spin-Off ” refers to the Distribution and all other transactions required for the consummation of the separation of the Company from the Guarantor under the separation and distribution agreement that the Company expects to enter into with the Guarantor in connection with the Distribution.

“ S&P ” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors.

First Supplemental Indenture

“ Voting Stock ” means, with respect to any specified “Person” as of any date, the capital stock of such Person that is at the time entitled to vote generally in the election of the board of directors of such Person.

Section 1.3. Additional Covenants .

The following additional covenants shall apply with respect to the Offered Securities so long as any of the Offered Securities remain Outstanding (but subject to defeasance, as provided in the Indenture):

(1) Limitation on Liens.

The Company will not, and will not permit any Restricted Subsidiary to, issue, assume or guarantee any Indebtedness that is secured by a mortgage, pledge, security interest, lien or encumbrance (each a “ lien ”) upon any property that at the time of such issuance, assumption or guarantee constitutes a Principal Property, or any shares of stock of or Indebtedness issued by any Restricted Subsidiary, whether now owned or hereafter acquired, without effectively providing that, for so long as such lien shall continue in existence with respect to such secured Indebtedness, the Offered Securities (together with, if the Company shall so determine, any other Indebtedness of the Company ranking equally with the Offered Securities, it being understood that for purposes hereof, Indebtedness which is secured by a lien and Indebtedness which is not so secured shall not, solely by reason of such lien, be deemed to be of different ranking) shall be equally and ratably secured by a lien ranking ratably with or equal to (or at the Company’s option prior to) such secured Indebtedness; provided, however, that the foregoing covenant shall not apply to:

(a) liens existing on the date the Offered Securities are first issued;

(b) liens on the stock, assets or Indebtedness of a Person existing at the time such Person becomes a Restricted Subsidiary, unless created in contemplation of such Person becoming a Restricted Subsidiary;

(c) liens on any assets or Indebtedness of a Person existing at the time such Person is merged with or into or consolidated with or acquired by the Company or a Restricted Subsidiary or at the time of a purchase, lease or other acquisition of the assets of a corporation or firm as an entirety or substantially as an entirety by the Company or any Restricted Subsidiary;

(d) liens on any Principal Property existing at the time of acquisition thereof by the Company or any Restricted Subsidiary, or liens to secure the payment of the purchase price of such Principal Property by the Company or any Restricted Subsidiary, or to secure any Indebtedness incurred, assumed or guaranteed by the Company or a Restricted Subsidiary for the purpose of financing all or any part of the purchase price of such Principal Property or improvements or construction thereon, which Indebtedness is incurred, assumed or guaranteed prior to, at the time of or within one year after such acquisition (or in the case of real property, completion of such improvement or construction or commencement of full operation of such property, whichever is later); provided, however , that in the case of any such acquisition, construction or improvement,

First Supplemental Indenture

the lien shall not apply to any Principal Property theretofore owned by the Company or a Restricted Subsidiary, other than the Principal Property so acquired, constructed or improved (and accessions thereto and improvements and replacements thereof and the proceeds of the foregoing);

(e) liens securing Indebtedness owing by any Restricted Subsidiary to the Company or a Subsidiary thereof;

(f) at any time prior to the Distribution, liens securing Indebtedness owing by any Restricted Subsidiary to the Guarantor or a subsidiary thereof, provided that the foregoing covenant will apply to liens in favor of the Guarantor or its subsidiaries that remain after the Distribution, as if the Indebtedness secured thereby had been incurred immediately after the Distribution;

(g) liens in favor of the United States or any State thereof, or any department, agency or instrumentality or political subdivision of the United States of America or any State thereof, or in favor of any other country or any political subdivision thereof, to secure partial, progress, advance or other payments pursuant to any contract, statute, rule or regulation or to secure any Indebtedness incurred or guaranteed for the purpose of financing all or any part of the purchase price (or, in the case of real property, the cost of construction or improvement) of the Principal Property subject to such liens (including liens incurred in connection with pollution control, industrial revenue or similar financings);

(h) pledges, liens or deposits under workers’ compensation or similar legislation, and liens thereunder that are not currently dischargeable, or in connection with bids, tenders, contracts (other than for the payment of money) or leases to which the Company or any Restricted Subsidiary is a party, or to secure the public or statutory obligations of the Company or any Restricted Subsidiary, or in connection with obtaining or maintaining self-insurance, or to obtain the benefits of any law, regulation or arrangement pertaining to unemployment insurance, old age pensions, social security or similar matters, or to secure surety, performance, appeal or customs bonds to which the Company or any Restricted Subsidiary is a party, or in litigation or other proceedings in connection with the matters heretofore referred to in this clause, such as interpleader proceedings, and other similar pledges, liens or deposits made or incurred in the ordinary course of business;

(i) liens created by or resulting from any litigation or other proceeding that is being contested in good faith by appropriate proceedings, including liens arising out of judgments or awards against the Company or any Restricted Subsidiary with respect to which the Company or such Restricted Subsidiary in good faith is prosecuting an appeal or proceedings for review or for which the time to make an appeal has not yet expired; or final unappealable judgment liens which are satisfied within 15 days of the date of judgment; or liens incurred by the Company or any Restricted Subsidiary for the purpose of obtaining a stay or discharge in the course of any litigation or other proceeding to which the Company or such Restricted Subsidiary is a party;

First Supplemental Indenture

(j) liens for taxes or assessments or governmental charges or levies not yet due or delinquent; or that can thereafter be paid without penalty, or that are being contested in good faith by appropriate proceedings; landlord’s liens on property held under lease; and any other liens or charges incidental to the conduct of the business of the Company or any Restricted Subsidiary, or the ownership of their respective assets, that were not incurred in connection with the borrowing of money or the obtaining of advances or credit and that, in the opinion of the Board of Directors of the Company, do not materially impair the use of such assets in the operation of the business of the Company or such Restricted Subsidiary or the value of such Principal Property for the purposes of such business;

(k) liens to secure the Company’s or any Restricted Subsidiary’s obligations under agreements with respect to spot, forward, future and option transactions, entered into in the ordinary course of business;

(l) liens not permitted by the foregoing clauses (a) to (k), inclusive, if at the time of, and after giving effect to, the creation or assumption of any such lien, the aggregate amount of all outstanding Indebtedness of the Company and its Restricted Subsidiaries (without duplication) secured by all such liens not so permitted by the foregoing clauses (a) through (k), inclusive, together with the Attributable Debt in respect of Sale and Lease-Back Transactions permitted by paragraph (a) under subsection (2) below, do not exceed the greater of $100,000,000 and 10% of Consolidated Net Worth; and

(m) any extension, renewal or replacement (or successive extensions, renewals or replacements) in whole or in part, of any lien referred to in the foregoing clauses (a) to (l), inclusive; provided, however, that the principal amount of Indebtedness secured thereby unless otherwise excepted under clauses (a) through (l) shall not exceed the principal amount of Indebtedness so secured at the time of such extension, renewal or replacement, and that such extension, renewal or replacement shall be limited to all or a part of the assets (or any replacements therefor) that secured the lien so extended, renewed or replaced (plus improvements and construction on real property).

(2) Limitation on Sale and Lease-Back Transactions.

The Company will not, and will not permit any Restricted Subsidiary to, enter into any Sale and Lease-Back Transaction unless:

(a) the Company or such Restricted Subsidiary, at the time of entering into a Sale and Lease-Back Transaction, would be entitled to incur Indebtedness secured by a lien on the Principal Property to be leased in an amount at least equal to the Attributable Debt in respect of such Sale and Lease-Back Transaction, without equally and ratably securing the Securities pursuant to Section 1.3(1) above; or

First Supplemental Indenture

the property or assets so leased is applied, within 180 days of the effective date of any such Sale and Lease-Back Transaction, to the purchase or acquisition (or, in the case of real property, commencement of the construction) of property or assets or to the retirement (other than at maturity or pursuant to a mandatory sinking fund or mandatory redemption provision) of Securities, or of Funded Indebtedness of the Company or a consolidated Subsidiary ranking on a parity with or senior to the Securities; provided that there shall be credited to the amount of net worth proceeds required to be applied pursuant to this clause (b) an amount equal to the sum of (i) the principal amount of Securities delivered within 180 days of the effective date of such Sale and Lease-Back Transaction to the Trustee for retirement and cancellation and (ii) the principal amount of other Funded Indebtedness voluntarily retired by the Company within such 180-day period, excluding retirements of Securities and other Funded Indebtedness as a result of conversions or pursuant to mandatory sinking fund or mandatory prepayment provisions.

(3) Change of Control Triggering Event.

(a) If a Change of Control Triggering Event occurs, unless the Company has exercised its option to redeem the Offered Securities, it shall be required to make an offer (a “ Change of Control Offer ”) to each Holder of the Offered Securities to repurchase, at the Holder’s election, all or any part (equal to $1,000 or an integral multiple of $1,000 in excess thereof) of that Holder’s Offered Securities on the terms set forth herein. In a Change of Control Offer, the Company shall be required to offer payment in cash equal to 101% of the aggregate principal amount of Offered Securities repurchased, plus accrued and unpaid interest, if any, on the Offered Securities repurchased to the date of repurchase (a “ Change of Control Payment ”). Within 30 days following any Change of Control Triggering Event or, at the Company’s option, prior to any Change of Control, but after public announcement of the transaction that constitutes or may constitute the Change of Control, a notice shall be mailed to the Trustee and to the Holders of the Offered Securities describing in reasonable detail the transaction that constitutes or may constitute the Change of Control Triggering Event and offering to repurchase such Offered Securities on the date specified in the notice, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed (a “ Change of Control Payment Date ”). The notice shall, if mailed prior to the date of consummation of the Change of Control, state that the offer to purchase is conditioned on the Change of Control Triggering Event occurring on or prior to the Change of Control Payment Date.

(b) In order to accept the Change of Control Offer, the Holder must deliver (or otherwise comply with alternative instructions in accordance with the procedures of the Depositary) to the paying agent, at least five Business Days prior to the Change of Control Payment Date, its Offered Security together with the form entitled “Election Form” (which form is contained in the form of note attached hereto as Exhibit A) duly completed, or a telegram, telex, facsimile transmission or a letter from a member of a national securities exchange or the Financial Industry Regulatory Authority, Inc., or a commercial bank or trust company in the United States setting forth:

(i) the name of the Holder of such Offered Security;

(ii) the principal amount of such Offered Security;

First Supplemental Indenture

(iii) the principal amount of such Offered Security to be repurchased;

(iv) the certificate number or a description of the tenor and terms of such Offered Security;

(v) a statement that the Holder is accepting the Change of Control Offer; and

(vi) a guarantee that such Offered Security, together with the form entitled “Election Form” duly completed, will be received by the paying agent at least five Business Days prior to the Change of Control Payment Date.

(c) Any exercise by a Holder of its election to accept the Change of Control Offer shall be irrevocable. The Change of Control Offer may be accepted for less than the entire principal amount of an Offered Security, but in that event the principal amount of such Offered Security remaining outstanding after repurchase must be equal to $2,000 or an integral multiple of $1,000 in excess thereof.

(d) On the Change of Control Payment Date, the Company shall, to the extent lawful:

(i) accept for payment all Offered Securities or portions of such Offered Securities properly tendered pursuant to the Change of Control Offer;

(ii) deposit with the paying agent an amount equal to the Change of Control Payment in respect of all Offered Securities or portions of Offered Securities properly tendered; and

(iii) deliver or cause to be delivered to the Trustee the Offered Securities properly accepted together with an Officers’ Certificate stating the aggregate principal amount of Offered Securities or portions of Offered Securities being repurchased.

(e) The Company shall not be required to make a Change of Control Offer upon the occurrence of a Change of Control Triggering Event if a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for an offer made by the Company and the third party purchases all Offered Securities properly tendered and not withdrawn under its offer. In addition, the Company shall not repurchase any Offered Securities if there has occurred and is continuing on the Change of Control Payment Date an Event of Default under the Indenture, other than a default in the payment of the Change of Control Payment upon a Change of Control Triggering Event.

(f) The Company shall comply with the requirements of Rule 14e-1 under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Offered Securities as a result of a Change of Control Triggering Event. To the extent that the provisions of any such securities laws or regulations conflict with this Section 1.3(3), the Company shall comply with those securities laws and regulations and shall not be deemed to have breached its obligations under this Section 1.3(3) by virtue of any compliance with such laws or regulations.

First Supplemental Indenture

Section 1.4 Replacement Events of Default .

The Events of Default in Sections 6.01(a)(4), (5) and (6) of the Base Indenture are hereby deleted with respect to the Offered Securities and replaced with the following, which events shall constitute an “Event of Default” under Section 6.01(a) of the Base Indenture with respect to the Offered Securities so long as any of the Offered Securities remain Outstanding:

(4) default in the performance, or breach, of any covenant or agreement of the Company or, prior to the Distribution, the Guarantor and the related Guarantee (other than a default or breach that is specifically dealt with elsewhere in this Section 6.01), and continuance of such default or breach for a period of 90 days after the date on which there has been given, by registered or certified mail, to the Company and, prior to the Distribution, the Guarantor by the Trustee or to the Company and the Trustee, and, prior to the Distribution, the Guarantor by the Holders of at least 25% in principal amount of the Outstanding Securities of such series, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder; or

(5) a court having jurisdiction in the premises shall enter a decree or order for relief in respect of the Company or, prior to the Distribution, the Guarantor in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee or sequestrator or similar official of the Company or, prior to the Distribution, the Guarantor or for any substantial part of its property or ordering the winding up or liquidation of its affairs, and such decree or order shall remain unstayed and in effect for a period of 90 consecutive days; or

(6) the Company or, prior to the Distribution, the Guarantor shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary case under any such law, or consent to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee or sequestrator or similar official of the Company or, prior to the Distribution, the Guarantor or for any substantial part of its property, or make any general assignment for the benefit of creditors; or

Section 1.5 Additional Events of Default .

Each of the following additional events shall be established and shall constitute an “Event of Default” under Section 6.01(a) of the Base Indenture with respect to the Offered Securities so long as any of the Offered Securities remain Outstanding:

(8) prior to the Distribution, the Guarantee with respect to the Offered Securities shall for any reason cease to be, or shall for any reason be asserted in writing by the Company or the Guarantor not to be, in full force and effect and enforceable in accordance with its terms except to the extent contemplated by this Indenture and such Guarantee; or

(9) an event of default shall happen and be continuing with respect to the Company’s or, prior to the Distribution, the Guarantor’s Indebtedness for borrowed money (other

First Supplemental Indenture

than Non-Recourse Indebtedness) under any indenture or other instrument evidencing or under which the Company or, prior to the Distribution, the Guarantor shall have a principal amount outstanding (such amount with respect to original issue discount bonds or zero coupon notes, bonds or debentures or similar securities based on the accreted amount determined in accordance with United States generally accepted accounting principles and as of the date of the most recently prepared consolidated balance sheet of the Company or the Guarantor, as the case may be) in excess of $100,000,000, and such event of default shall involve the failure to pay the principal of such Indebtedness on the final maturity date thereof after the expiration of any applicable grace period with respect thereto, or such Indebtedness shall have been accelerated so that the same shall have become due and payable prior to the date on which the same would otherwise have become due and payable, and such acceleration shall not be rescinded or annulled within ten Business Days after notice thereof shall have been given by the trustee to the Company and, prior to the Distribution, the Guarantor or by the holders of at least 25% in aggregate principal amount of outstanding securities of such series to the trustee, the Company and, prior to the Distribution, the Guarantor; provided however that:

(i) if such event of default under such indenture or instrument shall be remedied or cured by the Company or the Guarantor or waived by the requisite holders of such Indebtedness, then the Event of Default hereunder by reason thereof shall be deemed likewise to have been thereupon remedied, cured or waived without further action upon the part of either the Trustee or any of the Securityholders; and

(ii) subject to the provisions of Sections 7.01 and 7.02, the Trustee shall not be charged with knowledge of any such event of default unless written notice thereof shall have been given to the Trustee by the Company or the Guarantor, as the case may be, by the holder or an agent of the holder of any such Indebtedness, by the trustee then acting under any indenture or other instrument under which such default shall have occurred, or by the Holders of not less than 25% in the aggregate principal amount of Outstanding Securities of such series.

Section 1.6. Additional Changes to the Base Indenture .

(1) Until the Distribution, references to “the Company” in Section 4.04 and 5.03 of the Base Indenture shall be deemed to refer to “the Guarantor”.

(2) Section 10.01(i) of the Base Indenture is hereby deleted with respect to the Offered Securities and replaced with the following:

First Supplemental Indenture

acceptable to the Trustee, which counsel shall include Gibson, Dunn & Crutcher LLP, or (y) a ruling from the United States Internal Revenue Service, in either case to the effect that such merger or consolidation, or such sale or conveyance, will not result in an exchange of the Securities for new debt instruments for United States federal income tax purposes and (C) if such entity is not organized under the laws of the United States or any state of the United States, then it shall, with respect to the Offered Securities, expressly undertake obligations comparable to those initially undertaken by the Guarantor pursuant to Article II; provided, however, that no Additional Amounts shall be paid on account of any taxes imposed or withheld pursuant to Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (the “ Code ”) (or any amended or successor version that is substantively comparable) and any current or future regulations promulgated thereunder or official interpretations thereof.

(3) Consolidation, Merger and Sales of Assets by Guarantor .

The Guarantor covenants that it will not merge or consolidate with any other Person or sell or convey all or substantially all of its assets to any Person, unless:

(i) the Guarantor shall be the continuing entity, or the successor entity or the Person which acquires by sale or conveyance substantially all the assets of the Guarantor (if other than the Guarantor), (A) shall expressly assume the due and punctual payment of the principal of, premium, if any, and interest on the notes or the obligations under the guarantees, as the case may be, according to their tenor, and the due and punctual performance and observance of all of the covenants and agreements of the indenture to be performed or observed by the Guarantor by supplemental indenture reasonably satisfactory to the trustee, executed and delivered to the trustee by such person, and (B) is an entity treated as a “corporation” for U.S. tax purposes and obtains either (x) an opinion, in form and substance reasonably acceptable to the Trustee, of tax counsel of recognized standing reasonably acceptable to the Trustee, which counsel shall include Gibson, Dunn & Crutcher LLP, or (y) a ruling from the U.S. Internal Revenue Service, in either case to the effect that such merger or consolidation, or such sale or conveyance, will not result in an exchange of the notes for new debt instruments for U.S. federal income tax purposes; and

The Guarantor shall deliver to the Trustee prior to the consummation of the proposed transaction an Officer’s Certificate to the foregoing effect and an Opinion of Counsel stating that the proposed transaction and such supplemental indenture comply with this Indenture.

First Supplemental Indenture

Section 1.7. Guarantee .

(1) All payments by the Company under the Indenture and the Offered Securities are fully and unconditionally guaranteed by the Guarantor, to extent provided in the related Guarantee and the Indenture.

(2) At the time of the Distribution, the Guarantor shall be automatically and unconditionally released and discharged from all obligations under the Indenture and the Guarantee without any action required on the part of the Trustee or any holder of the Offered Securities. The release and discharge provided by this Section 1.7(2) shall be in addition to any defeasance, discharge or release of the Guarantee occurring pursuant to the other provisions of the Indenture, including Article XI and Section 15.03 of the Base Indenture.

(3) Upon the Company’s request and upon the delivery by the Company to the Trustee of an Officer’s Certificate and an Opinion of Counsel to the effect that the Distribution has occurred, the Trustee shall execute any documents reasonably required in order to evidence the release of the Guarantor from its obligations under the Indenture and Guarantee.

ARTICLE II

ADDITIONAL AMOUNTS; CERTAIN TAX PROVISIONS

Section 2.1. Redemption Upon Changes in Withholding Taxes .

The Offered Securities may be redeemed, as a whole but not in part, at the option of the Company, upon not less than 30 nor more than 90 days notice (which notice shall be irrevocable), at a redemption price equal to 100% of the principal amount thereof, together with accrued interest, if any, to the redemption date and Additional Amounts (as defined in Section 3.2), if any, if as a result of any amendment to, or change in, the laws or regulations of Switzerland or the United States, as applicable, or any political subdivision thereof or therein having the power to tax (a “ Taxing Jurisdiction ”), or any change in the application or official interpretation of such laws, including any action taken by a taxing authority or a holding by a court of competent jurisdiction (regardless of whether such action or such holding is with respect to the Company or Guarantor), which amendment or change is announced or becomes effective after the date the Offered Securities are issued, the Guarantor or the Company has become, or there is a material probability that it will become, obligated to pay Additional Amounts on the next date on which any amount would be payable with respect to the Securities of such series, and such obligation cannot be avoided by the use of commercially reasonable measures available to Guarantor or the Company, as the case may be; provided, however, that (a) no such notice of redemption may be given earlier than 90 days prior to the earliest date on which Guarantor or the Company, as the case may be, would be obligated to pay such Additional Amounts, and (b) at the time such notice of redemption is given, such obligation to pay such Additional Amounts remains in effect. Prior to the giving of any notice of redemption described in this paragraph, the Company or the Guarantor, as the case may be, shall deliver to the Trustee (i)(A) a certificate signed by two Officers of the Company stating that the obligation to pay Additional Amounts cannot be avoided by the Company taking commercially reasonable measures available to it or (B) a certificate signed by two Officers of the Guarantor stating that the obligation to pay

First Supplemental Indenture

Additional Amounts cannot be avoided by Guarantor taking commercially reasonable measures available to it, and (ii) a written opinion of independent legal counsel to the Guarantor or the Company, as the case may be, of recognized standing to the effect that the Company has or there is a material probability that it will become obligated to pay Additional Amounts as a result of a change, amendment, official interpretation or application described above and that the Guarantor or the Company, as the case may be, cannot avoid the payment of such Additional Amounts by taking commercially reasonable measures available to it.

Section 2.02. Payment of Additional Amounts .

All payments made by the Guarantor under or with respect to the Guarantees will be made free and clear of and without withholding or deduction for or on account of any present or future taxes, duties, levies, imposts, assessments or governmental charges of whatever nature imposed or levied by or on behalf of any Taxing Jurisdiction (“ Taxes ”), unless the Guarantor is required to withhold or deduct Taxes by law or by the interpretation or administration thereof. In the event that Guarantor is required to so withhold or deduct any amount for or on account of any Taxes from any payment made under or with respect to the Guarantees, the Guarantor will pay such additional amounts (“ Additional Amounts ”) as may be necessary so that the net amount received by each holder of Securities (including Additional Amounts) after such withholding or deduction will equal the amount that such Holder would have received if such Taxes had not been required to be withheld or deducted; provided that no Additional Amounts will be payable with respect to a payment to a holder of the Offered Securities or a holder of a beneficial interests in the Offered Securities where such holder is subject to taxation on such payment by a relevant Taxing Jurisdiction for any reason other than such holder’s mere ownership of the Offered Securities or for or on account of:

(a) any Taxes that are imposed or withheld solely because such holder or a fiduciary, settler, beneficiary, or member of such holder if such holder is an estate, trust, partnership, limited liability company or other fiscally transparent entity, or a person holding a power over an estate or trust administered by a fiduciary holder:

(i)

is or was present or engaged in, or is or was treated as present or engaged in, a trade or business in the Taxing Jurisdiction or has or had a permanent establishment in the Taxing Jurisdiction;

(ii)

has or had any present or former connection (other than the mere fact of ownership of such Securities) with the Taxing Jurisdiction imposing such Taxes, including being or having been a citizen or resident thereof or being treated as being or having been a resident thereof;

(iii)

with respect to any withholding Taxes imposed by the United States, is or was with respect to the United States a personal holding company, a passive foreign investment company, a controlled foreign corporation, a foreign tax exempt organization or corporation that has accumulated earnings to avoid United States federal income tax; or

First Supplemental Indenture

(iv)

owns or owned 10% or more of the total combined voting power of all classes of stock of the Company or the Guarantor;

(b) any estate, inheritance, gift, sales, transfer, excise or personal property Taxes imposed with respect to the Securities, except as otherwise provided herein;

(c) any Taxes imposed solely as a result of the presentation of such Securities (where presentation is required) for payment on a date more than 30 days after the date on which such payment became due and payable or the date on which payment thereof is duly provided for, whichever is later, except to the extent that the beneficiary or holder thereof would have been entitled to the payment of Additional Amounts had the Securities been presented for payment on any date during such 30-day period;

(d) any Taxes imposed solely as a result of the failure of such holder or any other person to comply with applicable certification, information, documentation or other reporting requirements concerning the nationality, residence, identity or connection with the Taxing Jurisdiction of such holder, if such compliance is required by statute or regulation of the relevant Taxing Jurisdiction as a precondition to relief or exemption from such Taxes;

(e) with respect to withholding Taxes imposed by the United States, any such Taxes imposed by reason of the failure of such holder to fulfill the statement requirements of sections 871(h) or 881(c) of the Code;

(f) any Taxes that are payable by any method other than withholding or deduction by the Guarantor or the Company or any paying agent from payments in respect of such Securities;

(g) any Taxes required to be withheld by any paying agent from any payment in respect of any Securities if such payment can be made without such withholding by at least one other paying agent;

(h) any Taxes required to be deducted or withheld pursuant to the European Council Directive 2003/48/EC of June 3, 2003 on the taxation of savings income in the form of interest payments, or any amendment thereof, or any law implementing or complying with, or introduced in order to conform to, that Directive or the Luxembourg Law of December 23, 2005, as amended;

(i) any withholding or deduction for Taxes which would not have been imposed if the relevant Securities had been presented to another paying agent in a Member State of the European Union; or

(j) any combination of Section 3.02(a), (b), (c), (d), (e), (f), (g), (h) and (i).

First Supplemental Indenture

claim for exemption or to provide a certificate declaring its non-residence, if the Company were treated as a domestic corporation under United States federal income tax and if (x) the making of such declaration or claim or the provision of such certificate is required or imposed by statute, treaty, regulation, ruling or administrative practice of the relevant Taxing Authority as a precondition to an exemption from, or reduction in, the relevant Taxes, and (y) at least 90 days prior to the first payment date with respect to which the Guarantor shall apply this paragraph, the Guarantor shall have notified all Holders of Offered Securities in writing that they shall be required to provide such declaration or claim.

Additional Amounts also will not be payable to any Holder or the holder of a beneficial interest in an Offered Security that is a fiduciary, partnership, limited liability company or other fiscally transparent entity, or to such holder that is not the sole Holder or holder of such beneficial interests of such Offered Security, as the case may be. This exception, however, will apply only to the extent that a beneficiary or settlor with respect to the fiduciary, or a beneficial owner or member of the partnership, limited liability company or other fiscally transparent entity, would not have been entitled to the payment of an Additional Amount had the beneficiary, settlor, beneficial owner or member received directly its beneficial or distributive share of the payment.

In addition, no Additional Amounts will be paid on account of any Taxes imposed or withheld pursuant to Sections 1471 through 1474 of the Code (or any amended or successor version that is substantively comparable) and any current or future regulations promulgated thereunder or official interpretations thereof.

The Guarantor will also (i) make such withholding or deduction of Taxes and (ii) remit the full amount of Taxes so deducted or withheld to the relevant Taxing Jurisdiction in accordance with all applicable laws. The Guarantor will use its commercially reasonable efforts to obtain certified copies of tax receipts evidencing the payment of any Taxes so deducted or withheld from each Taxing Authority imposing such Taxes. The Guarantor will, upon request, make available to the holders of the Offered Securities, within 90 days after the date the payment of any Taxes so deducted or withheld is due pursuant to applicable law, certified copies of tax receipts evidencing such payment by the Guarantor or if, notwithstanding Guarantor’s efforts to obtain such receipts, the same are not obtainable, other evidence of such payments by Guarantor.

At least 30 days prior to each date on which any payment under or with respect to the Guarantees is due and payable, if the Guarantor will be obligated to pay Additional Amounts with respect to such payment, the Guarantor will deliver to the Trustee an Officer’s Certificate stating the fact that such Additional Amounts will be payable, the amounts so payable and will set forth such other information as is necessary to enable such Trustee to pay such Additional Amounts to holders of Offered Securities on the payment date.

The provisions of this Article II shall survive any termination of the discharge of this Indenture and shall apply mutatis mutandis to any jurisdiction in which the Guarantor or any successor Person to the Guarantor is organized or is engaged in business for tax purposes or any political subdivisions or taxing authority or agency thereof or therein; provided, however, the date on which the Guarantor changes its jurisdiction in which it is organized or such Person becomes a successor to the Guarantor shall be substituted for the date on which the Offered Securities was issued.

First Supplemental Indenture

Whenever in this Indenture, the Securities or the Guarantees there is mentioned, in any context, the payment of principal and premium, if any, redemption price, interest or any other amount payable under or with respect to any Security, such mention shall be deemed to include mention of the payment of Additional Amounts to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.

ARTICLE III

MISCELLANEOUS

Section 3.1. Definitions .

Capitalized terms used but not defined in this First Supplemental Indenture shall have the meanings ascribed thereto in the Base Indenture.

Section 3.2. Confirmation of Indenture .

The Base Indenture, as supplemented and amended by this First Supplemental Indenture, is in all respects ratified and confirmed, and the Base Indenture, this First Supplemental Indenture and all indentures supplemental thereto shall be read, taken and construed as one and the same instrument.

Section 3.3. Concerning the Trustee .

In carrying out the Trustee’s responsibilities hereunder, the Trustee shall have all of the rights, protections and immunities which it possesses under the Indenture. The recitals contained herein and in the Offered Securities, except the Trustee’s certificate of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to (i) the validity or sufficiency of this First Supplemental Indenture or of the Offered Securities, (ii) the proper authorization hereof by the Company by action or otherwise, (iii) the due execution hereof by the Company or (iv) the consequences of any amendment herein provided for. The Trustee shall not be accountable for the use or application by the Company of the Offered Securities or the proceeds thereof.

Section 3.4. Governing Law .

This First Supplemental Indenture and the Offered Securities shall be deemed to be a contract made under the internal laws of the State of New York, and for all purposes shall be construed in accordance with the laws of said State without regard to conflicts of law principles that would require the application of any other law. This First Supplemental Indenture is subject to the provisions of the Trust Indenture Act that are required to be part of this First Supplemental Indenture and shall, to the extent applicable, be governed by such provisions.

First Supplemental Indenture

Section 3.5. Separability .

In case any one or more of the provisions contained in this First Supplemental Indenture or in the Offered Securities of any series shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this First Supplemental Indenture or of such Offered Securities, but this First Supplemental Indenture and such Offered Securities shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein or therein.

Section 3.6. Counterparts .

This First Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. The exchange of copies of this First Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this First Supplemental Indenture as to the parties hereto and may be used in lieu of the original First Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

Section 3.7 No Benefit .

Nothing in this First Supplemental Indenture, express or implied, shall give to any Person other than the parties hereto and their successors or assigns, and the Holders of the Offered Securities, any benefit or legal or equitable rights, remedy or claim under this First Supplemental Indenture or the Base Indenture.

Section 3.8 Amendments and Supplemental Indentures .

This First Supplemental Indenture and the Offered Securities are subject to the provisions regarding supplemental indentures and amendments set forth in Article IX of the Base Indenture.

Section 3.9 Legal, Valid and Binding Obligation .

The Company hereby represents and warrants that, assuming the due authorization, execution and delivery of this First Supplemental Indenture by the Trustee, this First Supplemental Indenture is its legal, valid and bind obligation enforceable against it in accordance with its terms.

[Signature Page Follows]

First Supplemental Indenture

IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed all as of the day and year first above written.


THE ADT CORPORATION, as ISSUER

By:	/s/ Ravi Tulsyan
	Name:	Ravi Tulsyan
	Title:	Vice President and Treasurer

TYCO INTERNATIONAL LTD., as GUARANTOR

By:	/s/ Frank S. Sklarsky
	Name:	Frank S. Sklarsky
	Title:	EVP / CFO

By:	/s/ Arun Nayar
	Name:	Arun Nayar
	Title:	Senior Vice President and Treasurer

WELLS FARGO BANK, NATIONAL ASSOCIATION as Trustee

By:	/s/ Stefan Victory
	Name:	Stefan Victory
	Title:	Vice President

[Signature Page to First Supplemental Indenture]

EXHIBIT A

FORM OF 2.250% NOTES DUE 2017

[Insert the Private Placement Legend and/or the Global Security legend, as applicable]

2.250% NOTES DUE 2017


No. [ ]		$[ ]
CUSIP No. [ ]

THE ADT CORPORATION

promises to pay to [ ] or registered assigns, the principal sum of [ ] Dollars on July 15, 2017.

Interest Payment Dates: January 15 and July 15

Record Dates: January 1 and July 1

Each holder of this Security (as defined below), by accepting the same, agrees to and shall be bound by the provisions hereof and of the Indenture described herein, and authorizes and directs the Trustee described herein on such holder’s behalf to be bound by such provisions. Each holder of this Security hereby waives all notice of the acceptance of the provisions contained herein and in the Indenture and waives reliance by such holder upon said provisions.

This Security shall not be entitled to any benefit under the Indenture, or be valid or become obligatory for any purpose, until the Certificate of Authentication hereon shall have been signed by or on behalf of the Trustee. The provisions of this Security are continued on the reverse side hereof, and such continued provisions shall for all purposes have the same effect as though fully set forth at this place.

IN WITNESS WHEREOF, the Company has caused this instrument to be signed in accordance with Section 2.04 of the Indenture.

Date: [ ]


THE ADT CORPORATION



Name:
Title:



[If second signature is applicable]

Name:
Title:

A-1

CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.


WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee

By:
		Authorized Signatory

Dated:

A-2

GUARANTEE

For value received, TYCO INTERNATIONAL LTD. hereby absolutely, unconditionally and irrevocably guarantees (i) to the holder of this Security the payment of principal of, premium, if any, and interest on, the Security upon which this Guarantee is set forth in the amounts and at the time when due and payable whether by declaration thereof or otherwise, and interest on the overdue principal and interest, if any, of such Security, if lawful, to the holder of such Security and the Trustee on behalf of the holders and (ii) all amounts owed to the Trustee under the Indenture, in each case in accordance with and subject to the terms and limitations of such Security, Article XIV of the Base Indenture and Section 1.7 of the First Supplemental Indenture. This Guarantee will not become effective until the Trustee or Authenticating Agent duly executes the certificate of authentication on this Security. This Guarantee shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of law principles thereof.

Dated:


TYCO INTERNATIONAL LTD.

By:
		Name:
		Title:

By:
		Name:
		Title:

A-3

THE ADT CORPORATION

2.250% Notes due 2017

This security is one of a duly authorized series of debt securities of The ADT Corporation, a Delaware company (the “Company”), issued or to be issued in one or more series under and pursuant to an Indenture for the Company’s unsubordinated debt securities, dated as of July 5, 2012 (the “Base Indenture”), duly executed and delivered by and among the Company and Wells Fargo Bank, National Association (the “Trustee”), as supplemented by the First Supplemental Indenture, dated as of July 5, 2012 (the “First Supplemental Indenture”), by and among the Company, Tyco International Ltd. (the “Guarantor”) and the Trustee. The Base Indenture as supplemented and amended by the First Supplemental Indenture is referred to herein as the “Indenture.” By the terms of the Base Indenture, the debt securities issuable thereunder are issuable in series that may vary as to amount, date of maturity, rate of interest and in other respects as provided in the Base Indenture. This security is one of the series designated on the face hereof (individually, a “Security,” and collectively, the “Securities”), and reference is hereby made to the Indenture for a description of the rights, limitations of rights, obligations, duties and immunities of the Trustee, the Company, Guarantor and the holders of the Securities (the “Securityholders”). Capitalized terms used herein and not otherwise defined shall have the meanings given them in the Base Indenture or the First Supplemental Indenture, as applicable.

1. Interest . The Company promises to pay interest on the principal amount of this Security at an annual rate of 2.250%. The Company will pay interest semi-annually on January 15 and July 15 of each year (each such day, an “Interest Payment Date”). If any Interest Payment Date, redemption date or maturity date of this Security is not a Business Day, then payment of interest or principal (and premium, if any) shall be made on the next succeeding Business Day with the same force and effect as if made on the date such payment was due, and no interest shall accrue for the period after such date to the date of such payment on the next succeeding Business Day. Interest on the Securities will accrue from the most recent date to which interest has been paid or duly provided for or, if no interest has been paid, from the date of issuance; provided that, if there is no existing Default in the payment of interest, and if this Security is authenticated between a regular record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; and provided, further, that the first Interest Payment Date shall be January 15, 2013. Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months.

2. Method of Payment . The Company will pay interest on the Securities (except defaulted interest), if any, to the persons in whose name such Securities are registered at the close of business on the regular record date referred to on the facing page of this Security for such interest installment. In the event that the Securities or a portion thereof are called for redemption and the Redemption Date is subsequent to a regular record date with respect to any Interest Payment Date and prior to such Interest Payment Date, interest on such Securities will be paid upon presentation and surrender of such Securities as provided in the Indenture. The principal of and the interest on the Securities shall be payable in the coin or currency of the United States of America that at the time is legal tender for public and private debt, at the office or agency of the Company maintained for that purpose in accordance with the Indenture.

A-4

3. Paying Agent and Registrar . Initially, Wells Fargo Bank, National Association, the Trustee, will act as paying agent and Security Registrar. The Company may change or appoint any paying agent or Security Registrar without notice to any Securityholder. The Company or any of its Subsidiaries may act in any such capacity.

4. Indenture . The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (“TIA”) as in effect on the date the Indenture is qualified. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and TIA for a statement of such terms. The Securities are unsecured general obligations of the Company and constitute the series designated on the face hereof as the “2.50% Notes due 2017”, initially limited to $750,000,000 in aggregate principal amount.

The Company will furnish to any Securityholder upon written request and without charge a copy of the Base Indenture and the First Supplemental Indenture. Requests may be made to: The ADT Corporation, 1501 Yamato Road, Boca Raton, FL 33431, Attention: Investor Relations.

5. Optional Redemption . The Securities will be subject to redemption at the option of the Company on any date prior to the maturity date, in whole or from time to time in part, in $1,000 increments ( provided that any remaining principal amount thereof shall be at least the minimum authorized denomination thereof), on written notice given to the Securityholders thereof not less than 30 days nor more than 90 days prior to the date fixed for redemption in such notice (the “Redemption Date”). The Securities will be redeemable at a redemption price equal to the greater of (i) 100% of the principal amount of such Securities to be redeemed and (ii) as determined by the Quotation Agent and delivered to the Trustee in writing, the sum of the present values of the remaining scheduled payments of principal and interest thereon due on any date after the Redemption Date (excluding the portion of interest that will be accrued and unpaid to and including the Redemption Date) discounted from their scheduled date of payment to the Redemption Date (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Redemption Treasury Rate plus 25 basis points, plus, in either the case of clause (i) or clause (ii), accrued and unpaid interest, if any, thereon to the Redemption Date. This Security is also subject to redemption to the extent provided in Article II of the First Supplemental Indenture.

If the giving of the notice of redemption is completed as provided in the Indenture, interest on such Securities or portions of Securities shall cease to accrue on and after the Redemption Date, unless the Company shall default in the payment of any such redemption price and accrued interest with respect to any such Security or portion thereof.

The Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Securities.

6. Special Redemption . The Securities will be subject to redemption at the option of the Company if the Distribution has not occurred on or prior to March 31, 2013 or if the Board of

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Directors of the Guarantor determines that the Distribution Date will not occur by March 31, 2013. The Company may elect to redeem the Securities by issuing a special redemption notice on or prior to June 30, 2013. The Special Redemption Notice will specify a redemption date for the notes (the “Special Redemption Date”), which will be no earlier than 10 days and no later than 30 days after the date of the Special Redemption Notice. In connection with such redemption, the Securities will be redeemable at a redemption price equal to 101% of the principal amount of the Securities being redeemed, plus accrued and unpaid interest, if any, thereon to the Special Redemption Date.

If the giving of the Special Redemption Notice is completed as provided in the Indenture, interest on such Securities or portions of Securities shall cease to accrue on and after the Special Redemption Date, unless the Company shall default in the payment of any such redemption price and accrued interest with respect to any such Security or portion thereof.

6. Change of Control Triggering Event . If a Change of Control Triggering Event occurs, unless the Company has exercised its option to redeem this Security, it shall be required to make an offer to the holder of this Security to repurchase, at such holder’s election, all or a part (equal to $1,000 or an integral multiple of $1,000 in excess thereof; provided that any remaining principal amount thereof shall be at least the minimum authorized denomination thereof), of this Security, in cash equal to 101% of the aggregate principal amount of this Security repurchased, plus accrued and unpaid interest, if any, to the date of repurchase. Within 30 days following any Change of Control Triggering Event, or at the Company’s option, prior to any Change of Control, but after public announcement of the transaction that constitutes or may constitute the Change of Control Triggering Event, a notice shall be mailed to each Holder describing in reasonable detail the transaction that constitutes or may constitute the Change of Control Triggering Event and offering to repurchase this Security on the date specified in the notice, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed.

7. Denominations, Transfer, Exchange . The Securities are in registered form without coupons in the denominations of $2,000 or any integral multiple of $1,000 in excess thereof. The transfer of Securities may be registered and Securities may be exchanged as provided in the Indenture. The Securities may be presented for exchange or for registration of transfer (duly endorsed or with the form of transfer endorsed thereon duly executed if so required by the Company or the Security Registrar) at the office of the Security Registrar or at the office of any transfer agent designated by the Company for such purpose. No service charge will be made for any registration of transfer or exchange, but a Securityholder may be required to pay any applicable taxes or other governmental charges. If the Securities are to be redeemed, the Company will not be required to: (i) issue, register the transfer of, or exchange any Security during a period beginning at the opening of business 15 days before the day of mailing of a notice of redemption of less than all of the outstanding Securities of the same series and ending at the close of business on the day of such mailing; (ii) register the transfer of or exchange any Security of any series or portions thereof selected for redemption, in whole or in part, except the unredeemed portion of any such Security being redeemed in part; nor (iii) register the transfer of or exchange a Security of any series between the applicable record date and the next succeeding Interest Payment Date.

A-6

8. Persons Deemed Owners . The registered Securityholder may be treated as its owner for all purposes.

9. Repayment to Guarantor or the Company . Any funds or Governmental Obligations deposited with any paying agent or the Trustee, or then held by Guarantor or the Company, in trust for payment of principal of, premium, if any, or interest on the Securities of a particular series that are not applied but remain unclaimed by the holders of such Securities for at least one year after the date upon which the principal of, premium, if any, or interest on such Securities shall have respectively become due and payable, shall be repaid to Guarantor or the Company, as applicable, or (if then held by Guarantor or the Company) shall be discharged from such trust. After return to the Company or Guarantor, Holders entitled to the money or securities must look to the Company or Guarantor, as applicable, for payment as unsecured general creditors.

10. Amendments, Supplements and Waivers . The Base Indenture contains provisions permitting the Company, Guarantor and the Trustee, with the consent of the holders of not less than a majority in aggregate principal amount of the securities of each series at the time Outstanding affected by such supplemental indenture or indentures to enter into supplemental indentures for the purpose of adding, changing or eliminating any provisions of the Base Indenture or any supplemental indenture or of modifying in any manner not covered elsewhere in the Base Indenture the rights of the holders of the securities of such series; provided , however , that no such supplemental indenture, without the consent of the holders of each Security then Outstanding and affected thereby, shall: (i) extend a fixed maturity of or any installment of principal of any Securities of any series or reduce the principal amount thereof, or reduce the amount of principal of any original issue discount security that would be due and payable upon declaration of acceleration of the maturity thereof; (ii) reduce the rate of or extend the time for payment of interest of any Security of any series; (iii) reduce the premium payable upon the redemption of any Security; (iv) make any Security payable in Currency other than that stated in the Security; (v) impair the right to institute suit for the enforcement of any payment on or after the fixed maturity thereof (or in the case or redemption, on or after the redemption date); or (vi) reduce the percentage of Securities, the holders of which are required to consent to any such supplemental indenture or indentures. The Base Indenture also contains provisions permitting the holders of not less than a majority in aggregate principal amount of the Outstanding securities of each series affected thereby, on behalf of all of the holders of the securities of such series, to waive any past Default under the Base Indenture, and its consequences, except a Default in the payment of the principal of, premium, if any, or interest on any security of such series or a Default in respect of a covenant or provision of the Base Indenture that cannot be modified or amended without the consent of the holder of each Outstanding security of such affected series. Any such consent or waiver by the registered Securityholder shall be conclusive and binding upon such holder and upon all future holders and owners of this Security and of any Security issued in exchange for this Security or in place hereof (whether by registration of transfer or otherwise), irrespective of whether or not any notation of such consent or waiver is made upon this Security.

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Trustee if notice is given by such holders), may declare the unpaid principal of, premium, if any, and accrued interest, if any, due and payable immediately. Subject to the terms of the Indenture, if an Event of Default under the Indenture shall occur and be continuing, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the holders, unless such holders have offered the Trustee indemnity satisfactory to it. Upon satisfaction of certain conditions set forth in the Indenture, the holders of a majority in principal amount of the Outstanding securities of a series issued pursuant to the Base Indenture will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the securities of such series.

12. Trustee, Paying Agent and Security Registrar May Hold Securities . The Trustee, subject to certain limitations imposed by the TIA, or any paying agent or Security Registrar, in its individual or any other capacity, may become the owner or pledgee of Securities with the same rights it would have if it were not Trustee, paying agent or Security Registrar.

13. No Recourse Against Others . No recourse under or upon any obligation, covenant or agreement of the Indenture, or of any Security, or for any claim based thereon or otherwise in respect hereof or thereof, shall be had against any incorporator, stockholder, officer or director, past, present or future as such, of the Guarantor or the Company or of any predecessor or successor corporation, either directly or through the Guarantor or the Company or any such predecessor or successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that the Indenture and the obligations issued hereunder and thereunder are solely corporate obligations, and that no such personal liability whatever shall attach to, or is or shall be incurred by, the incorporators, shareholders, officers or directors as such, of the Guarantor or the Company or of any predecessor or successor corporation, or any of them, because of the creation of the indebtedness authorized by the Indenture, or under or by reason of the obligations, covenants or agreements contained in the Indenture or in the Securities or implied therefrom; and that any and all such personal liability of every name and nature, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against, every such incorporator, shareholder, officer or director as such, because of the creation of the indebtedness authorized by the Indenture, or under or by reason of the obligations, covenants or agreements contained in the Indenture or in the Securities or implied therefrom, are hereby expressly waived and released as a condition of, and as a consideration for, the acceptance of the Securities.

14. Discharge of Indenture . The Indenture contains certain provisions pertaining to defeasance, which provisions shall for all purposes have the same effect as if set forth herein.

15. Authentication . This Security shall not be valid until the Trustee signs the certificate of authentication attached to the other side of this Security.

16. Guarantee and Unconditional Release of Guarantee . All payments by the Company under the Indenture and this Security are fully and unconditionally guaranteed to the holder of this Security by the Guarantor, as provided in the related Guarantee and the Indenture. At the time of the Distribution, the Guarantor shall be automatically and unconditionally released and discharged from all obligations under the Indenture and the Guarantee without any action required on the part of the Trustee or any holder of the Offered Securities.

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17. Additional Amounts . Prior to the Distribution Date, the Parent is obligated to pay Additional Amounts on this Security to the extent provided in Article II of the First Supplemental Indenture.

18. Abbreviations . Customary abbreviations may be used in the name of a Securityholder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

19. Governing Law . The Base Indenture, the First Supplemental Indenture and this Security (and the Guarantee hereon) shall be deemed to be a contract made under the internal laws of the State of New York, and for all purposes shall be construed in accordance with the laws of said State without regard to conflicts of laws principles that would require the application of any other law.

A-9

ASSIGNMENT FORM

To assign this Security, fill in the form below: (I) or (we) assign and transfer this Security to

(Insert assignee’s soc. sec. or tax I.D. no.)

(Print or type assignee’s name, address and zip code)


and irrevocably appoint

agent to transfer this Security on the books of the Company. The agent may substitute another to act for him.

Date:


Your Signature:
(Sign exactly as your name appears on the face of this Security)


Signature Guarantee:

A-10

ELECTION FORM

TO BE COMPLETED ONLY IF THE HOLDER

ELECTS TO ACCEPT THE CHANGE OF CONTROL OFFER

The undersigned hereby irrevocably requests and instructs the Company to repurchase the within Security (or the portion thereof specified below), pursuant to its terms, on the Change of Control Payment Date specified in the Change of Control Offer, for the Change of Control Payment specified in the within Security, to the undersigned, , at (please print or typewrite name, address and telephone number of the undersigned).

For this election to accept the Change of Control Offer to be effective, the undersigned must (A) deliver, to the address of the paying agent set forth below or at such other place or places of which the Company shall from time to time notify the Holder of the within Security, either (i) the Security with this “Election Form” form duly completed, or (ii) a telegram, telex, facsimile transmission or a letter from a member of a national securities exchange or the Financial Industry Regulatory Authority, Inc. or a commercial bank or a trust company in the United States setting forth (a) the name of the Holder of the Security, (b) the principal amount of the Security, (c) the principal amount of the Security to be repurchased, (d) the certificate number or description of the tenor and terms of the Security, (e) a statement that the option to elect repurchase is being exercised, and (f) a guarantee stating that the Security to be repurchased, together with this “Election Form” duly completed, will be received by the paying agent at least five Business Days prior to the Change of Control Payment Date or (B) otherwise comply with alternative instructions in accordance with the procedures of the depositary. The address of the paying agent is [ ]; Attention: [ ].

If less than the entire principal amount of the within Security is to be repurchased, specify the portion thereof (which principal amount must be $1,000 or an integral multiple of $1,000 in excess thereof; provided that any remaining principal amount shall be at least the minimum authorized denomination thereof) which the Holder elects to have repurchased: $ .


Holder:

By:
		Name:
		Title:

A-11

Exhibit 4.3

EXECUTION VERSION

THE ADT CORPORATION,

as Issuer

AND

TYCO INTERNATIONAL LTD.

as Guarantor

AND

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee

SECOND SUPPLEMENTAL INDENTURE

Dated as of July 5, 2012

$1,000,000,000 of 3.500% Notes due 2022

THIS SECOND SUPPLEMENTAL INDENTURE is dated as of July 5, 2012 among THE ADT CORPORATION, a Delaware corporation (the “ Company ”), TYCO INTERNATIONAL LTD., a Swiss corporation (“ Guarantor ”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association (the “ Trustee ”).

RECITALS

B. Pursuant to resolutions of a duly authorized Pricing Committee of the Board of Directors, the Company has authorized the issuance of $1,000,000,000 principal amount of 3.500% Notes due 2022 (the “ Offered Securities ”).

C. The entry into this Second Supplemental Indenture by the parties hereto is in all respects authorized by the provisions of the Base Indenture.

D. The Guarantor and the Company desire to enter into this Second Supplemental Indenture pursuant to Section 9.01 of the Base Indenture to establish the terms of the Offered Securities in accordance with Section 2.01 of the Base Indenture and to establish the form of the Offered Securities in accordance with Section 2.02 of the Base Indenture.

E. All things necessary to make this Second Supplemental Indenture a legal, valid and binding indenture and agreement according to its terms have been done.

ARTICLE I

Section 1.1. Terms of Offered Securities .

The following terms relate to the Offered Securities:

(1) The Offered Securities constitute a series of securities having the title “3.500% Notes due 2022”.

(3) The entire Outstanding principal of the Offered Securities shall be payable on July 15, 2022.

Second Supplemental Indenture

(4) The rate at which the Offered Securities shall bear interest shall be 3.500% per year. The date from which interest shall accrue on the Offered Securities shall be July 5, 2012, or the most recent Interest Payment Date to which interest has been paid or provided for. The Interest Payment Dates for the Offered Securities shall be January 15 and July 15 of each year, beginning January 15, 2013. Interest shall be payable on each Interest Payment Date to the Holders of record at the close of business on the January 1 and July 1 prior to each Interest Payment Date (a “ regular record date ”). The basis upon which interest shall be calculated shall be that of a 360-day year consisting of twelve 30-day months.

(6) (A) The Offered Securities will be subject to redemption at the Company’s option on any date (a “ Redemption Date ”) prior to the maturity date, in whole or from time to time in part, in $1,000 increments ( provided that any remaining principal amount thereof shall be at least the minimum authorized denomination thereof). The Offered Securities will be redeemable at a redemption price equal to the greater of (i) 100% of the principal amount of the Offered Securities to be redeemed and (ii) as determined by the Quotation Agent and delivered to the Trustee in writing, the sum of the present values of the remaining scheduled payments of principal and interest thereon due on any date after the Redemption Date (excluding the portion of interest that will be accrued and unpaid to and including the Redemption Date) discounted from their scheduled date of payment to the Redemption Date (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Redemption Treasury Rate plus 30 basis points, plus accrued and unpaid interest, if any, thereon to the Redemption Date.

(B) As used herein:

Second Supplemental Indenture

“ Quotation Agent ” means a Redemption Reference Treasury Dealer appointed as such agent by the Company.

“ Redemption Reference Treasury Dealer ” means four primary U.S. Government securities dealers in the United States selected by the Company.

(9) Except as provided herein, the Holders of the Offered Securities shall have no special rights in addition to those provided in the Base Indenture upon the occurrence of any particular events.

(10) The Offered Securities will be general unsecured and unsubordinated obligations of the Company and will be ranked equally among themselves.

(12) The Offered Securities are not convertible into shares of common stock or other securities of the Company or the Guarantor.

Second Supplemental Indenture

(13) The additional and replacement Events of Default and restrictive covenants set forth in Sections 1.3, 1.4 and 1.5 shall be applicable only to the Offered Securities.

(14) The additional provisions set forth in Sections 1.6 and 1.7 shall be applicable only to the Offered Securities.

Section 1.2 Additional Defined Terms .

As used herein, the following defined terms shall have the following meanings with respect to the Offered Securities only:

Second Supplemental Indenture

“ Change of Control Triggering Event ” means the occurrence of both a Change of Control and a Rating Event.

“ Continuing Director ” means, as of any date of determination, any member of the Company’s Board of Directors who:

(1) was a member of such Board of Directors on the date hereof;

(2) became a member of such Board of Directors immediately following the Distribution; or

“ Distribution ” refers to the pro-rata distribution of all of the outstanding common stock of the Company to the Guarantor’s shareholders in the form of a special dividend.

“ Fitch ” means Fitch Inc., and its successors.

Second Supplemental Indenture

“ Moody’s ” means Moody’s Investors Service, Inc., and its successors.

Second Supplemental Indenture

“ Restricted Subsidiary ” means any Subsidiary of the Company that owns or leases a Principal Property.

“ S&P ” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors.

Second Supplemental Indenture

Section 1.3. Additional Covenants .

(1) Limitation on Liens.

(a) liens existing on the date the Offered Securities are first issued;

Second Supplemental Indenture

(e) liens securing Indebtedness owing by any Restricted Subsidiary to the Company or a Subsidiary thereof;

Second Supplemental Indenture

(2) Limitation on Sale and Lease-Back Transactions.

The Company will not, and will not permit any Restricted Subsidiary to, enter into any Sale and Lease-Back Transaction unless:

Second Supplemental Indenture

(3) Change of Control Triggering Event.

(i) the name of the Holder of such Offered Security;

(ii) the principal amount of such Offered Security;

Second Supplemental Indenture

(iii) the principal amount of such Offered Security to be repurchased;

(iv) the certificate number or a description of the tenor and terms of such Offered Security;

(v) a statement that the Holder is accepting the Change of Control Offer; and

(d) On the Change of Control Payment Date, the Company shall, to the extent lawful:

(i) accept for payment all Offered Securities or portions of such Offered Securities properly tendered pursuant to the Change of Control Offer;

(ii) deposit with the paying agent an amount equal to the Change of Control Payment in respect of all Offered Securities or portions of Offered Securities properly tendered; and

Second Supplemental Indenture

Section 1.4 Replacement Events of Default .

Section 1.5 Additional Events of Default .

(9) an event of default shall happen and be continuing with respect to the Company’s or, prior to the Distribution, the Guarantor’s Indebtedness for borrowed money (other

Second Supplemental Indenture

Section 1.6. Additional Changes to the Base Indenture .

(1) Until the Distribution, references to “the Company” in Section 4.04 and 5.03 of the Base Indenture shall be deemed to refer to “the Guarantor”.

(2) Section 10.01(i) of the Base Indenture is hereby deleted with respect to the Offered Securities and replaced with the following:

Second Supplemental Indenture

acceptable to the Trustee, which counsel shall include Gibson, Dunn & Crutcher LLP, or (y) a ruling from the United States Internal Revenue Service, in either case to the effect that such merger or consolidation, or such sale or conveyance, will not result in an exchange of the Securities for new debt instruments for United States federal income tax purposes and (C) if such entity is not organized under the laws of the United States or any state of the United States, then it shall, with respect to the Offered Securities, expressly undertake obligations comparable to those initially undertaken by the Guarantor pursuant to Article II; ; provided, however, that no Additional Amounts shall be paid on account of any taxes imposed or withheld pursuant to Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (the “ Code ”) (or any amended or successor version that is substantively comparable) and any current or future regulations promulgated thereunder or official interpretations thereof.

(3) Consolidation, Merger and Sales of Assets by Guarantor .

The Guarantor covenants that it will not merge or consolidate with any other Person or sell or convey all or substantially all of its assets to any Person, unless:

Second Supplemental Indenture

Section 1.7. Guarantee .

ARTICLE II

ADDITIONAL AMOUNTS; CERTAIN TAX PROVISIONS

Section 2.1. Redemption Upon Changes in Withholding Taxes .

Second Supplemental Indenture

Section 2.02. Payment of Additional Amounts .

(i)

is or was present or engaged in, or is or was treated as present or engaged in, a trade or business in the Taxing Jurisdiction or has or had a permanent establishment in the Taxing Jurisdiction;

(ii)

(iii)

Second Supplemental Indenture

(iv)

owns or owned 10% or more of the total combined voting power of all classes of stock of the Company or the Guarantor;

(b) any estate, inheritance, gift, sales, transfer, excise or personal property Taxes imposed with respect to the Securities, except as otherwise provided herein;

(f) any Taxes that are payable by any method other than withholding or deduction by the Guarantor or the Company or any paying agent from payments in respect of such Securities;

(g) any Taxes required to be withheld by any paying agent from any payment in respect of any Securities if such payment can be made without such withholding by at least one other paying agent;

(i) any withholding or deduction for Taxes which would not have been imposed if the relevant Securities had been presented to another paying agent in a Member State of the European Union; or

(j) any combination of Section 3.02(a), (b), (c), (d), (e), (f), (g), (h) and (i).

Second Supplemental Indenture

ARTICLE III

MISCELLANEOUS

Section 3.1. Definitions .

Capitalized terms used but not defined in this Second Supplemental Indenture shall have the meanings ascribed thereto in the Base Indenture.

Section 3.2. Confirmation of Indenture .

The Base Indenture, as supplemented and amended by this Second Supplemental Indenture, is in all respects ratified and confirmed, and the Base Indenture, this Second Supplemental Indenture and all indentures supplemental thereto shall be read, taken and construed as one and the same instrument.

Section 3.3. Concerning the Trustee .

In carrying out the Trustee’s responsibilities hereunder, the Trustee shall have all of the rights, protections and immunities which it possesses under the Indenture. The recitals contained herein and in the Offered Securities, except the Trustee’s certificate of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to (i) the validity or sufficiency of this Second Supplemental Indenture or of the Offered Securities, (ii) the proper authorization hereof by the Company by action or otherwise, (iii) the due execution hereof by the Company or (iv) the consequences of any amendment herein provided for. The Trustee shall not be accountable for the use or application by the Company of the Offered Securities or the proceeds thereof.

Section 3.4. Governing Law .

This Second Supplemental Indenture and the Offered Securities shall be deemed to be a contract made under the internal laws of the State of New York, and for all purposes shall be construed in accordance with the laws of said State without regard to conflicts of law principles that would require the application of any other law. This Second Supplemental Indenture is subject to the provisions of the Trust Indenture Act that are required to be part of this Second Supplemental Indenture and shall, to the extent applicable, be governed by such provisions.

Second Supplemental Indenture

Section 3.5. Separability .

In case any one or more of the provisions contained in this Second Supplemental Indenture or in the Offered Securities of any series shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Second Supplemental Indenture or of such Offered Securities, but this Second Supplemental Indenture and such Offered Securities shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein or therein.

Section 3.6. Counterparts .

This Second Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. The exchange of copies of this Second Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Second Supplemental Indenture as to the parties hereto and may be used in lieu of the original Second Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

Section 3.7 No Benefit .

Nothing in this Second Supplemental Indenture, express or implied, shall give to any Person other than the parties hereto and their successors or assigns, and the Holders of the Offered Securities, any benefit or legal or equitable rights, remedy or claim under this Second Supplemental Indenture or the Base Indenture.

Section 3.8 Amendments and Supplemental Indentures .

This Second Supplemental Indenture and the Offered Securities are subject to the provisions regarding supplemental indentures and amendments set forth in Article IX of the Base Indenture.

Section 3.9 Legal, Valid and Binding Obligation .

The Company hereby represents and warrants that, assuming the due authorization, execution and delivery of this Second Supplemental Indenture by the Trustee, this Second Supplemental Indenture is its legal, valid and bind obligation enforceable against it in accordance with its terms.

[Signature Page Follows]

Second Supplemental Indenture

IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed all as of the day and year first above written.


THE ADT CORPORATION, as ISSUER

By:	/s/ Ravi Tulsyan
	Name:	Ravi Tulsyan
	Title:	Vice President and Treasurer

TYCO INTERNATIONAL LTD., as GUARANTOR

By:	/s/ Frank S. Sklarsky
	Name:	Frank S. Sklarsky
	Title:	EVP / CFO

By:	/s/ Arun Nayar
	Name:	Arun Nayar
	Title:	Senior Vice President and Treasurer

WELLS FARGO BANK, NATIONAL ASSOCIATION as Trustee

By:	/s/ Stefan Victory
	Name:	Stefan Victory
	Title:	Vice President

[Signature Page to Second Supplemental Indenture]

EXHIBIT A

FORM OF 3.500% NOTES DUE 2022

[Insert the Private Placement Legend and/or the Global Security legend, as applicable]

3.500% NOTES DUE 2022


No. [ ]		$[ ]
CUSIP No. [ ]

THE ADT CORPORATION

promises to pay to [ ] or registered assigns, the principal sum of [ ] Dollars on July 15, 2022.

Interest Payment Dates: January 15 and July 15

Record Dates: January 1 and July 1

IN WITNESS WHEREOF, the Company has caused this instrument to be signed in accordance with Section 2.04 of the Indenture.

Date: [ ]

THE ADT CORPORATION

Name:

Title:

[If second signature is applicable]

Name:

Title:

A-1

CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.


WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee

By:
		Authorized Signatory

Dated:

A-2

GUARANTEE

For value received, TYCO INTERNATIONAL LTD. hereby absolutely, unconditionally and irrevocably guarantees (i) to the holder of this Security the payment of principal of, premium, if any, and interest on, the Security upon which this Guarantee is set forth in the amounts and at the time when due and payable whether by declaration thereof or otherwise, and interest on the overdue principal and interest, if any, of such Security, if lawful, to the holder of such Security and the Trustee on behalf of the holders and (ii) all amounts owed to the Trustee under the Indenture, in each case in accordance with and subject to the terms and limitations of such Security, Article XIV of the Base Indenture and Section 1.7 of the Second Supplemental Indenture. This Guarantee will not become effective until the Trustee or Authenticating Agent duly executes the certificate of authentication on this Security. This Guarantee shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of law principles thereof.

Dated:


TYCO INTERNATIONAL LTD.

By:
		Name:
		Title:

By:
		Name:
		Title:

A-3

THE ADT CORPORATION

3.500% Notes due 2022

This security is one of a duly authorized series of debt securities of The ADT Corporation, a Delaware company (the “Company”), issued or to be issued in one or more series under and pursuant to an Indenture for the Company’s unsubordinated debt securities, dated as of July 5, 2012 (the “Base Indenture”), duly executed and delivered by and among the Company and Wells Fargo Bank, National Association (the “Trustee”), as supplemented by the Second Supplemental Indenture, dated as of July 5, 2012 (the “Second Supplemental Indenture”), by and among the Company, Tyco International Ltd. (the “Guarantor”) and the Trustee. The Base Indenture as supplemented and amended by the Second Supplemental Indenture is referred to herein as the “Indenture.” By the terms of the Base Indenture, the debt securities issuable thereunder are issuable in series that may vary as to amount, date of maturity, rate of interest and in other respects as provided in the Base Indenture. This security is one of the series designated on the face hereof (individually, a “Security,” and collectively, the “Securities”), and reference is hereby made to the Indenture for a description of the rights, limitations of rights, obligations, duties and immunities of the Trustee, the Company, Guarantor and the holders of the Securities (the “Securityholders”). Capitalized terms used herein and not otherwise defined shall have the meanings given them in the Base Indenture or the Second Supplemental Indenture, as applicable.

1. Interest . The Company promises to pay interest on the principal amount of this Security at an annual rate of 3.500%. The Company will pay interest semi-annually on January 15 and July 15 of each year (each such day, an “Interest Payment Date”). If any Interest Payment Date, redemption date or maturity date of this Security is not a Business Day, then payment of interest or principal (and premium, if any) shall be made on the next succeeding Business Day with the same force and effect as if made on the date such payment was due, and no interest shall accrue for the period after such date to the date of such payment on the next succeeding Business Day. Interest on the Securities will accrue from the most recent date to which interest has been paid or duly provided for or, if no interest has been paid, from the date of issuance; provided that, if there is no existing Default in the payment of interest, and if this Security is authenticated between a regular record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; and provided, further, that the first Interest Payment Date shall be January 15, 2013. Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months.

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4. Indenture . The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (“TIA”) as in effect on the date the Indenture is qualified. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and TIA for a statement of such terms. The Securities are unsecured general obligations of the Company and constitute the series designated on the face hereof as the “3.500% Notes due 2022”, initially limited to $1,000,000,000 in aggregate principal amount.

The Company will furnish to any Securityholder upon written request and without charge a copy of the Base Indenture and the Second Supplemental Indenture. Requests may be made to: The ADT Corporation, 1501 Yamato Road, Boca Raton, FL 33431, Attention: Investor Relations.

5. Optional Redemption . The Securities will be subject to redemption at the option of the Company on any date prior to the maturity date, in whole or from time to time in part, in $1,000 increments ( provided that any remaining principal amount thereof shall be at least the minimum authorized denomination thereof), on written notice given to the Securityholders thereof not less than 30 days nor more than 90 days prior to the date fixed for redemption in such notice (the “Redemption Date”). The Securities will be redeemable at a redemption price equal to the greater of (i) 100% of the principal amount of such Securities to be redeemed and (ii) as determined by the Quotation Agent and delivered to the Trustee in writing, the sum of the present values of the remaining scheduled payments of principal and interest thereon due on any date after the Redemption Date (excluding the portion of interest that will be accrued and unpaid to and including the Redemption Date) discounted from their scheduled date of payment to the Redemption Date (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Redemption Treasury Rate plus 30 basis points, plus, in either the case of clause (i) or clause (ii), accrued and unpaid interest, if any, thereon to the Redemption Date. This Security is also subject to redemption to the extent provided in Article II of the Second Supplemental Indenture.

The Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Securities.

6. Special Redemption . The Securities will be subject to redemption at the option of the Company if the Distribution has not occurred on or prior to March 31, 2013 or if the Board of

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8. Persons Deemed Owners . The registered Securityholder may be treated as its owner for all purposes.

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14. Discharge of Indenture . The Indenture contains certain provisions pertaining to defeasance, which provisions shall for all purposes have the same effect as if set forth herein.

15. Authentication . This Security shall not be valid until the Trustee signs the certificate of authentication attached to the other side of this Security.

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17. Additional Amounts . Prior to the Distribution Date, the Parent is obligated to pay Additional Amounts on this Security to the extent provided in Article II of the Second Supplemental Indenture.

19. Governing Law . The Base Indenture, the Second Supplemental Indenture and this Security (and the Guarantee hereon) shall be deemed to be a contract made under the internal laws of the State of New York, and for all purposes shall be construed in accordance with the laws of said State without regard to conflicts of laws principles that would require the application of any other law.

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ASSIGNMENT FORM

To assign this Security, fill in the form below: (I) or (we) assign and transfer this Security to

(Insert assignee’s soc. sec. or tax I.D. no.)

(Print or type assignee’s name, address and zip code)


and irrevocably appoint

agent to transfer this Security on the books of the Company. The agent may substitute another to act for him.

Date:


Your Signature:
(Sign exactly as your name appears on the face of this Security)


Signature Guarantee:

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ELECTION FORM

TO BE COMPLETED ONLY IF THE HOLDER

ELECTS TO ACCEPT THE CHANGE OF CONTROL OFFER


Holder:

By:
		Name:
		Title:

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Exhibit 4.4

EXECUTION VERSION

THE ADT CORPORATION,

as Issuer

AND

TYCO INTERNATIONAL LTD.

as Guarantor

AND

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee

THIRD SUPPLEMENTAL INDENTURE

Dated as of July 5, 2012

$750,000,000 of 4.875% Notes due 2042

THIS THIRD SUPPLEMENTAL INDENTURE is dated as of July 5, 2012 among THE ADT CORPORATION, a Delaware corporation (the “ Company ”), TYCO INTERNATIONAL LTD., a Swiss corporation (“ Guarantor ”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association (the “ Trustee ”).

RECITALS

B. Pursuant to resolutions of a duly authorized Pricing Committee of the Board of Directors, the Company has authorized the issuance of $750,000,000 principal amount of 4.875% Notes due 2042 (the “ Offered Securities ”).

C. The entry into this Third Supplemental Indenture by the parties hereto is in all respects authorized by the provisions of the Base Indenture.

D. The Guarantor and the Company desire to enter into this Third Supplemental Indenture pursuant to Section 9.01 of the Base Indenture to establish the terms of the Offered Securities in accordance with Section 2.01 of the Base Indenture and to establish the form of the Offered Securities in accordance with Section 2.02 of the Base Indenture.

E. All things necessary to make this Third Supplemental Indenture a legal, valid and binding indenture and agreement according to its terms have been done.

ARTICLE I

Section 1.1. Terms of Offered Securities .

The following terms relate to the Offered Securities:

(1) The Offered Securities constitute a series of securities having the title “4.875% Notes due 2042”.

(3) The entire Outstanding principal of the Offered Securities shall be payable on July 15, 2042.

Third Supplemental Indenture

(4) The rate at which the Offered Securities shall bear interest shall be 4.875% per year. The date from which interest shall accrue on the Offered Securities shall be July 5, 2012, or the most recent Interest Payment Date to which interest has been paid or provided for. The Interest Payment Dates for the Offered Securities shall be January 15 and July 15 of each year, beginning January 15, 2013. Interest shall be payable on each Interest Payment Date to the Holders of record at the close of business on the January 1 and July 1 prior to each Interest Payment Date (a “ regular record date ”). The basis upon which interest shall be calculated shall be that of a 360-day year consisting of twelve 30-day months.

(6) (A) The Offered Securities will be subject to redemption at the Company’s option on any date (a “ Redemption Date ”) prior to the maturity date, in whole or from time to time in part, in $1,000 increments ( provided that any remaining principal amount thereof shall be at least the minimum authorized denomination thereof). The Offered Securities will be redeemable at a redemption price equal to the greater of (i) 100% of the principal amount of the Offered Securities to be redeemed and (ii) as determined by the Quotation Agent and delivered to the Trustee in writing, the sum of the present values of the remaining scheduled payments of principal and interest thereon due on any date after the Redemption Date (excluding the portion of interest that will be accrued and unpaid to and including the Redemption Date) discounted from their scheduled date of payment to the Redemption Date (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Redemption Treasury Rate plus 35 basis points, plus accrued and unpaid interest, if any, thereon to the Redemption Date.

(B) As used herein:

Third Supplemental Indenture

“ Quotation Agent ” means a Redemption Reference Treasury Dealer appointed as such agent by the Company.

“ Redemption Reference Treasury Dealer ” means four primary U.S. Government securities dealers in the United States selected by the Company.

(9) Except as provided herein, the Holders of the Offered Securities shall have no special rights in addition to those provided in the Base Indenture upon the occurrence of any particular events.

(10) The Offered Securities will be general unsecured and unsubordinated obligations of the Company and will be ranked equally among themselves.

(12) The Offered Securities are not convertible into shares of common stock or other securities of the Company or the Guarantor.

Third Supplemental Indenture

(13) The additional and replacement Events of Default and restrictive covenants set forth in Sections 1.3, 1.4 and 1.5 shall be applicable only to the Offered Securities.

(14) The additional provisions set forth in Sections 1.6 and 1.7 shall be applicable only to the Offered Securities.

Section 1.2 Additional Defined Terms .

As used herein, the following defined terms shall have the following meanings with respect to the Offered Securities only:

Third Supplemental Indenture

“ Change of Control Triggering Event ” means the occurrence of both a Change of Control and a Rating Event.

“ Continuing Director ” means, as of any date of determination, any member of the Company’s Board of Directors who:

(1) was a member of such Board of Directors on the date hereof;

(2) became a member of such Board of Directors immediately following the Distribution; or

“ Distribution ” refers to the pro-rata distribution of all of the outstanding common stock of the Company to the Guarantor’s shareholders in the form of a special dividend.

“ Fitch ” means Fitch Inc., and its successors.

Third Supplemental Indenture

“ Moody’s ” means Moody’s Investors Service, Inc., and its successors.

Third Supplemental Indenture

“ Restricted Subsidiary ” means any Subsidiary of the Company that owns or leases a Principal Property.

“ S&P ” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors.

Third Supplemental Indenture

Section 1.3. Additional Covenants .

(1) Limitation on Liens.

(a) liens existing on the date the Offered Securities are first issued;

Third Supplemental Indenture

(e) liens securing Indebtedness owing by any Restricted Subsidiary to the Company or a Subsidiary thereof;

Third Supplemental Indenture

(2) Limitation on Sale and Lease-Back Transactions.

The Company will not, and will not permit any Restricted Subsidiary to, enter into any Sale and Lease-Back Transaction unless:

Third Supplemental Indenture

(3) Change of Control Triggering Event.

(i) the name of the Holder of such Offered Security;

(ii) the principal amount of such Offered Security;

Third Supplemental Indenture

(iii) the principal amount of such Offered Security to be repurchased;

(iv) the certificate number or a description of the tenor and terms of such Offered Security;

(v) a statement that the Holder is accepting the Change of Control Offer; and

(d) On the Change of Control Payment Date, the Company shall, to the extent lawful:

(i) accept for payment all Offered Securities or portions of such Offered Securities properly tendered pursuant to the Change of Control Offer;

(ii) deposit with the paying agent an amount equal to the Change of Control Payment in respect of all Offered Securities or portions of Offered Securities properly tendered; and

Third Supplemental Indenture

Section 1.4 Replacement Events of Default .

Section 1.5 Additional Events of Default .

(9) an event of default shall happen and be continuing with respect to the Company’s or, prior to the Distribution, the Guarantor’s Indebtedness for borrowed money (other

Third Supplemental Indenture

Section 1.6. Additional Changes to the Base Indenture .

(1) Until the Distribution, references to “the Company” in Section 4.04 and 5.03 of the Base Indenture shall be deemed to refer to “the Guarantor”.

(2) Section 10.01(i) of the Base Indenture is hereby deleted with respect to the Offered Securities and replaced with the following:

Third Supplemental Indenture

acceptable to the Trustee, which counsel shall include Gibson, Dunn & Crutcher LLP, or (y) a ruling from the United States Internal Revenue Service, in either case to the effect that such merger or consolidation, or such sale or conveyance, will not result in an exchange of the Securities for new debt instruments for United States federal income tax purposes and (C) if such entity is not organized under the laws of the United States or any state of the United States, then it shall, with respect to the Offered Securities, expressly undertake obligations comparable to those initially undertaken by the Guarantor pursuant to Article II; ; provided, however, that no Additional Amounts shall be paid on account of any taxes imposed or withheld pursuant to Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (the “ Code ”) (or any amended or successor version that is substantively comparable) and any current or future regulations promulgated thereunder or official interpretations thereof.

(3) Consolidation, Merger and Sales of Assets by Guarantor .

The Guarantor covenants that it will not merge or consolidate with any other Person or sell or convey all or substantially all of its assets to any Person, unless:

Third Supplemental Indenture

Section 1.7. Guarantee .

ARTICLE II

ADDITIONAL AMOUNTS; CERTAIN TAX PROVISIONS

Section 2.1. Redemption Upon Changes in Withholding Taxes .

Third Supplemental Indenture

Section 2.02. Payment of Additional Amounts .

(i)

is or was present or engaged in, or is or was treated as present or engaged in, a trade or business in the Taxing Jurisdiction or has or had a permanent establishment in the Taxing Jurisdiction;

(ii)

(iii)

Third Supplemental Indenture

(iv)

owns or owned 10% or more of the total combined voting power of all classes of stock of the Company or the Guarantor;

(b) any estate, inheritance, gift, sales, transfer, excise or personal property Taxes imposed with respect to the Securities, except as otherwise provided herein;

(f) any Taxes that are payable by any method other than withholding or deduction by the Guarantor or the Company or any paying agent from payments in respect of such Securities;

(g) any Taxes required to be withheld by any paying agent from any payment in respect of any Securities if such payment can be made without such withholding by at least one other paying agent;

(i) any withholding or deduction for Taxes which would not have been imposed if the relevant Securities had been presented to another paying agent in a Member State of the European Union; or

(j) any combination of Section 3.02(a), (b), (c), (d), (e), (f), (g), (h) and (i).

Third Supplemental Indenture

ARTICLE III

MISCELLANEOUS

Section 3.1. Definitions .

Capitalized terms used but not defined in this Third Supplemental Indenture shall have the meanings ascribed thereto in the Base Indenture.

Section 3.2. Confirmation of Indenture .

The Base Indenture, as supplemented and amended by this Third Supplemental Indenture, is in all respects ratified and confirmed, and the Base Indenture, this Third Supplemental Indenture and all indentures supplemental thereto shall be read, taken and construed as one and the same instrument.

Section 3.3. Concerning the Trustee .

In carrying out the Trustee’s responsibilities hereunder, the Trustee shall have all of the rights, protections and immunities which it possesses under the Indenture. The recitals contained herein and in the Offered Securities, except the Trustee’s certificate of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to (i) the validity or sufficiency of this Third Supplemental Indenture or of the Offered Securities, (ii) the proper authorization hereof by the Company by action or otherwise, (iii) the due execution hereof by the Company or (iv) the consequences of any amendment herein provided for. The Trustee shall not be accountable for the use or application by the Company of the Offered Securities or the proceeds thereof.

Section 3.4. Governing Law .

This Third Supplemental Indenture and the Offered Securities shall be deemed to be a contract made under the internal laws of the State of New York, and for all purposes shall be construed in accordance with the laws of said State without regard to conflicts of law principles that would require the application of any other law. This Third Supplemental Indenture is subject to the provisions of the Trust Indenture Act that are required to be part of this Third Supplemental Indenture and shall, to the extent applicable, be governed by such provisions.

Third Supplemental Indenture

Section 3.5. Separability .

In case any one or more of the provisions contained in this Third Supplemental Indenture or in the Offered Securities of any series shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Third Supplemental Indenture or of such Offered Securities, but this Third Supplemental Indenture and such Offered Securities shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein or therein.

Section 3.6. Counterparts .

This Third Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. The exchange of copies of this Third Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Third Supplemental Indenture as to the parties hereto and may be used in lieu of the original Third Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

Section 3.7 No Benefit .

Nothing in this Third Supplemental Indenture, express or implied, shall give to any Person other than the parties hereto and their successors or assigns, and the Holders of the Offered Securities, any benefit or legal or equitable rights, remedy or claim under this Third Supplemental Indenture or the Base Indenture.

Section 3.8 Amendments and Supplemental Indentures .

This Third Supplemental Indenture and the Offered Securities are subject to the provisions regarding supplemental indentures and amendments set forth in Article IX of the Base Indenture.

Section 3.9 Legal, Valid and Binding Obligation .

The Company hereby represents and warrants that, assuming the due authorization, execution and delivery of this Third Supplemental Indenture by the Trustee, this Third Supplemental Indenture is its legal, valid and bind obligation enforceable against it in accordance with its terms.

[Signature Page Follows]

Third Supplemental Indenture

IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed all as of the day and year first above written.


THE ADT CORPORATION, as ISSUER

By:	/s/ Ravi Tulsyan
	Name:	Ravi Tulsyan
	Title:	Vice President and Treasurer

TYCO INTERNATIONAL LTD., as GUARANTOR

By:	/s/ Frank S. Sklarsky
	Name:	Frank S. Sklarsky
	Title:	EVP / CFO

By:	/s/ Arun Nayar
	Name:	Arun Nayar
	Title:	Senior Vice President and Treasurer

WELLS FARGO BANK, NATIONAL ASSOCIATION as Trustee

By:	/s/ Stefan Victory
	Name:	Stefan Victory
	Title:	Vice President

[Signature Page to Third Supplemental Indenture]

EXHIBIT A

FORM OF 4.875% NOTES DUE 2042

[Insert the Private Placement Legend and/or the Global Security legend, as applicable]

4.875% NOTES DUE 2042


No. [ ]		$[ ]
CUSIP No. [ ]

THE ADT CORPORATION

promises to pay to [ ] or registered assigns, the principal sum of [ ] Dollars on July 15, 2042.

Interest Payment Dates: January 15 and July 15

Record Dates: January 1 and July 1

IN WITNESS WHEREOF, the Company has caused this instrument to be signed in accordance with Section 2.04 of the Indenture.

Date: [ ]

THE ADT CORPORATION

Name:

Title:

[If second signature is applicable]

Name:

Title:

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CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.


WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee

By:
		Authorized Signatory

Dated:

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GUARANTEE

For value received, TYCO INTERNATIONAL LTD. hereby absolutely, unconditionally and irrevocably guarantees (i) to the holder of this Security the payment of principal of, premium, if any, and interest on, the Security upon which this Guarantee is set forth in the amounts and at the time when due and payable whether by declaration thereof or otherwise, and interest on the overdue principal and interest, if any, of such Security, if lawful, to the holder of such Security and the Trustee on behalf of the holders and (ii) all amounts owed to the Trustee under the Indenture, in each case in accordance with and subject to the terms and limitations of such Security, Article XIV of the Base Indenture and Section 1.7 of the Third Supplemental Indenture. This Guarantee will not become effective until the Trustee or Authenticating Agent duly executes the certificate of authentication on this Security. This Guarantee shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of law principles thereof.

Dated:


TYCO INTERNATIONAL LTD.

By:
		Name:
		Title:

By:
		Name:
		Title:

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THE ADT CORPORATION

4.875% Notes due 2042

This security is one of a duly authorized series of debt securities of The ADT Corporation, a Delaware company (the “Company”), issued or to be issued in one or more series under and pursuant to an Indenture for the Company’s unsubordinated debt securities, dated as of July 5, 2012 (the “Base Indenture”), duly executed and delivered by and among the Company and Wells Fargo Bank, National Association (the “Trustee”), as supplemented by the Third Supplemental Indenture, dated as of July 5, 2012 (the “Third Supplemental Indenture”), by and among the Company, Tyco International Ltd. (the “Guarantor”) and the Trustee. The Base Indenture as supplemented and amended by the Third Supplemental Indenture is referred to herein as the “Indenture.” By the terms of the Base Indenture, the debt securities issuable thereunder are issuable in series that may vary as to amount, date of maturity, rate of interest and in other respects as provided in the Base Indenture. This security is one of the series designated on the face hereof (individually, a “Security,” and collectively, the “Securities”), and reference is hereby made to the Indenture for a description of the rights, limitations of rights, obligations, duties and immunities of the Trustee, the Company, Guarantor and the holders of the Securities (the “Securityholders”). Capitalized terms used herein and not otherwise defined shall have the meanings given them in the Base Indenture or the Third Supplemental Indenture, as applicable.

1. Interest . The Company promises to pay interest on the principal amount of this Security at an annual rate of 4.875%. The Company will pay interest semi-annually on January 15 and July 15 of each year (each such day, an “Interest Payment Date”). If any Interest Payment Date, redemption date or maturity date of this Security is not a Business Day, then payment of interest or principal (and premium, if any) shall be made on the next succeeding Business Day with the same force and effect as if made on the date such payment was due, and no interest shall accrue for the period after such date to the date of such payment on the next succeeding Business Day. Interest on the Securities will accrue from the most recent date to which interest has been paid or duly provided for or, if no interest has been paid, from the date of issuance; provided that, if there is no existing Default in the payment of interest, and if this Security is authenticated between a regular record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; and provided, further, that the first Interest Payment Date shall be January 15, 2013. Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months.

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4. Indenture . The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (“TIA”) as in effect on the date the Indenture is qualified. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and TIA for a statement of such terms. The Securities are unsecured general obligations of the Company and constitute the series designated on the face hereof as the “4.875% Notes due 2042”, initially limited to $750,000,000 in aggregate principal amount.

The Company will furnish to any Securityholder upon written request and without charge a copy of the Base Indenture and the Third Supplemental Indenture. Requests may be made to: The ADT Corporation, 1501 Yamato Road, Boca Raton, FL 33431, Attention: Investor Relations.

5. Optional Redemption . The Securities will be subject to redemption at the option of the Company on any date prior to the maturity date, in whole or from time to time in part, in $1,000 increments ( provided that any remaining principal amount thereof shall be at least the minimum authorized denomination thereof), on written notice given to the Securityholders thereof not less than 30 days nor more than 90 days prior to the date fixed for redemption in such notice (the “Redemption Date”). The Securities will be redeemable at a redemption price equal to the greater of (i) 100% of the principal amount of such Securities to be redeemed and (ii) as determined by the Quotation Agent and delivered to the Trustee in writing, the sum of the present values of the remaining scheduled payments of principal and interest thereon due on any date after the Redemption Date (excluding the portion of interest that will be accrued and unpaid to and including the Redemption Date) discounted from their scheduled date of payment to the Redemption Date (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Redemption Treasury Rate plus 35 basis points, plus, in either the case of clause (i) or clause (ii), accrued and unpaid interest, if any, thereon to the Redemption Date. This Security is also subject to redemption to the extent provided in Article II of the Third Supplemental Indenture.

The Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Securities.

6. Special Redemption . The Securities will be subject to redemption at the option of the Company if the Distribution has not occurred on or prior to March 31, 2013 or if the Board of

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8. Persons Deemed Owners . The registered Securityholder may be treated as its owner for all purposes.

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14. Discharge of Indenture . The Indenture contains certain provisions pertaining to defeasance, which provisions shall for all purposes have the same effect as if set forth herein.

15. Authentication . This Security shall not be valid until the Trustee signs the certificate of authentication attached to the other side of this Security.

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17. Additional Amounts . Prior to the Distribution Date, the Parent is obligated to pay Additional Amounts on this Security to the extent provided in Article II of the Third Supplemental Indenture.

19. Governing Law . The Base Indenture, the Third Supplemental Indenture and this Security (and the Guarantee hereon) shall be deemed to be a contract made under the internal laws of the State of New York, and for all purposes shall be construed in accordance with the laws of said State without regard to conflicts of laws principles that would require the application of any other law.

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ASSIGNMENT FORM

To assign this Security, fill in the form below: (I) or (we) assign and transfer this Security to

(Insert assignee’s soc. sec. or tax I.D. no.)

(Print or type assignee’s name, address and zip code)


and irrevocably appoint

agent to transfer this Security on the books of the Company. The agent may substitute another to act for him.

Date:


Your Signature:
(Sign exactly as your name appears on the face of this Security)


Signature Guarantee:

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ELECTION FORM

TO BE COMPLETED ONLY IF THE HOLDER

ELECTS TO ACCEPT THE CHANGE OF CONTROL OFFER


Holder:

By:
		Name:
		Title:

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Exhibit 4.5

EXECUTION VERSION

THE ADT CORPORATION,

as Issuer

AND

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee

FOURTH SUPPLEMENTAL INDENTURE

Dated as of January 14, 2013

$700,000,000 of 4.125% Senior Notes due 2023

THIS FOURTH SUPPLEMENTAL INDENTURE is dated as of January 14, 2013, between THE ADT CORPORATION, a Delaware corporation (the “ Company ”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association (the “ Trustee ”).

RECITALS

B. Pursuant to resolutions of the Board of Directors, the Company has authorized the issuance of $700,000,000 principal amount of 4.125% Senior Notes due 2023 (the “ Offered Securities ”).

C. The entry into this Fourth Supplemental Indenture by the parties hereto is in all respects authorized by the provisions of the Base Indenture.

D. The Company desires to enter into this Fourth Supplemental Indenture pursuant to Section 9.01 of the Base Indenture to establish the terms of the Offered Securities in accordance with Section 2.01 of the Base Indenture and to establish the form of the Offered Securities in accordance with Section 2.02 of the Base Indenture.

E. All things necessary to make this Fourth Supplemental Indenture a legal, valid and binding indenture and agreement according to its terms have been done.

NOW, THEREFORE, for and in consideration of the foregoing premises, the Company and the Trustee mutually covenant and agree for the equal and proportionate benefit of the respective holders from time to time of the Offered Securities as follows:

ARTICLE I

Section 1.1.

Terms of Offered Securities .

The following terms relate to the Offered Securities:

(1) The Offered Securities constitute a series of securities having the title “4.125% Senior Notes due 2023”.

(3) The entire Outstanding principal of the Offered Securities shall be payable on June 15, 2023.

Fourth Supplemental Indenture

(4) The rate at which the Offered Securities shall bear interest shall be 4.125% per year. The date from which interest shall accrue on the Offered Securities shall be January 14, 2013, or the most recent Interest Payment Date to which interest has been paid or provided for. The Interest Payment Dates for the Offered Securities shall be June 15 and December 15 of each year, beginning June 15, 2013. Interest shall be payable on each Interest Payment Date to the Holders of record at the close of business on the June 1 and December 1 prior to each Interest Payment Date (a “ regular record date ”). The basis upon which interest shall be calculated shall be that of a 360-day year consisting of twelve 30-day months.

(6) (A) The Offered Securities will be subject to redemption at the Company’s option on any date (a “ Redemption Date ”) prior to the maturity date, in whole or from time to time in part, in $1,000 increments ( provided that any remaining principal amount thereof shall be at least the minimum authorized denomination thereof). The Offered Securities will be redeemable at a redemption price equal to the greater of (i) 100% of the principal amount of the Offered Securities to be redeemed and (ii) as determined by the Quotation Agent and delivered to the Trustee in writing, the sum of the present values of the remaining scheduled payments of principal and interest thereon due on any date after the Redemption Date (excluding the portion of interest that will be accrued and unpaid to and including the Redemption Date) discounted from their scheduled date of payment to the Redemption Date (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Redemption Treasury Rate plus 40 basis points, plus accrued and unpaid interest, if any, thereon to the Redemption Date.

(B) As used herein:

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“ Quotation Agent ” means a Redemption Reference Treasury Dealer appointed as such agent by the Company.

“ Redemption Reference Treasury Dealer ” means four primary U.S. Government securities dealers in the United States selected by the Company.

(7) Except as provided herein, the Offered Securities shall not be subject to redemption, repurchase or repayment at the option of any Holder thereof, upon the occurrence of any particular circumstances or otherwise. The Offered Securities will not have the benefit of any sinking fund.

(8) Except as provided herein, the Holders of the Offered Securities shall have no special rights in addition to those provided in the Base Indenture upon the occurrence of any particular events.

(9) The Offered Securities will be general unsecured and unsubordinated obligations of the Company and will be ranked equally among all of the Company’s other existing and future unsecured and unsubordinated debt.

(10) The Offered Securities are not convertible into shares of common stock or other securities of the Company.

(11) The additional and replacement Events of Default and restrictive covenants set forth in Sections 1.3, 1.4 and 1.5 shall be applicable only to the Offered Securities.

Section 1.2

Additional Defined Terms .

As used herein, the following defined terms shall have the following meanings with respect to the Offered Securities only:

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the lessor, may be extended. The term “net rental payments” under any lease of any period shall mean the sum of the rental and other payments required to be paid in such period by the lessee thereunder, not including any amounts required to be paid by such lessee, whether or not designated as rental or additional rental, on account of maintenance and repairs, reconstruction, insurance, taxes, assessments, water rates or similar charges required to be paid by such lessee thereunder or any amounts required to be paid by such lessee thereunder contingent upon the amount of sales, maintenance and repairs, reconstruction, insurance, taxes, assessments, water rates or similar charges.

“ Change of Control ” means the occurrence of any of the following: (1) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or more series of related transactions, of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, to any person other than the Company or a direct or indirect wholly-owned subsidiary of the Company; (2) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any person becomes the “beneficial owner” (as defined in Rules 13(d)(3) and 13(d)(5) under the Exchange Act), directly or indirectly, of more than 50% of the Company’s outstanding Voting Stock or other Voting Stock into which the Company’s Voting Stock is reclassified, consolidated, exchanged or changed, measured by voting power rather than number of shares; (3) the Company consolidates with, or merges with or into, any person, or any person consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction in which any of the Company’s outstanding Voting Stock or the Voting Stock of such other person is converted into or exchanged for cash, securities or other property, other than any such transaction where the shares of the Company’s Voting Stock outstanding immediately prior to such transaction constitute, or are converted into or exchanged for, a majority of the Voting Stock of the surviving person or any direct or indirect parent company of the surviving person immediately after giving effect to such transaction; (4) the first day on which a majority of the members of the Company’s Board of Directors are not Continuing Directors or (5) the adoption of a plan relating to the Company’s liquidation or dissolution. Notwithstanding the foregoing, a transaction shall not be deemed to involve a Change of Control under clause (1), (2) or (5) above if: (i) the Company becomes a direct or indirect wholly-owned subsidiary of a holding company or a holding company becomes the successor to the Company under Section 8.2 of the Indenture pursuant to a transaction that is permitted under Section 8.1 of the Indenture and (ii) the direct or indirect holders of the Voting Stock of such holding company immediately following that transaction (or a series of related transactions) are substantially the same (and hold in the same proportions) as the holders of the Company’s Voting Stock immediately prior to that transaction. The term “person,” as used in this definition, means any Person and any two or more Persons as provided in Section 13(d)(3) of the Exchange Act.

“ Change of Control Triggering Event ” means the occurrence of both a Change of Control and a Rating Event.

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“ Continuing Director ” means, as of any date of determination, any member of the Company’s Board of Directors who:

(1) was a member of such Board of Directors on the date hereof; or

(2) was nominated for election, elected or appointed to such Board of Directors pursuant to a proposal by a majority of the Continuing Directors who were members of such board of directors at the time of such nomination, election or appointment (either by a specific vote or by approval of the Company’s proxy statement in which such member was named as a nominee for election as a director, without objection to such nomination).

“ Fitch ” means Fitch Inc., and its successors.

“ Indebtedness ” means, without duplication, the principal amount (such amount being the face amount or, with respect to original issue discount bonds or zero coupon notes, bonds or debentures or similar securities, determined based on the accreted amount as of the date of the most recently prepared consolidated balance sheet of the Company and its Subsidiaries as of the end of a fiscal quarter of the Company prepared in accordance with United States generally accepted accounting principles as in effect on the date of such consolidated balance sheet) of (i) all obligations for borrowed money, (ii) all obligations evidenced by debentures, notes or other similar instruments, (iii) all obligations in respect of letters of credit or bankers acceptances or similar instruments or reimbursement obligations with respect thereto (such instruments to constitute Indebtedness only to the extent that the outstanding reimbursement obligations in respect thereof are collateralized by cash or cash equivalents reflected as assets on a balance sheet prepared in accordance with United States generally accepted accounting principles), (iv) all obligations to pay the deferred purchase price of property or services, except (A) trade and similar accounts payable and accrued expenses, (B) employee compensation, deferred compensation and pension obligations, and other obligations arising from employee benefit programs and agreements or other similar employment arrangements, (C) obligations in respect of customer advances received and (D) obligations in connection with earnout and holdback agreements, in each case in the ordinary course of business, (v) all obligations as lessee to the extent capitalized in accordance with United States generally accepted accounting principles and (vi) all Indebtedness of others consolidated in such balance sheet that is guaranteed by the Company or any of its subsidiaries or for which the Company or any of its subsidiaries are legally responsible or liable (whether by agreement to purchase indebtedness of, or to supply funds or to invest in, others).

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“ Moody’s ” means Moody’s Investors Service, Inc., and its successors.

“ Non-Recourse Indebtedness ” means Indebtedness upon the enforcement of which recourse may be had by the holder(s) thereof only to identified assets of the Company or any of its Subsidiaries and not to such entity personally (subject to, for the avoidance of doubt, customary exceptions contained in non-recourse financings to the non-recourse nature of the obligations thereunder).

“ Principal Property ” means any U.S. manufacturing, processing or assembly plant or any U.S. warehouse or distribution facility of the Company or any of its Subsidiaries that is used by any U.S. Subsidiary of the Company and (A) is owned by the Company or any Subsidiary of the Company on the date hereof, (B) the initial construction of which has been completed after the date hereof, or (C) is acquired after the date hereof, in each case, other than any such plants, facilities, warehouses or portions thereof, that in the opinion of the Board of Directors of the Company, are not collectively of material importance to the total business conducted by the Company and its subsidiaries as an entirety, or that has a net book value (excluding any capitalized interest expense), on the date hereof in the case of clause (A) of this definition, on the date of completion of the initial construction in the case of clause (B) of this definition or on the date of acquisition in the case of clause (C) of this definition, of less than 2.0% of Consolidated Tangible Assets on the consolidated balance sheet of the Company and its subsidiaries as of the applicable date.

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“ Restricted Subsidiary ” means any Subsidiary of the Company that owns or leases a Principal Property.

“ S&P ” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors.

Section 1.3.

Additional Covenants .

(1) Limitation on Liens.

(a) liens existing on the date the Offered Securities are first issued;

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(e) liens securing Indebtedness owing by any Restricted Subsidiary to the Company or a Subsidiary thereof;

(f) liens in favor of the United States or any State thereof, or any department, agency or instrumentality or political subdivision of the United States of America or any State thereof, or in favor of any other country or any political subdivision thereof, to secure partial, progress, advance or other payments pursuant to any contract, statute, rule or regulation or to secure any Indebtedness incurred or guaranteed for the purpose of financing all or any part of the purchase price (or, in the case of real property, the cost of construction or improvement) of the Principal Property subject to such liens (including liens incurred in connection with pollution control, industrial revenue or similar financings);

(g) pledges, liens or deposits under workers’ compensation or similar legislation, and liens thereunder that are not currently dischargeable, or in connection with bids, tenders, contracts (other than for the payment of money) or leases to which the Company or any Restricted Subsidiary is a party, or to secure the public or statutory obligations of the Company or any Restricted Subsidiary, or in connection with obtaining or maintaining self-insurance, or to obtain the benefits of any law, regulation or arrangement pertaining to unemployment insurance, old age pensions, social security or similar matters, or to secure surety, performance, appeal or customs bonds to which the Company or any Restricted Subsidiary is a party, or in litigation or other proceedings in connection with the matters heretofore referred to in this clause, such as interpleader proceedings, and other similar pledges, liens or deposits made or incurred in the ordinary course of business;

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which the Company or such Restricted Subsidiary in good faith is prosecuting an appeal or proceedings for review or for which the time to make an appeal has not yet expired; or final unappealable judgment liens which are satisfied within 15 days of the date of judgment; or liens incurred by the Company or any Restricted Subsidiary for the purpose of obtaining a stay or discharge in the course of any litigation or other proceeding to which the Company or such Restricted Subsidiary is a party;

(i) liens for taxes or assessments or governmental charges or levies not yet due or delinquent; or that can thereafter be paid without penalty, or that are being contested in good faith by appropriate proceedings; landlord’s liens on property held under lease; and any other liens or charges incidental to the conduct of the business of the Company or any Restricted Subsidiary, or the ownership of their respective assets, that were not incurred in connection with the borrowing of money or the obtaining of advances or credit and that, in the opinion of the Board of Directors of the Company, do not materially impair the use of such assets in the operation of the business of the Company or such Restricted Subsidiary or the value of such Principal Property for the purposes of such business;

(j) liens to secure the Company’s or any Restricted Subsidiary’s obligations under agreements with respect to spot, forward, future and option transactions, entered into in the ordinary course of business;

(k) liens not permitted by the foregoing clauses (a) to (j), inclusive, if at the time of, and after giving effect to, the creation or assumption of any such lien, the aggregate amount of all outstanding Indebtedness of the Company and its Restricted Subsidiaries (without duplication) secured by all such liens not so permitted by the foregoing clauses (a) through (j), inclusive, together with the Attributable Debt in respect of Sale and Lease-Back Transactions permitted by paragraph (a) under subsection (2) below, do not exceed the greater of $100,000,000 and 10% of Consolidated Net Worth; and

(l) any extension, renewal or replacement (or successive extensions, renewals or replacements) in whole or in part, of any lien referred to in the foregoing clauses (a) to (l), inclusive; provided, however, that the principal amount of Indebtedness secured thereby unless otherwise excepted under clauses (a) through (k) shall not exceed the principal amount of Indebtedness so secured at the time of such extension, renewal or replacement, and that such extension, renewal or replacement shall be limited to all or a part of the assets (or any replacements therefor) that secured the lien so extended, renewed or replaced (plus improvements and construction on real property).

(2) Limitation on Sale and Lease-Back Transactions.

The Company will not, and will not permit any Restricted Subsidiary to, enter into any Sale and Lease-Back Transaction unless:

(a) the Company or such Restricted Subsidiary, at the time of entering into a Sale and Lease-Back Transaction, would be entitled to incur Indebtedness secured by a

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lien on the Principal Property to be leased in an amount at least equal to the Attributable Debt in respect of such Sale and Lease-Back Transaction, without equally and ratably securing the Offered Securities pursuant to Section 1.3(1) above; or

(b) the direct or indirect proceeds of the sale of the Principal Property to be leased are at least equal to the fair value of such Principal Property (as determined by the Company’s Board of Directors) and an amount equal to the net proceeds from the sale of the property or assets so leased is applied, within 180 days of the effective date of any such Sale and Lease-Back Transaction, to the purchase or acquisition (or, in the case of real property, commencement of the construction) of property or assets or to the retirement (other than at maturity or pursuant to a mandatory sinking fund or mandatory redemption provision) of Offered Securities, or of Funded Indebtedness of the Company or a consolidated Subsidiary ranking on a parity with or senior to the Offered Securities; provided that there shall be credited to the amount of net proceeds required to be applied pursuant to this clause (b) an amount equal to the sum of (i) the principal amount of Offered Securities delivered within 180 days of the effective date of such Sale and Lease-Back Transaction to the Trustee for retirement and cancellation and (ii) the principal amount of other Funded Indebtedness voluntarily retired by the Company within such 180-day period, excluding retirements of Offered Securities and other Funded Indebtedness as a result of conversions or pursuant to mandatory sinking fund or mandatory prepayment provisions.

(3) Change of Control Triggering Event.

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is contained in the form of note attached hereto as Exhibit A) duly completed, or a telegram, telex, facsimile transmission or a letter from a member of a national securities exchange or the Financial Industry Regulatory Authority, Inc., or a commercial bank or trust company in the United States setting forth:

(i) the name of the Holder of such Offered Security;

(ii) the principal amount of such Offered Security;

(iii) the principal amount of such Offered Security to be repurchased;

(iv) the certificate number or a description of the tenor and terms of such Offered Security;

(v) a statement that the Holder is accepting the Change of Control Offer; and

(d) On the Change of Control Payment Date, the Company shall, to the extent lawful:

(i) accept for payment all Offered Securities or portions of such Offered Securities properly tendered pursuant to the Change of Control Offer;

(ii) deposit with the paying agent an amount equal to the Change of Control Payment in respect of all Offered Securities or portions of Offered Securities properly tendered; and

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Section 1.4

Replacement Events of Default .

(4) default in the performance, or breach, of any covenant or agreement of the Company (other than a default or breach that is specifically dealt with elsewhere in this Section 6.01), and continuance of such default or breach for a period of 90 days after the date on which there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of such series, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder; or

(5) a court having jurisdiction in the premises shall enter a decree or order for relief in respect of the Company in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee or sequestrator or similar official of the Company or, for any substantial part of its property or ordering the winding up or liquidation of its affairs, and such decree or order shall remain unstayed and in effect for a period of 90 consecutive days; or

Section 1.5

Additional Events of Default .

(8) an event of default shall happen and be continuing with respect to the Company’s Indebtedness for borrowed money (other than Non-Recourse Indebtedness) under any

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indenture or other instrument evidencing or under which the Company shall have a principal amount outstanding (such amount with respect to original issue discount bonds or zero coupon notes, bonds or debentures or similar securities based on the accreted amount determined in accordance with United States generally accepted accounting principles and as of the date of the most recently prepared consolidated balance sheet of the Company) in excess of $100,000,000, and such event of default shall involve the failure to pay the principal of such Indebtedness on the final maturity date thereof after the expiration of any applicable grace period with respect thereto, or such Indebtedness shall have been accelerated so that the same shall have become due and payable prior to the date on which the same would otherwise have become due and payable, and such acceleration shall not be rescinded or annulled within ten Business Days after notice thereof shall have been given by the trustee to the Company or by the holders of at least 25% in aggregate principal amount of outstanding securities of such series to the trustee and the Company; provided however that:

(i) if such event of default under such indenture or instrument shall be remedied or cured by the Company or waived by the requisite holders of such Indebtedness, then the Event of Default hereunder by reason thereof shall be deemed likewise to have been thereupon remedied, cured or waived without further action upon the part of either the Trustee or any of the Securityholders; and

(ii) subject to the provisions of Sections 7.01 and 7.02, the Trustee shall not be charged with knowledge of any such event of default unless written notice thereof shall have been given to the Trustee by the Company, by the holder or an agent of the holder of any such Indebtedness, by the trustee then acting under any indenture or other instrument under which such default shall have occurred, or by the Holders of not less than 25% in the aggregate principal amount of Outstanding Securities of such series.

ARTICLE II

ADDITIONAL AMOUNTS; CERTAIN TAX PROVISIONS

Section 2.1.

Redemption Upon Changes in Withholding Taxes .

The Offered Securities may be redeemed, as a whole but not in part, at the option of the Company, upon not less than 30 nor more than 90 days’ notice (which notice shall be irrevocable), at a redemption price equal to 100% of the principal amount thereof, together with accrued interest, if any, to the redemption date and Additional Amounts (as defined in Section 3.2), if any, if as a result of any amendment to, or change in, the laws or regulations of Switzerland or the United States, as applicable, or any political subdivision thereof or therein having the power to tax (a “ Taxing Jurisdiction ”), or any change in the application or official interpretation of such laws, including any action taken by a taxing authority or a holding by a court of competent jurisdiction (regardless of whether such action or such holding is with respect to the Company), which amendment or change is announced or becomes effective after the date the Offered Securities are issued, the Company has become, or there is a material probability that

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it will become, obligated to pay Additional Amounts on the next date on which any amount would be payable with respect to the Securities of such series, and such obligation cannot be avoided by the use of commercially reasonable measures available to the Company; provided, however, that (a) no such notice of redemption may be given earlier than 90 days prior to the earliest date on which the Company would be obligated to pay such Additional Amounts, and (b) at the time such notice of redemption is given, such obligation to pay such Additional Amounts remains in effect. Prior to the giving of any notice of redemption described in this paragraph, the Company shall deliver to the Trustee (i) a certificate signed by two Officers of the Company stating that the obligation to pay Additional Amounts cannot be avoided by the Company taking commercially reasonable measures available to it, and (ii) a written opinion of independent legal counsel to the Company of recognized standing to the effect that the Company has or there is a material probability that it will become obligated to pay Additional Amounts as a result of a change, amendment, official interpretation or application described above and that the Company cannot avoid the payment of such Additional Amounts by taking commercially reasonable measures available to it.

Section 2.2.

Payment of Additional Amounts .

All payments made by the Company under or with respect to the Offered Securities will be made free and clear of and without withholding or deduction for or on account of any present or future taxes, duties, levies, imposts, assessments or governmental charges of whatever nature imposed or levied by or on behalf of any Taxing Jurisdiction (“ Taxes ”), unless the Company is required to withhold or deduct Taxes by law or by the interpretation or administration thereof. In the event that the Company is required to so withhold or deduct any amount for or on account of any Taxes from any payment made under or with respect to the Offered Securities, the Company will pay such additional amounts (“ Additional Amounts ”) as may be necessary so that the net amount received by each holder of Offered Securities (including Additional Amounts) after such withholding or deduction will equal the amount that such Holder would have received if such Taxes had not been required to be withheld or deducted; provided that no Additional Amounts will be payable with respect to a payment to a holder of the Offered Securities or a holder of a beneficial interest in the Offered Securities where such holder is subject to taxation on such payment by a relevant Taxing Jurisdiction for any reason other than such holder’s mere ownership of the Offered Securities or for or on account of:

(i)

is or was present or engaged in, or is or was treated as present or engaged in, a trade or business in the Taxing Jurisdiction or has or had a permanent establishment in the Taxing Jurisdiction;

(ii)

has or had any present or former connection (other than the mere fact of ownership of such Offered Securities) with the Taxing Jurisdiction imposing such Taxes, including being or having been a citizen or resident thereof or being treated as being or having been a resident thereof;

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(iii)

(iv)

owns or owned 10% or more of the total combined voting power of all classes of stock of the Company;

(b) any estate, inheritance, gift, sales, transfer, excise or personal property Taxes imposed with respect to the Offered Securities, except as otherwise provided herein;

(c) any Taxes imposed solely as a result of the presentation of such Offered Securities (where presentation is required) for payment on a date more than 30 days after the date on which such payment became due and payable or the date on which payment thereof is duly provided for, whichever is later, except to the extent that the beneficiary or holder thereof would have been entitled to the payment of Additional Amounts had the Offered Securities been presented for payment on any date during such 30-day period;

(f) any Taxes that are payable by any method other than withholding or deduction by the Company or any paying agent from payments in respect of such Offered Securities;

(g) any Taxes required to be withheld by any paying agent from any payment in respect of any Offered Securities if such payment can be made without such withholding by at least one other paying agent; or

(j) any combination of Section 3.02(a), (b), (c), (d), (e), (f) and (g).

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treaty, regulation, ruling or administrative practice of the relevant Taxing Authority as a precondition to an exemption from, or reduction in, the relevant Taxes, and (y) at least 90 days prior to the first payment date with respect to which the Company shall apply this paragraph, the Company shall have notified all Holders of Offered Securities in writing that they shall be required to provide such declaration or claim.

Additional Amounts also will not be payable to any Holder or the holder of a beneficial interest in an Offered Security that is a fiduciary, partnership, limited liability company or other fiscally transparent entity, or to such holder that is not the sole Holder or holder of such beneficial interest of such Offered Security, as the case may be. This exception, however, will apply only to the extent that a beneficiary or settlor with respect to the fiduciary, or a beneficial owner or member of the partnership, limited liability company or other fiscally transparent entity, would not have been entitled to the payment of an Additional Amount had the beneficiary, settlor, beneficial owner or member received directly its beneficial or distributive share of the payment.

At least 30 days prior to each date on which any payment under or with respect to the Offered Securities is due and payable, if the Company will be obligated to pay Additional Amounts with respect to such payment, the Company will deliver to the Trustee an Officer’s Certificate stating the fact that such Additional Amounts will be payable, the amounts so payable and will set forth such other information as is necessary to enable such Trustee to pay such Additional Amounts to holders of Offered Securities on the payment date.

The provisions of this Article II shall survive any termination or the discharge of this Indenture and shall apply mutatis mutandis to any jurisdiction in which the Company or any successor Person to the Company is organized or is engaged in business for tax purposes or any political subdivisions or taxing authority or agency thereof or therein; provided, however, the date on which the Company changes its jurisdiction in which it is organized or such Person becomes a successor to the Company shall be substituted for the date on which the Offered Securities were issued.

Whenever in this Indenture, the Offered Securities are mentioned, in any context, the payment of principal and premium, if any, redemption price, interest or any other amount payable under or with respect to any Offered Security, such mention shall be deemed to include mention of the payment of Additional Amounts to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.

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ARTICLE III

MISCELLANEOUS

Section 3.1.

Definitions .

Capitalized terms used but not defined in this Fourth Supplemental Indenture shall have the meanings ascribed thereto in the Base Indenture.

Section 3.2.

Confirmation of Indenture .

The Base Indenture, as supplemented and amended by this Fourth Supplemental Indenture, is in all respects ratified and confirmed, and the Base Indenture, this Fourth Supplemental Indenture and all indentures supplemental thereto shall be read, taken and construed as one and the same instrument.

Section 3.3.

Concerning the Trustee .

In carrying out the Trustee’s responsibilities hereunder, the Trustee shall have all of the rights, protections and immunities which it possesses under the Indenture. The recitals contained herein and in the Offered Securities, except the Trustee’s certificate of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to (i) the validity or sufficiency of this Fourth Supplemental Indenture or of the Offered Securities, (ii) the proper authorization hereof by the Company by action or otherwise, (iii) the due execution hereof by the Company or (iv) the consequences of any amendment herein provided for. The Trustee shall not be accountable for the use or application by the Company of the Offered Securities or the proceeds thereof.

Section 3.4.

Governing Law .

This Fourth Supplemental Indenture and the Offered Securities shall be deemed to be a contract made under the internal laws of the State of New York without regard to conflicts of law principles, and for all purposes shall be construed in accordance with the laws of said State without regard to conflicts of law principles that would require the application of any other law. This Fourth Supplemental Indenture is subject to the provisions of the Trust Indenture Act that are required to be part of this Fourth Supplemental Indenture and shall, to the extent applicable, be governed by such provisions.

Section 3.5.

Separability .

In case any one or more of the provisions contained in this Fourth Supplemental Indenture or in the Offered Securities of any series shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Fourth Supplemental Indenture or of such Offered Securities, but this Fourth Supplemental Indenture and such Offered Securities shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein or therein.

Fourth Supplemental Indenture

Section 3.6.

Counterparts .

This Fourth Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. The exchange of copies of this Fourth Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Fourth Supplemental Indenture as to the parties hereto and may be used in lieu of the original Fourth Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

Section 3.7

No Benefit .

Nothing in this Fourth Supplemental Indenture, express or implied, shall give to any Person other than the parties hereto and their successors or assigns, and the Holders of the Offered Securities, any benefit or legal or equitable rights, remedy or claim under this Fourth Supplemental Indenture or the Base Indenture.

Section 3.8

Amendments and Supplemental Indentures .

This Fourth Supplemental Indenture and the Offered Securities are subject to the provisions regarding supplemental indentures and amendments set forth in Article IX of the Base Indenture.

Section 3.9

Legal, Valid and Binding Obligation .

The Company hereby represents and warrants that, assuming the due authorization, execution and delivery of this Fourth Supplemental Indenture by the Trustee, this Fourth Supplemental Indenture is its legal, valid and bind obligation enforceable against it in accordance with its terms.

[Signature Page Follows]

Fourth Supplemental Indenture

IN WITNESS WHEREOF, the parties hereto have caused this Fourth Supplemental Indenture to be duly executed all as of the day and year first above written.


THE ADT CORPORATION , as Issuer

By:	/s/ Ravi Tulsyan
	Name:	Ravi Tulsyan
	Title:	Senior Vice President and Treasurer

WELLS FARGO BANK, NATIONAL ASSOCIATION as Trustee

By:	/s/ Stefan Victory
	Name:	Stefan Victory
	Title:	Vice President

[Signature Page to Fourth Supplemental Indenture]

EXHIBIT A

FORM OF 4.125% SENIOR NOTES DUE 2023

[Insert the Private Placement Legend and/or the Global Security legend, as applicable]

4.125% SENIOR NOTES DUE 2023


No. [ ]		$[ ]
CUSIP No. [ ]

THE ADT CORPORATION

promises to pay to [ ] or registered assigns, the principal sum of [ ] Dollars on June 15, 2023.

Interest Payment Dates: June 15 and December 15

Record Dates: June 1 and December 1

IN WITNESS WHEREOF, the Company has caused this instrument to be signed in accordance with Section 2.04 of the Indenture.

Date: [ ]

THE ADT CORPORATION

Name:

Title:

[If second signature is applicable]

Name:

Title:

A-1

CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.


WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee

By:
		Authorized Signatory

Dated:

A-2

THE ADT CORPORATION

4.125% Senior Notes due 2023

This security is one of a duly authorized series of debt securities of The ADT Corporation, a Delaware company (the “Company”), issued or to be issued in one or more series under and pursuant to an Indenture for the Company’s unsubordinated debt securities, dated as of July 5, 2012 (the “Base Indenture”), duly executed and delivered between the Company and Wells Fargo Bank, National Association (the “Trustee”), as supplemented by the Fourth Supplemental Indenture, dated as of January 14 , 2013 (the “Fourth Supplemental Indenture”), between the Company and the Trustee. The Base Indenture as supplemented and amended by the Fourth Supplemental Indenture is referred to herein as the “Indenture.” By the terms of the Base Indenture, the debt securities issuable thereunder are issuable in series that may vary as to amount, date of maturity, rate of interest and in other respects as provided in the Base Indenture. This security is one of the series designated on the face hereof (individually, a “Security,” and collectively, the “Securities”), and reference is hereby made to the Indenture for a description of the rights, limitations of rights, obligations, duties and immunities of the Trustee, the Company and the holders of the Securities (the “Securityholders”). Capitalized terms used herein and not otherwise defined shall have the meanings given them in the Base Indenture or the Fourth Supplemental Indenture, as applicable.

1. Interest . The Company promises to pay interest on the principal amount of this Security at an annual rate of 4.125%. The Company will pay interest semi-annually on June 15 and December 15 of each year (each such day, an “Interest Payment Date”). If any Interest Payment Date, redemption date or maturity date of this Security is not a Business Day, then payment of interest or principal (and premium, if any) shall be made on the next succeeding Business Day with the same force and effect as if made on the date such payment was due, and no interest shall accrue for the period after such date to the date of such payment on the next succeeding Business Day. Interest on the Securities will accrue from the most recent date to which interest has been paid or duly provided for or, if no interest has been paid, from the date of issuance; provided that, if there is no existing Default in the payment of interest, and if this Security is authenticated between a regular record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; and provided, further, that the first Interest Payment Date shall be June 15, 2013. Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months.

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4. Indenture . The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (“TIA”) as in effect on the date the Indenture is qualified. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and TIA for a statement of such terms. The Securities are unsecured general obligations of the Company and constitute the series designated on the face hereof as the “4.125% Senior Notes due 2023”, initially limited to $700,000,000 in aggregate principal amount.

The Company will furnish to any Securityholder upon written request and without charge a copy of the Base Indenture and the Fourth Supplemental Indenture. Requests may be made to: The ADT Corporation, 1501 Yamato Road, Boca Raton, FL 33431, Attention: Investor Relations.

5. Optional Redemption . The Securities will be subject to redemption at the option of the Company on any date prior to the maturity date, in whole or from time to time in part, in $1,000 increments ( provided that any remaining principal amount thereof shall be at least the minimum authorized denomination thereof), on written notice given to the Securityholders thereof not less than 30 days nor more than 90 days prior to the date fixed for redemption in such notice (the “Redemption Date”). The Securities will be redeemable at a redemption price equal to the greater of (i) 100% of the principal amount of such Securities to be redeemed and (ii) as determined by the Quotation Agent and delivered to the Trustee in writing, the sum of the present values of the remaining scheduled payments of principal and interest thereon due on any date after the Redemption Date (excluding the portion of interest that will be accrued and unpaid to and including the Redemption Date) discounted from their scheduled date of payment to the Redemption Date (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Redemption Treasury Rate plus 40 basis points, plus, in either the case of clause (i) or clause (ii), accrued and unpaid interest, if any, thereon to the Redemption Date. This Security is also subject to redemption to the extent provided in Article II of the Fourth Supplemental Indenture.

The Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Securities.

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Security, in cash equal to 101% of the aggregate principal amount of this Security repurchased, plus accrued and unpaid interest, if any, to the date of repurchase. Within 30 days following any Change of Control Triggering Event, or at the Company’s option, prior to any Change of Control, but after public announcement of the transaction that constitutes or may constitute the Change of Control Triggering Event, a notice shall be mailed to the Trustee and to each Holder describing in reasonable detail the transaction that constitutes or may constitute the Change of Control Triggering Event and offering to repurchase this Security on the date specified in the notice, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed.

8. Persons Deemed Owners . The registered Securityholder may be treated as its owner for all purposes.

9. Repayment to the Company . Any funds or Governmental Obligations deposited with any paying agent or the Trustee, or then held by the Company, in trust for payment of principal of, premium, if any, or interest on the Securities of a particular series that are not applied but remain unclaimed by the holders of such Securities for at least one year after the date upon which the principal of, premium, if any, or interest on such Securities shall have respectively become due and payable, shall be repaid to the Company or (if then held by the Company) shall be discharged from such trust. After return to the Company, Holders entitled to the money or securities must look to the Company for payment as unsecured general creditors.

10. Amendments, Supplements and Waivers . The Base Indenture contains provisions permitting the Company and the Trustee, with the consent of the holders of not less than a majority in aggregate principal amount of the securities of each series at the time Outstanding affected by such supplemental indenture or indentures to enter into supplemental indentures for the purpose of adding, changing or eliminating any provisions of the Base Indenture or any supplemental indenture or of modifying in any manner not covered elsewhere in the Base Indenture the rights of the holders of the securities of such series; provided , however , that no

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such supplemental indenture, without the consent of the holders of each Security then Outstanding and affected thereby, shall: (i) extend a fixed maturity of or any installment of principal of any Securities of any series or reduce the principal amount thereof, or reduce the amount of principal of any original issue discount security that would be due and payable upon declaration of acceleration of the maturity thereof; (ii) reduce the rate of or extend the time for payment of interest of any Security of any series; (iii) reduce the premium payable upon the redemption of any Security; (iv) make any Security payable in Currency other than that stated in the Security; (v) impair the right to institute suit for the enforcement of any payment on or after the fixed maturity thereof (or in the case of redemption, on or after the redemption date); or (vi) reduce the percentage of Securities, the holders of which are required to consent to any such supplemental indenture or indentures. The Base Indenture also contains provisions permitting the holders of not less than a majority in aggregate principal amount of the Outstanding securities of each series affected thereby, on behalf of all of the holders of the securities of such series, to waive any past Default under the Base Indenture, and its consequences, except a Default in the payment of the principal of, premium, if any, or interest on any security of such series or a Default in respect of a covenant or provision of the Base Indenture that cannot be modified or amended without the consent of the holder of each Outstanding security of such affected series. Any such consent or waiver by the registered Securityholder shall be conclusive and binding upon such holder and upon all future holders and owners of this Security and of any Security issued in exchange for this Security or in place hereof (whether by registration of transfer or otherwise), irrespective of whether or not any notation of such consent or waiver is made upon this Security.

11. Defaults and Remedies . If an Event of Default with respect to the securities of a series issued pursuant to the Base Indenture occurs and is continuing, the Trustee or the holders of at least 25% in aggregate principal amount of the Securities of such series then Outstanding, by notice in writing to the Company (and to the Trustee if notice is given by such holders), may declare the unpaid principal of, premium, if any, and accrued interest, if any, due and payable immediately. Subject to the terms of the Indenture, if an Event of Default under the Indenture shall occur and be continuing, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the holders, unless such holders have offered the Trustee indemnity satisfactory to it. Upon satisfaction of certain conditions set forth in the Indenture, the holders of a majority in principal amount of the Outstanding securities of a series issued pursuant to the Base Indenture will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the securities of such series.

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either directly or through the Company or any such predecessor or successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that the Indenture and the obligations issued hereunder and thereunder are solely corporate obligations, and that no such personal liability whatever shall attach to, or is or shall be incurred by, the incorporators, shareholders, officers or directors as such, of the Company or of any predecessor or successor corporation, or any of them, because of the creation of the indebtedness authorized by the Indenture, or under or by reason of the obligations, covenants or agreements contained in the Indenture or in the Securities or implied therefrom; and that any and all such personal liability of every name and nature, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against, every such incorporator, shareholder, officer or director as such, because of the creation of the indebtedness authorized by the Indenture, or under or by reason of the obligations, covenants or agreements contained in the Indenture or in the Securities or implied therefrom, are hereby expressly waived and released as a condition of, and as a consideration for, the acceptance of the Securities.

14. Discharge of Indenture . The Indenture contains certain provisions pertaining to defeasance, which provisions shall for all purposes have the same effect as if set forth herein.

15. Authentication . This Security shall not be valid until the Trustee signs the certificate of authentication attached to the other side of this Security.

16. Additional Amounts . The Company is obligated to pay Additional Amounts on this Security to the extent provided in Article II of the Fourth Supplemental Indenture.

17. Abbreviations . Customary abbreviations may be used in the name of a Securityholder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

18. Governing Law . The Base Indenture, the Fourth Supplemental Indenture and this Security shall be deemed to be a contract made under the internal laws of the State of New York, and for all purposes shall be construed in accordance with the laws of said State without regard to conflicts of laws principles that would require the application of any other law.

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ASSIGNMENT FORM

To assign this Security, fill in the form below: (I) or (we) assign and transfer this Security to

(Insert assignee’s soc. sec. or tax I.D. no.)

(Print or type assignee’s name, address and zip code)


and irrevocably appoint

agent to transfer this Security on the books of the Company. The agent may substitute another to act for him.


Date:


Your Signature:
(Sign exactly as your name appears on the face of this Security)


Signature Guarantee:

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ELECTION FORM

TO BE COMPLETED ONLY IF THE HOLDER

ELECTS TO ACCEPT THE CHANGE OF CONTROL OFFER


		, at


		(please print or typewrite name, address and

telephone number of the undersigned).


Holder:

By:
		Name:
		Title:

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Exhibit 4.6

Execution Version

THE ADT CORPORATION,

as Issuer

AND

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee

FIFTH SUPPLEMENTAL INDENTURE

Dated as of October 1, 2013

$1,000,000,000 of 6.250% Senior Notes due 2021

THIS FIFTH SUPPLEMENTAL INDENTURE is dated as of October 1, 2013, between THE ADT CORPORATION, a Delaware corporation (the “ Company ”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association (the “ Trustee ”).

RECITALS

B. Pursuant to resolutions of the Board of Directors, the Company has authorized the issuance of $1,000,000,000 principal amount of 6.250% Senior Notes due 2021 (the “ Offered Securities ”).

C. The entry into this Fifth Supplemental Indenture by the parties hereto is in all respects authorized by the provisions of the Base Indenture.

D. The Company desires to enter into this Fifth Supplemental Indenture pursuant to Section 9.01 of the Base Indenture to establish the terms of the Offered Securities in accordance with Section 2.01 of the Base Indenture and to establish the form of the Offered Securities in accordance with Section 2.02 of the Base Indenture.

E. All things necessary to make this Fifth Supplemental Indenture a legal, valid and binding indenture and agreement according to its terms have been done.

ARTICLE I

Section 1.1. Terms of Offered Securities .

The following terms relate to the Offered Securities:

(1) The Offered Securities constitute a series of securities having the title “6.250% Senior Notes due 2021”.

(3) The entire Outstanding principal of the Offered Securities shall be payable on October 15, 2021.

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(4) The rate at which the Offered Securities shall bear interest shall be 6.250% per year. The date from which interest shall accrue on the Offered Securities shall be October 1, 2013, or the most recent Interest Payment Date to which interest has been paid or provided for. The Interest Payment Dates for the Offered Securities shall be October 15 and April 15 of each year, beginning April 15, 2014. Interest shall be payable on each Interest Payment Date to the Holders of record at the close of business on the October 1 and April 1 prior to each Interest Payment Date (a “ regular record date ”). The basis upon which interest shall be calculated shall be that of a 360-day year consisting of twelve 30-day months.

(6) (A) The Offered Securities will be subject to redemption at the Company’s option on any date (a “ Redemption Date ”) prior to the maturity date, in whole or from time to time in part, in $1,000 increments ( provided that any remaining principal amount thereof shall be at least the minimum authorized denomination thereof). The Offered Securities will be redeemable at a redemption price equal to the greater of (i) 100% of the principal amount of the Offered Securities to be redeemed and (ii) as determined by the Quotation Agent and delivered to the Trustee in writing, the sum of the present values of the remaining scheduled payments of principal and interest thereon due on any date after the Redemption Date (excluding the portion of interest that will be accrued and unpaid to and including the Redemption Date) discounted from their scheduled date of payment to the Redemption Date (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Redemption Treasury Rate plus 50 basis points, plus accrued and unpaid interest, if any, thereon to the Redemption Date.

(B) As used herein:

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“ Quotation Agent ” means a Redemption Reference Treasury Dealer appointed as such agent by the Company.

“ Redemption Reference Treasury Dealer ” means four primary U.S. Government securities dealers in the United States selected by the Company.

(8) Except as provided herein, the Holders of the Offered Securities shall have no special rights in addition to those provided in the Base Indenture upon the occurrence of any particular events.

(10) The Offered Securities are not convertible into shares of common stock or other securities of the Company.

(11) The additional and replacement Events of Default and restrictive covenants set forth in Sections 1.3, 1.4 and 1.5 shall be applicable only to the Offered Securities.

(12) The additional provision set forth in Section 1.6 shall be applicable only to the Offered Securities.

Section 1.2 Additional Defined Terms .

As used herein, the following defined terms shall have the following meanings with respect to the Offered Securities only:

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over a similar term the funds necessary to purchase the leased assets) of the obligations of the Company or any Restricted Subsidiary for net rental payments during the remaining term of the applicable lease, including any period for which such lease has been extended or, at the option of the lessor, may be extended. The term “net rental payments” under any lease of any period shall mean the sum of the rental and other payments required to be paid in such period by the lessee thereunder, not including any amounts required to be paid by such lessee, whether or not designated as rental or additional rental, on account of maintenance and repairs, reconstruction, insurance, taxes, assessments, water rates or similar charges required to be paid by such lessee thereunder or any amounts required to be paid by such lessee thereunder contingent upon the amount of sales, maintenance and repairs, reconstruction, insurance, taxes, assessments, water rates or similar charges.

“ Change of Control ” means the occurrence of any of the following: (1) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or more series of related transactions, of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, to any person other than the Company or a direct or indirect wholly-owned subsidiary of the Company; (2) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any person becomes the “beneficial owner” (as defined in Rules 13(d)(3) and 13(d)(5) under the Exchange Act), directly or indirectly, of more than 50% of the Company’s outstanding Voting Stock or other Voting Stock into which the Company’s Voting Stock is reclassified, consolidated, exchanged or changed, measured by voting power rather than number of shares; (3) the Company consolidates with, or merges with or into, any person, or any person consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction in which any of the Company’s outstanding Voting Stock or the Voting Stock of such other person is converted into or exchanged for cash, securities or other property, other than any such transaction where the shares of the Company’s Voting Stock outstanding immediately prior to such transaction constitute, or are converted into or exchanged for, a majority of the Voting Stock of the surviving person or any direct or indirect parent company of the surviving person immediately after giving effect to such transaction; (4) the first day on which a majority of the members of the Company’s Board of Directors are not Continuing Directors or (5) the adoption of a plan relating to the Company’s liquidation or dissolution. Notwithstanding the foregoing, a transaction shall not be deemed to involve a Change of Control under clause (1), (2) or (5) above if: (i) the Company becomes a direct or indirect wholly-owned subsidiary of a holding company or a holding company becomes the successor to the Company under Section 10.2 of the Indenture pursuant to a transaction that is permitted under Section 10.1 of the Indenture and (ii) the direct or indirect holders of the Voting Stock of such holding company immediately following that transaction (or a series of related transactions) are substantially the same (and hold in the same proportions) as the holders of the Company’s Voting Stock immediately prior to that transaction. The term “person,” as used in this definition, means any Person and any two or more Persons as provided in Section 13(d)(3) of the Exchange Act.

“ Change of Control Triggering Event ” means the occurrence of both a Change of Control and a Rating Event.

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“ Continuing Director ” means, as of any date of determination, any member of the Company’s Board of Directors who:

(1) was a member of such Board of Directors on the date hereof; or

“ Fitch ” means Fitch Inc., and its successors.

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agreements, in each case in the ordinary course of business, (v) all obligations as lessee to the extent capitalized in accordance with United States generally accepted accounting principles and (vi) all Indebtedness of others consolidated in such balance sheet that is guaranteed by the Company or any of its subsidiaries or for which the Company or any of its subsidiaries are legally responsible or liable (whether by agreement to purchase indebtedness of, or to supply funds or to invest in, others).

“ Moody’s ” means Moody’s Investors Service, Inc., and its successors.

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“ Restricted Subsidiary ” means any Subsidiary of the Company that owns or leases a Principal Property.

“ S&P ” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors.

Section 1.3. Additional Covenants .

(1) Limitation on Liens.

(a) liens existing on the date the Offered Securities are first issued;

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(e) liens securing Indebtedness owing by any Restricted Subsidiary to the Company or a Subsidiary thereof;

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(h) liens created by or resulting from any litigation or other proceeding that is being contested in good faith by appropriate proceedings, including liens arising out of judgments or awards against the Company or any Restricted Subsidiary with respect to which the Company or such Restricted Subsidiary in good faith is prosecuting an appeal or proceedings for review or for which the time to make an appeal has not yet expired; or final unappealable judgment liens which are satisfied within 15 days of the date of judgment; or liens incurred by the Company or any Restricted Subsidiary for the purpose of obtaining a stay or discharge in the course of any litigation or other proceeding to which the Company or such Restricted Subsidiary is a party;

(2) Limitation on Sale and Lease-Back Transactions.

The Company will not, and will not permit any Restricted Subsidiary to, enter into any Sale and Lease-Back Transaction unless:

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(3) Change of Control Triggering Event.

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(i) the name of the Holder of such Offered Security;

(ii) the principal amount of such Offered Security;

(iii) the principal amount of such Offered Security to be repurchased;

(iv) the certificate number or a description of the tenor and terms of such Offered Security;

(v) a statement that the Holder is accepting the Change of Control Offer; and

(d) On the Change of Control Payment Date, the Company shall, to the extent lawful:

(i) accept for payment all Offered Securities or portions of such Offered Securities properly tendered pursuant to the Change of Control Offer;

(ii) deposit with the paying agent an amount equal to the Change of Control Payment in respect of all Offered Securities or portions of Offered Securities properly tendered; and

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Section 1.4 Replacement Events of Default .

(5) a court having jurisdiction in the premises shall enter a decree or order for relief in respect of the Company in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee or sequestrator or similar official of the Company or, for any substantial part of its property or ordering the winding up or liquidation of its affairs, and such decree or order shall remain unstayed and in effect for a period of 90 consecutive days; or

Section 1.5 Additional Events of Default .

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(8) an event of default shall happen and be continuing with respect to the Company’s Indebtedness for borrowed money (other than Non-Recourse Indebtedness) under any indenture or other instrument evidencing or under which the Company shall have a principal amount outstanding (such amount with respect to original issue discount bonds or zero coupon notes, bonds or debentures or similar securities based on the accreted amount determined in accordance with United States generally accepted accounting principles and as of the date of the most recently prepared consolidated balance sheet of the Company) in excess of $100,000,000, and such event of default shall involve the failure to pay the principal of such Indebtedness on the final maturity date thereof after the expiration of any applicable grace period with respect thereto, or such Indebtedness shall have been accelerated so that the same shall have become due and payable prior to the date on which the same would otherwise have become due and payable, and such acceleration shall not be rescinded or annulled within ten Business Days after notice thereof shall have been given by the trustee to the Company or by the holders of at least 25% in aggregate principal amount of outstanding securities of such series to the trustee and the Company; provided however that:

(ii) subject to the provisions of Sections 7.01 and 7.02, the Trustee shall not be charged with knowledge of any such event of default unless written notice thereof shall have been given to the Trustee by the Company, by the holder or an agent of the holder of any such Indebtedness, by the trustee then acting under any indenture or other instrument under which such default shall have occurred, or by the Holders of not less than 25% in the aggregate principal amount of Outstanding Securities of such series.

Section 1.6 Additional Changes to the Base Indenture .

(1) Section 10.01(i) of the Base Indenture is hereby deleted with respect to the Offered Securities and replaced with the following:

(i) the Company shall be the continuing entity, or the successor entity or the Person which acquires by sale or conveyance substantially all the assets of the Company (if other than the Company), (A) shall expressly assume all of the obligations of the Company under the Indenture, (B) is an entity treated as a “corporation” for United States tax purposes and obtains either (x) an opinion, in form and substance reasonably acceptable to the Trustee, of tax counsel of recognized standing reasonably acceptable to the Trustee, which counsel shall include Gibson, Dunn & Crutcher LLP, or (y) a ruling from the United States Internal Revenue Service, in either case to the effect that such merger or consolidation, or such sale or conveyance, will not result in an exchange of the Securities for new debt instruments for United States federal income tax purposes

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and (C) if such entity is not organized under the laws of the United States or any state of the United States (a “ Foreign Successor ”), then it shall, with respect to the Offered Securities, expressly undertake obligations pursuant to Article II; ; provided, however, that no Additional Amounts shall be paid on account of any taxes imposed or withheld pursuant to Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (the “ Code ”) (or any amended or successor version that is substantively comparable) and any current or future regulations promulgated thereunder or official interpretations thereof.

ARTICLE II

ADDITIONAL AMOUNTS; CERTAIN TAX PROVISIONS

Section 2.1. Redemption Upon Changes in Withholding Taxes .

If the Company merges or consolidates with, or sells or conveys substantially all of its assets to, a Foreign Successor (as permitted by Section 1.6 above with respect to the Offered Securities), then the Offered Securities may be redeemed, as a whole but not in part, at the option of the Foreign Successor, upon not less than 30 nor more than 90 days’ notice (which notice shall be irrevocable), at a redemption price equal to 100% of the principal amount thereof, together with accrued interest, if any, to the redemption date and Additional Amounts (as defined in Section 3.2), if any, under the laws or regulations of the jurisdiction of organization of any Foreign Successor (a “ Taxing Jurisdiction ”), or any change in the application or official interpretation of such laws, including any action taken by a taxing authority or a holding by a court of competent jurisdiction (regardless of whether such action or such holding is with respect to the Foreign Successor), the Foreign Successor has become, or there is a material probability that it will become, obligated to pay Additional Amounts on the next date on which any amount would be payable with respect to the Securities of such series, and such obligation cannot be avoided by the use of commercially reasonable measures available to the Foreign Successor; provided, however, that (a) no such notice of redemption may be given earlier than 90 days prior to the earliest date on which the Foreign Successor would be obligated to pay such Additional Amounts, and (b) at the time such notice of redemption is given, such obligation to pay such Additional Amounts remains in effect. Prior to the giving of any notice of redemption described in this paragraph, the Foreign Successor shall deliver to the Trustee (i) a certificate signed by two Officers of the Foreign Successor stating that the obligation to pay Additional Amounts cannot be avoided by the Foreign Successor taking commercially reasonable measures available to it, and (ii) a written opinion of independent legal counsel to the Foreign Successor of recognized standing to the effect that the Foreign Successor has or there is a material probability that it will become obligated to pay Additional Amounts as a result of a change, amendment, official interpretation or application described above and that the Foreign Successor cannot avoid the payment of such Additional Amounts by taking commercially reasonable measures available to it.

Fifth Supplemental Indenture

Section 2.2. Payment of Additional Amounts .

If the Company merges or consolidates with, or sells or conveys substantially all of its assets to, a Foreign Successor (as permitted by Section 1.6 above with respect to the Offered Securities), all payments made by such Foreign Successor under or with respect to the Offered Securities will be made free and clear of and without withholding or deduction for or on account of any present or future taxes, duties, levies, imposts, assessments or governmental charges of whatever nature imposed or levied by or on behalf of any Taxing Jurisdiction (“ Taxes ”), unless such Foreign Successor is required to withhold or deduct Taxes by law or by the interpretation or administration thereof. In the event that a Foreign Successor is required to so withhold or deduct any amount for or on account of any Taxes from any payment made under or with respect to the Offered Securities, the Foreign Successor will pay such additional amounts (“ Additional Amounts ”) as may be necessary so that the net amount received by each holder of Offered Securities (including Additional Amounts) after such withholding or deduction will equal the amount that such Holder would have received if such Taxes had not been required to be withheld or deducted; provided that no Additional Amounts will be payable with respect to a payment to a holder of the Offered Securities or a holder of a beneficial interest in the Offered Securities where such holder is subject to taxation on such payment by a relevant Taxing Jurisdiction for any reason other than such holder’s mere ownership of the Offered Securities or for or on account of:

(a) any Taxes that are imposed or withheld solely because such holder or a fiduciary, settlor, beneficiary, or member of such holder if such holder is an estate, trust, partnership, limited liability company or other fiscally transparent entity, or a person holding a power over an estate or trust administered by a fiduciary holder:

(i)

is or was present or engaged in, or is or was treated as present or engaged in, a trade or business in the Taxing Jurisdiction or has or had a permanent establishment in the Taxing Jurisdiction;

(ii)

(iii)

(iv)

owns or owned 10% or more of the total combined voting power of all classes of stock of the Foreign Successor;

(b) any estate, inheritance, gift, sales, transfer, excise or personal property Taxes imposed with respect to the Offered Securities, except as otherwise provided herein;

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(f) any Taxes that are payable by any method other than withholding or deduction by the Foreign Successor or any paying agent from payments in respect of such Offered Securities;

(h) any combination of Section 2.2(a), (b), (c), (d), (e), (f) and (g).

Additional Amounts will not be payable to or for the account of any Holder or the holder of a beneficial interest in an Offered Security if such payment would not be subject to such withholding or deduction of Taxes but for the failure of a Holder or the holder of a beneficial interest in an Offered Security to make a valid declaration of non-residence or other similar claim for exemption or to provide a certificate declaring its non-residence, and if (x) the making of such declaration or claim or the provision of such certificate is required or imposed by statute, treaty, regulation, ruling or administrative practice of the relevant Taxing Authority as a precondition to an exemption from, or reduction in, the relevant Taxes, and (y) at least 90 days prior to the first payment date with respect to which the Foreign Successor shall apply this paragraph, the Foreign Successor shall have notified all Holders of Offered Securities in writing that they shall be required to provide such declaration or claim.

Additional Amounts also will not be payable to any Holder or the holder of a beneficial interest in an Offered Security that is a fiduciary, partnership, limited liability company or other fiscally transparent entity, or to such holder that is not the sole Holder or holder of such beneficial interest of such Offered Security, as the case may be. This exception, however, will apply only to the extent that a beneficiary or settlor with respect to the fiduciary, or a beneficial owner or member of the partnership, limited liability company or other fiscally transparent entity, would not have been entitled to the payment of an Additional Amount had the beneficiary, settlor, beneficial owner or member received directly its beneficial or distributive share of the payment.

Fifth Supplemental Indenture

At least 30 days prior to each date on which any payment under or with respect to the Offered Securities is due and payable, if a Foreign Successor will be obligated to pay Additional Amounts with respect to such payment, the Foreign Successor will deliver to the Trustee an Officer’s Certificate stating the fact that such Additional Amounts will be payable, the amounts so payable and will set forth such other information as is necessary to enable such Trustee to pay such Additional Amounts to holders of Offered Securities on the payment date.

The provisions of this Article II shall survive any termination or the discharge of this Indenture and shall apply mutatis mutandis to any jurisdiction in which the Foreign Successor (or any successor Person to the Foreign Successor if such successor is not organized under the laws of the United States or any state of the United States) is organized or is engaged in business for tax purposes or any political subdivisions or taxing authority or agency thereof or therein; provided, however, the date on which the Foreign Successor changes its jurisdiction in which it is organized or such Person becomes a successor to the Foreign Successor shall be substituted for the date on which the Offered Securities were issued.

ARTICLE III

MISCELLANEOUS

Section 3.1. Definitions .

Capitalized terms used but not defined in this Fifth Supplemental Indenture shall have the meanings ascribed thereto in the Base Indenture.

Section 3.2. Confirmation of Indenture .

The Base Indenture, as supplemented and amended by this Fifth Supplemental Indenture, is in all respects ratified and confirmed, and the Base Indenture, this Fifth Supplemental Indenture and all indentures supplemental thereto shall be read, taken and construed as one and the same instrument.

Fifth Supplemental Indenture

Section 3.3. Concerning the Trustee .

In carrying out the Trustee’s responsibilities hereunder, the Trustee shall have all of the rights, protections and immunities which it possesses under the Indenture. The recitals contained herein and in the Offered Securities, except the Trustee’s certificate of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to (i) the validity or sufficiency of this Fifth Supplemental Indenture or of the Offered Securities, (ii) the proper authorization hereof by the Company by action or otherwise, (iii) the due execution hereof by the Company or (iv) the consequences of any amendment herein provided for. The Trustee shall not be accountable for the use or application by the Company of the Offered Securities or the proceeds thereof.

Section 3.4. Governing Law .

This Fifth Supplemental Indenture and the Offered Securities shall be deemed to be a contract made under the internal laws of the State of New York without regard to conflicts of law principles, and for all purposes shall be construed in accordance with the laws of said State without regard to conflicts of law principles that would require the application of any other law. This Fifth Supplemental Indenture is subject to the provisions of the Trust Indenture Act that are required to be part of this Fifth Supplemental Indenture and shall, to the extent applicable, be governed by such provisions.

Section 3.5. Separability .

In case any one or more of the provisions contained in this Fifth Supplemental Indenture or in the Offered Securities of any series shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Fifth Supplemental Indenture or of such Offered Securities, but this Fifth Supplemental Indenture and such Offered Securities shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein or therein.

Section 3.6. Counterparts .

This Fifth Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. The exchange of copies of this Fifth Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Fifth Supplemental Indenture as to the parties hereto and may be used in lieu of the original Fifth Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

Section 3.7 No Benefit .

Nothing in this Fifth Supplemental Indenture, express or implied, shall give to any Person other than the parties hereto and their successors or assigns, and the Holders of the Offered Securities, any benefit or legal or equitable rights, remedy or claim under this Fifth Supplemental Indenture or the Base Indenture.

Fifth Supplemental Indenture

Section 3.8 Amendments and Supplemental Indentures .

This Fifth Supplemental Indenture and the Offered Securities are subject to the provisions regarding supplemental indentures and amendments set forth in Article IX of the Base Indenture.

Section 3.9 Legal, Valid and Binding Obligation .

The Company hereby represents and warrants that, assuming the due authorization, execution and delivery of this Fifth Supplemental Indenture by the Trustee, this Fifth Supplemental Indenture is its legal, valid and bind obligation enforceable against it in accordance with its terms.

[Signature Page Follows]

Fifth Supplemental Indenture

IN WITNESS WHEREOF, the parties hereto have caused this Fifth Supplemental Indenture to be duly executed all as of the day and year first above written.


THE ADT CORPORATION, as Issuer

By:		/s/ N. David Bleisch
		Name: N. David Bleisch
		Title: Senior Vice President, General Counsel and Corporate Secretary

WELLS FARGO BANK, NATIONAL ASSOCIATION as Trustee

By:		/s/ Stefan Victory
		Name: Stefan Victory
		Title: Vice President

[Signature Page to Fifth Supplemental Indenture]

EXHIBIT A

FORM OF 6.250% SENIOR NOTES DUE 2021

[Insert the Private Placement Legend and/or the Global Security legend, as applicable]

6.250% SENIOR NOTES DUE 2021


No. [ ]		$[ ]
CUSIP No. [ ]

THE ADT CORPORATION

promises to pay to [ ] or registered assigns, the principal sum of [ ] Dollars on October 15, 2021.

Interest Payment Dates: October 15 and April 15

Record Dates: October 1 and April 1

IN WITNESS WHEREOF, the Company has caused this instrument to be signed in accordance with Section 2.04 of the Indenture.

Date: [ ]

THE ADT CORPORATION

Name:

Title:

[If second signature is applicable]

Name:

Title:

A-1

CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.


WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee

By:
		Authorized Signatory

Dated:

A-2

THE ADT CORPORATION

6.250% Senior Notes due 2021

This security is one of a duly authorized series of debt securities of The ADT Corporation, a Delaware company (the “Company”), issued or to be issued in one or more series under and pursuant to an Indenture for the Company’s unsubordinated debt securities, dated as of July 5, 2012 (the “Base Indenture”), duly executed and delivered between the Company and Wells Fargo Bank, National Association (the “Trustee”), as supplemented by the Fifth Supplemental Indenture, dated as of October 1, 2013 (the “Fifth Supplemental Indenture”), between the Company and the Trustee. The Base Indenture as supplemented and amended by the Fifth Supplemental Indenture is referred to herein as the “Indenture.” By the terms of the Base Indenture, the debt securities issuable thereunder are issuable in series that may vary as to amount, date of maturity, rate of interest and in other respects as provided in the Base Indenture. This security is one of the series designated on the face hereof (individually, a “Security,” and collectively, the “Securities”), and reference is hereby made to the Indenture for a description of the rights, limitations of rights, obligations, duties and immunities of the Trustee, the Company and the holders of the Securities (the “Securityholders”). Capitalized terms used herein and not otherwise defined shall have the meanings given them in the Base Indenture or the Fifth Supplemental Indenture, as applicable.

1. Interest . The Company promises to pay interest on the principal amount of this Security at an annual rate of 6.250%. The Company will pay interest semi-annually on October 15 and April 15 of each year (each such day, an “Interest Payment Date”). If any Interest Payment Date, redemption date or maturity date of this Security is not a Business Day, then payment of interest or principal (and premium, if any) shall be made on the next succeeding Business Day with the same force and effect as if made on the date such payment was due, and no interest shall accrue for the period after such date to the date of such payment on the next succeeding Business Day. Interest on the Securities will accrue from the most recent date to which interest has been paid or duly provided for or, if no interest has been paid, from the date of issuance; provided that, if there is no existing Default in the payment of interest, and if this Security is authenticated between a regular record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; and provided, further, that the first Interest Payment Date shall be April 15, 2014. Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months.

A-3

4. Indenture . The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (“TIA”) as in effect on the date the Indenture is qualified. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and TIA for a statement of such terms. The Securities are unsecured general obligations of the Company and constitute the series designated on the face hereof as the “6.250% Senior Notes due 2021”, initially limited to $1,000,000,000 in aggregate principal amount.

The Company will furnish to any Securityholder upon written request and without charge a copy of the Base Indenture and the Fifth Supplemental Indenture. Requests may be made to: The ADT Corporation, 1501 Yamato Road, Boca Raton, FL 33431, Attention: Investor Relations.

5. Optional Redemption . The Securities will be subject to redemption at the option of the Company on any date prior to the maturity date, in whole or from time to time in part, in $1,000 increments ( provided that any remaining principal amount thereof shall be at least the minimum authorized denomination thereof), on written notice given to the Securityholders thereof not less than 30 days nor more than 90 days prior to the date fixed for redemption in such notice (the “Redemption Date”). The Securities will be redeemable at a redemption price equal to the greater of (i) 100% of the principal amount of such Securities to be redeemed and (ii) as determined by the Quotation Agent and delivered to the Trustee in writing, the sum of the present values of the remaining scheduled payments of principal and interest thereon due on any date after the Redemption Date (excluding the portion of interest that will be accrued and unpaid to and including the Redemption Date) discounted from their scheduled date of payment to the Redemption Date (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Redemption Treasury Rate plus 50 basis points, plus, in either the case of clause (i) or clause (ii), accrued and unpaid interest, if any, thereon to the Redemption Date. This Security is also subject to redemption to the extent provided in Article II of the Fifth Supplemental Indenture.

The Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Securities.

A-4

8. Persons Deemed Owners . The registered Securityholder may be treated as its owner for all purposes.

A-5

A-6

14. Discharge of Indenture . The Indenture contains certain provisions pertaining to defeasance, which provisions shall for all purposes have the same effect as if set forth herein.

15. Authentication . This Security shall not be valid until the Trustee signs the certificate of authentication attached to the other side of this Security.

16. Additional Amounts . The Company is obligated to pay Additional Amounts on this Security to the extent provided in Article II of the Fifth Supplemental Indenture.

18. Governing Law . The Base Indenture, the Fifth Supplemental Indenture and this Security shall be deemed to be a contract made under the internal laws of the State of New York, and for all purposes shall be construed in accordance with the laws of said State without regard to conflicts of laws principles that would require the application of any other law.

A-7

ASSIGNMENT FORM

To assign this Security, fill in the form below: (I) or (we) assign and transfer this Security to

(Insert assignee’s soc. sec. or tax I.D. no.)

(Print or type assignee’s name, address and zip code)

and irrevocably appoint agent to transfer this Security on the books of the Company. The agent may substitute another to act for him.

Date:

Your Signature:

(Sign exactly as your name appears on the face of this Security)

Signature Guarantee:

A-8

ELECTION FORM

TO BE COMPLETED ONLY IF THE HOLDER

ELECTS TO ACCEPT THE CHANGE OF CONTROL OFFER


Holder:

By:
		Name:
		Title:

A-9

Exhibit 4.7

EXECUTION VERSION

THE ADT CORPORATION,

as Issuer

THE NOTES GUARANTORS PARTY HERETO

AND

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee

SIXTH SUPPLEMENTAL INDENTURE

Dated as of April 8, 2016

TO INDENTURE

Dated as of July 5, 2012

THIS SIXTH SUPPLEMENTAL INDENTURE is dated as of April 8, 2016, among THE ADT CORPORATION, a Delaware corporation (the “ Company ”), the guarantors listed on Schedule I hereto (the “ Notes Guarantors ”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association (the “ Trustee ”).

RECITALS

A. The Company and the Trustee executed and delivered an Indenture, dated as of July 5, 2012 (as originally executed, the “ Base Indenture ” or, as it may be from time to time supplemented or amended by one or more supplemental indentures supplemental thereto, the “ Indenture ”), to provide for the issuance by the Company from time to time of unsubordinated debt securities evidencing its unsecured indebtedness.

B. The Company has issued (i) $750,000,000 of 2.250% Notes due 2017 pursuant to the First Supplemental Indenture, dated as of July 5, 2012, (ii) $1,000,000,000 of 3.500% Notes due 2022 (the “ 2022 Notes ”) pursuant to the Second Supplemental Indenture, dated as of July 5, 2012 (the “ Second Supplemental Indenture ”), (iii) $750,000,000 of 4.875% Notes due 2042 (the “ 2042 Notes ”) pursuant to the Third Supplemental Indenture, dated as of July 5, 2012 (the “ Third Supplemental Indenture ”), (iv) $700,000,000 of 4.125% Senior Notes due 2023 (the “ 2023 Notes ” and, together with the 2022 Notes and the 2042 Notes, the “ Secured Notes ”) pursuant to the Fourth Supplemental Indenture, dated as of January 14, 2013 (the “ Fourth Supplemental Indenture ” and, together with the Second Supplemental Indenture and the Third Supplemental Indenture, the “ Secured Notes Supplemental Indentures ”) and (v) $1,000,000,000 of 6.250% Senior Notes due 2021 pursuant to the Fifth Supplemental Indenture, dated as of October 1, 2013.

C. This Sixth Supplemental Indenture is being entered into in connection with the proposed Acquisition (as defined below) of the Company by Prime Security Services Borrower, LLC, a Delaware limited liability company (“ New Parent ”). On February 14, 2016, the Company entered into an Agreement and Plan of Merger (the “ Merger Agreement ”) with, inter alia , New Parent and Prime Security One MS, Inc., a Delaware corporation and a Wholly Owned Subsidiary of New Parent (“ Merger Sub ”), pursuant to which Merger Sub will be merged with and into the Company (the “ Merger ”), with the Company surviving the Merger as a Wholly Owned Subsidiary of New Parent.

D. The Company desires to enter into this Sixth Supplemental Indenture pursuant to Section 9.01 of the Indenture to (i) provide guarantees to each series of Secured Notes, (ii) secure the Securities of each series of Secured Notes and (iii) to make certain other changes permitted thereby.

E. Pursuant to Section 9.02 of the Indenture, the Company and the Trustee may amend the Indenture with the written consent of the Holders of not less than a majority in aggregate principal amount of the Securities of each series then Outstanding.

Sixth Supplemental Indenture

Acquisition (the “ Waiver ”) and (ii) make certain amendments to the Indenture, which are set forth in Article VI of this Sixth Supplemental Indenture (the “ Permitted Holder Amendments ”), upon the terms and subject to the conditions set forth in the Consent Solicitation Statement, dated April 1, 2016 (the “ Consent Solicitation Statement ”).

G. Pursuant to Section 8.01 of the Base Indenture, the Company fixed 5:00 p.m., New York City time, on March 31, 2016 as the record date (the “ Record Date ”) for the purpose of determining the Holders entitled to consent to the Waiver and the Permitted Holder Amendments.

H. The Holders of a majority in aggregate principal amount of each series of the Secured Notes outstanding as of the Record Date has delivered and not withdrawn written consents to the Waiver and the Permitted Holder Amendments.

I. The entry into this Sixth Supplemental Indenture by the parties hereto is in all respects authorized by the provisions of the Indenture.

NOW, THEREFORE, for and in consideration of the foregoing premises, the Company, the Notes Guarantors and the Trustee mutually covenant and agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Additional Defined Terms .

As used herein, the following defined terms shall have the following meanings:

“ 2022 Notes ” has the meaning set forth in the Recitals.

“ 2023 Notes ” has the meaning set forth in the Recitals.

“ 2042 Notes ” has the meaning set forth in the Recitals.

“ Acquisition ” means the consummation of the Merger.

“ Acquisition Closing Date ” means the date on which the Acquisition is consummated.

“ Additional First Lien Obligations ” means all Other First Lien Obligations other than the Secured Notes Obligations.

“ Authorized Representative ” means (i) in the case of any First Lien Credit Facility Obligations or the holders of any First Lien Credit Facility Obligations, the First Lien Collateral Agent, (ii) in the case of the Secured Notes Obligations or the holders of the Secured Note Obligations, the Trustee, and (iii) in the case of any series of Additional First Lien Obligations or the holders of such series of Additional First Lien Obligations that become subject to the First Lien Intercreditor Agreement, the authorized representative (and successor thereto) named for such series in the applicable joinder agreement to the First Lien Intercreditor Agreement.

Sixth Supplemental Indenture

“ Base Indenture ” has the meaning set forth in the Recitals.

“ Collateral ” means “Collateral” as defined in the credit agreement under the First Lien Credit Facility. For the avoidance of doubt, Collateral with respect to each series of Secured Notes does not include Specified Excluded Collateral with respect to such series of Secured Notes.

“ Collateral Agreement ” means the Collateral Agreement (First Lien), dated as of July 1, 2015 (as amended, supplemented, modified, extended, renewed, restated, refunded or refinanced from time to time), among New Parent, each Subsidiary of New Parent from time to time identified therein as a party and the First Lien Collateral Agent.

“ Consent and Acknowledgment ” means the Consent and Acknowledgment substantially in the form of Exhibit A-1 to the First Lien/Second Lien Intercreditor Agreement, dated as of the Acquisition Closing Date, to be executed by the Trustee, as Authorized Representative for the Secured Notes Obligations and the holders of the Secured Notes Obligations, and acknowledged by New Parent, the First Lien Collateral Agent and the Second Lien Collateral Agent.

“ Consent Solicitation Statement ” has the meaning set forth in the Recitals.

“ Credit Facilities ” means, collectively, the First Lien Credit Facility and the Second Lien Credit Facility.

“ Excluded Subsidiary ” means each Subsidiary of New Parent that would qualify as an “Excluded Subsidiary” (or any similar term) as defined in the Credit Facilities or any other indebtedness of New Parent from time to time.

“ First Lien Collateral Agent ” means Barclays Bank PLC, in its capacity as collateral agent for the lenders and other secured parties under the First Lien Credit Facility, the Secured Notes and the First Lien Security Documents, together with its successors and permitted assigns under the First Lien Security Documents exercising substantially the same rights and powers.

“ First Lien Credit Facility ” means the First Lien Credit Agreement, dated as of July 1, 2015, among Prime Security Services Holdings, LLC, New Parent, the lenders party thereto in their capacities as lenders thereunder and the First Lien Collateral Agent, as amended or restated on the Acquisition Closing Date, including any guarantees, collateral documents, instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals, restatements, refundings or refinancings thereof and any indentures or credit facilities or commercial paper facilities with banks or other institutional lenders or investors that replace, refund or refinance any part of the loans, notes, other credit facilities or commitments thereunder, including any such replacement, refunding or refinancing facility or indenture that increases the amount borrowable thereunder or alters the maturity thereof.

“ First Lien Credit Facility Obligations ” means “Obligations” as defined in the First Lien Credit Facility as in effect as of the Acquisition Closing Date (or any comparable term as defined in the First Lien Credit Facility as in effect from time to time).

Sixth Supplemental Indenture

“ First Lien Intercreditor Agreement ” means the intercreditor agreement, substantially in the form of Exhibit H to the First Lien Credit Facility (as in effect on the Acquisition Closing Date), among the First Lien Collateral Agent, the Trustee and the other parties from time to time party thereto, to be entered into on the Acquisition Closing Date (as amended, supplemented, modified, extended, renewed, restated, refunded or refinanced from time to time).

“ First Lien Obligations ” means, collectively, (a) all First Lien Credit Facility Obligations, (b) all Secured Notes Obligations and (c) all Other First Lien Obligations.

“ First Lien Security Documents ” means the Security Documents and any other agreement, document or instrument pursuant to which a lien is granted or purported to be granted securing First Lien Obligations or under which rights or remedies with respect to such liens are governed, in each case to the extent relating to the collateral securing the First Lien Obligations.

“ First Lien/Second Lien Intercreditor Agreement ” means (i) the First Lien/Second Lien Intercreditor Agreement, dated as of July 1, 2015, among the First Lien Collateral Agent and Credit Suisse AG, Cayman Islands Branch, as Second Lien Facility Agent and Applicable Second Lien Agent (each, as defined therein) (as amended, supplemented, modified, extended, renewed, restated, refunded or refinanced from time to time), and (ii) any other First Lien/Second Lien Intercreditor Agreement that is not materially less favorable to the Holders of the Secured Notes than the First Lien/Second Lien Intercreditor Agreement referred to in clause (i), as determined by the Company in good faith (as amended, supplemented, modified, extended, renewed, restated, refunded or refinanced from time to time).

“ First Priority After-Acquired Property ” means, with respect to any series of Secured Notes, any property of the Company or any Notes Guarantor that secures any First Lien Credit Facility Obligations that is not already subject to the lien under the Security Documents, other than Specified Excluded Collateral with respect to such series of Secured Notes.

“ First Priority Liens ” means the first priority Liens securing the First Lien Obligations.

“ Foreign Subsidiary ” means a Restricted Secured Notes Subsidiary not organized or existing under the laws of the United States of America or any state or territory thereof or the District of Columbia and any direct or indirect subsidiary of such Restricted Secured Notes Subsidiary.

“ Guaranteed Obligations ” has the meaning set forth in Section 2.1 hereof.

“ Indenture ” has the meaning set forth in the Recitals.

“ Intercreditor Agreements ” means, collectively, the First Lien/Second Lien Intercreditor Agreement and the First Lien Intercreditor Agreement.

“ Merger ” has the meaning set forth in the Recitals.

“ Merger Agreement ” has the meaning set forth in the Recitals.

“ Merger Sub ” has the meaning set forth in the Recitals.

Sixth Supplemental Indenture

“ New Parent ” has the meaning set forth in the Recitals.

“ Notes Guarantors ” has the meaning assigned to such term in the introductory paragraph.

“ Obligations ” means any principal, interest (including any interest and other monetary obligations accruing subsequent to the filing of a petition in bankruptcy, reorganization or similar proceeding at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable state, federal or foreign law), premium, penalties, fees, indemnifications, reimbursements (including reimbursement obligations with respect to letters of credit and bankers’ acceptances), damages and other liabilities, and guarantees of payment of such principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities, payable under the documentation governing any indebtedness.

“ Other First Lien Obligations ” shall have the meaning given such term by the Collateral Agreement.

“ Other First Lien Secured Party Consent ” means the Other First Lien Secured Party Consent substantially in the form of Exhibit III to the Collateral Agreement, dated as of the Acquisition Closing Date, to be executed by the Trustee, as Authorized Representative for the Secured Notes Obligations and the holders of the Secured Notes Obligations, and acknowledged by the First Lien Collateral Agent and New Parent.

“ Permitted Holder Amendments ” has the meaning set forth in the Recitals.

“ Record Date ” has the meaning set forth in the Recitals.

“ Regulation S-X Excluded Collateral ” has the meaning set forth in Section 3.4 hereof.

“ Reporting Entity ” has the meaning set forth in Section 5.1 hereof.

“ Restricted Secured Notes Subsidiary ” means, with respect to any Person, any Subsidiary of such Person other than an Unrestricted Subsidiary of such Person. Unless otherwise indicated in this Indenture, all references to Restricted Secured Notes Subsidiaries shall mean Restricted Secured Notes Subsidiaries of the New Parent.

“ Second Lien Collateral Agent ” means Credit Suisse AG, Cayman Islands Branch, in its capacity as administrative agent and collateral agent for the lenders and other secured parties under the Second Lien Credit Facility, together with its successors and permitted assigns.

“ Second Lien Credit Facility ” means the credit agreement entered into as of July 1, 2015, by and among the New Parent, the subsidiary borrowers party thereto (including, upon consummation of the Acquisition, the Company and its subsidiaries), the lenders party thereto in their capacities as lenders thereunder and the Second Lien Collateral Agent, including any guarantees, collateral documents, instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals, restatements, refundings or refinancings thereof and any indentures or credit facilities or commercial paper facilities with banks or other institutional lenders or investors that replace, refund or refinance any part of the

Sixth Supplemental Indenture

loans, notes, other credit facilities or commitments thereunder, including any such replacement, refunding or refinancing facility or indenture that increases the amount borrowable thereunder or alters the maturity thereof.

“ Second Priority Senior Secured Notes due 2023 ” means the $1,890,000,000 of Second Priority Senior Secured Notes due 2023 to be issued by New Parent and Prime Finance Inc.

“ Secured Notes ” has the meaning set forth in the Recitals.

“ Secured Notes Guarantee ” means the guarantee set forth in Article II hereof.

“ Secured Notes Obligations ” means Obligations in respect of the Secured Notes, each Secured Notes Guarantee and the Security Documents.

“ Secured Notes Supplemental Indenture ” has the meaning set forth in the Recitals.

“ Secured Party ” means, collectively, the Trustee and the Holders of each series of Secured Notes.

“ Security Documents ” means, collectively, the Intercreditor Agreements, the Collateral Agreement, the Other First Lien Secured Party Consent, other security agreements, pledge agreements and mortgages relating to the Collateral and instruments filed and recorded in appropriate jurisdictions to preserve and protect the liens on the Collateral (including, without limitation, financing statements under the Uniform Commercial Code of the relevant states) applicable to the Collateral.

“ Specified Excluded Collateral ” shall have the meaning given such term by the Collateral Agreement. For the avoidance of doubt, Specified Excluded Collateral with respect to each series of the Secured Notes includes the Regulation S-X Excluded Collateral and the Capital Stock of the New Parent.

“ Unrestricted Subsidiary ” means any Subsidiary of the New Parent that is designated as an “Unrestricted Subsidiary” (or any comparable term) under any other indebtedness of New Parent or any of its Subsidiaries.

“ Waiver ” has the meaning set forth in the Recitals.

“ Wholly Owned Restricted Secured Notes Subsidiary ” is any Wholly Owned Subsidiary that is a Restricted Secured Notes Subsidiary. Unless otherwise indicated in this Indenture, all references to Wholly Owned Restricted Secured Notes Subsidiaries shall mean Wholly Owned Restricted Secured Notes Subsidiaries of the New Parent.

“ Wholly Owned Subsidiary ” of any Person means a Subsidiary of such Person 100% of the outstanding Capital Stock or other ownership interests of which (other than directors’ qualifying shares or shares required to be held by Foreign Subsidiaries) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person.

Sixth Supplemental Indenture

ARTICLE II

SECURED NOTES GUARANTEE

Section 2.1 Guaranty of Guaranteed Obligations .

Subject to Article IV hereof, each Notes Guarantor guarantees, as of the Acquisition Closing Date, to the Trustee, jointly and severally with the other Notes Guarantors, as a primary obligor and not merely as a surety, the due and punctual payment and performance of the Secured Notes Obligations (such guarantee obligations of the Notes Guarantors, the “ Guaranteed Obligations ”) for the benefit of the Secured Parties. Each Notes Guarantor further agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon its guarantee notwithstanding any extension or renewal of any Guaranteed Obligation. Each Notes Guarantor waives presentment to, demand of payment from and protest to the Company of any of the Guaranteed Obligations, and also waives notice of acceptance of its guarantee and notice of protest for nonpayment.

Section 2.2 Guaranty of Payment .

Each Notes Guarantor further agrees that its guarantee hereunder constitutes a guarantee of payment when due (whether at stated maturity, by acceleration or otherwise) and not of collection, and waives any right to require that any resort be had by the Trustee or any other Secured Party to any security held for the payment of the Guaranteed Obligations or to any balance of any deposit account or credit on the books of the Trustee or any other Secured Party in favor of the Company or any other Person.

Section 2.3 No Limitations .

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existence, structure or ownership of the Company, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting the Company or its assets or any resulting release or discharge of any Guaranteed Obligation (other than the payment in full in cash in immediately available funds of all the Guaranteed Obligations); (viii) the existence of any claim, set-off or other rights that such Notes Guarantor may have at any time against the Company, the Trustee, or any other corporation or Person, whether in connection herewith or any unrelated transactions; provided that nothing herein will prevent the assertion of any such claim by separate suit or compulsory counterclaim; and (ix) any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by the Trustee that might otherwise constitute a defense to, or a legal or equitable discharge of, the Company or any other guarantor or surety (other than defense of payment or performance). Each Notes Guarantor expressly authorizes the Secured Parties (or the Trustee on behalf of the Secured Parties) to take and hold security for the payment and performance of the Guaranteed Obligations, to exchange, waive or release any or all such security (with or without consideration), to enforce or apply such security and direct the order and manner of any sale thereof in their sole discretion or to release or substitute any one or more other guarantors or obligors upon or in respect of the Guaranteed Obligations, all without affecting the obligations of any Notes Guarantor hereunder. To the fullest extent permitted by applicable law, each Notes Guarantor waives any defense based on or arising out of any defense of any other Notes Guarantor or the unenforceability of the Guaranteed Obligations or any part thereof from any cause, or the cessation from any cause of the liability of any other Notes Guarantor, other than the payment in full in cash in immediately available funds of all the Guaranteed Obligations. The Trustee and the other Secured Parties may, at their election, foreclose on any security held by one or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Guaranteed Obligations, make any other accommodation with the Company or exercise any other right or remedy available to them against the Company, without affecting or impairing in any way the liability of any Notes Guarantor hereunder except to the extent the Guaranteed Obligations have been paid in full in cash in immediately available funds. To the fullest extent permitted by applicable law, each Notes Guarantor waives any defense arising out of any such election even though such election operates, pursuant to applicable law, to impair or to extinguish any right of reimbursement or subrogation or other right or remedy of such Notes Guarantor against any other Notes Guarantor, as the case may be, or any security.

Section 2.4 Reinstatement .

Notwithstanding the provisions of Section 2.8 , each Notes Guarantor agrees that its Secured Notes Guarantee shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any Guaranteed Obligation is rescinded or must otherwise be restored or returned by the Trustee or any other Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Company, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Company or any substantial part of its property, or otherwise, all as though such payment had not been made.

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Section 2.5 Agreement To Pay; Subrogation .

In furtherance of the foregoing and not in limitation of any other right that the Trustee or any other Secured Party has at law or in equity against any Notes Guarantor by virtue hereof, upon the failure of the Company to pay any Guaranteed Obligation when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, each Notes Guarantor hereby promises to and will forthwith pay, or cause to be paid, to the Trustee for distribution to the applicable Secured Party in cash in immediately available funds the amount of such unpaid Guaranteed Obligation. Upon payment by any Notes Guarantor of any sums to the First Lien Collateral Agent as provided above, all rights of such Notes Guarantor against the Company arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all respects be subject to Section 7.06 of the Indenture.

Section 2.6 Information .

Each Notes Guarantor assumes all responsibility for being and keeping itself informed of the Company’s financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature, scope and extent of the risks that such Notes Guarantor assumes and incurs hereunder, and agrees that neither the Trustee nor any other Secured Party will have any duty to advise such Notes Guarantor of information known to it or any of them regarding such circumstances or risks.

Section 2.7 Maximum Liability .

Each Notes Guarantor, and by its acceptance of each Secured Notes Guarantee, the Trustee and each Secured Party hereby confirms that it is the intention of all such Persons that its Secured Notes Guarantee and its Guaranteed Obligations not constitute a fraudulent transfer or conveyance for purposes of the U.S. Bankruptcy Code or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal or state law to the extent applicable to this Secured Notes Guarantee and the Guaranteed Obligations of each Notes Guarantor hereunder. To effectuate the foregoing intention, the First Lien Collateral Agent, the Secured Parties and the Notes Guarantors hereby irrevocably agree that the Guaranteed Obligations of each Notes Guarantor under this Secured Notes Guarantee at any time shall be limited to the maximum amount as will result in the Guaranteed Obligations of such Notes Guarantor under this Secured Notes Guarantee not constituting a fraudulent transfer or conveyance.

Section 2.8 Termination and Release .

(1) A Notes Guarantor shall automatically be released from its obligations hereunder in accordance with Article IV hereof.

(2) A Secured Notes Guarantee as to any Notes Guarantor shall terminate and be of no further force or effect and such Notes Guarantor shall be deemed to be released from all obligations under this Article II upon:

(a) the sale, disposition, exchange or other transfer (including through merger, consolidation, amalgamation or otherwise) of the Capital Stock (including any sale,

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disposition or other transfer following which the applicable Notes Guarantor is no longer a Wholly Owned Restricted Secured Notes Subsidiary) of the applicable Notes Guarantor if such sale, disposition, exchange or other transfer is made in a manner not in violation of the Indenture;

(b) such Notes Guarantor becoming an Unrestricted Subsidiary or an Excluded Subsidiary;

(c) the release or discharge of the guarantee by such Notes Guarantor of the First Lien Credit Facility or other indebtedness (including the Second Lien Credit Facility) or the guarantee of any other indebtedness which resulted in the obligation to guarantee the Secured Notes;

(d) the Company’s exercise of its legal defeasance option or covenant defeasance option with respect to an applicable series of Secured Notes pursuant to the Indenture or the Company’s discharge of its obligations with respect to an applicable series of Secured Notes pursuant to the Indenture; and

(e) as described under Article IX of the Indenture.

(3) A Secured Notes Guarantee as to any Subsidiary of New Parent will be automatically released upon the applicable Subsidiary ceasing to be a Subsidiary of New Parent as a result of any foreclosure of any pledge or security interest securing the Credit Facilities or other exercise of remedies in respect thereof.

In connection with any termination or release pursuant to this Section 2.8 , the Trustee shall execute and deliver to the Company all documents that the Company shall reasonably request to evidence such termination or release. Any execution and delivery of documents pursuant to this Section 2.8 shall be made without recourse to or warranty by the Trustee. The Company agrees to pay all reasonable and documented out-of-pocket expenses incurred by the Trustee in connection with the execution and delivery of such documents.

Section 2.9 Additional Notes Guarantors .

The Company shall cause each Wholly Owned Restricted Secured Notes Subsidiary that is not an Excluded Subsidiary and that guarantees or becomes a borrower under the Credit Facilities or that guarantees any other indebtedness of the Company or any of the Notes Guarantors to execute and deliver to the Trustee (i) a supplemental indenture substantially in the form of Exhibit A hereto pursuant to which such Subsidiary will guarantee payment of the Secured Notes and (ii) joinders to or new Security Documents and take all actions required by the Security Documents to perfect the liens created thereunder.

Section 2.10 Form of Guarantee .

The form of Secured Notes Guarantee shall be set forth on the applicable series of Securities substantially as follows:

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SECURED NOTES GUARANTEE

For value received, each Notes Guarantor hereby guarantees, jointly and severally with the other Notes Guarantors, as a primary obligor and not merely as a surety, the due and punctual payment and performance (i) to the holder of this Security the payment of principal of, premium, if any, and interest on, the Security upon which this Secured Notes Guarantee is set forth in the amounts and at the time when due and payable whether by declaration thereof, or otherwise, and interest on the overdue principal and interest, if any, of such Security, if lawful, to the holder of such Security and the Trustee on behalf of the Holders and (ii) all amounts owed to the Trustee under the Indenture, in each case in accordance with and subject to the terms and limitations of such Security, the Indenture and Articles II and IV of the Sixth Supplemental Indenture. This Secured Notes Guarantee (i) will not become effective until the Trustee or Authenticating Agent duly executes the certificate of authentication on this Security and (ii) shall be immediately and automatically released and/or terminated, with no further effect, if, (a) during the period commencing 60 days prior to the first public notice of the Company’s intention to effect the Merger and ending 60 days after the consummation of the Acquisition, a “Rating Event” is deemed to occur or (b) within 61 days after the consummation of the Acquisition, (1) a “Change of Control Triggering Event” is deemed to occur or (2) it is publicly announced that the rating of such series of Secured Notes is under consideration for a possible downgrade by any of the Rating Agencies. This Secured Notes Guarantee shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of law principles thereof.

Dated:


[NOTES GUARANTORS]



By:
		Name:
		Title:

ARTICLE III

COLLATERAL

Section 3.1 Security Documents .

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amendments to UCC financing statements that may be necessary to continue the effectiveness of such UCC financing statements) and all other actions as are required by the Security Documents to maintain (at the sole cost and expense of the Company and the Notes Guarantors) the security interest created by the Security Documents in the Collateral (other than with respect to any Collateral the security interest in which is not required to be perfected under the Security Documents) as a perfected security interest.

Section 3.2 First Lien Collateral Agent .

(1) The First Lien Collateral Agent shall have all the rights and protections provided in the Security Documents and the First Lien Credit Facility.

(2) Subject to the provisions of Section 7.01 of the Indenture, neither the Trustee nor the First Lien Collateral Agent nor any of their respective officers, directors, employees, attorneys or agents will be responsible or liable for the existence, genuineness, value or protection of any Collateral, for the legality, enforceability, effectiveness or sufficiency of the Security Documents, for the obtaining or maintaining of insurance on any Collateral, for the creation, perfection, priority, sufficiency or protection of any First Priority Lien, or for any defect or deficiency as to any such matters. Beyond the exercise of reasonable care in the custody thereof, neither the Trustee nor the First Lien Collateral Agent shall have any duty as to any Collateral in its possession or control or in the possession or control of any agent or bailee or any income thereon or as to preservation of rights against prior parties or any other rights pertaining thereto and neither the Trustee nor the First Lien Collateral Agent shall be responsible for filing any financing or continuation statements or recording any documents or instruments in any public office at any time or times or otherwise perfecting or maintaining the perfection of any security interest in the Collateral. The Trustee and the First Lien Collateral Agent shall be deemed to have exercised reasonable care in the custody of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which it accords its own property and shall not be liable or responsible for any loss or diminution in the value of any of the Collateral, by reason of the act or omission of any carrier, forwarding agency or other agent or bailee selected by the Trustee or the First Lien Collateral Agent in good faith.

(3) Subject to the Security Documents and the Intercreditor Agreements, (i) the Trustee shall direct the First Lien Collateral Agent and (ii) except as directed by the Trustee as required or permitted by the Indenture and any other representatives or pursuant to the Security Documents, in each case, subject to the Intercreditor Agreements, the Holders acknowledge that the First Lien Collateral Agent will not be obligated:

(a) to act upon directions purported to be delivered to it by any other Person;

(b) to foreclose upon or otherwise enforce any First Priority Lien; or

(c) to take any other action whatsoever with regard to any or all of the First Priority Liens, Security Documents or Collateral.

(4) The Holders agree that the First Lien Collateral Agent shall be entitled to the rights, privileges, protections, immunities, indemnities and benefits provided to the First Lien

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Collateral Agent by the Security Documents and the First Lien Credit Facility. Furthermore, each Holder consents to the terms of and authorizes and directs the Trustee (in each of its capacities) and the First Lien Collateral Agent to enter into and perform the Intercreditor Agreements and Security Documents in each of its capacities thereunder.

(5) If the Company (i) incurs First Lien Obligations at any time when the First Lien Intercreditor Agreement is not in effect or at any time when indebtedness constituting First Lien Obligations entitled to the benefit of an existing intercreditor agreement is concurrently retired and (ii) directs the Trustee to deliver to the First Lien Collateral Agent an Officer’s Certificate so stating and requesting the First Lien Collateral Agent to enter into an intercreditor agreement (on substantially the same terms as the First Lien Intercreditor Agreement) in favor of a designated agent or representative for the holders of the First Lien Obligations so incurred, the Holders acknowledge that the First Lien Collateral Agent is hereby authorized and directed to enter into such intercreditor agreement, bind the Holders on the terms set forth therein and perform and observe its obligations thereunder.

Section 3.3 Actions to Be Taken .

(1) The Trustee is authorized and directed to execute and deliver on the Acquisition Closing Date, and authorized and empowered to bind the Holders of the Secured Notes under, the following documents to which it is a party and, subject to the Intercreditor Agreements, to perform its obligations and exercise its rights and powers thereunder:

(a) the Other First Lien Secured Party Consent;

(b) the First Lien Intercreditor Agreement; and

(2) Subject to the Intercreditor Agreements, the Trustee is authorized and empowered to receive for the benefit of the Holders any funds collected or distributed under the Security Documents to which the Trustee is a party and to make further distributions of such funds to the Holders according to Section 6.03 of the Indenture.

(3) Subject to the provisions of Sections 7.01 and 7.02 of the Indenture, the Intercreditor Agreements and the Security Documents, the Trustee may, in its sole discretion and without the consent of the Holders, direct, on behalf of the Holders, the First Lien Collateral Agent to take all actions it deems necessary or appropriate in order to:

(a) foreclose upon or otherwise enforce any or all of the First Priority Liens;

(b) enforce any of the terms of the Security Documents to which the First Lien Collateral Agent or Trustee is a party; or

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Subject to the Intercreditor Agreements, the Trustee is authorized and empowered to institute and maintain, or direct the First Lien Collateral Agent to institute and maintain, such suits and proceedings as it may deem expedient to protect or enforce the First Priority Liens or the Security Documents to which the First Lien Collateral Agent or Trustee is a party or to prevent any impairment of Collateral by any acts that may be unlawful or in violation of the Security Documents to which the First Lien Collateral Agent or Trustee is a party or this Sixth Supplemental Indenture, and such suits and proceedings as the Trustee or First Lien Collateral Agent may deem expedient to preserve or protect its interests and the interests of the Holders in the Collateral, including power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the security interest hereunder or be prejudicial to the interests of Holders, the Trustee or the First Lien Collateral Agent.

Section 3.4 Release of Collateral .

(1) Subject to the terms of the applicable Secured Notes Supplemental Indenture, Collateral may be released from the lien and security interest created by the Security Documents to secure the Secured Notes Obligations at any time or from time to time in accordance with the provisions of the First Lien Intercreditor Agreement or as provided hereby or in the Security Documents. The applicable assets included in the Collateral shall be automatically released from the liens securing each series of Secured Notes, and the applicable Notes Guarantor shall be automatically released from its obligations under this Sixth Supplemental Indenture and the Security Documents, under any one or more of the following circumstances:

(a) in respect of the property and assets of a Notes Guarantor, upon the consummation of any transaction permitted by the Indenture as a result of which such Notes Guarantor ceases to be a Subsidiary of New Parent or otherwise ceases to be a Pledgor (as defined in the Collateral Agreement), and such Notes Guarantor shall be automatically released from its obligations hereunder and under the Security Documents, all without delivery of any instrument or performance of any act by any party, and all rights to the Collateral shall revert to such Notes Guarantor;

(b) upon any sale or other transfer by the Company or any Notes Guarantor of any Collateral that is permitted under the Indenture to any Person that is not the Company or a Notes Guarantor (including in connection with a condemnation or casualty event), or upon the effectiveness of any written consent to the release of the security interest granted by the Collateral Agreement in any Collateral pursuant to the Indenture, the security interest in such Collateral securing the Secured Notes shall be automatically released, all without delivery of any instrument or performance of any act by any party;

(c) to enable the Company or any Notes Guarantor to consummate the disposition (other than any disposition to the Company or another Notes Guarantor) of such property or assets and to enable any release described in Section 5.15 of the Collateral Agreement;

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(d) in respect of the property and assets of a Notes Guarantor, upon such Notes Guarantor becoming an Unrestricted Subsidiary or an Excluded Subsidiary, and such Notes Guarantor shall be automatically released from its obligations hereunder and under the Security Documents;

(e) in respect of the property and assets of a Notes Guarantor, upon the release or discharge of the pledge granted by such Notes Guarantor to secure the First Lien Credit Facility Obligations or any other indebtedness or the guarantee of any other indebtedness which resulted in the obligation to become a Notes Guarantor with respect to the Secured Notes;

(f) as described under Article IX of the Indenture; and

(g) in accordance with Article IV hereof.

In addition, the security interests granted pursuant to the Security Documents securing the Secured Notes Obligations with respect to each series of Secured Notes shall automatically terminate and/or be released all without delivery of any instrument or performance of any act by any party, and all rights to the Collateral shall revert to the applicable Pledgors as of the date upon (i) all Obligations under such series of Secured Notes and the Indenture (other than contingent or unliquidated obligations or liabilities not then due) have been paid in full in cash or immediately available funds or (ii) a legal defeasance or covenant defeasance or discharge under Article XI of the Indenture.

(2) Notwithstanding anything herein to the contrary, at any time when an Event of Default has occurred and is continuing and the maturity of any series of Secured Notes has been accelerated (whether by declaration or otherwise) and the Trustee has delivered a notice of acceleration to the First Lien Collateral Agent, no release of Collateral pursuant to the provisions of this Sixth Supplemental Indenture or the Security Documents will be effective as against the Holders of such series of Secured Notes, except as otherwise provided in the First Lien Intercreditor Agreement.

(3) To the extent necessary and for so long as required for any Subsidiary of the New Parent not to be subject to any requirement pursuant to Rule 3-16 of Regulation S-X under the Securities Act to file separate financial statements with the SEC (or any other governmental agency), the Capital Stock of such Subsidiary of the New Parent (the “ Regulation S-X Excluded Collateral ”) shall not be included in the Collateral with respect to the respective Secured Notes so affected and shall not be subject to the liens securing such Secured Notes and the Secured Notes Obligations in accordance with and only to the extent provided in the Security Documents.

Section 3.5 Powers Exercisable by Receiver or Trustee.

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officers thereof required by the provisions of this Article III ; and if the Trustee or the First Lien Collateral Agent shall be in the possession of the Collateral under any provision of this Sixth Supplemental Indenture, then such powers may be exercised by the Trustee or the First Lien Collateral Agent, as the case may be.

Section 3.6 Release upon Termination of the Company’s Obligations .

In the event that (i) the Company delivers to the Trustee, in form and substance acceptable to it, an Officer’s Certificate and Opinion of Counsel certifying that all the Obligations under any series of Secured Notes have been satisfied and discharged by the payment in full of the Company’s obligations under such series of Secured Notes, and all such Obligations have been so satisfied, or (ii) a discharge, legal defeasance or covenant defeasance occurs under Article XI of the Indenture with respect to any series of Secured Notes, the Trustee shall deliver to the Company and the First Lien Collateral Agent a notice stating that the Trustee, on behalf of the Holders of the relevant series of Secured Notes, disclaims and gives up any and all rights it has in or to the Collateral with respect to such series of Secured Notes, and any rights it has under such series of Secured Notes, and upon receipt by the First Lien Collateral Agent of such notice, the First Lien Collateral Agent shall be deemed not to hold a lien in the Collateral with respect to such series of Secured Notes on behalf of the Trustee and shall (or shall direct the First Lien Collateral Agent to) do or cause to be done all acts reasonably necessary to release such lien, with respect to such series of Secured Notes, as soon as is reasonably practicable.

Section 3.7 General Authority of the First Lien Collateral Agent .

(1) By acceptance of the benefits of this Sixth Supplemental Indenture and the Security Documents, each Secured Party (whether or not a signatory hereto) shall be deemed irrevocably (i) to consent to the appointment of the First Lien Collateral Agent as its agent under the Security Documents, (ii) to confirm that the First Lien Collateral Agent shall have the authority to act as the exclusive agent of such Secured Party for the enforcement of any provision of any Security Document against any Pledgor, the exercise of remedies thereunder and the giving or withholding of any consent or approval thereunder relating to any Collateral or any Pledgor’s obligations with respect thereto, (iii) to agree that it shall not take any action to enforce any provisions of any Security Document against any Pledgor, to exercise any remedy thereunder or to give any consents or approvals thereunder except as expressly provided in this Sixth Supplemental Indenture or any Security Document and (iv) to agree to be bound by the terms of this Sixth Supplemental Indenture and the Security Documents and the Intercreditor Agreements.

(2) As between the First Lien Collateral Agent and the Pledgors, the First Lien Collateral Agent shall be conclusively presumed to be acting as agent for the Secured Parties with full and valid authority so to act or refrain from acting, and no Pledgor shall be under any obligation, or entitlement, to make any inquiry respecting such authority.

Section 3.8 Further Assurances

Upon the acquisition by the Company or any Secured Notes Guarantor of any First Priority After-Acquired Property, the Company or such Secured Notes Guarantor shall execute

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and deliver such mortgages, deeds of trust, deeds to secure debt, security instruments, financing statements and certificates or such other documentation substantially similar to the documentation delivered to secure First Lien Credit Facility Obligations, if any, as shall be reasonably necessary to vest in the First Lien Collateral Agent, for the benefit of the Holders of each series of Secured Notes, a perfected security interest or lien in such First Priority After-Acquired Property and to have such First Priority After-Acquired Property (but subject to certain limitations, if applicable, including as described in the Security Documents and Articles III and IV hereof) added to the Collateral, and thereupon all provisions of this Indenture relating to the Collateral shall be deemed to relate to such First Priority After-Acquired Property to the same extent and with the same force and effect.

ARTICLE IV

Section 4.1 Automatic Termination of Guarantees and Collateral .

Except to the extent that a Waiver is obtained with respect to a series of Secured Notes, each of (i) the Secured Notes Guarantee contemplated by Article II hereof, (ii) the security interests contemplated by Article III hereof (except such portion of such security interests with respect to a Principal Property (as defined under the applicable Secured Notes Supplemental Indenture) or any shares of stock of or indebtedness issued by any Restricted Secured Notes Subsidiary as required to be maintained pursuant to the applicable Secured Notes Supplemental Indenture), (iii) the reporting covenant contemplated by Article V hereof and (iv) Section 3.8 hereof, shall be immediately and automatically released and/or terminated, with no further effect, with respect to such series of Secured Notes if, (a) during the period commencing 60 days prior to the first public notice of the Company’s intention to effect the Merger and ending 60 days after the consummation of the Acquisition, a Rating Event (as defined under the applicable Secured Notes Supplemental Indenture) occurs or (b) within 61 days after the consummation of the Acquisition, (1) a Change of Control Triggering Event (as defined under the applicable Secured Notes Supplemental Indenture) occurs or (2) it is publicly announced that the rating of such series of Secured Notes is under consideration for a possible downgrade by any of the Rating Agencies (as defined under the applicable Secured Notes Supplemental Indenture). Following any such release with respect to any series of Secured Notes, all property and assets of the Company and each Notes Guarantor not required to be pledged for the benefit of such series of Secured Notes pursuant to the applicable Secured Notes Supplemental Indenture shall constitute “Specified Excluded Collateral” with respect to such series of Secured Notes.

ARTICLE V

REPORTING COVENANT

Section 5.1 Reports .

(a) Subject to Article IV hereof, so long as any Secured Notes of a series are outstanding, the Company will provide to the Trustee and, upon request, to beneficial owners of such Secured Notes a copy of all of the information and reports referred to below:

(i) within 15 days after the time period specified in the SEC’s rules and regulations for non-accelerated filers, annual reports of the Reporting Entity (as defined below) for such fiscal year containing the information that would have been required to be contained in an annual report on Form 10-K (or any successor or comparable form) if the Reporting Entity had been a reporting company under the Exchange Act, except to the extent permitted to be excluded by the SEC;

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(ii) within 15 days after the time period specified in the SEC’s rules and regulations for non-accelerated filers, quarterly reports of the Reporting Entity for such fiscal quarter containing the information that would have been required to be contained in a quarterly report on Form 10-Q (or any successor or comparable form) if the Reporting Entity had been a reporting company under the Exchange Act, except to the extent permitted to be excluded by the SEC; and

(iii) within 15 days after the time period specified in the SEC’s rules and regulations for filing current reports on Form 8-K, current reports containing substantially all of the information that would be required to be filed in a Current Report on Form 8-K under the Exchange Act on the operative date of the Sixth Supplemental Indenture pursuant to Sections 1, 2 and 4, Items 5.01, 5.02(a)–(d) (other than compensation information), 5.03(b) and Item 9.01 (only to the extent relating to any of the foregoing) of Form 8-K if the Reporting Entity had been a reporting company under the Exchange Act; provided , however , that no such current reports will be required to be furnished if the Company or any direct or indirect parent of the Company determines in its good faith judgment that such event is not material to Holders or the business, assets, operations, financial position or prospects of the Company and its Affiliates, taken as a whole.

If at any time the Company or any direct or indirect parent of the Company has made a good faith determination to file a registration statement with the SEC with respect to an initial public offering of such Person’s Capital Stock, the Company will not be required to disclose any information or take any actions that, in the good faith view of the Company, would violate the securities laws or the SEC’s “gun jumping” rules or otherwise have an adverse effect on such initial public offering.

Notwithstanding the foregoing, (1) the Company (and the applicable Reporting Entity) will not be required to furnish any information, certificates or reports that would otherwise be required by (A) Section 302 or Section 404 of the Sarbanes-Oxley Act of 2002, or related Items 307 or 308 of Regulation S-K, or (B) Item 10(e) of Regulation S-K promulgated by the SEC with respect to any non-generally accepted accounting principles financial measures contained therein, (2) such reports will not be required to contain financial information required by Rule 3-09, Rule 3-10 or Rule 3-16 of Regulation S-X or include any exhibits or certifications required by Form 10-K or Form 10-Q (or any such successor or comparable forms) or related rules under Regulation S-K, and (3) such reports shall be subject to exceptions and exclusions consistent with the presentation of financial and other information in the preliminary offering memorandum for the Second Priority Senior Secured Notes due 2023 and shall not be required to present compensation or beneficial ownership information.

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The financial statements, information and other documents required to be provided as described above, may be those of (1) the Company or (2) any direct or indirect parent of the Company (any such entity described in clause (1) or (2), a “ Reporting Entity ”), so long as, in the case of (2), either (A) such direct or indirect parent of the Company will not conduct, transact or otherwise engage, or commit to conduct, transact or otherwise engage, in any business or operations other than its direct or indirect ownership of all of the equity interests in, and its management of the Company or (B) such direct or indirect parent of the Company is or becomes a guarantor of the applicable series of Secured Notes; provided that, if the financial information so furnished relates to such direct or indirect parent of the Company pursuant to (2)(A) above, the same is accompanied by a reasonably detailed description of the quantitative differences between the information relating to such parent, on the one hand, and the information relating to the Company and the guarantors of the Secured Notes on a standalone but consolidated basis, on the other hand.

In addition to providing such information to the Trustee, the Company will make available to the Holders, prospective investors and securities analysts the information required to be provided pursuant to clauses (i), (ii) or (iii) of this Section, by posting such information to the website of the Company (or the website of any direct or indirect parent of the Company) or on IntraLinks or any comparable online data system or website.

(b) The Reporting Entity will also hold quarterly conference calls, beginning with the first full fiscal quarter ending after the operative date of the Sixth Supplemental Indenture, for all Holders and securities analysts to discuss such financial information no later than 10 business days after the distribution of such information required by clauses (a)(i) and (a)(ii) of this Section 5.1, and prior to the date of each such conference call, the Reporting Entity will announce the time and date of such conference call and either include all information necessary to access the call in such announcement or inform Holders of each series of Secured Notes, prospective investors and securities analysts how they can obtain such information, including, without limitation, the applicable password or other login information (if applicable).

(c) Notwithstanding the foregoing, the Company will be deemed to have furnished such reports referred to above to the Trustee and Holders if the Company or a Reporting Entity has filed such reports with the SEC via the EDGAR filing system (or any successor system) and such reports are publicly available. In addition, the requirements of this covenant shall be deemed satisfied by the posting of reports that would be required to be provided to the Holders on the Company’s website (or the website of any direct or indirect parent of the Company). Furthermore, (1) the time requirements set forth in clause (ii) of the first paragraph of this covenant shall be satisfied if the quarterly reports for the fiscal quarters ending March 31, 2016, June 30, 2016 and September 30, 2016 are filed within 75 days after the end of such fiscal quarter and (2) the time requirements set forth in clause (i) of the first paragraph of this covenant shall be satisfied if the annual report for the fiscal year ending December 31, 2016 is filed within 120 days after the end of such fiscal year.

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ARTICLE VI

PERMITTED HOLDER AMENDMENTS

Section 6.1 Amendments .

Each Secured Notes Supplemental Indenture is hereby amended as follows:

(a) [Reserved.]

(b) The following definition of “Management Group” is hereby added to Section 1.2 of each Secured Notes Supplemental Indenture:

“ Management Group ” means the group consisting of the directors, executive officers and other management personnel of the Company or any direct or indirect parent of the Company, as the case may be, on the Merger Closing Date together with (1) any new directors whose election by such boards of directors or whose nomination for election by the shareholders of the Company or any direct or indirect parent of the Company, as applicable, was approved by a vote of a majority of the directors of the Company or any direct or indirect parent of the Company, as applicable, then still in office who were either directors on the Merger Closing Date or whose election or nomination was previously so approved and (2) executive officers and other management personnel of the Company or any direct or indirect parent of the Company, as applicable, hired at a time when the directors on the Merger Closing Date together with the directors so approved constituted a majority of the directors of the Company or any direct or indirect parent of the Company, as applicable.

(c) The following definition of “Merger Closing Date” is hereby added to Section 1.2 of each Secured Notes Supplemental Indenture:

“ Merger Closing Date ” means the closing date under the Agreement and Plan of Merger, by and among the Company, Parent, Prime Security One MS, Inc., a Delaware corporation and a Wholly Owned Subsidiary of Parent (“ Merger Sub ”), and solely for the purposes of Article IX thereof, Prime Security Services Parent, Inc., a Delaware corporation and Prime Security Services TopCo Parent, L.P., a Delaware limited partnership, pursuant to which Merger Sub merged with and into the Company (the “ Merger ”) with the Company surviving the Merger as a Wholly Owned Subsidiary of Parent.

(d) The following definition of “Parent” is hereby added to Section 1.2 of each Secured Notes Supplemental Indenture:

“ Parent ” means Prime Security Services Borrower, LLC, a Delaware limited liability company.

(e) The following definition of “Permitted Holders” is hereby added to Section 1.2 of each Secured Notes Supplemental Indenture:

Sixth Supplemental Indenture

the Voting Stock of the Company, and of which no other Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), other than any of the other Permitted Holders, holds more than 50% of the total voting power of the Voting Stock thereof and (iv) any group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision) the members of which include any of the Permitted Holders specified in clauses (i), (ii) and (iii) above and that, directly or indirectly, hold or acquire beneficial ownership of the Voting Stock of the Company (a “ Permitted Holder Group ”), so long as (1) each member of the Permitted Holder Group has voting rights proportional to the percentage of ownership interests held or acquired by such member (or more favorable voting rights, in the case of any Permitted Holder) and (2) no Person or other “group” (other than Permitted Holders specified in clauses (i), (ii) and (iii) above) beneficially owns more than 50% on a fully diluted basis of the Voting Stock held by the Permitted Holder Group. Any Person or group whose acquisition of beneficial ownership constitutes a Change of Control in respect of which a Change of Control Offer (as defined under the applicable Secured Notes Supplemental Indenture) is made in accordance with the requirements of the Indenture will thereafter, together with its Affiliates, constitute an additional Permitted Holder.

(f) The following definition of “Sponsors” is hereby added to Section 1.2 of each Secured Notes Supplemental Indenture:

“ Sponsors ” means (i) one or more investment funds affiliated with Apollo Global Management, LLC and any of their respective Affiliates, including Parent and each of its Affiliates and Subsidiaries but excluding other portfolio companies (collectively, the “ Apollo Sponsors ”), and (ii) any Person that forms a group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision) with the Apollo Sponsors; provided that any Apollo Sponsor (x) owns a majority of the voting power and (y) controls a majority of the Board of Directors of the Company.

(g) The definition of “Change of Control” in Section 1.2 of each Secured Notes Supplemental Indenture is hereby amended and restated in its entirety to read as follows:

“ Change of Control ” means the occurrence of either of the following: (1) the sale, lease or transfer, in one or a series of related transactions, of all or substantially all the assets of the Company and its Subsidiaries, taken as a whole, to a Person other than any of the Permitted Holders; or (2) the Company becomes aware (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) of the acquisition by any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act), other than any of the Permitted Holders, in a single transaction or in a related series of transactions, by way of merger, consolidation, amalgamation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision), of more than 50% of the total voting power of the Voting Stock of the Company.

Sixth Supplemental Indenture

(h) Any definitions used exclusively in the provisions of the Indenture, the Secured Notes Supplemental Indentures, or the Secured Notes that are deleted pursuant to this Article VI , and any definitions used exclusively within such definitions, are hereby deleted in their entirety from the Indenture, the applicable Secured Notes Supplemental Indentures and the Secured Notes, and all references in the Indenture, the applicable Secured Notes Supplemental Indentures and the Secured Notes to paragraphs, Sections, Articles or other terms or provisions of the Indenture or the applicable Secured Notes Supplemental Indentures deleted pursuant to this Article VI(h) or that have been otherwise deleted pursuant to this Sixth Supplemental Indenture are hereby deleted in their entirety.

ARTICLE VII

WAIVER

Section 7.1 Waiver .

The Trustee has received validly delivered and unrevoked consents from Holders of at least a majority in aggregate principal amount of each series of Secured Notes outstanding as of the Record Date to the Waiver, which waives the requirement for the Company to comply with Section 1.3(3) of each of the Secured Notes Supplemental Indentures in connection with the Acquisition.

Section 7.2 Effect of Waiver .

Upon Section 7.1 above and the Waiver becoming operative, the Company shall no longer be required to comply with the requirements and obligations pursuant to Section 1.3(3) of each of the Secured Notes Supplemental Indentures in connection with the Acquisition, including, but not limited to, the requirement for the Company to make a Change of Control Offer (as defined under the applicable Secured Notes Supplemental Indenture) in connection with the Acquisition, and each Holder and every subsequent Holder of each series of Secured Notes shall be bound by the Waiver, even if notation of the Waiver is not made on the Secured Notes.

ARTICLE VIII

MISCELLANEOUS

Section 8.1 Effect of Sixth Supplemental Indenture .

This Sixth Supplemental Indenture shall become effective upon its execution by the parties hereto. Notwithstanding the foregoing, Articles I , II , III , IV , V , VI and VII of this Sixth Supplemental Indenture shall not become operative, and shall have no force and effect, until (i) the Acquisition Closing Date and (ii) in the case of the amendments set forth in Section 3.4(3) , Article V , Article VI and the Waiver set forth in Article VII , such later time and date at which the Company notifies the Trustee that it has delivered to D.F. King & Co., Inc. in its

Sixth Supplemental Indenture

capacity as paying agent for the Consent Payment (as defined in the Consent Solicitation Statement), on behalf of Holders, the aggregate Consent Payment to be paid to Holders, upon the terms and subject to the conditions in the Consent Solicitation Statement, in respect of the written consents validly delivered in respect of the Waiver and the Permitted Holder Amendments.

Section 8.2 Definitions .

Capitalized terms used but not defined in this Sixth Supplemental Indenture shall have the meanings ascribed thereto in the Indenture or the applicable Secured Notes Supplemental Indenture.

Section 8.3 Confirmation of Indenture .

The Indenture, as supplemented and amended by this Sixth Supplemental Indenture, is in all respects ratified and confirmed, and the Indenture, this Sixth Supplemental Indenture and all indentures supplemental thereto shall be read, taken and construed as one and the same instrument.

Section 8.4 Concerning the Trustee .

In carrying out the Trustee’s responsibilities hereunder, the Trustee shall have all of the rights, protections and immunities which it possesses under the Indenture. The recitals contained herein, except the Trustee’s certificate of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to (i) the validity or sufficiency of this Sixth Supplemental Indenture, (ii) the proper authorization hereof by the Company by action or otherwise, (iii) the due execution hereof by the Company or (iv) the consequences of any amendment herein provided for.

Section 8.5 Governing Law .

This Sixth Supplemental Indenture shall be deemed to be a contract made under the internal laws of the State of New York, and for all purposes shall be construed in accordance with the laws of said State without regard to conflicts of law principles that would require the application of any other law.

Section 8.6 Separability .

In case any one or more of the provisions contained in this Sixth Supplemental Indenture shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Sixth Supplemental Indenture, but this Sixth Supplemental Indenture shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein or therein.

Section 8.7 Counterparts .

This Sixth Supplemental Indenture may be executed in any number of

Sixth Supplemental Indenture

counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. The exchange of copies of this Sixth Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Sixth Supplemental Indenture as to the parties hereto and may be used in lieu of the original Sixth Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

Section 8.8 No Benefit .

Nothing in this Sixth Supplemental Indenture, express or implied, shall give to any Person other than the parties hereto and their successors or assigns and the Holders of Secured Notes from time to time, any benefit or legal or equitable rights, remedy or claim under this Sixth Supplemental Indenture or the Indenture.

Section 8.9 Amendments and Supplemental Indentures .

This Sixth Supplemental Indenture is subject to the provisions regarding supplemental indentures and amendments set forth in Article IX of the Indenture.

Section 8.10 Legal, Valid and Binding Obligation .

The Company and each Notes Guarantor hereby represents and warrants that, assuming the due authorization, execution and delivery of this Sixth Supplemental Indenture by the Trustee, this Sixth Supplemental Indenture is its legal, valid and binding obligation enforceable against it in accordance with its terms.

[Signature Page Follows]

Sixth Supplemental Indenture

IN WITNESS WHEREOF, the parties hereto have caused this Sixth Supplemental Indenture to be duly executed all as of the day and year first above written.


Issuer :

THE ADT CORPORATION



By:		/s/ Michael S. Geltzeiler
		Name: Michael S. Geltzeiler
		Title: Senior Vice President & Chief Financial Officer

Trustee :

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee

By:		/s/ Stefan Victory
		Name: Stefan Victory
		Title: Vice President

Notes Guarantors :

PRIME SECURITY SERVICES BORROWER, LLC

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

ASG INTERMEDIATE HOLDING CORP.

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

[ Signature Page to Sixth Supplemental Indenture ]


ASG HOLDINGS LLC

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

ALARM SECURITY GROUP LLC

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

ABC SECURITY CORPORATION

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

BRINKMAN SECURITY, INC.

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

ASG GOVERNMENT SERVICES LLC

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

NOLAN’S PROTECTION SYSTEMS, INC.

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

[ Signature Page to Sixth Supplemental Indenture ]


PROTECTION HOLDINGS II, INC.

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

PROTECTION ONE, INC.

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

PROTECTION ONE ALARM MONITORING, INC.

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

SECURITY MONITORING SERVICES, INC.

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: Vice President

PROTECTION ONE SYSTEMS, INC.

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

PROTECTION ONE DATA SERVICES, INC.

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

[ Signature Page to Sixth Supplemental Indenture ]


PROTECTION ONE ALARM MONITORING OF MASS., INC.

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

MONITAL SIGNAL CORPORATION

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

ADT CANADA HOLDINGS, INC.

By:		/s/ Michael S. Geltzeiler
		Name: Michael S. Geltzeiler
		Title: Senior Vice President & Chief Financial Officer

ADT HOLDINGS, INC.

By:		/s/ Michael S. Geltzeiler
		Name: Michael S. Geltzeiler
		Title: Senior Vice President & Chief Financial Officer

ADT US HOLDINGS, INC.

By:		/s/ Michael S. Geltzeiler
		Name: Michael S. Geltzeiler
		Title: Senior Vice President & Chief Financial Officer

ADT INVESTMENTS, INC.

By:		/s/ Michael S. Geltzeiler
		Name: Michael S. Geltzeiler
		Title: Senior Vice President & Chief Financial Officer

[ Signature Page to Sixth Supplemental Indenture ]


ADT LLC

By:		/s/ Michael S. Geltzeiler
		Name: Michael S. Geltzeiler
		Title: Senior Vice President & Chief Financial Officer

ELECTRO SIGNAL LAB, INC.

By:		/s/ Michael S. Geltzeiler
		Name: Michael S. Geltzeiler
		Title: Senior Vice President & Chief Financial Officer

S2 MERGERSUB INC.

By:		/s/ Michael S. Geltzeiler
		Name: Michael S. Geltzeiler
		Title: Senior Vice President & Chief Financial Officer

[ Signature Page to Sixth Supplemental Indenture ]

EXHIBIT A

[FORM OF SUPPLEMENTAL INDENTURE]

SUPPLEMENTAL INDENTURE (this “ Supplemental Indenture ”) dated as of [ ], among [GUARANTOR] (the “ New Guarantor ”), a subsidiary PRIME SECURITY SERVICES BORROWER, LLC (or its successor), a Delaware limited liability company, and THE ADT CORPORATION (or its successor), a Delaware corporation (the “ Company ”), and WELLS FARGO BANK NATIONAL ASSOCIATION, a national banking association, as trustee under the indenture referred to below (the “ Trustee ”).

W I T N E S S E T H :

WHEREAS, the Company and the Trustee executed and delivered an Indenture, dated as of July 5, 2012 (as originally executed or as it may be from time to time supplemented or amended by one or more supplemental indentures supplemental thereto, the “ Indenture ”), to provide for the issuance by the Company from time to time of unsubordinated debt securities evidencing its unsecured indebtedness;

WHEREAS, the Company has issued (i) $750,000,000 of 2.250% Notes due 2017, (ii) $1,000,000,000 of 3.500% Notes due 2022 (the “ 2022 Notes ”), (iii) $750,000,000 of 4.875% Notes due 2042 (the “ 2042 Notes ”), (iv) $700,000,000 of 4.125% Senior Notes due 2023 (the “ 2023 Notes ” and, together with the 2022 Notes and the 2042 Notes, the “ Secured Notes ”) and (v) $1,000,000,000 of 6.250% Senior Notes due 2021;

WHEREAS, the Company, the Trustee and the existing Notes Guarantors have executed and delivered a Sixth Supplemental Indenture, dated as of April 8, 2016 (the “ Sixth Supplemental Indenture ”), to provide guarantees and security in respect of the Secured Notes; and

WHEREAS pursuant to the Indenture and the Sixth Supplemental Indenture, the Trustee, the Company and any Notes Guarantors are authorized to execute and deliver this Supplemental Indenture;

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the New Guarantor, the Company and the Trustee mutually covenant and agree for the equal and ratable benefit of the holders of the Secured Notes as follows:

1. Defined Terms . As used in this Supplemental Indenture, terms defined in the Indenture or in the preamble or recital hereto are used herein as therein defined. The words “ herein ,” “ hereof ” and “ hereby ” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof.

Article II of the Sixth Supplemental Indenture and to be bound by all other applicable provisions of the Indenture and the Sixth Supplemental Indenture and the Secured Notes and to perform all of the obligations and agreements of a guarantor under the Indenture and the Sixth Supplemental Indenture.

3. Notices . All notices or other communications to the New Guarantor shall be given as provided in Section 13.03 of the Indenture.

4. Ratification of Indenture; Supplemental Indentures Part of Indenture . Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Secured Notes heretofore or hereafter authenticated and delivered shall be bound hereby.

5. Governing Law . THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

6. Trustee Makes No Representation . The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture.

7. Counterparts . The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

8. Effect of Headings . The Section headings herein are for convenience only and shall not effect the construction thereof.

A-2

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written.


[NEW GUARANTOR]

By:
		Name:
		Title:

THE ADT CORPORATION

By:
		Name:
		Title:

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee

By:
		Name:
		Title:

A-3

Exhibit 4.8

THE ADT CORPORATION,

as Issuer

THE NOTES GUARANTORS PARTY HERETO

AND

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee

SEVENTH SUPPLEMENTAL INDENTURE

Dated as of April 22, 2016

TO INDENTURE

Dated as of July 5, 2012

THIS SEVENTH SUPPLEMENTAL INDENTURE is dated as of April 22, 2016, among THE ADT CORPORATION, a Delaware corporation (the “ Company ”), the guarantors listed on Schedule I hereto (the “ Notes Guarantors ”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association (the “ Trustee ”).

RECITALS

B. Pursuant to the Fifth Supplemental Indenture, dated as of October 1, 2013 (the “ Fifth Supplemental Indenture ”), the Company has issued $1,000,000,000 of 6.250% Senior Notes due 2021 (the “ Secured Notes ”).

C. This Seventh Supplemental Indenture is being entered into in connection with the proposed Acquisition (as defined below) of the Company by Prime Security Services Borrower, LLC, a Delaware limited liability company (“ New Parent ”). On February 14, 2016, the Company entered into an Agreement and Plan of Merger (the “ Merger Agreement ”) with, inter alia , New Parent and Prime Security One MS, Inc., a Delaware corporation and a Wholly Owned Subsidiary of New Parent (“ Merger Sub ”), pursuant to which Merger Sub will be merged with and into the Company (the “ Merger ”), with the Company surviving the Merger as a Wholly Owned Subsidiary of New Parent.

D. The Company desires to enter into this Seventh Supplemental Indenture pursuant to Section 9.01 of the Indenture to (i) provide guarantees to the Secured Notes, (ii) secure the Securities of the Secured Notes and (iii) to make certain other changes permitted thereby.

F. In connection with the Acquisition, the Company has solicited consents from Holders of the Secured Notes to: (i) waive the requirement for the Company to comply with Section 1.3(3) of the Fifth Supplemental Indenture in connection with the Acquisition (the “ Waiver ”) and (ii) make certain amendments to the Indenture, which are set forth in Article VI of this Seventh Supplemental Indenture (the “ Permitted Holder Amendments ”), upon the terms and subject to the conditions set forth in the Consent Solicitation Statement, dated April 1, 2016 (the “ Consent Solicitation Statement ”).

Seventh Supplemental Indenture

H. The Holders of a majority in aggregate principal amount of the Secured Notes outstanding as of the Record Date has delivered and not withdrawn written consents to the Waiver and the Permitted Holder Amendments.

I. The entry into this Seventh Supplemental Indenture by the parties hereto is in all respects authorized by the provisions of the Indenture.

NOW, THEREFORE, for and in consideration of the foregoing premises, the Company, the Notes Guarantors and the Trustee mutually covenant and agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Additional Defined Terms .

As used herein, the following defined terms shall have the following meanings:

“ Acquisition ” means the consummation of the Merger.

“ Acquisition Closing Date ” means the date on which the Acquisition is consummated.

“ Additional First Lien Obligations ” means all Other First Lien Obligations other than the Secured Notes Obligations.

“ Base Indenture ” has the meaning set forth in the Recitals.

“ Collateral ” means “Collateral” as defined in the credit agreement under the First Lien Credit Facility. For the avoidance of doubt, Collateral with respect to the Secured Notes does not include Specified Excluded Collateral with respect to the Secured Notes.

Seventh Supplemental Indenture

“ Consent Solicitation Statement ” has the meaning set forth in the Recitals.

“ Credit Facilities ” means, collectively, the First Lien Credit Facility and the Second Lien Credit Facility.

“ Fifth Supplemental Indenture ” has the meaning set forth in the Recitals.

“ First Lien Obligations ” means, collectively, (a) all First Lien Credit Facility Obligations, (b) all Secured Notes Obligations and (c) all Other First Lien Obligations.

Seventh Supplemental Indenture

“ First Priority After-Acquired Property ” means, with respect to the Secured Notes, any property of the Company or any Notes Guarantor that secures any First Lien Credit Facility Obligations that is not already subject to the lien under the Security Documents, other than Specified Excluded Collateral with respect to the Secured Notes.

“ First Priority Liens ” means the first priority Liens securing the First Lien Obligations.

“ Guaranteed Obligations ” has the meaning set forth in Section 2.1 hereof.

“ Indenture ” has the meaning set forth in the Recitals.

“ Intercreditor Agreements ” means, collectively, the First Lien/Second Lien Intercreditor Agreement and the First Lien Intercreditor Agreement.

“ Merger ” has the meaning set forth in the Recitals.

“ Merger Agreement ” has the meaning set forth in the Recitals.

“ Merger Sub ” has the meaning set forth in the Recitals.

“ New Parent ” has the meaning set forth in the Recitals.

“ Notes Guarantors ” has the meaning assigned to such term in the introductory paragraph.

Seventh Supplemental Indenture

“ Other First Lien Obligations ” shall have the meaning given such term by the Collateral Agreement.

“ Permitted Holder Amendments ” has the meaning set forth in the Recitals.

“ Record Date ” has the meaning set forth in the Recitals.

“ Regulation S-X Excluded Collateral ” has the meaning set forth in Section 3.4 hereof.

“ Reporting Entity ” has the meaning set forth in Section 5.1 hereof.

“ Second Priority Senior Secured Notes due 2023 ” means the $1,890,000,000 of Second Priority Senior Secured Notes due 2023 to be issued by New Parent and Prime Finance Inc.

“ Secured Notes ” has the meaning set forth in the Recitals.

“ Secured Notes Guarantee ” means the guarantee set forth in Article II hereof.

“ Secured Notes Obligations ” means Obligations in respect of the Secured Notes, each Secured Notes Guarantee and the Security Documents.

Seventh Supplemental Indenture

“ Secured Party ” means, collectively, the Trustee and the Holders of the Secured Notes.

“ Specified Excluded Collateral ” shall have the meaning given such term by the Collateral Agreement. For the avoidance of doubt, Specified Excluded Collateral with respect to the Secured Notes includes the Regulation S-X Excluded Collateral and the Capital Stock of the New Parent.

“ Waiver ” has the meaning set forth in the Recitals.

ARTICLE II

SECURED NOTES GUARANTEE

Section 2.1 Guaranty of Guaranteed Obligations .

Seventh Supplemental Indenture

Section 2.2 Guaranty of Payment .

Section 2.3 No Limitations .

Except for termination or release of a Notes Guarantor’s obligations hereunder as expressly provided for in Section 2.8 and Article IV , the obligations of each Notes Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense or set-off, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of the Guaranteed Obligations or otherwise (other than defense of payment or performance). Without limiting the generality of the foregoing, the obligations of each Notes Guarantor hereunder, to the fullest extent permitted by applicable law, shall not be discharged or impaired or otherwise affected by: (i) the failure of the Trustee or any other Secured Party to assert any claim or demand or to exercise or enforce any right or remedy under the provisions of the Indenture or otherwise; (ii) any rescission, waiver, amendment or modification of, or any release from any of the terms or provisions of, the Indenture or any other agreement, including with respect to any other Notes Guarantor under this Secured Notes Guarantee; (iii) the failure to perfect any security interest in, or the exchange, substitution, release or any impairment of, any security held by the Trustee or any other Secured Party for the Guaranteed Obligations; (iv) any default, failure or delay, willful or otherwise, in the performance of the Guaranteed Obligations; (v) any other act or omission that may or might in any manner or to any extent vary the risk of any Notes Guarantor or otherwise operate as a discharge of any Notes Guarantor as a matter of law or equity (other than the payment in full in cash in immediately available funds of all the Guaranteed Obligations); (vi) any illegality, lack of validity or enforceability of any Guaranteed Obligation; (vii) any change in the corporate existence, structure or ownership of the Company, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting the Company or its assets or any resulting release or discharge of any Guaranteed Obligation (other than the payment in full in cash in immediately available funds of all the Guaranteed Obligations); (viii) the existence of any claim, set-off or other rights that such Notes Guarantor may have at any time against the Company, the Trustee, or any other corporation or Person, whether in connection herewith or any unrelated transactions; provided that nothing herein will prevent the assertion of any such claim by separate suit or compulsory counterclaim; and (ix) any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by the Trustee that might otherwise constitute a defense to, or a legal or equitable discharge of, the Company or any other guarantor or surety (other than defense of payment or performance). Each Notes Guarantor expressly authorizes the Secured Parties (or the Trustee on behalf of the Secured Parties) to take and hold security for the payment and performance of the Guaranteed Obligations, to exchange, waive or release any or all such security (with or without consideration), to enforce or apply such security and direct the order and manner of any sale thereof in their sole discretion or to release or substitute any one or more other guarantors or obligors upon or in respect of the Guaranteed Obligations, all without affecting the obligations of any Notes Guarantor hereunder. To the

Seventh Supplemental Indenture

fullest extent permitted by applicable law, each Notes Guarantor waives any defense based on or arising out of any defense of any other Notes Guarantor or the unenforceability of the Guaranteed Obligations or any part thereof from any cause, or the cessation from any cause of the liability of any other Notes Guarantor, other than the payment in full in cash in immediately available funds of all the Guaranteed Obligations. The Trustee and the other Secured Parties may, at their election, foreclose on any security held by one or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Guaranteed Obligations, make any other accommodation with the Company or exercise any other right or remedy available to them against the Company, without affecting or impairing in any way the liability of any Notes Guarantor hereunder except to the extent the Guaranteed Obligations have been paid in full in cash in immediately available funds. To the fullest extent permitted by applicable law, each Notes Guarantor waives any defense arising out of any such election even though such election operates, pursuant to applicable law, to impair or to extinguish any right of reimbursement or subrogation or other right or remedy of such Notes Guarantor against any other Notes Guarantor, as the case may be, or any security.

Section 2.4 Reinstatement .

Section 2.5 Agreement To Pay; Subrogation .

Section 2.6 Information .

Seventh Supplemental Indenture

that such Notes Guarantor assumes and incurs hereunder, and agrees that neither the Trustee nor any other Secured Party will have any duty to advise such Notes Guarantor of information known to it or any of them regarding such circumstances or risks.

Section 2.7 Maximum Liability .

Section 2.8 Termination and Release .

(1) A Notes Guarantor shall automatically be released from its obligations hereunder in accordance with Article IV hereof.

(a) the sale, disposition, exchange or other transfer (including through merger, consolidation, amalgamation or otherwise) of the Capital Stock (including any sale, disposition or other transfer following which the applicable Notes Guarantor is no longer a Wholly Owned Restricted Secured Notes Subsidiary) of the applicable Notes Guarantor if such sale, disposition, exchange or other transfer is made in a manner not in violation of the Indenture;

(b) such Notes Guarantor becoming an Unrestricted Subsidiary or an Excluded Subsidiary;

(d) the Company’s exercise of its legal defeasance option or covenant defeasance option with respect to the Secured Notes pursuant to the Indenture or the Company’s discharge of its obligations with respect to the Secured Notes pursuant to the Indenture; and

(e) as described under Article IX of the Indenture.

Seventh Supplemental Indenture

Section 2.9 Additional Notes Guarantors .

Section 2.10 Form of Guarantee .

The form of Secured Notes Guarantee shall be set forth on the Secured Notes substantially as follows:

SECURED NOTES GUARANTEE

For value received, each Notes Guarantor hereby guarantees, jointly and severally with the other Notes Guarantors, as a primary obligor and not merely as a surety, the due and punctual payment and performance (i) to the holder of this Security the payment of principal of, premium, if any, and interest on, the Security upon which this Secured Notes Guarantee is set forth in the amounts and at the time when due and payable whether by declaration thereof, or otherwise, and interest on the overdue principal and interest, if any, of such Security, if lawful, to the holder of such Security and the Trustee on behalf of the Holders and (ii) all amounts owed to the Trustee under the Indenture, in each case in accordance with and subject to the terms and limitations of such Security, the Indenture and Articles II and IV of the Seventh Supplemental Indenture. This Secured Notes Guarantee (i) will not become effective until the Trustee or Authenticating Agent duly executes the certificate of authentication on this Security and (ii) shall be immediately and automatically released and/or terminated, with no further effect, if, (a) during the period commencing 60 days prior to the first public notice of the Company’s intention to effect the Merger and ending 60 days after the consummation of the Acquisition, a “Rating Event” is deemed to occur or (b) within 61 days after the consummation of the Acquisition, (1) a “Change of Control Triggering Event” is deemed to occur or (2) it is publicly announced that the rating of the Secured Notes is under consideration for a possible downgrade by any of the Rating Agencies. This Secured Notes Guarantee shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of law principles thereof.

Dated:


[NOTES GUARANTORS]



By:
		Name:
		Title:

Seventh Supplemental Indenture

ARTICLE III

COLLATERAL

Section 3.1 Security Documents .

Subject to Article IV hereof, the payment of the principal of and interest and premium, if any, on the Secured Notes when due, whether on an Interest Payment Date, at maturity, by acceleration, repurchase, redemption or otherwise and whether by the Company pursuant to the Secured Notes or by the Notes Guarantors pursuant to the Secured Notes Guarantees, the payment of all other Secured Notes Obligations and the performance of all other obligations of the Company and the Notes Guarantors under the Secured Notes, the Secured Notes Guarantees and the Security Documents shall be secured, as of the Acquisition Closing Date, as provided in the Security Documents, subject to the Intercreditor Agreements. The Company and each Notes Guarantor shall make all filings (including filings of continuation statements and amendments to UCC financing statements that may be necessary to continue the effectiveness of such UCC financing statements) and all other actions as are required by the Security Documents to maintain (at the sole cost and expense of the Company and the Notes Guarantors) the security interest created by the Security Documents in the Collateral (other than with respect to any Collateral the security interest in which is not required to be perfected under the Security Documents) as a perfected security interest.

Section 3.2 First Lien Collateral Agent .

(1) The First Lien Collateral Agent shall have all the rights and protections provided in the Security Documents and the First Lien Credit Facility.

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thereof, neither the Trustee nor the First Lien Collateral Agent shall have any duty as to any Collateral in its possession or control or in the possession or control of any agent or bailee or any income thereon or as to preservation of rights against prior parties or any other rights pertaining thereto and neither the Trustee nor the First Lien Collateral Agent shall be responsible for filing any financing or continuation statements or recording any documents or instruments in any public office at any time or times or otherwise perfecting or maintaining the perfection of any security interest in the Collateral. The Trustee and the First Lien Collateral Agent shall be deemed to have exercised reasonable care in the custody of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which it accords its own property and shall not be liable or responsible for any loss or diminution in the value of any of the Collateral, by reason of the act or omission of any carrier, forwarding agency or other agent or bailee selected by the Trustee or the First Lien Collateral Agent in good faith.

(a) to act upon directions purported to be delivered to it by any other Person;

(b) to foreclose upon or otherwise enforce any First Priority Lien; or

(c) to take any other action whatsoever with regard to any or all of the First Priority Liens, Security Documents or Collateral.

(4) The Holders agree that the First Lien Collateral Agent shall be entitled to the rights, privileges, protections, immunities, indemnities and benefits provided to the First Lien Collateral Agent by the Security Documents and the First Lien Credit Facility. Furthermore, each Holder consents to the terms of and authorizes and directs the Trustee (in each of its capacities) and the First Lien Collateral Agent to enter into and perform the Intercreditor Agreements and Security Documents in each of its capacities thereunder.

Seventh Supplemental Indenture

Section 3.3 Actions to Be Taken .

(a) the Other First Lien Secured Party Consent;

(b) the First Lien Intercreditor Agreement; and

(a) foreclose upon or otherwise enforce any or all of the First Priority Liens;

(b) enforce any of the terms of the Security Documents to which the First Lien Collateral Agent or Trustee is a party; or

Subject to the Intercreditor Agreements, the Trustee is authorized and empowered to institute and maintain, or direct the First Lien Collateral Agent to institute and maintain, such suits and proceedings as it may deem expedient to protect or enforce the First Priority Liens or the Security Documents to which the First Lien Collateral Agent or Trustee is a party or to prevent any impairment of Collateral by any acts that may be unlawful or in violation of the Security Documents to which the First Lien Collateral Agent or Trustee is a party or this Seventh Supplemental Indenture, and such suits and proceedings as the Trustee or First Lien Collateral Agent may deem expedient to preserve or protect its interests and the interests of the Holders in the Collateral, including power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the security interest hereunder or be prejudicial to the interests of Holders, the Trustee or the First Lien Collateral Agent.

Section 3.4 Release of Collateral .

(1) Subject to the terms of the Fifth Supplemental Indenture, Collateral may be released from the lien and security interest created by the Security Documents to secure the Secured Notes Obligations at any time or from time to time in accordance with the provisions of

Seventh Supplemental Indenture

the First Lien Intercreditor Agreement or as provided hereby or in the Security Documents. The applicable assets included in the Collateral shall be automatically released from the liens securing the Secured Notes, and the applicable Notes Guarantor shall be automatically released from its obligations under this Seventh Supplemental Indenture and the Security Documents, under any one or more of the following circumstances:

(f) as described under Article IX of the Indenture; and

(g) in accordance with Article IV hereof.

In addition, the security interests granted pursuant to the Security Documents securing the Secured Notes Obligations with respect to the Secured Notes shall automatically terminate and/or be released all without delivery of any instrument or performance of any act by any party, and all rights to the Collateral shall revert to the applicable Pledgors as of the date upon (i) all Obligations under the Secured Notes and the Indenture (other than contingent or unliquidated obligations or liabilities not then due) have been paid in full in cash or immediately available funds or (ii) a legal defeasance or covenant defeasance or discharge under Article XI of the Indenture.

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(2) Notwithstanding anything herein to the contrary, at any time when an Event of Default has occurred and is continuing and the maturity of the Secured Notes has been accelerated (whether by declaration or otherwise) and the Trustee has delivered a notice of acceleration to the First Lien Collateral Agent, no release of Collateral pursuant to the provisions of this Seventh Supplemental Indenture or the Security Documents will be effective as against the Holders of the Secured Notes, except as otherwise provided in the First Lien Intercreditor Agreement.

(3) To the extent necessary and for so long as required for any Subsidiary of the New Parent not to be subject to any requirement pursuant to Rule 3-16 of Regulation S-X under the Securities Act to file separate financial statements with the SEC (or any other governmental agency), the Capital Stock of such Subsidiary of the New Parent (the “ Regulation S-X Excluded Collateral ”) shall not be included in the Collateral with respect to the Secured Notes so affected and shall not be subject to the liens securing the Secured Notes and the Secured Notes Obligations in accordance with and only to the extent provided in the Security Documents.

Section 3.5 Powers Exercisable by Receiver or Trustee .

In case the Collateral shall be in the possession of a receiver or trustee, lawfully appointed, the powers conferred in this Article III upon the Company or the Notes Guarantors with respect to the release, sale or other disposition of such property may be exercised by such receiver or trustee, and an instrument signed by such receiver or trustee shall be deemed the equivalent of any similar instrument of the Company or any Notes Guarantor or of any officer or officers thereof required by the provisions of this Article III ; and if the Trustee or the First Lien Collateral Agent shall be in the possession of the Collateral under any provision of this Seventh Supplemental Indenture, then such powers may be exercised by the Trustee or the First Lien Collateral Agent, as the case may be.

Section 3.6 Release upon Termination of the Company’s Obligations .

In the event that (i) the Company delivers to the Trustee, in form and substance acceptable to it, an Officer’s Certificate and Opinion of Counsel certifying that all the Obligations under the Secured Notes have been satisfied and discharged by the payment in full of the Company’s obligations under the Secured Notes, and all such Obligations have been so satisfied, or (ii) a discharge, legal defeasance or covenant defeasance occurs under Article XI of the Indenture with respect to the Secured Notes, the Trustee shall deliver to the Company and the First Lien Collateral Agent a notice stating that the Trustee, on behalf of the Holders of the Secured Notes, disclaims and gives up any and all rights it has in or to the Collateral with respect the Secured Notes, and any rights it has under the Secured Notes, and upon receipt by the First Lien Collateral Agent of such notice, the First Lien Collateral Agent shall be deemed not to hold a lien in the Collateral with respect to the Secured Notes on behalf of the Trustee and shall (or shall direct the First Lien Collateral Agent to) do or cause to be done all acts reasonably necessary to release such lien, with respect to the Secured Notes, as soon as is reasonably practicable.

Seventh Supplemental Indenture

Section 3.7 General Authority of the First Lien Collateral Agent .

(1) By acceptance of the benefits of this Seventh Supplemental Indenture and the Security Documents, each Secured Party (whether or not a signatory hereto) shall be deemed irrevocably (i) to consent to the appointment of the First Lien Collateral Agent as its agent under the Security Documents, (ii) to confirm that the First Lien Collateral Agent shall have the authority to act as the exclusive agent of such Secured Party for the enforcement of any provision of any Security Document against any Pledgor, the exercise of remedies thereunder and the giving or withholding of any consent or approval thereunder relating to any Collateral or any Pledgor’s obligations with respect thereto, (iii) to agree that it shall not take any action to enforce any provisions of any Security Document against any Pledgor, to exercise any remedy thereunder or to give any consents or approvals thereunder except as expressly provided in this Seventh Supplemental Indenture or any Security Document and (iv) to agree to be bound by the terms of this Seventh Supplemental Indenture and the Security Documents and the Intercreditor Agreements.

Section 3.8 Further Assurances

Upon the acquisition by the Company or any Secured Notes Guarantor of any First Priority After-Acquired Property, the Company or such Secured Notes Guarantor shall execute and deliver such mortgages, deeds of trust, deeds to secure debt, security instruments, financing statements and certificates or such other documentation substantially similar to the documentation delivered to secure First Lien Credit Facility Obligations, if any, as shall be reasonably necessary to vest in the First Lien Collateral Agent, for the benefit of the Holders of the Secured Notes, a perfected security interest or lien in such First Priority After-Acquired Property and to have such First Priority After-Acquired Property (but subject to certain limitations, if applicable, including as described in the Security Documents and Articles III and IV hereof) added to the Collateral, and thereupon all provisions of this Indenture relating to the Collateral shall be deemed to relate to such First Priority After-Acquired Property to the same extent and with the same force and effect.

ARTICLE IV

Section 4.1 Automatic Termination of Guarantees and Collateral .

Except to the extent that a Waiver is obtained with respect to the Secured Notes, each of (i) the Secured Notes Guarantee contemplated by Article II hereof, (ii) the security interests contemplated by Article III hereof (except such portion of such security interests with respect to a Principal Property (as defined under the Fifth Supplemental Indenture) or any shares of stock of or indebtedness issued by any Restricted Secured Notes Subsidiary as required to be

Seventh Supplemental Indenture

maintained pursuant to the Fifth Supplemental Indenture, (iii) the reporting covenant contemplated by Article V hereof and (iv) Section 3.8 hereof, shall be immediately and automatically released and/or terminated, with no further effect, with respect to the Secured Notes if, (a) during the period commencing 60 days prior to the first public notice of the Company’s intention to effect the Merger and ending 60 days after the consummation of the Acquisition, a Rating Event occurs or (b) within 61 days after the consummation of the Acquisition, (1) a Change of Control Triggering Event (as defined under the Fifth Supplemental Indenture) occurs or (2) it is publicly announced that the rating of the Secured Notes is under consideration for a possible downgrade by any of the Rating Agencies (as defined under the Fifth Supplemental Indenture). Following any such release with respect to the Secured Notes, all property and assets of the Company and each Notes Guarantor not required to be pledged for the benefit of the Secured Notes pursuant to the Fifth Supplemental Indenture shall constitute “Specified Excluded Collateral” with respect to the Secured Notes.

ARTICLE V

REPORTING COVENANT

Section 5.1 Reports .

(a) Subject to Article IV hereof, so long as the Secured Notes are outstanding, the Company will provide to the Trustee and, upon request, to beneficial owners of the Secured Notes a copy of all of the information and reports referred to below:

(iii) within 15 days after the time period specified in the SEC’s rules and regulations for filing current reports on Form 8-K, current reports containing substantially all of the information that would be required to be filed in a Current Report on Form 8-K under the Exchange Act on the operative date of the Seventh Supplemental Indenture pursuant to Sections 1, 2 and 4, Items 5.01, 5.02(a)–(d) (other than compensation information), 5.03(b) and Item 9.01 (only to the extent relating to any of the foregoing) of Form 8-K if the Reporting Entity had been a reporting company under the Exchange Act; provided , however , that no such current reports will be required to be furnished if the Company or any direct or indirect parent of the Company determines in its good faith judgment that such event is not material to Holders or the business, assets, operations, financial position or prospects of the Company and its Affiliates, taken as a whole.

Seventh Supplemental Indenture

The financial statements, information and other documents required to be provided as described above, may be those of (1) the Company or (2) any direct or indirect parent of the Company (any such entity described in clause (1) or (2), a “ Reporting Entity ”), so long as, in the case of (2), either (A) such direct or indirect parent of the Company will not conduct, transact or otherwise engage, or commit to conduct, transact or otherwise engage, in any business or operations other than its direct or indirect ownership of all of the equity interests in, and its management of the Company or (B) such direct or indirect parent of the Company is or becomes a guarantor of the Secured Notes; provided that, if the financial information so furnished relates to such direct or indirect parent of the Company pursuant to (2)(A) above, the same is accompanied by a reasonably detailed description of the quantitative differences between the information relating to such parent, on the one hand, and the information relating to the Company and the guarantors of the Secured Notes on a standalone but consolidated basis, on the other hand.

(b) The Reporting Entity will also hold quarterly conference calls, beginning with the first full fiscal quarter ending after the operative date of the Seventh Supplemental Indenture, for all Holders and securities analysts to discuss such financial information no later than 10 business days after the distribution of such information required by

Seventh Supplemental Indenture

clauses (a)(i) and (a)(ii) of this Section 5.1, and prior to the date of each such conference call, the Reporting Entity will announce the time and date of such conference call and either include all information necessary to access the call in such announcement or inform Holders of the Secured Notes, prospective investors and securities analysts how they can obtain such information, including, without limitation, the applicable password or other login information (if applicable).

ARTICLE VI

PERMITTED HOLDER AMENDMENTS

Section 6.1 Amendments .

The Fifth Supplemental Indenture is hereby amended as follows:

(a) [Reserved.]

(b) The following definition of “Management Group” is hereby added to Section 1.2 thereof:

Seventh Supplemental Indenture

(d) The following definition of “Parent” is hereby added to Section 1.2 thereof:

“ Parent ” means Prime Security Services Borrower, LLC, a Delaware limited liability company.

(e) The following definition of “Permitted Holders” is hereby added to Section 1.2 thereof:

“ Permitted Holders ” means, at any time, each of (i) the Sponsors, (ii) the Management Group, (iii) any Person that has no material assets other than the Capital Stock of the Company, any direct or indirect parent of the Company and other Permitted Holders and, directly or indirectly, holds or acquires 100% of the total voting power of the Voting Stock of the Company, and of which no other Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), other than any of the other Permitted Holders, holds more than 50% of the total voting power of the Voting Stock thereof and (iv) any group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision) the members of which include any of the Permitted Holders specified in clauses (i), (ii) and (iii) above and that, directly or indirectly, hold or acquire beneficial ownership of the Voting Stock of the Company (a “ Permitted Holder Group ”), so long as (1) each member of the Permitted Holder Group has voting rights proportional to the percentage of ownership interests held or acquired by such member (or more favorable voting rights, in the case of any Permitted Holder) and (2) no Person or other “group” (other than Permitted Holders specified in clauses (i), (ii) and (iii) above) beneficially owns more than 50% on a fully diluted basis of the Voting Stock held by the Permitted Holder Group. Any Person or group whose acquisition of beneficial ownership constitutes a Change of Control in respect of which a Change of Control Offer (as defined under the Fifth Supplemental Indenture) is made in accordance with the requirements of the Indenture will thereafter, together with its Affiliates, constitute an additional Permitted Holder.

(f) The following definition of “Sponsors” is hereby added to Section 1.2 thereof:

Seventh Supplemental Indenture

“ Apollo Sponsors ”), and (ii) any Person that forms a group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision) with the Apollo Sponsors; provided that any Apollo Sponsor (x) owns a majority of the voting power and (y) controls a majority of the Board of Directors of the Company.

(g) The definition of “Change of Control” in Section 1.2 thereof is hereby amended and restated in its entirety to read as follows:

(h) Any definitions used exclusively in the provisions of the Indenture, the Fifth Supplemental Indenture, or the Secured Notes that are deleted pursuant to this Article VI , and any definitions used exclusively within such definitions, are hereby deleted in their entirety from the Indenture, the Fifth Supplemental Indenture and the Secured Notes, and all references in the Indenture, the Fifth Supplemental Indenture and the Secured Notes to paragraphs, Sections, Articles or other terms or provisions of the Indenture or the Fifth Supplemental Indenture deleted pursuant to this Article VI(h) or that have been otherwise deleted pursuant to this Seventh Supplemental Indenture are hereby deleted in their entirety.

ARTICLE VII

WAIVER

Section 7.1 Waiver .

The Trustee has received validly delivered and unrevoked consents from Holders of at least a majority in aggregate principal amount of the Secured Notes outstanding as of the Record Date to the Waiver, which waives the requirement for the Company to comply with Section 1.3(3) of the Fifth Supplemental Indenture in connection with the Acquisition.

Section 7.2 Effect of Waiver .

Upon Section 7.1 above and the Waiver becoming operative, the Company shall no longer be required to comply with the requirements and obligations pursuant to Section 1.3(3) of the Fifth Supplemental Indenture in connection with the Acquisition, including, but not limited

Seventh Supplemental Indenture

to, the requirement for the Company to make a Change of Control Offer (as defined under the Fifth Supplemental Indenture) in connection with the Acquisition, and each Holder and every subsequent Holder of the Secured Notes shall be bound by the Waiver, even if notation of the Waiver is not made on the Secured Notes.

ARTICLE VIII

MISCELLANEOUS

Section 8.1 Effect of Seventh Supplemental Indenture .

This Seventh Supplemental Indenture shall become effective upon its execution by the parties hereto. Notwithstanding the foregoing, Articles I , II , III , IV , V , VI and VII of this Seventh Supplemental Indenture shall not become operative, and shall have no force and effect, until (i) the Acquisition Closing Date and (ii) in the case of the amendments set forth in Section 3.4(3) , Article V , Article VI and the Waiver set forth in Article VII , such later time and date at which the Company notifies the Trustee that it has delivered to D.F. King & Co., Inc. in its capacity as paying agent for the Consent Payment (as defined in the Consent Solicitation Statement), on behalf of Holders, the aggregate Consent Payment to be paid to Holders, upon the terms and subject to the conditions in the Consent Solicitation Statement, in respect of the written consents validly delivered in respect of the Waiver and the Permitted Holder Amendments.

Section 8.2 Definitions .

Capitalized terms used but not defined in this Seventh Supplemental Indenture shall have the meanings ascribed thereto in the Indenture or the Fifth Supplemental Indenture.

Section 8.3 Confirmation of Indenture .

The Indenture, as supplemented and amended by this Seventh Supplemental Indenture, is in all respects ratified and confirmed, and the Indenture, this Seventh Supplemental Indenture and all indentures supplemental thereto shall be read, taken and construed as one and the same instrument.

Section 8.4 Concerning the Trustee .

In carrying out the Trustee’s responsibilities hereunder, the Trustee shall have all of the rights, protections and immunities which it possesses under the Indenture. The recitals contained herein, except the Trustee’s certificate of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to (i) the validity or sufficiency of this Seventh Supplemental Indenture, (ii) the proper authorization hereof by the Company by action or otherwise, (iii) the due execution hereof by the Company or (iv) the consequences of any amendment herein provided for.

Seventh Supplemental Indenture

Section 8.5 Governing Law .

This Seventh Supplemental Indenture shall be deemed to be a contract made under the internal laws of the State of New York, and for all purposes shall be construed in accordance with the laws of said State without regard to conflicts of law principles that would require the application of any other law.

Section 8.6 Separability .

In case any one or more of the provisions contained in this Seventh Supplemental Indenture shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Seventh Supplemental Indenture, but this Seventh Supplemental Indenture shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein or therein.

Section 8.7 Counterparts .

This Seventh Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. The exchange of copies of this Seventh Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Seventh Supplemental Indenture as to the parties hereto and may be used in lieu of the original Seventh Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

Section 8.8 No Benefit .

Nothing in this Seventh Supplemental Indenture, express or implied, shall give to any Person other than the parties hereto and their successors or assigns and the Holders of Secured Notes from time to time, any benefit or legal or equitable rights, remedy or claim under this Seventh Supplemental Indenture or the Indenture.

Section 8.9 Amendments and Supplemental Indentures .

This Seventh Supplemental Indenture is subject to the provisions regarding supplemental indentures and amendments set forth in Article IX of the Indenture.

Section 8.10 Legal, Valid and Binding Obligation .

The Company and each Notes Guarantor hereby represents and warrants that, assuming the due authorization, execution and delivery of this Seventh Supplemental Indenture by the Trustee, this Seventh Supplemental Indenture is its legal, valid and binding obligation enforceable against it in accordance with its terms.

[Signature Page Follows]

Seventh Supplemental Indenture

IN WITNESS WHEREOF, the parties hereto have caused this Seventh Supplemental Indenture to be duly executed all as of the day and year first above written.


Issuer :

THE ADT CORPORATION

By:		/s/ Michael S. Geltzeiler
		Name: Michael S. Geltzeiler
		Title: Senior Vice President & Chief Financial Officer

[ Signature Page to Seventh Supplemental Indenture ]


Trustee :

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee

By:		/s/ STEFAN VICTORY
		Name: STEFAN VICTORY
		Title: VICE PRESIDENT

[ Signature Page to Seventh Supplemental Indenture ]


Notes Guarantors :

PRIME SECURITY SERVICES BORROWER, LLC

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

ASG INTERMEDIATE HOLDING CORP.

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

ASG HOLDINGS LLC

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

ALARM SECURITY GROUP LLC

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

ABC SECURITY CORPORATION

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

[ Signature Page to Seventh Supplemental Indenture ]


BRINKMAN SECURITY, INC.

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

ASG GOVERNMENT SERVICES LLC

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

NOLAN’S PROTECTION SYSTEMS, INC.

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

PROTECTION HOLDINGS II, INC.

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

PROTECTION ONE, INC.

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

[ Signature Page to Seventh Supplemental Indenture ]


PROTECTION ONE ALARM MONITORING, INC.

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

SECURITY MONITORING SERVICES, INC.

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: Vice President

PROTECTION ONE SYSTEMS, INC.

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

PROTECTION ONE DATA SERVICES, INC.

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

PROTECTION ONE ALARM MONITORING OF MASS., INC.

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

[ Signature Page to Seventh Supplemental Indenture ]


MONITAL SIGNAL CORPORATION

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

[ Signature Page to Seventh Supplemental Indenture ]


ADT CANADA HOLDINGS, INC.

By:		/s/ Michael S. Geltzeiler
		Name: Michael S. Geltzeiler
		Title: Senior Vice President & Chief Financial Officer

ADT HOLDINGS, INC.

By:		/s/ Michael S. Geltzeiler
		Name: Michael S. Geltzeiler
		Title: Senior Vice President & Chief Financial Officer

ADT US HOLDINGS, INC.

By:		/s/ Michael S. Geltzeiler
		Name: Michael S. Geltzeiler
		Title: Senior Vice President & Chief Financial Officer

ADT INVESTMENTS, INC.

By:		/s/ Michael S. Geltzeiler
		Name: Michael S. Geltzeiler
		Title: Senior Vice President & Chief Financial Officer

[ Signature Page to Seventh Supplemental Indenture ]


ADT LLC

By:		/s/ Michael S. Geltzeiler
		Name: Michael S. Geltzeiler
		Title: Senior Vice President & Chief Financial Officer

ELECTRO SIGNAL LAB, INC.

By:		/s/ Michael S. Geltzeiler
		Name: Michael S. Geltzeiler
		Title: Senior Vice President & Chief Financial Officer

S2 MERGERSUB INC.

By:		/s/ Michael S. Geltzeiler
		Name: Michael S. Geltzeiler
		Title: Senior Vice President & Chief Financial Officer

[ Signature Page to Seventh Supplemental Indenture ]

EXHIBIT A

[FORM OF SUPPLEMENTAL INDENTURE]

W I T N E S S E T H :

WHEREAS, the Company has issued $1,000,000,000 of 6.250% Senior Notes due 2021 (the “ Secured Notes ”) pursuant to the Fifth Supplemental Indenture, dated as of October 1, 2013;

WHEREAS, the Company, the Trustee and the existing Notes Guarantors have executed and delivered a Seventh Supplemental Indenture, dated as of April 22, 2016 (the “ Seventh Supplemental Indenture ”), to provide guarantees and security in respect of the Secured Notes; and

WHEREAS pursuant to the Indenture and the Seventh Supplemental Indenture, the Trustee, the Company and any Notes Guarantors are authorized to execute and deliver this Supplemental Indenture;

2. Agreement to Guarantee . The New Guarantor hereby agrees, jointly and severally with all existing Notes Guarantors (if any), to guarantee the Company’s Obligations under the Secured Notes and the Indenture on the terms and subject to the conditions set forth in Article II of the Seventh Supplemental Indenture and to be bound by all other applicable provisions of the Indenture and the Seventh Supplemental Indenture and the Secured Notes and to perform all of the obligations and agreements of a guarantor under the Indenture and the Seventh Supplemental Indenture.

3. Notices . All notices or other communications to the New Guarantor shall be given as provided in Section 13.03 of the Indenture.

5. Governing Law . THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

6. Trustee Makes No Representation . The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture.

7. Counterparts . The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

8. Effect of Headings . The Section headings herein are for convenience only and shall not effect the construction thereof.

A-2

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written.


[NEW GUARANTOR]

By:
		Name:
		Title:

THE ADT CORPORATION

By:
		Name:
		Title:

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee

By:
		Name:
		Title:

A-3

Exhibit 4.9

EXECUTION VERSION

EIGHTH SUPPLEMENTAL INDENTURE

SUPPLEMENTAL INDENTURE (this “ Supplemental Indenture ”) dated as of May 2, 2016, by and among PRIME FINANCE INC., a Delaware corporation (the “ New Guarantor ”), a subsidiary of PRIME SECURITY SERVICES BORROWER, LLC (or its successor), a Delaware limited liability company, and THE ADT CORPORATION (or its successor), a Delaware corporation (the “ Company ”), and WELLS FARGO BANK NATIONAL ASSOCIATION, a national banking association, as trustee under the indenture referred to below (the “ Trustee ”).

W I T N E S S E T H :

WHEREAS, the Company has issued (i) $750,000,000 of 2.250% Notes due 2017, (ii) $1,000,000,000 of 3.500% Notes due 2022 (the “ 2022 Notes ”), (iii) $750,000,000 of 4.875% Notes due 2042 (the “ 2042 Notes ”), (iv) $700,000,000 of 4.125% Senior Notes due 2023 (the “ 2023 Notes ”) and (v) $1,000,000,000 of 6.250% Senior Notes due 2021 (the “ 2021 Notes ” and, together with the 2022 Notes, the 2042 Notes and the 2023 Notes, the “ Secured Notes ”);

WHEREAS, pursuant to the Indenture, the Sixth Supplemental Indenture and the Seventh Supplemental Indenture, the Trustee, the Company and any Notes Guarantors are authorized to execute and deliver this Supplemental Indenture;

2. Agreement to Guarantee . The New Guarantor hereby agrees, jointly and severally with all existing Notes Guarantors (if any), to guarantee the Company’s Obligations under the Secured Notes and the Indenture on the terms and subject to the conditions set forth in Article II of the Sixth Supplemental Indenture and Article II of the Seventh Supplemental Indenture, as applicable, and to be bound by all other applicable provisions of the Indenture, the Sixth Supplemental Indenture, the Seventh Supplemental Indenture and the Secured Notes and to perform all of the obligations and agreements of a guarantor under the Indenture, the Sixth Supplemental Indenture and the Seventh Supplemental Indenture, as applicable.

3. Notices . All notices or other communications to the New Guarantor shall be given as provided in Section 13.03 of the Indenture.

5. Governing Law . THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

6. Trustee Makes No Representation . The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture.

7. Counterparts . The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

8. Effect of Headings . The Section headings herein are for convenience only and shall not effect the construction thereof.

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written.


PRIME FINANCE INC.

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

THE ADT CORPORATION

By:		/s/ Timothy J. Whall
		Name: Timothy J. Whall
		Title: President and Chief Executive Officer

[ Signature Page to Eighth Supplemental Indenture ]


WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee

By:		/s/ Stefan Victory
		Name: Stefan Victory
		Title: Vice President

[ Signature Page to Eighth Supplemental Indenture ]

Exhibit 4.10

THE ADT CORPORATION,

as Issuer

AND

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee

INDENTURE

Dated as of March 19, 2014

UNSUBORDINATED DEBT SECURITIES

TABLE OF CONTENTS

Page


ARTICLE I. DEFINITIONS		1
Section 1.01	Definitions of Terms	1

ARTICLE II. ISSUE, DESCRIPTION, TERMS, EXECUTION, REGISTRATION AND EXCHANGE OF SECURITIES		9
Section 2.01	Designation and Terms of Securities	9
Section 2.02	Form of Securities and Trustee’s Certificate	12
Section 2.03	Denominations; Provisions for Payment	14
Section 2.04	Execution and Authentications	15
Section 2.05	Transfer and Exchange	16
Section 2.06	Temporary Securities	24
Section 2.07	Mutilated, Destroyed, Lost or Stolen Securities	25
Section 2.08	Cancellation	25
Section 2.09	Third Party Beneficiaries	26
Section 2.10	Authenticating Agent	26
Section 2.11	Global Securities	26
Section 2.12	CUSIP Numbers	27
Section 2.13	Securities Denominated in Foreign Currencies	27
Section 2.14	Wire Transfers	27
Section 2.15	Designated Currency	28
Section 2.16	Form of Guarantee	28

ARTICLE III. REDEMPTION OF SECURITIES AND SINKING FUND PROVISIONS		29
Section 3.01	Redemption	29
Section 3.02	Notice of Redemption	29
Section 3.03	Payment Upon Redemption	30
Section 3.04	Sinking Fund	31
Section 3.05	Satisfaction of Sinking Fund Payments with Securities	31
Section 3.06	Redemption of Securities for Sinking Fund	31

ARTICLE IV. CERTAIN COVENANTS		32
Section 4.01	Payment of Principal, Premium and Interest	32
Section 4.02	Maintenance of Office or Agency	32
Section 4.03	Paying Agents	32
Section 4.04	Statement by Officers as to Default	33
Section 4.05	Appointment to Fill Vacancy in Office of Trustee	33

ARTICLE V. SECURITYHOLDERS’ LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE		34
Section 5.01	Company to Furnish Trustee Names and Addresses of Securityholders	34
Section 5.02	Preservation of Information; Communications with Securityholders	34
Section 5.03	Reports by the Company	34


Section 5.04	Reports by the Trustee	35

ARTICLE VI. REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT		35
Section 6.01	Events of Default	35
Section 6.02	Collection of Indebtedness and Suits for Enforcement by Trustee	37
Section 6.03	Application of Funds Collected	38
Section 6.04	Limitation on Suits	39
Section 6.05	Rights and Remedies Cumulative; Delay or Omission not Waiver	39
Section 6.06	Control by Securityholders	40
Section 6.07	Undertaking to Pay Costs	41
Section 6.08	Waiver Of Usury, Stay Or Extension Laws	41

ARTICLE VII. CONCERNING THE TRUSTEE		42
Section 7.01	Certain Duties and Responsibilities of Trustee.	42
Section 7.02	Certain Rights of Trustee	43
Section 7.03	Trustee Not Responsible for Recitals or Issuance of Securities	44
Section 7.04	May Hold Securities	44
Section 7.05	Funds Held in Trust	45
Section 7.06	Compensation, Reimbursement and Indemnification	45
Section 7.07	Reliance on Officer’s Certificate	46
Section 7.08	Disqualification; Conflicting Interests	46
Section 7.09	Corporate Trustee Required; Eligibility	46
Section 7.10	Resignation and Removal; Appointment of Successor	46
Section 7.11	Acceptance of Appointment By Successor	48
Section 7.12	Merger, Conversion, Consolidation or Succession to Business	49
Section 7.13	Preferential Collection of Claims Against the Company	49

ARTICLE VIII. CONCERNING THE SECURITYHOLDERS		49
Section 8.01	Evidence of Action by Securityholders	49
Section 8.02	Proof of Execution by Securityholders	50
Section 8.03	Who May be Deemed Owners	50
Section 8.04	Certain Securities Owned by Company Disregarded	50
Section 8.05	Actions Binding on Future Securityholders	51

ARTICLE IX. SUPPLEMENTAL INDENTURES		51
Section 9.01	Supplemental Indentures Without the Consent of Securityholders	51
Section 9.02	Supplemental Indentures with Consent of Securityholders	53
Section 9.03	Effect of Supplemental Indentures	54
Section 9.04	Securities Affected by Supplemental Indentures	54
Section 9.05	Execution of Supplemental Indentures	54

ARTICLE X. SUCCESSOR		55
Section 10.01	Consolidation, Merger and Sale of Assets	55
Section 10.02	Successor Person Substituted	56

ARTICLE XI. ADDITIONAL AMOUNTS; CERTAIN TAX PROVISIONS		56


Section 11.01	Redemption Upon Changes in Withholding Taxes	56
Section 11.02	Payment of Additional Amounts	56

ARTICLE XII. SATISFACTION AND DISCHARGE		59
Section 12.01	Applicability of Article	59
Section 12.02	Satisfaction and Discharge of Indenture	59
Section 12.03	Defeasance and Discharge of Obligations; Covenant Defeasance	60
Section 12.04	Deposited Funds to Be Held in Trust	62
Section 12.05	Payment of Funds Held by Paying Agents	62
Section 12.06	Repayment to the Company or Guarantor	63
Section 12.07	Reinstatement	63

ARTICLE XIII. IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS		64
Section 13.01	No Recourse	64

ARTICLE XIV. MISCELLANEOUS PROVISIONS		64
Section 14.01	Effect on Successors and Assigns	64
Section 14.02	Actions by Successor	64
Section 14.03	Notices	65
Section 14.04	Governing Law	66
Section 14.05	Treatment of Securities as Debt	66
Section 14.06	Compliance Certificates and Opinions	66
Section 14.07	Payments on Business Days	67
Section 14.08	Conflict with Trust Indenture Act	67
Section 14.09	Counterparts	67
Section 14.10	Separability	67
Section 14.11	No Adverse Interpretation of Other Agreements	67
Section 14.12	Table of Contents, Headings, Etc	67
Section 14.13	Consent to Jurisdiction and Service of Process	68
Section 14.14	Waiver of Jury Trial	69
Section 14.15	USA Patriot Act	69
Section 14.16	Force Majeure	69

ARTICLE XV. GUARANTEES		69
Section 15.01	Guarantee	69
Section 15.02	Execution and Delivery of Guarantees	71
Section 15.03	Release of Guarantee	71

iii

Cross-Reference Table*


Section of Trust Indenture Act of 1939, as amended		Section of Indenture
310(a)		7.09
310(b)		7.08
		7.10
310(c)		Inapplicable
311(a)		7.13
311(b)		7.13
311(c)		Inapplicable
312(a)		5.01
		5.02(a)
312(b)		5.02(b)
312(c)		5.02(b)
313(a)		5.04(a)
313(b)		5.04(b)
313(c)		5.04(b)
		5.04(c)
313(d)		5.04(c)
314(a)		5.03
314(b)		Inapplicable
314(c)		14.06
314(d)		Inapplicable
314(e)		14.06
314(f)		Inapplicable
315(a)		7.01
315(b)		6.01(c)
315(c)		7.01(a)
315(d)		7.01(b)
315(e)		6.07
316(a)		6.06, 8.04
316(b)		6.04
316(c)		8.01
317(a)		6.02
317(b)		4.03
318(a)		14.08

*	This Cross-Reference Table does not constitute part of the Indenture and shall not have any bearing on the interpretation of any of its terms or provisions.

THIS INDENTURE is dated as of March 19, 2014 among THE ADT CORPORATION, a Delaware corporation (the “ Company ”) and Wells Fargo Bank, National Association, a national banking association (the “ Trustee ”).

RECITALS

C. All things necessary to make this Indenture a legal, valid and binding agreement, in accordance with its terms, have been done.

ARTICLE I.

DEFINITIONS

Section 1.01 Definitions of Terms .

“ Additional Amounts ” has the meaning set forth in Section 11.02.

“ Authentication Order ” has the meaning set forth in Section 2.04.

“ Board of Directors ” means the Board of Directors of the Company or a Guarantor, as applicable, or any duly authorized committee of such Board of Directors.

“ Clearstream ” means Clearstream Banking S.A., or its successors.

“ Code ” has the meaning set forth in Section 10.01.

“ Commission ” means the Securities and Exchange Commission.

“ Company ” means The ADT Corporation until a successor entity shall have become such pursuant to Article X, and thereafter “Company” shall mean such successor entity.

“ Corporate Trust Office ” means the office of the Trustee at which, at any particular time, its corporate trust business shall be principally administered, which office at the date hereof is located at Wells Fargo Bank, National Association, 7000 Central Parkway NE, Suite 550, Atlanta, GA 30328, Attention: Corporate Trust Services, or such other address as the Trustee may designate from time to time by notice to the Securityholders and the Company, or the principal corporate trust office of any successor Trustee (or such other address as such successor Trustee may designate from time to time by notice to the Securityholders and the Company).