Vivint Smart Home

April 27, 2020

Dear Stockholder:

Please join us for Vivint Smart Home, Inc.’s Annual Meeting of Stockholders on Tuesday, June 9, 2020, at
10:00 a.m., Mountain Time. Due to the public health impact of the coronavirus outbreak (COVID-19) and to
support the health and well-being of our stockholders and associates, the Annual Meeting will be held in a virtual
meeting format only and will be conducted via live audio webcast. You will be able to attend the Annual Meeting
online, vote your shares electronically and submit your questions during the Annual Meeting via a live audio
webcast by visiting www.virtualshareholdermeeting.com/VVNT2020.

Attached to this letter are a Notice of Annual Meeting of Stockholders and Proxy Statement, which describe the
business to be conducted at the meeting. This Proxy Statement and the enclosed proxy card and annual report are
first being sent to stockholders on or about April 27, 2020. We urge you to read the accompanying materials
regarding the matters to be voted on at the meeting and to submit your voting instructions by proxy.

Whether or not you plan to attend the meeting, your vote is important to us. You may vote your shares by proxy
on the internet, by telephone or by completing, signing and promptly returning a proxy card, or you may vote via
the internet at the Annual Meeting. We encourage you to vote by proxy by internet, by telephone or by proxy
card even if you plan to attend the Annual Meeting. By doing so, you will ensure that your shares are represented
and voted at the Annual Meeting.

Thank you for your continued support of Vivint Smart Home, Inc.

Sincerely,

David F. D’Alessandro
Chairman of the Board of Directors

Todd R. Pedersen
Chief Executive Officer

VIVINT SMART HOME, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TIME

10:00 a.m., Mountain Time, on Tuesday, June 9, 2020

VIRTUAL LOCATION

ITEMS OF BUSINESS

RECORD DATE

You can attend the Annual Meeting online, vote your shares electronically and
submit your questions during the Annual Meeting, by visiting
www.virtualshareholdermeeting.com/VVNT2020. You will need to have your
16-Digit Control Number included on your proxy card or the instructions that
accompanied your proxy materials in order to join the Annual Meeting.

1.

2.

3.

4.

5.

To elect the director nominees listed in the Proxy Statement.

To ratify the appointment of Ernst & Young LLP as our independent
registered public accounting firm for 2020.

To approve, in a non-binding advisory vote, the compensation paid to our
named executive officers.

To determine, in a non-binding advisory vote, whether a non-binding
stockholder vote to approve the compensation paid to our named executive
officers should occur every one, two or three years.

To consider such other business as may properly come before the Annual
Meeting and any adjournments or postponements thereof.

You may vote at the Annual Meeting if you were a stockholder of record at the
close of business on April 21, 2020. A list of the stockholders of record at the
close of business on April 21, 2020 will be open for examination by any
stockholder for any purpose germane to the Annual Meeting electronically for a
period of 10 days prior to the Annual Meeting and during the Annual Meeting at
www.virtualshareholdermeeting.com/VVNT2020 when you enter your 16-Digit
Control Number.

VOTING BY PROXY

To ensure your shares are voted, you may vote your shares by proxy over the
internet, by telephone or by mail. Voting procedures are described on the
following page and on the proxy card.

By Order of the Board of Directors,

Shawn J. Lindquist
Chief Legal Officer and Secretary
April 27, 2020

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on
Tuesday, June 9, 2020: This Proxy Statement and our Annual Report are available free of charge at
www.proxyvote.com. A list of the stockholders of record at the close of business on April 21, 2020 will also be
open for examination by any stockholder for any purpose germane to the Annual Meeting for a period of 10
days prior to the Annual Meeting and during the Annual Meeting at www.virtualshareholdermeeting.com/
VVNT2020.

PROXY VOTING METHODS

If at the close of business on April 21, 2020, you were a stockholder of record or held shares through a broker or
bank, you may vote your shares by proxy at the Annual Meeting. If you were a stockholder of record, you may
vote your shares over the internet, by telephone or by mail, or you may vote via the internet at the Annual
Meeting. You may also revoke your proxies at the times and in the manners described in the General Information
section of this Proxy Statement. For shares held through a broker, bank or other nominee, you may submit voting
instructions to your broker, bank or other nominee. Please refer to information from your broker, bank or other
nominee on how to submit voting instructions.

If you are a stockholder of record, your internet, telephone or mail vote must be received by 11:59 p.m.,
Eastern Time, on June 8, 2020 to be counted.

To vote by proxy if you are a stockholder of record:

BY INTERNET

• Go to the website www.proxyvote.com and follow the instructions, 24 hours a day, seven days a week.

• You will need the 16-digit number included on your proxy card to obtain your records and to create an

electronic voting instruction form.

BY TELEPHONE

•

From a touch-tone telephone, dial 1-800-690-6903 and follow the recorded instructions, 24 hours a
day, seven days a week.

• You will need the 16-digit number included on your proxy card in order to vote by telephone.

BY MAIL

• Mark your selections on the proxy card.

• Date and sign your name exactly as it appears on your proxy card.

• Mail the proxy card in the enclosed postage-paid envelope provided to you.

YOUR VOTE IS IMPORTANT TO US. THANK YOU FOR VOTING.

TABLE OF CONTENTS

GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PROPOSAL NO. 1—ELECTION OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1

6

THE BOARD OF DIRECTORS AND CERTAIN GOVERNANCE MATTERS . . . . . . . . . . . . . . . . . . . . . . .

10

PROPOSAL NO. 2—RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

FIRM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

REPORT OF THE AUDIT COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PROPOSAL NO. 3—NON-BINDING VOTE ON EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . .

PROPOSAL NO. 4—NON-BINDING VOTE ON THE FREQUENCY OF FUTURE NON-BINDING

VOTES ON EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

EXECUTIVE OFFICERS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

REPORT OF THE COMPENSATION COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT . . . . . . . . . . . .

TRANSACTIONS WITH RELATED PERSONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

STOCKHOLDER PROPOSALS FOR THE 2021 ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

HOUSEHOLDING OF PROXY MATERIALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

OTHER BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20

23

24

25

26

28

29

65

67

72

73

73

EXHIBIT 16.1—LETTER FROM WITHUMSMTIH+BROWN, PC TO THE U.S. SECURITIES AND

EXCHANGE COMMISSION, DATED APRIL 23, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

74

[This page intentionally left blank(cid:17)] 

VIVINT SMART HOME, INC.
4900 North 300 West
Provo, Utah 84604
Telephone: (801) 377-9111

PROXY STATEMENT
Annual Meeting of Stockholders
June 9, 2020

GENERAL INFORMATION

Why am I being provided with these materials?

This proxy statement and the enclosed proxy card and annual report are first being sent to stockholders on or
about April 27, 2020. We have delivered these proxy materials to you in connection with the solicitation by the
Board of Directors (the “Board” or “Board of Directors”) of Vivint Smart Home, Inc. (“we,” “our,” “us” and the
“Company”) of proxies to be voted at our Annual Meeting of Stockholders to be held on June 9, 2020 at
10:00 a.m. (the “Annual Meeting”), and at any postponements or adjournments of the Annual Meeting. This
year’s Annual meeting will be a completely “virtual” meeting of stockholders. You are invited to attend the
virtual Annual Meeting online, vote your shares electronically, and submit your questions during the Annual
Meeting, by visiting www.virtualshareholdermeeting.com/VVNT2020.

What am I voting on?

There are four proposals scheduled to be voted on at the Annual Meeting:

•

•

•

•

Proposal No. 1: Election of the director nominees listed in this Proxy Statement.

Proposal No. 2: Ratification of the appointment of Ernst & Young LLP as our independent registered
public accounting firm for 2020.

Proposal No. 3: Approval, in a non-binding advisory vote, of the compensation paid to our named
executive officers.

Proposal No. 4: Determination, in a non-binding advisory vote, of whether a non-binding stockholder
vote to approve the compensation paid to our named executive officers should occur every one, two or
three years.

Who is entitled to vote?

Stockholders as of the close of business on April 21, 2020 (the “Record Date”) may vote at the Annual Meeting.
As of that date, there were 177,901,334 shares of common stock outstanding. You have one vote for each share
of common stock held by you as of the Record Date, including shares:

• Held directly in your name as “stockholder of record” (also referred to as “registered stockholder”);

and

• Held for you in an account with a broker, bank or other nominee (shares held in “street name”)—Street
name holders generally cannot vote their shares directly and instead must instruct the brokerage firm,
bank or nominee how to vote their shares.

What constitutes a quorum?

The holders of record of a majority of the voting power of the issued and outstanding shares of common stock
entitled to vote at the Annual Meeting must be present in person or represented by proxy to constitute a quorum
for the Annual Meeting. Abstentions and “broker non-votes” that are present and entitled to vote are counted for
purposes of determining a quorum.

1

What is a “broker non-vote”?

A broker non-vote occurs when shares held through a broker are not voted with respect to a proposal because
(1) the broker has not received voting instructions from the stockholder who beneficially owns the shares and
(2) the broker lacks the authority to vote the shares at its discretion. Under current New York Stock Exchange
(“NYSE”) interpretations that govern broker non-votes, Proposal Nos. 1, 3 and 4 are considered non-routine
matters, and a broker will lack the authority to vote uninstructed shares at their discretion on such proposals.
Proposal No. 2 is considered a routine matter, and a broker will be permitted to exercise its discretion to vote
uninstructed shares on this proposal.

How many votes are required to approve each proposal?

Under our Amended and Restated Bylaws (the “Bylaws”), directors are elected by a plurality vote, which means
that the director nominees with the greatest number of votes cast, even if less than a majority, will be elected.
There is no cumulative voting.

For any other proposal being considered at the Annual Meeting, under our Bylaws, approval of the proposal
requires a majority of the of the voting power of the shares of stock present in person or represented by proxy and
entitled to vote on the proposal.

It is important to note that the proposals to ratify the appointment of Ernst & Young LLP as our independent
registered public accounting firm for 2020 (Proposal No. 2), to approve the compensation of our named
executive officers (Proposal No. 3) and to determine the frequency of future non-binding votes to approve the
compensation of our named executive officers (Proposal No. 4) are non-binding and advisory. While the
ratification of Ernst & Young LLP as our independent registered public accounting firm is not required by our
Bylaws or otherwise, if our stockholders fail to ratify the selection, we will consider it notice to the Board and the
Audit Committee to consider the selection of a different firm. While the votes on executive compensation and the
frequency of future votes on executive compensation are advisory in nature and non-binding, the Board will
review the voting results and expects to take them into consideration when making future decisions regarding
executive compensation and determining the frequency of future votes on executive compensation.

How are votes counted?

With respect to the election of directors (Proposal No. 1), you may vote “FOR” or “WITHHOLD” with respect to
each nominee. Votes that are “withheld” will have the same effect as an abstention and will not count as a vote
“FOR” or “AGAINST” a director because directors are elected by plurality voting. Broker non-votes will have
no effect on the outcome of Proposal No. 1.

With respect to the ratification of our independent registered public accounting firm (Proposal No. 2) and the
approval of the compensation of our named executive officers (Proposal No. 3), you may vote “FOR,”
“AGAINST” or “ABSTAIN.”

With respect to the frequency of future non-binding stockholder votes on executive compensation (Proposal 4),
you may vote every “ONE YEAR”, “TWO YEARS”, “THREE YEARS” or “ABSTAIN”.

For each of Proposal Nos. 2, 3 and 4, abstentions will count as votes “AGAINST” the proposal. For Proposal
Nos. 3 and 4, broker non-votes will have no effect on the outcome of the proposals.

If you sign and submit your proxy card without voting instructions, your shares will be voted in accordance with
the recommendation of the Board with respect to the Proposals and in accordance with the discretion of the
holders of the proxy with respect to any other matters that may be voted upon.

2

How does the Board recommend that I vote?

Our Board recommends that you vote your shares:

•

•

•

•

“FOR” each of the director nominees set forth in this Proxy Statement.

“FOR” the ratification of the appointment of Ernst & Young LLP as our independent registered public
accounting firm for 2020.

“FOR” the approval, on a non-binding, advisory basis, of the compensation paid to our named
executive officers.

For every “ONE YEAR” on a non-binding, advisory basis, with respect to how frequently a
non-binding stockholder vote to approve the compensation paid to our named executive officers should
occur.

Who will count the vote?

Representatives of Broadridge Financial Solutions, Inc. will tabulate the votes and act as inspectors of election.

How do I vote my shares without attending the Annual Meeting?

If you are a stockholder of record, you may vote by authorizing a proxy to vote on your behalf at the Annual
Meeting. Specifically, you may authorize a proxy:

• By Internet—If you have internet access, you may submit your proxy by going to www.proxyvote.com
and by following the instructions on how to complete an electronic proxy card. You will need the
16-digit number included on your proxy card in order to vote by internet.

• By Telephone—If you have access to a touch-tone telephone, you may submit your proxy by dialing
1-800-690-6903 and by following the recorded instructions. You will need the 16-digit number
included on your proxy card in order to vote by telephone.

• By Mail—You may vote by mail by indicating your vote, signing and dating the enclosed proxy card
where indicated and by mailing or otherwise returning the card in the postage-paid envelope provided
to you. You should sign your name exactly as it appears on the proxy card. If you are signing in a
representative capacity (for example, as guardian, executor, trustee, custodian, attorney or officer of a
corporation), indicate your name and title or capacity.

Internet and telephone voting facilities will close at 11:59 p.m., Eastern Time, on June 8, 2020, for the
voting of shares held by stockholders of record as of the Record Date. Proxy cards with respect to shares
held of record must be received no later than June 8, 2020.

If you hold your shares in street name, you may submit voting instructions to your broker, bank or other
nominee. In most instances, you will be able to do this over the internet, by telephone or by mail. Please refer to
information from your bank, broker or other nominee on how to submit voting instructions.

How do I attend and vote my shares at the Virtual Annual Meeting?

This year’s Annual Meeting will be a completely “virtual” meeting of stockholders. You may attend the Annual
Meeting via the Internet. Any stockholder can attend the Annual Meeting live online at
www.virtualshareholdermeeting.com/VVNT2020. If you virtually attend the Annual Meeting you can vote your
shares electronically, and submit your questions during the Annual Meeting, by visiting
www.virtualshareholdermeeting.com/VVNT2020. A summary of the information you need to attend the Annual
Meeting and vote via the Internet is provided below:

•

Instructions on how to attend and participate via the internet, including how to demonstrate proof of
stock ownership, are posted at www.virtualshareholdermeeting.com/VVNT2020;

3

• Assistance with questions regarding how to attend and participate via the internet will be provided at

www.virtualshareholdermeeting.com/VVNT2020 on the day of the Annual Meeting;

•

Stockholders may vote and submit questions while attending the Annual Meeting via the internet; and

• You will need your 16-Digit Control Number that is included in your proxy card or the instructions that
accompanied your proxy materials in order to enter the Annual Meeting and to vote during the Annual
Meeting.

Whether you plan to attend the Annual Meeting or not, we encourage you to vote by proxy in advance over the
internet, by telephone or mail so that your vote will be counted if you do not vote at the Annual Meeting.

Will I be able to participate in the online Annual Meeting on the same basis I would be able to participate
in a live annual meeting?

In light of the public health concerns due to the COVID-19 outbreak and to support the health and well-being of
our stockholders and associates, the Annual Meeting will be held in a virtual meeting format only and will be
conducted via live audio webcast. The online meeting format for the Annual Meeting will enable full and equal
participation by all our stockholders from any place in the world at little to no cost.

We designed the format of the online Annual Meeting to ensure that our stockholders who attend our Annual
Meeting will be afforded the same rights and opportunities to participate as they would at an in-person meeting
and to enhance stockholder access, participation and communication through online tools. We will take the
following steps to ensure such an experience:

•

•

•

providing stockholders with the ability to submit appropriate questions up to 15 minutes in advance of
the meeting to ensure thoughtful responses from management and the Board;

providing stockholders with the ability to submit appropriate questions real-time via the meeting
website, limiting questions to one per stockholder unless time otherwise permits; and

answering as many questions submitted in accordance with the meeting rules of conduct as possible in
the time allotted for the meeting without discrimination.

What does it mean if I receive more than one proxy card on or about the same time?

It generally means you hold shares registered in more than one account. To ensure that all your shares are voted,
please sign and return each proxy card or, if you vote by internet or telephone, vote once for each proxy card you
receive.

May I change my vote or revoke my proxy?

Yes. Whether you have voted by internet, telephone or mail, if you are a stockholder of record, you may change
your vote and revoke your proxy by:

•

•

•

•

sending a written statement to that effect to our Secretary, provided such statement is received no later
than June 8, 2020;

voting by internet or telephone at a later time than your previous vote and before the closing of those
voting facilities at 11:59 p.m., Eastern Time, on June 8, 2020;

submitting a properly signed proxy card, which has a later date than your previous vote, and that is
received no later than June 8, 2020; or

attending the virtual Annual Meeting and voting via the internet.

If you hold shares in street name, please refer to information from your bank, broker or other nominee on how to
revoke or submit new voting instructions.

4

Could other matters be decided at the Annual Meeting?

As of the date of this Proxy Statement, we do not know of any matters to be raised at the Annual Meeting other
than those referred to in this Proxy Statement. If other matters are properly presented at the Annual Meeting for
consideration and you are a stockholder of record and have submitted a proxy card, the persons named in your
proxy card will have the discretion to vote on those matters for you.

Who will pay for the cost of this proxy solicitation?

We will pay the cost of soliciting proxies. Proxies may be solicited on our behalf by directors, officers or
employees of the Company (for no additional compensation) in person or by telephone, electronic transmission
and facsimile transmission. Brokers and other nominees will be requested to solicit proxies or authorizations
from beneficial owners and will be reimbursed for their reasonable expenses.

5

PROPOSAL NO. 1—ELECTION OF DIRECTORS

Our Amended and Restated Certificate of Incorporation provides for a classified board of directors divided into
three classes. Todd R. Pedersen, David F. D’Alessandro and Joseph S. Tibbetts, Jr. constitute a class with a term
that expires at the Annual Meeting (the “Class I Directors”); Peter F. Wallace constitutes a class with a term that
expires at our annual meeting of stockholders in 2021 (the “Class II Director”); and Bruce McEvoy, Paul S.
Galant and Jay D. Pauley constitute a class with a term that expires at our annual meeting of stockholders in 2022
(the “Class III Directors”).

Upon the recommendation of the Nominating and Corporate Governance Committee, the full Board of Directors
has considered and nominated the following slate of nominees for a three-year term expiring in 2023: Todd R.
Pedersen, David F. D’Alessandro and Joseph S. Tibbetts, Jr. Action will be taken at the Annual Meeting for the
election of these three Class I nominees.

Unless otherwise instructed, the persons named in the form of proxy card (the “proxyholders”) attached to this
proxy statement intend to vote the proxies held by them for the election of Todd R. Pedersen, David F.
D’Alessandro and Joseph S. Tibbetts, Jr. If any of these three nominees ceases to be a candidate for election by
the time of the Annual Meeting (a contingency which the Board does not expect to occur), such proxies may be
voted by the proxyholders in accordance with the recommendation of the Board.

Nominees for Election to the Board of Directors in 2020

The following information describes the offices held, other business directorships and the term of service of each
director nominee. Beneficial ownership of equity securities of the director nominees is shown under “Ownership
of Securities” below.

Class I—Nominees for Term Expiring in 2023

Name

Age

Principal Occupation and Other Information

Todd R. Pedersen

51 Mr. Pedersen founded Legacy Vivint Smart Home (as defined below under

“The Board of Directors and Certain Governance Matters—The Merger”) in
1999 and served as Legacy Vivint Smart Home’s President, Chief Executive
Officer and Director. In February 2013, Mr. Pedersen relinquished his title
as Legacy Vivint Smart Home’s President and remained its Chief Executive
Officer and Director. He has served as our Chief Executive Officer and
Director since January 2020. In 2011, Mr. Pedersen founded Legacy Vivint
Smart Home’s publicly traded sister company, Vivint Solar, Inc. (“Vivint
Solar”) and served as its Chief Executive Officer from August 2011 through
January 2013. Mr. Pedersen currently serves as a member of Vivint Solar’s
board of directors, a position he has held since November 2012.
Mr. Pedersen was named the Ernst & Young Entrepreneur of the Year in
2010 in the services category for the Utah Region. Mr. Pedersen attended
Brigham Young University.

6

Name

Age

Principal Occupation and Other Information

Class I—Nominees for Term Expiring in 2023

David F. D’Alessandro

Joseph S. Tibbetts, Jr.

69 Mr. D’Alessandro has served as a Director and Chairperson of our Board of
Directors since January 2020. He previously served as a Director of Legacy
Vivint Smart Home since July 2013. Mr. D’Alessandro serves on the boards
of directors of several private companies as well as our publicly traded sister
company, Vivint Solar. From 2010 to September 2017, Mr. D’Alessandro
also served as chairman of the board of directors of SeaWorld
Entertainment, Inc. He served as chairman, president and chief executive
officer of John Hancock Financial Services, Inc. from 2000 to 2004, having
served as president and chief operating officer of the same entity from 1996
to 2000, and guided it through a merger with ManuLife Financial
Corporation in 2004. Mr. D’Alessandro served as president and chief
operating officer of ManuLife in 2004. He is a former partner of the Boston
Red Sox. A graduate of Syracuse University, he holds honorary doctorates
from three colleges and served as vice chairman and a trustee of Boston
University.

67 Mr. Tibbetts has served as a Director since January 2020. Previously, he
served as a Director of Legacy Vivint Smart Home since October 2015.
From March 2017 to March 2018, Mr. Tibbetts served as the interim chief
financial officer of Acquia Corporation, a private company that is a leading
provider of cloud-based, digital experience management solutions. Prior to
that Mr. Tibbetts served as the senior vice president and chief financial
officer of Publicis Sapient, part of Publicis Group SA, from February 2015,
when Publicis acquired Sapient Corporation, to September 2015. Prior to
that Mr. Tibbetts served as senior vice president and global chief financial
officer of Sapient Corporation from October 2006 to February 2015. He
began serving as Sapient Corporation’s treasurer in December 2012 and was
reappointed as Sapient Corporation’s chief accounting officer in June 2013,
a role he previously held from 2009 to 2012. In addition to being Sapient
Corporation’s chief financial officer, Mr. Tibbetts also served as Sapient
Corporation’s managing director- SapientNitro Asia Pacific. Prior to joining
Sapient Corporation, Mr. Tibbetts was the chief financial officer of Novell,
Inc. from February 2003 to June 2006 and, prior to that, he held a variety of
senior financial management positions at Charles River Ventures,
Lightbridge, Inc., and SeaChange International, Inc. Mr. Tibbetts was also
formerly a partner with Price Waterhouse LLP. Mr. Tibbetts currently serves
on the board of directors of our publicly traded sister company, Vivint Solar.
Mr. Tibbetts holds a B.S. in business administration from the University of
New Hampshire.

YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE
ELECTION OF EACH OF THE DIRECTOR NOMINEES NAMED ABOVE.

7

Continuing Members of the Board of Directors

The following information describes the offices held, other business directorships, the class and term of
each director whose term continues beyond the Annual Meeting and who is not subject to election this year.
Beneficial ownership of equity securities for these directors is also shown under “Ownership of Securities”
below.

Class II—Director Whose Term Expires in 2021

Name

Age

Principal Occupation and Other Information

Peter F. Wallace

45 Mr. Wallace has served as a Director since January 2020. Previously, he

Name

Paul S. Galant

served as a Director of Legacy Vivint Smart Home since November 2012.
Mr. Wallace is a Senior Managing Director at The Blackstone Group Inc. in
the Private Equity Group, which he joined in 1997. Mr. Wallace has served
on the board of directors of our publicly traded sister company, Vivint Solar,
Inc., since November 2012 and as chairman of its board since March 2014.
Mr. Wallace also serves on the board of directors of Alight Solutions, Inc.,
Michaels Stores, Inc., Outerstuff, Service King, Tradesmen International and
The Weather Channel Companies. Mr. Wallace was formerly a director of
AlliedBarton Security Services, GCA Services, New Skies Satellites
Holdings Ltd. and SeaWorld Entertainment. Mr. Wallace holds a B.A. in
Government from Harvard College.

Class III—Directors Whose Term Expires in 2022

Age

Principal Occupation and Other Information

52 Mr. Galant has served as a Director since January 2020. Previously, he
served as a Director of Legacy Vivint Smart Home since October 2015.
Mr. Galant served as Chief Executive Officer of Brightstar Corp., a leading
mobile services company for managing devices and accessories and
subsidiary of SoftBank Group Corp., and he has served as an Operating
Partner of SoftBank. Prior to joining Brightstar, Mr. Galant was the Chief
Executive Officer of VeriFone Systems, Inc., and a member of VeriFone’s
board of directors, since October 2013. Prior to joining Verifone, Mr. Galant
served as the CEO of Citigroup Inc.’s Enterprise Payments business since
2010. In this role, Mr. Galant oversaw the design, marketing and
implementation of global business-to-consumer and consumer-to-business
digital payments solutions. From 2009 to 2010, Mr. Galant served as CEO
of Citi Cards, heading Citigroup’s North American and International Credit
Cards business. From 2007 to 2009, Mr. Galant served as CEO of Citi
Transaction Services, a division of Citi’s Institutional Clients Group. From
2002 to 2007, Mr. Galant was the Global Head of the Cash Management
business, one of the largest processors of payments globally. Mr. Galant
joined Citigroup, a multinational financial services corporation, in 2000.
Prior to joining Citigroup, Mr. Galant held positions at Donaldson, Lufkin &
Jenrette, Smith Barney, and Credit Suisse. Mr. Galant also brings broad
financial industry experience from his time as chairman of the NY Federal
Reserve Bank Payments Risk Committee and chairman of The Clearing
House Secure Digital Payments LLC. Mr. Galant was on the board of
directors of Conduent Incorporated, a leading provider of diversified
business services with leading capabilities in transaction processing,
automation and analytics. Mr. Galant holds a B.S. in Economics from
Cornell University where he graduated a Phillip Merrill Scholar.

8

Name

Age

Principal Occupation and Other Information

Bruce McEvoy

42 Mr. McEvoy has served as a Director since January 2020. Previously, he

served as a Director of Legacy Vivint Smart Home since November 2012.
Mr. McEvoy is a Senior Managing Director at The Blackstone Group Inc. in
the Private Equity Group. Before joining The Blackstone Group Inc. in
2006, Mr. McEvoy worked at General Atlantic from 2002 to 2004, and was
a consultant at McKinsey & Company from 1999 to 2002. Mr. McEvoy
currently serves on the board of directors of Center for Autism and Related
Disorders, MB Aerospace, RGIS Inventory Specialists, TeamHealth and our
publicly traded sister company, Vivint Solar. Mr. McEvoy was formerly a
director of Performance Food Group Company, Catalent, Inc., GCA
Services Group, Inc., SeaWorld Entertainment, Inc. and Vistar Corporation.
Mr. McEvoy holds an A.B. in History from Princeton University and an
MBA from the Harvard Business School.

42 Mr. Pauley has served as a Director since January 2020. Previously, he
served as a Director of Legacy Vivint Smart Home since October 2015.
Mr. Pauley is a Managing Director at Summit Partners, which he joined in
2010. Prior to joining Summit Partners, Mr. Pauley was Vice President at
GTCR, a private equity firm, and an associate at Apax Partners, a private
equity and venture capital firm. Before that, he worked for GE Capital.
Mr. Pauley currently serves on the boards of directors of numerous private
companies, including our publicly traded sister company, Vivint Solar.
Mr. Pauley holds a B.S. from the Ohio State University and an MBA from
the Wharton School at the University of Pennsylvania.

Jay D. Pauley

9

THE BOARD OF DIRECTORS AND CERTAIN GOVERNANCE MATTERS

Our Board manages or directs the business and affairs of the Company, as provided by Delaware law, and
conducts its business through meetings of the Board and three standing committees: the Audit Committee, the
Compensation Committee and the Nominating and Corporate Governance Committee.

Our Board evaluates the Company’s corporate governance policies on an ongoing basis with a view towards
maintaining the best corporate governance practices in the context of the Company’s current business
environment and aligning our governance practices closely with the interests of our stockholders. Our Board and
management value the perspective of our stockholders and encourage stockholders to communicate with the
Board as described under “—Communications with the Board” below.

The Merger

On January 17, 2020, the Company consummated the previously announced merger pursuant to that certain
Agreement and Plan of Merger, dated September 15, 2019, by and among the Company, Maiden Merger Sub,
Inc., a subsidiary of the Company (“Merger Sub”), and Legacy Vivint Smart Home, Inc. (“Legacy Vivint Smart
Home”), as amended by Amendment No. 1 to the Agreement and Plan of Merger (the “Amendment” and as
amended, the “Merger Agreement”), dated as of December 18, 2019, by and among the Company, Merger Sub
and Legacy Vivint Smart Home.

Pursuant to the terms of the Merger Agreement, a business combination between the Company and Legacy
Vivint Smart Home was effected through the merger of Merger Sub with and into Legacy Vivint Smart Home,
with Legacy Vivint Smart Home surviving as the surviving company (the “Merger”). Effective as of immediately
prior to the effective time of the Merger (the “Effective Time”), the size of our Board was increased from five
members to ten members and Messrs. Pedersen, Dunn, D’Alessandro, Galant, McEvoy, Pauley, Tibbetts and
Wallace were appointed to serve as directors of the Company. Eugene I. Davis, Tyler S. Kolarik, Andrew A.
McKnight and Joshua A. Pack resigned as directors of the Company. David M. Maura resigned as a director of
the Company on March 26, 2020. The size of our Board was subsequently reduced to seven members. In
connection with the Merger, the name of the Company was changed from “Mosaic Acquisition Corp.” to “Vivint
Smart Home, Inc.” All references herein to “Mosaic” or “Mosaic Acquisition” are to the Company prior to the
Merger.

Controlled Company Exemption

Certain investment funds managed by affiliates of The Blackstone Group Inc. (such investment funds,
collectively, “Blackstone”) beneficially own a majority of the voting power of all outstanding shares of our
common stock. As a result, we are a “controlled company” within the meaning of the NYSE’s corporate
governance standards. Under these corporate governance standards, a company of which more than 50% of the
voting power is held by an individual, group or another company is a “controlled company” and may elect not to
comply with certain corporate governance standards, including the requirements that (1) a majority of our Board
consist of independent directors, (2) our Board has a compensation committee that is composed entirely of
independent directors with a written charter addressing the committee’s purpose and responsibilities and (3) our
Board have a nominating and corporate governance committee that is composed entirely of independent directors
with a written charter addressing the committee’s purpose and responsibilities. We may choose to utilize certain
of these exemptions. If 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 standards and, depending on the Board’s independence determination
with respect to our then-current directors, we may be required to add additional directors to our Board in order to
achieve such compliance within the applicable transition periods.

10

Director Independence and Independence Determinations

Under our Corporate Governance Guidelines and NYSE rules, a director is not independent unless our Board of
Directors affirmatively determines that he or she does not have a direct or indirect material relationship with us
or any of our subsidiaries.

Our Corporate Governance Guidelines define independence in accordance with the independence definition in
the current NYSE corporate governance rules for listed companies. Our Corporate Governance Guidelines
require our Board of Directors to review the independence of all directors at least annually.

In the event a director has a relationship with the Company that is relevant to his or her independence and is not
addressed by the objective tests set forth in the NYSE independence definition, our Board of Directors will
determine, considering all relevant facts and circumstances, whether such relationship is material.

Our Board of Directors has affirmatively determined that each of Messrs. D’Alessandro, Galant, Pauley,
McEvoy, Tibbetts and Wallace is independent under the guidelines for director independence set forth in the
Corporate Governance Guidelines and under all applicable NYSE guidelines, including with respect to
committee membership. Our Board also has determined that each of Messrs. Galant, Pauley and Tibbetts is
“independent” for purposes of Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and that each of Messrs. D’Alessandro, McEvoy and Wallace is “independent” for purposes of
Section 10C(a)(3) of the Exchange Act. In making its independence determinations, our Board of Directors
considered and reviewed all information known to it (including information identified through annual directors’
questionnaires).

Director Nomination Process

The Nominating and Corporate Governance Committee weighs the characteristics, experience, independence and
skills of potential candidates for election to the Board and recommends nominees for director to the Board for
election. In considering candidates for the Board, the Nominating and Corporate Governance Committee also
assesses the size, composition and combined expertise of the Board. As the application of these factors involves
the exercise of judgment, the Nominating and Corporate Governance Committee does not have a standard set of
fixed qualifications that is applicable to all director candidates, although the Nominating and Corporate
Governance Committee does at a minimum assess each candidate’s strength of character, judgment, industry
knowledge or experience, his or her ability to work collegially with the other members of the Board and his or
her ability to satisfy any applicable legal requirements or listing standards. In addition, although the Board
considers diversity of viewpoints, background and experiences, the Board does not have a formal diversity
policy. In identifying prospective director candidates, the Nominating and Corporate Governance Committee
may seek referrals from other members of the Board, management, stockholders and other sources, including
third party recommendations. The Nominating and Corporate Governance Committee also may, but need not,
retain a search firm in order to assist it in identifying candidates to serve as directors of the Company. The
Nominating and Corporate Governance Committee utilizes the same criteria for evaluating candidates regardless
of the source of the referral. When considering director candidates, the Nominating and Corporate Governance
Committee seeks individuals with backgrounds and qualities that, when combined with those of our incumbent
directors, provide a blend of skills and experience to further enhance the Board’s effectiveness.

In recommending that, or determining whether, members of the Board should stand for re-election, the
Nominating and Corporate Governance Committee also may assess the contributions of incumbent directors in
the context of the Board evaluation process and other perceived needs of the Board.

In addition, the Stockholders Agreement (as defined and described further under “Transactions with Related
Persons—Stockholders Agreement”) provides that Blackstone has the right to nominate to our Board of Directors
a number of designees approximately equal to the percentage of our Class A common stock entitled to vote

11

generally in the election of directors as collectively beneficially owned by 313 Acquisition LLC (“313
Acquisition”), Blackstone and their respective affiliates (collectively, the “313 Acquisition Entities”). In addition,
Fortress Investment Group LLC (“Fortress”) has the right to nominate to our Board of Directors one director so
long as Fortress beneficially owns at least 50% of the shares of our Class A common stock it owned immediately
following the consummation of the Merger; provided that the Fortress designee must be (A) Andrew McKnight,
(B) Max Saffian or (C) another senior employee or principal of Fortress who is acceptable to a majority of the
members of the Board of Directors. Under the Stockholders Agreement, Summit Partners, L.P. (“Summit”) has
the right to nominate one director to our Board of Directors so long as the Summit Holders (as defined in the
Stockholders Agreement) beneficially own at least 50% of the shares of our Class A common stock they owned
immediately following the consummation of the Merger. Currently, we have two directors on our Board who are
current employees of Blackstone and who were recommended by Blackstone as director nominees pursuant to
the Stockholders Agreement (Messrs. McEvoy and Wallace), and we have one director on our Board who was
designated by Summit (Mr. Pauley). The provisions of the Stockholders’ Agreement regarding the nomination of
directors will remain in effect until Blackstone is no longer entitled to nominate a director to our Board of
Directors, unless Blackstone requests that they terminate at an earlier date.

When considering whether the nominees have the experience, qualifications, attributes and skills, taken as a
whole, to enable the Board to satisfy its oversight responsibilities effectively in light of our business and
structure, the Board focused primarily on the information discussed in each of the board member’s biographical
information set forth above. We believe that our directors provide an appropriate mix of experience and skills
relevant to the size and nature of our business. In particular, the members of our Board of Directors considered
the following important characteristics:

• Mr. Pedersen’s extensive knowledge of our industry and significant experience, as well as his insights
as the original founder of our firm. Mr. Pedersen has played a critical role in our firm’s successful
growth since its founding and has developed a unique and unparalleled understanding of our business.

• Mr. D’Alessandro’s extensive business and leadership experience, including as Chairman, President

and Chief Executive Officer of John Hancock Financial Services, as well as his familiarity with board
responsibilities, oversight and control resulting from serving on the boards of directors of public
companies.

• Mr. Galant’s significant business and leadership experience, including as the Chief Executive Officer
of Citigroup’s Enterprise Payments business, as well as his familiarity with board responsibilities,
oversight and control resulting from serving on the board of directors of VeriFone Systems.

• Mr. McEvoy’s significant financial and investment experience, including as a Senior Managing

Director in the Private Equity Group at Blackstone, as well as his familiarity with board
responsibilities, oversight and control resulting from serving on the boards of directors of public
companies.

• Mr. Pauley’s significant financial expertise and business experience, including as a Managing Director

at Summit Partners, as well as his familiarity with board responsibilities, oversight and control
resulting from serving on the boards of directors of public companies.

• Mr. Tibbetts’ significant financial expertise and business experience, including as Senior Vice

President and Chief Financial Officer of Sapient Corporation and 20 years at Price Waterhouse LLP
(now PricewaterhouseCoopers LLP) including his experience as an Audit Partner and National
Director of the firm’s Software Services Group, as well as his familiarity with board responsibilities,
oversight and control resulting from serving on the boards of directors of public companies.

• Mr. Wallace’s significant financial expertise and business experience, including as a Senior Managing

Director in the Private Equity Group at Blackstone, as well as his familiarity with board
responsibilities, oversight and control resulting from serving on the boards of directors of public
companies.

12

This process resulted in the Board’s nomination of the three incumbent Class I directors named in this Proxy
Statement and proposed for election by you at the upcoming Annual Meeting.

The Nominating and Corporate Governance Committee will consider director candidates recommended by
stockholders on the same basis as director candidates recommended by current directors, management or other
sources. Any recommendation submitted to the Secretary of the Company should be in writing and should
include any supporting material the stockholder considers appropriate in support of that recommendation, but
must include information that would be required under the rules of the U.S. Securities and Exchange
Commission (the “SEC”) to be included in a proxy statement soliciting proxies for the election of such candidate
and a written consent of the candidate to serve as one of our directors if elected. Stockholders wishing to propose
a candidate for consideration may do so by submitting the above information to the attention of the Secretary,
Vivint Smart Home, Inc., 4931 North 300 West, Provo, Utah 84604. All recommendations for nomination
received by the Secretary that satisfy the requirements in our Bylaws relating to director nominations will be
presented to the Nominating and Corporate Governance Committee for its consideration. Stockholders also must
satisfy the notification, timeliness, consent and information requirements set forth in our Bylaws. These
requirements are also described under “Stockholder Proposals for the 2021 Annual Meeting.”

Board Structure

Our Board of Directors is led by Mr. D’Alessandro, our Chairperson. The Chief Executive Officer position is
separate from the Chairperson position. We believe that the separation of the Chairperson and Chief Executive
Officer positions is appropriate corporate governance for us at this time. Accordingly, Mr. D’Alessandro serves
as Chairperson, while Mr. Pedersen serves as our Chief Executive Officer. Our Board of Directors believes this
structure best encourages the free and open dialogue of competing views and provides for strong checks and
balances. Additionally, Mr. D’Alessandro’s attention to Board of Directors and committee matters allows
Mr. Pedersen to focus more specifically on overseeing the Company’s day-to-day operations, as well as strategic
opportunities and planning.

Executive Sessions

Executive sessions, which are meetings of the non-management members of the Board, are regularly scheduled
throughout the year. In addition, at least once a year, the independent directors meet in a private session that
excludes management and any non-independent directors. Our Chairperson, Mr. D’Alessandro, presides at the
executive sessions.

Communications with the Board

As described in our Corporate Governance Guidelines, stockholders or other interested parties who would like to
communicate with, or otherwise make their concerns known directly to the chairperson of any of the Audit,
Nominating and Corporate Governance and Compensation Committees, any then-serving lead director or the
director designated by the non-management or independent directors as the presiding director, or to the
non-management or independent directors as a group, may do so by addressing such communications or concerns
to the Company’s Chief Legal Officer, 4931 North 300 West, Provo UT 84604, who will forward such
communications to the appropriate party.

13

Board Committees and Meetings

The following table summarizes the membership of each of the Board’s Committees as of December 31, 2019,
and the number of meetings held by each committee during the year ended December 31, 2019.

Audit
Committee

Compensation
Committee

Eugene I. Davis . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tyler S. Kolarik . . . . . . . . . . . . . . . . . . . . . . . . . . .
Andrew A. McKnight . . . . . . . . . . . . . . . . . . . . . .
Joshua A. Pack . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of meetings held in 2019: . . . . . . . . . . .

Chair

X
X
4

Chair
X
X

—

Nominating
and
Corporate
Governance
Committee

Chair
X
X
X
—

All directors are expected to attend all meetings of the Board, meetings of the committees of which they are
members and the annual meeting of stockholders. During the year ended December 31, 2019, the Board held six
meetings. In 2019, all of our directors attended at least 75% of the meetings of the Board and committees during
the time in which he served as a member of the Board or such committee.

Audit Committee

In connection with the Merger, on January 17, 2020, our Board reconstituted the Audit Committee as follows:
Joseph S. Tibbetts, chair; Jay Pauley, member; and Paul S. Galant, member.

Each member of the audit committee qualifies as an independent director under the NYSE corporate governance
standards and the independence requirements of Rule 10A-3 of the Exchange Act. Each member of the audit
committee meets the financial literacy requirements of the NYSE and our Board has determined that each
member of the audit committee qualifies as an “audit committee financial expert” as defined in applicable SEC
rules and has accounting or related financial management expertise.

The duties and responsibilities of the Audit Committee are set forth in its charter, which may be found at
www.vivint.com under Investor Relations: Corporate Governance: Governance Documents: Audit Committee
Charter, and include oversight of the following:

•

•

•

•

•

the Company’s accounting and financial reporting processes and internal control over financial
reporting, as well as the audit and integrity of the Company’s financial statements;

the independent registered public accounting firm’s qualifications, performance and independence;

the performance of our internal audit function;

the Company’s compliance with applicable law (including U.S. federal securities laws and other legal
and regulatory requirements); and

risk assessment and risk management, including, but not limited to, the Company’s IT security
program.

The Audit Committee also prepares the report of the committee required by the rules and regulations of the SEC
to be included in our annual proxy statement.

With respect to our reporting and disclosure matters, the responsibilities and duties of the Audit Committee
include reviewing and discussing with management and the independent registered public accounting firm our
annual audited financial statements and quarterly financial statements prior to inclusion in our Annual Report on
Form 10-K, Quarterly Reports on Form 10-Q or other public filings in accordance with applicable rules and
regulations of the SEC.

14

The charter of the Audit Committee permits the committee to delegate any or all of its authority to one or more
subcommittees. In addition, the Audit Committee has the authority under its charter to engage independent
counsel and other advisors as it deems necessary or advisable.

Compensation Committee

In connection with the Merger, on January 17, 2020, our Board reconstituted the Compensation Committee as
follows: David F. D’Alessandro, chair; Bruce McEvoy, member; and Peter F. Wallace, member. Each of Messrs.
D’Alessandro, McEvoy and Wallace has been determined to be “independent” as defined by our Corporate
Governance Guidelines and the NYSE listing standards applicable to boards of directors in general and
compensation committees in particular.

The duties and responsibilities of the Compensation Committee are set forth in its charter, which may be found at
www.vivint.com under Investor Relations: Corporate Governance: Governance Documents: Compensation
Committee Charter, and include the following:

•

•

•

•

oversight of the Company’s compensation policies, plans and benefit programs, and overall
compensation philosophy;

oversight of the compensation of the Company’s Chief Executive Officer and other executive officers;

approving and evaluating the executive officer compensation plans, policies and programs of the
Company; and

administering the Company’s equity compensation plans.

With respect to our reporting and disclosure matters, the responsibilities and duties of the Compensation
Committee include overseeing the preparation of the Compensation Discussion and Analysis for inclusion in our
annual proxy statement and Annual Report on Form 10-K in accordance with applicable rules and regulations of
the SEC.

The charter of the Compensation Committee permits the committee to delegate any or all of its authority to one
or more subcommittees and to delegate to one or more of our officers the authority to make awards to team
members other than any Section 16 officer under our incentive compensation or other equity-based plan, subject
to compliance with the plan and the laws of our state of jurisdiction. In addition, the Compensation Committee
has the authority under its charter to retain outside consultants or advisors, as it deems necessary or advisable.

See “Executive Compensation—Compensation Discussion and Analysis for Legacy Vivint Smart Home, Inc.—
Compensation Determination Process” for a description of our process for determining compensation, and
“Executive Compensation—Compensation Discussion and Analysis for Legacy Vivint Smart Home, Inc.—Role
of Compensation Consultant” for a description of the role of our independent compensation consultant.

Nominating and Corporate Governance Committee

In connection with the Merger, on January 17, 2020, our Board reconstituted the Nominating and Corporate
Governance Committee as follows: Peter F. Wallace, chair; David F. D’Alessandro, member; and Paul S. Galant,
member. Each of Messrs. Wallace, D’Alessandro and Galant has been determined to be “independent” as defined
by our Corporate Governance Guidelines and the NYSE listing standards.

The duties and responsibilities of the Nominating and Corporate Governance Committee are set forth in its
charter, which may be found at www.vivint.com under Investor Relations: Corporate Governance: Governance
Documents: Nominating and Corporate Governance Committee Charter, and include the following:

•

identifying individuals qualified to become new board of directors members, consistent with criteria
approved by the board of directors;

15

•

•

•

•

•

•

reviewing the qualifications of incumbent directors to determine whether to recommend them for
reelection and selecting, or recommending that the Board select, the director nominees for the next
annual meeting of stockholders;

recommending members of the Board to serve on committees of the Board and evaluating the functions
and performance of such committees;

reviewing and recommending to the Board corporate governance principles applicable to us;

overseeing the evaluation of the Board and management;

overseeing and approving the management continuity planning process; and

shaping the corporate governance of the Company.

The charter of the Nominating and Corporate Governance Committee permits the committee to delegate any or
all of its authority to one or more subcommittees. In addition, the Nominating and Corporate Governance
Committee has the authority under its charter to retain outside counsel or other experts as it deems necessary or
advisable.

Committee Charters and Corporate Governance Guidelines

Our commitment to good corporate governance is reflected in our Corporate Governance Guidelines, which
describe our Board of Directors’ views and policies on a wide range of governance topics. These Corporate
Governance Guidelines are reviewed from time to time by our Nominating and Corporate Governance
Committee and, to the extent deemed appropriate in light of emerging practices, revised accordingly, upon
recommendation to and approval by our Board of Directors.

Our Corporate Governance Guidelines, Audit Committee, Compensation Committee, Nominating and Corporate
Governance Committee charters, and other corporate governance information are available on our website at
www.vivint.com under Investor Relations: Corporate Governance: Governance Documents. Any stockholder also
may request them in print, without charge, by contacting the Secretary of Vivint Smart Home, Inc., 4931 North
300 West, Provo UT 84604.

Code of Business Conduct and Ethics

We maintain a Code of Business Conduct and Ethics that is applicable to all of our directors, officers and
employees, including our Chairperson, Chief Executive Officer, Chief Financial Officer, Chief Accounting
Officer and other senior officers. The Code of Business Conduct and Ethics sets forth our policies and
expectations on a number of topics, including conflicts of interest, corporate opportunities, confidentiality,
compliance with laws (including insider trading laws), use of our assets and business conduct and fair dealing.
This Code of Business Conduct and Ethics also satisfies the requirements for a code of ethics, as defined by Item
406 of Regulation S-K promulgated by the SEC. The Code of Business Conduct and Ethics may be found on our
website at www.vivint.com under Investor Relations: Corporate Governance: Governance Documents: Code of
Business Conduct and Ethics.

We will disclose within four business days any substantive changes in or waivers of the Code of Business
Conduct and Ethics granted to our principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, by posting such information on our website as set
forth above rather than by filing a Current Report on Form 8-K. In the case of a waiver for an executive officer or
a director, the required disclosure also will be made available on our website within four business days of the
date of such waiver.

Oversight of Risk Management

The Board has extensive involvement in the oversight of risk management related to us and our business. The
Board accomplishes this oversight both directly and through its Audit Committee, Compensation Committee and

16

Nominating and Corporate Governance Committee, each of which assists the Board in overseeing a part of our
overall risk management and regularly reports to the Board. The Audit Committee represents the Board by
periodically reviewing our accounting, reporting and financial practices, including the integrity of our financial
statements, the surveillance of administrative and financial controls, our compliance with legal and regulatory
requirements and our enterprise risk management program, including our IT security program. Through its
regular meetings with management, including the finance, legal and internal audit functions, the Audit
Committee reviews and discusses all significant areas of our business and summarizes for the Board all areas of
risk and the appropriate mitigating factors. The Compensation Committee considers, and discusses with
management, management’s assessment of certain risks, including whether any risks arising from our
compensation policies and practices for our employees are reasonably likely to have a material adverse effect on
us. The Nominating and Corporate Governance Committee oversees and evaluates programs and risks associated
with Board organization, membership and structure, succession planning and corporate governance. In addition,
our Board receives periodic detailed operating performance reviews from management.

Anti-Hedging and Pledging Policies

The Company’s insider trading policy prohibits directors, officers, employees and agents (such as consultants
and independent contractors) of the Company from pledging Company securities as collateral for loans and from
engaging in transactions in publicly traded options, such as puts and calls, and other derivative securities with
respect to the Company’s securities. This prohibition extends to any hedging or similar transactions designed to
decrease the risks associated with holding Company securities.

Compensation Committee Interlocks and Insider Participation

During 2019, our compensation committee was comprised of our former directors Eugene I. Davis, Tyler S.
Kolarik and Andrew A. McKnight. No member of the compensation committee was at any time during fiscal
year 2019, or at any other time, one of our employees. None of our executive officers has served as a director or
member of a compensation committee (or other committee serving an equivalent function) of any entity, one of
whose executive officers served as a director of our board of directors or member of our compensation
committee.

Compensation of Directors

Compensation of Directors of Vivint Smart Home, Inc. (f/k/a Mosaic Acquisition Corp.) in 2019

Until the completion of the Merger, Mosaic’s sponsors, officers and directors, or any of their respective affiliates,
were reimbursed for any reasonable out-of-pocket expenses incurred in connection with activities on our behalf
such as identifying potential target businesses and performing due diligence on suitable business combinations.
Mosaic’s audit committee reviewed on a quarterly basis all payments that were made to Mosaic’s sponsors,
officers, directors or our or any of their affiliates. Other than as described above, none of Mosaic’s directors
received compensation for their service on Mosaic’s board of directors for the fiscal year ending December 31,
2019.

Compensation of Directors of Vivint Smart Home, Inc. Following the Merger

On January 17, 2020, our Board of Directors approved a non-employee director compensation program, effective
immediately, under which directors (other than directors employed by Blackstone, Fortress and Summit) will
receive (i) annual compensation consisting of $150,000 in cash and $120,000 in RSUs; and (ii) reimbursement, in
accordance with our policy or practice, for all reasonable out-of-pocket expenses associated with attendance at
board and committee meetings. The chairpersons of the Compensation Committee, Audit Committee and
Nominating and Corporate Governance Committee will also receive an additional $10,000, $20,000 and $10,000,
respectively, in cash. Annual RSU grants to non-employee directors will be made immediately following each
annual meeting of stockholders and will vest on the date of the next annual meeting of stockholders following the
grant date.

17

Compensation of Directors of Legacy Vivint Smart Home, Inc. in 2019

The members of Legacy Vivint Smart Home’s board of directors other than David F. D’Alessandro, who was
elected to Legacy Vivint Smart Home’s board of directors in fiscal 2013, and Paul Galant and Joseph S. Tibbetts,
Jr., who were elected to Legacy Vivint Smart Home’s board of directors in October 2015, received no additional
compensation for serving on Legacy Vivint Smart Home’s board of directors or audit committee or
compensation committee during 2019.

In connection with the election of each of Messrs. D’Alessandro, Galant and Tibbetts, Legacy Vivint Smart
Home entered into a letter agreement setting forth the compensation terms related to his service on the Board.
Pursuant to their respective letter agreements, Legacy Vivint Smart Home would pay each of them an annual
retainer of $150,000 per year, and Messrs. D’Alessandro, Galant and Tibbetts would not be eligible for any
bonus amounts or be eligible to participate in any of Legacy Vivint Smart Home’s employee benefit plans.

In addition, in 2013, an affiliate of Mr. D’Alessandro was granted 500,000 Class B Units (“Class B Units”) in
313 Acquisition, Legacy Vivint Smart Home’s parent, which are similar to the Class B Units granted to Legacy
Vivint Smart Home’s NEOs as described below under “Compensation Discussion and Analysis for Legacy
Vivint Smart Home Inc.”. The Class B Units were initially divided into a time-vesting portion (one-third of the
Class B Units granted), a 2.0x exit-vesting portion (one-third of the Class B Units granted), and a 3.0x exit-
vesting portion (one-third of the Class B Units granted). The vesting terms of these units, which have a “vesting
reference date” of July 18, 2013, are substantially similar to the Class B Units previously granted to Legacy
Vivint Smart Home’s NEOs and are described under “Executive Compensation—Compensation Discussion and
Analysis for Legacy Vivint Smart Home Inc.—Narrative to Legacy Vivint Smart Home’s Summary
Compensation Table and Grants of Plan-Based Awards—Equity Awards”. Subsequently, in March 2019, 313
Acquisition entered into an agreement with the affiliate of Mr. D’Alessandro which provided that the 2.0x exit-
vesting portion of the Class B Units and 3.0x exit portion of the Class B Units would be further modified such
that (i) the 2.0x exit-vesting portion will instead vest on the earlier to occur of (x) March 4, 2020, and (y) a
change of control and (ii) the 3.0x exit-vesting portion will instead vest on the earlier to occur of (x) March 4,
2021, and (y) a change of control, subject, in each case, to Mr. D’Alessandro continuing to serve on Legacy
Vivint Smart Home’s board of directors as of such date.

On September 20, 2016, each of Messrs. Galant and Tibbetts was granted an award of stock appreciation rights
(“SARs”) pursuant to the Vivint Group Plan (as defined in “Executive Compensation— Compensation
Elements—Long-Term Incentive Compensation—Vivint Group, Inc. Stock Appreciation Rights”) covering
84,034 shares of common stock of Vivint Group, Inc. (“Vivint Group”) with a strike price of $1.19 per share,
which became vested and exercisable on July 1, 2017. In connection with the spin-off of Vivint Wireless, Inc.
from Legacy Vivint Smart Home in 2019, the strike price of the SARs held by Messrs. Galant and Tibbetts was
reduced to $1.1637. Upon exercise of a vested SAR, Vivint Group was to pay the holder an amount in cash,
shares of common stock of Vivint Group, shares or units of capital stock of 313 Acquisition or one of 313
Acquisition’s majority-owned subsidiaries that beneficially owns, directly or indirectly, a majority of the voting
power of Vivint Group’s capital stock valued at fair market value, or any combination thereof equal to the
number of shares subject to such vested SAR which are being exercised, multiplied by the excess of the fair
market value of one share over the applicable strike price, and reduced by the aggregate amount of all applicable
income and employment taxes required to be withheld.

In addition, on June 8, 2018, each of Messrs. Galant and Tibbetts was granted an award of 180,000 restricted
stock units (“RSUs”) and on March 4, 2019, an affiliate of Mr. D’Alessandro was granted an award of 236,111
RSUs, in each case covering an equivalent number of shares of Vivint Group common stock and pursuant to the
Vivint Group Plan. The RSUs granted to Messrs. Galant and Tibbetts become vested on each of the first three
anniversaries of June 8, 2018. The RSUs granted to the affiliate of Mr. D’Alessandro become vested on each of
the first three anniversaries of September 20, 2018. Vested RSUs will be settled as soon as reasonably practicable
(and, in any event, within two and one-half months) following the earliest to occur of (x) the termination of a
director’s service other than (1) a removal of such director for Cause (as defined in the Vivint Group Plan) or

18

(2) a resignation of such director at a time when grounds exist for a removal for Cause, (y) a Change of Control
(as defined in the Vivint Group Plan) and (z) the fifth anniversary of the grant date. Upon settlement of a vested
RSU, Vivint Group was to pay the holder an amount equal to one share of common stock of Vivint Group in
cash, shares of common stock of Vivint Group, shares or units of capital stock of 313 Acquisition or one of 313
Acquisition’s majority-owned subsidiaries that beneficially owns, directly or indirectly, a majority of the voting
power of Vivint Group’s capital stock valued at fair market value or any combination thereof. Prior to an initial
public offering, if a director’s service was terminated due to death or disability, such director had the right,
subject to specified limitations and for a specified period following the termination date, to cause the Company to
purchase on one occasion all, but not less than all, of such director’s vested RSUs, in either case, at the fair
market value of such units. In addition, if the director’s service is terminated for any reason other than cause or,
with respect to the RSUs granted to Messrs. Galant and Tibbetts, a restrictive covenant violation, if the director
terminates his service voluntarily when grounds do not exist for a termination with cause or, with respect to
Messrs. Galant and Tibbetts, if the director engages in any conduct that would be a violation of a restrictive
covenant set forth in the applicable award agreement but for the fact that the conduct occurred outside the
relevant periods (any such conduct a “Competitive Activity”), then the Company has the right, for a specified
period following the termination of such director’s service, to purchase all of such director’s vested RSUs at fair
market value.

The award agreements with Messrs. Galant and Tibbetts relating to the RSUs contain specified restrictive
covenants, including an indefinite covenant on confidentiality of information, and covenants related to
non-disparagement, non-competition and non-solicitation of our employees and subscribers and affiliates at all
times during the director’s service, and for a one-year period after any termination of his service.

In connection with the merger, the Class B Units, SARs and RSUs held by Messrs. D’Alessandro, Galant and
Tibbetts were treated as described under “Executive Compensation—Compensation Discussion and Analysis for
Legacy Vivint Smart Home, Inc.—Treatment of Equity Incentive Awards in Connection with the Merger”.

The following table provides information on the compensation of Legacy Vivint Smart Home’s non-management
directors in fiscal 2019.

Name

David F. D’Alessandro . . . . . . . . . . .
Paul S. Galant . . . . . . . . . . . . . . . . . .
Bruce McEvoy (2)
. . . . . . . . . . . . . .
Jay D. Pauley (2) . . . . . . . . . . . . . . . .
Joseph S. Tibbetts, Jr. . . . . . . . . . . . .
. . . . . . . . . . . . .
Peter F. Wallace (2)

Fees Earned or Paid in
Cash ($)

Stock Awards ($) (1)

Total ($)

150,000
150,000
—
—
150,000
—

255,000
—
—
—
—
—

405,000
150,000
—
—
150,000
—

(1) The amounts reported in this column for Mr. D’Alessandro reflect the grant date fair value of the RSUs granted to him in
2019, calculated in accordance with Topic 718. As of December 31, 2019, Mr. D’Alessandro held Class B Units as
follows: 166,667 unvested Class B Units which will vest subject to his continued service, on the earlier to occur of
(x) March 4, 2020, and (y) a change of control, 166,667 unvested Class B Units will vest, subject to his continued
service, on the earlier to occur of (x) March 4, 2021, and (y) a change of control and 166,667 vested Class B Units. As of
December 31, 2019, Mr. D’Alessandro held RSUs as follows: 157,407 unvested RSUs subject to time-vesting criteria
that vest in two equal installments on September 20, 2020 and September 20, 2021 and 78,704 vested RSUs. Each of
Messrs. Galant and Tibbetts held 84,034 stock appreciation rights covering shares of common stock of Vivint Group,
which became vested and exercisable on July 1, 2017. Messrs. Galant and Tibbetts each held RSUs as follows:
120,000 RSUs subject to time-vesting criteria that vest in two equal installments on June 8, 2020 and June 8, 2021 and
60,000 vested RSUs.

(2) Employees of Blackstone and Summit did not receive any compensation from Legacy Vivint Smart Home for their

service on its Board of Directors.

19

PROPOSAL NO. 2—RATIFICATION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

The Audit Committee has selected Ernst & Young LLP to serve as our independent registered public accounting
firm for 2020.

Although ratification is not required by our Bylaws or otherwise, the Board is submitting the selection of Ernst &
Young LLP to our stockholders for ratification because we value our stockholders’ views on the Company’s
independent registered public accounting firm. If our stockholders fail to ratify the selection, it will be considered
as notice to the Board and the Audit Committee to consider the selection of a different firm. Even if the selection
is ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting
firm at any time during the year if it determines that such a change would be in the best interests of the Company
and our stockholders.

A representative of Ernst & Young LLP is expected to be present at the Annual Meeting. The representative will
also have the opportunity to make a statement if he or she desires to do so, and the representative is expected to
be available to respond to appropriate questions. A representative of WithumSmith+Brown, PC (“Withum”), the
Company’s independent registered public accounting firm for 2017, 2018 and 2019 is not expected to be present
at the Annual Meeting.

The shares represented by your proxy will be voted “FOR” the ratification of the selection of Ernst & Young
LLP unless you specify otherwise.

Change of the Company’s Independent Registered Public Accounting Firm

In a Current Report on Form 8-K filed on January 24, 2020 (as amended on January 27, 2020 and March 13,
2020, the “Form 8-K”), the Company disclosed that on January 17, 2020, the Audit Committee of the Board
approved the engagement of Ernst & Young LLP (“EY”) as the Company’s independent registered public
accounting firm to audit the Company’s consolidated financial statements for the year ending December 31,
2020. EY served as the independent registered public accounting firm of Legacy Vivint Smart Home prior to the
Merger. Accordingly, Withum, the Company’s independent registered public accounting firm prior to the
Merger, was informed that it would be replaced by EY as the Company’s independent registered public
accounting firm following completion of the Company’s audit for the year ended December 31, 2019, which
consisted only of the accounts of the pre-merger special purpose acquisition company.

In the Form 8-K, the Company disclosed that Withum’s report on the Company’s financial statements as of
December 31, 2018 and 2017 and the related statements of operations, changes in shareholders’ equity and cash
flows for the years ended December 31, 2018 and the period from July 26, 2017 (inception) through
December 31, 2017 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or
modified as to uncertainty, audit scope or accounting principles.

In addition, Withum’s report on the Company’s financial statements as of December 31, 2019 and the related
statements of operations, changes in shareholders’ equity and cash flows for the year ended December 31, 2019
did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to
uncertainty, audit scope or accounting principles.

In the Form 8-K, the Company disclosed that during the period from July 26, 2017 (inception) through
December 31, 2018 and the subsequent period through January 24, 2020, there were no: (i) disagreements with
Withum on any matter of accounting principles or practices, financial statement disclosures or audited scope or
procedures, which disagreements if not resolved to Withum’s satisfaction would have caused Withum to make
reference to the subject matter of the disagreement in connection with its report or (ii) reportable events as
defined in Item 304(a)(1)(v) of Regulation S-K.

20

In addition, during the subsequent period through March 13, 2020, the date of Withum’s opinion with respect to
the balance sheets of the Company as of December 31, 2019 and 2018, and the related statements of operations,
changes in stockholders’ equity and cash flows for the years ended December 31, 2019 and 2018, and the related
notes, there were no: (i) disagreements with Withum on any matter of accounting principles or practices,
financial statement disclosures or audited scope or procedures, which disagreements if not resolved to Withum’s
satisfaction would have caused Withum to make reference to the subject matter of the disagreement in
connection with its report or (ii) reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.

In the Form 8-K, the Company disclosed that during the year period from July 26, 2017 (inception) to
December 31, 2017, the year ended December 31, 2018 and the interim period through January 24, 2020, the
Company did not consult EY with respect to either (i) the application of accounting principles to a specified
transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company’s
financial statements, and no written report or oral advice was provided to the Company by EY that EY concluded
was an important factor considered by the Company in reaching a decision as to the accounting, auditing or
financial reporting issue; or (ii) any matter that was either the subject of a disagreement, as that term is described
in Item 304(a)(1)(iv) of Regulation S-K under the Exchange Act and the related instructions to Item 304 of
Regulation S-K under the Exchange Act, or a reportable event, as that term is defined in Item 304(a)(1)(v) of
Regulation S-K under the Exchange Act.

In addition, during the subsequent period through March 13, 2020, the Company did not consult EY with respect
to either (i) the application of accounting principles to a specified transaction, either completed or proposed; or
the type of audit opinion that might be rendered on the Company’s financial statements, and no written report or
oral advice was provided to the Company by EY that EY concluded was an important factor considered by the
Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that
was either the subject of a disagreement, as that term is described in Item 304(a)(1)(iv) of Regulation S-K under
the Exchange Act and the related instructions to Item 304 of Regulation S-K under the Exchange Act, or a
reportable event, as that term is defined in Item 304(a)(1)(v) of Regulation S-K under the Exchange Act.

The Company provided Withum with a copy of the disclosures made by the Company in the Form 8-K and the
additional disclosures set forth above and requested that Withum furnish the Company with a letter addressed to
the SEC stating whether it agrees with the statements made by the Company in response to Item 304(a) of
Regulation S-K and, if not, stating the respects in which it does not agree. A letter from Withum with respect to
the disclosures made by the Company in the Form 8-K was attached as Exhibit 16.1 to the Form 8-K. A letter
from Withum with respect to the additional disclosures set forth above is attached as Exhibit 16.1 hereto.

Audit and Non-Audit Fees

In connection with the audit of the Company’s 2019 financial statements, we entered into an agreement with
Withum which sets forth the terms by which Withum would perform audit services for the Company.

The following table presents fees for professional services rendered by Withum for the audits of our annual
financial statements for the years ended December 31, 2019 and 2018:

Audit fees(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Audit-related fees(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax fees(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All other fees(4)

2019

2018

$87,870
—
3,500
—

$61,634
—
—
—

Total: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$91,370

$61,634

(1) Audit fees consist of fees billed for professional services rendered for the audit of our financial statements and services

that are normally provided by Withum in connection with regulatory filings. The aggregate fees billed by Withum in

21

2019 and 2018 for professional services rendered for the audit of our annual financial statements included in our
Form 10-K, review of the quarterly financial information included in our subsequent Exchange Act filings and review of
the financial information included in our Form S-4 related to our pro forma.

(2) Audit-related fees consist of fees billed for assurance and related services that are reasonably related to performance of
the audit or review of our year-end financial statements and are not reported under “Audit Fees.” These services include
attest services that are not required by statute or regulation and consultation concerning financial accounting and
reporting standards. We did not pay Withum for consultations concerning financial accounting and reporting standards
for the year ended December 31, 2019 and 2018.

(3) Tax fees consist of fees billed for professional services relating to tax compliance, tax planning and tax advice.
(4) All other fees consist of fees billed for all other services. We did not pay Withum for other services for the year ended

December 31, 2019 and 2018.

The Audit Committee considered whether providing the non-audit services shown in this table was compatible
with maintaining Withum’s independence and concluded that it was.

Pre-Approval Policy for Services of Independent Registered Public Accounting Firm

Consistent with SEC policies regarding auditor independence and the Audit Committee’s charter, the Audit
Committee has responsibility for engaging, setting compensation for and reviewing the performance of the
independent registered public accounting firm. In exercising this responsibility, the Audit Committee has
established procedures relating to the approval of all audit and non-audit services that are to be performed by our
independent registered public accounting firm and, subject to the next sentence, pre-approves all audit and
permitted non-audit services provided by any independent registered public accounting firm prior to each
engagement. As part of such procedures, the Audit Committee has delegated to its chair the authority to review
and pre-approve any such services in between the Audit Committee’s regular meetings. Any such pre-approval
will be presented to and ratified by the full Audit Committee at the next regularly scheduled meeting and
reflected in the minutes thereof.

YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION
OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FOR 2020.

22

REPORT OF THE AUDIT COMMITTEE

The Audit Committee operates pursuant to a charter which is reviewed annually by the Audit Committee.
Additionally, a brief description of the primary responsibilities of the Audit Committee is included in this Proxy
Statement under “The Board of Directors and Certain Governance Matters—Board Committees and Meetings—
Audit Committee.” Under the Audit Committee charter, our management is responsible for the preparation,
presentation and integrity of our financial statements, the application of accounting and financial reporting
principles and our internal controls and procedures designed to assure compliance with accounting standards and
applicable laws and regulations. The independent registered public accounting firm is responsible for auditing
our financial statements and expressing an opinion as to their conformity with accounting principles generally
accepted in the United States of America.

In the performance of its oversight function, the Audit Committee reviewed and discussed the audited financial
statements of the Company with management and with the independent registered public accounting firm. The
Audit Committee also discussed with the independent registered public accounting firm the matters required to
be discussed by Public Company Accounting Oversight Board Auditing Standard No. 1301 “Communications
with Audit Committees” and the rules of the SEC. In addition, the Audit Committee received the written
disclosures and the letter from the independent registered public accounting firm required by applicable
requirements of the Public Company Accounting Oversight Board regarding the independent registered public
accounting firm’s communications with the Audit Committee concerning independence, and discussed with the
independent registered public accounting firm their independence.

Based upon the review and discussions described in the preceding paragraph, the Audit Committee recommended
to the Board that the audited financial statements of the Company be included in the Annual Report on Form
10-K for the fiscal year ended December 31, 2019 filed with the SEC.

Submitted by the Audit Committee of the Company’s Board of Directors:

Joseph S. Tibbetts, Jr., Chair
Paul S. Galant
Jay D. Pauley

23

PROPOSAL NO. 3—NON-BINDING VOTE ON EXECUTIVE COMPENSATION

In accordance with the requirements of Section 14A of the Exchange Act and the related rules of the SEC,
stockholders are being asked to approve, in a non-binding advisory vote, the compensation of our named
executive officers as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion
and Analysis with respect to Legacy Vivint Smart Home, compensation tables for Legacy Vivint Smart Home
and narrative discussion. While the results of the vote are non-binding and advisory in nature, the Board intends
to carefully consider the results of this vote.

The text of the resolution in respect of Proposal No. 3 is as follows:

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed in this Proxy
Statement pursuant to the rules of the SEC, including the Compensation Discussion and Analysis for Legacy
Vivint Smart Home, compensation tables for Legacy Vivint Smart Home and any related narrative discussion, is
hereby APPROVED.”

As described in the Compensation Discussion and Analysis for Legacy Vivint Smart Home section of this Proxy
Statement, our executive compensation programs and underlying principles, as developed and administered by
the Compensation Committee, are designed to provide competitive pay opportunities within the labor markets in
which we compete to support the attraction and retention of highly qualified executives while promoting our core
values. Our executive compensation programs are structured to be consistent with our pay for performance
philosophy and utilize performance measures that are intended to align the executive team’s incentives with the
long-term interests of the Company and its stockholders.

In considering their vote, stockholders may wish to review with care the information on our compensation
policies and decisions regarding the named executive officers presented in the Compensation Discussion and
Analysis for Legacy Vivint Smart Home on pages 29 to 64, as well as the discussion regarding the Compensation
Committee on page 15.

The shares represented by your proxy will be voted “FOR” the approval of the compensation paid to our named
executive officers unless you specify otherwise.

YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL OF
THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS.

24

PROPOSAL NO. 4— NON-BINDING VOTE ON FREQUENCY OF STOCKHOLDER VOTES ON
EXECUTIVE COMPENSATION

In accordance with the requirements of Section 14A of the Exchange Act and the related rules of the SEC,
stockholders are being asked to recommend, in a non-binding advisory vote, whether a non-binding stockholder
vote to approve the compensation paid to our named executive officers (that is, votes similar to the non-binding
vote in Proposal No. 3 on page 24) should occur every one, two or three years. While the results of the vote are
non-binding and advisory in nature, the Board intends to carefully consider the results of the vote.

In considering their vote, stockholders may wish to review with care the information presented in connection
with Proposal No. 3 on page 24, the information on our compensation policies and decisions regarding the named
executive officers presented in the Compensation Discussion and Analysis for Legacy Vivint Smart Home on
pages 29 to 64 as well as the discussion regarding the Compensation Committee on page 15.

We believe a one-year frequency is most consistent with the Company’s approach to compensation. Our reasons
include:

• We believe that an annual advisory vote on executive compensation will allow our stockholders to

provide us with direct input on our compensation philosophy, policies and practices as disclosed in the
proxy statement each year.

• We believe that an annual advisory vote on executive compensation is consistent with our policy of

seeking input from our stockholders on corporate governance matters and our executive compensation
philosophy, policies and practices even though it is not required by law.

The shares represented by your proxy will be voted for every “ONE YEAR” with respect to how frequently a
stockholder vote to approve, in a non-binding vote, the compensation paid to our named executive officers
should occur unless you specify otherwise.

YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “ONE YEAR” WITH RESPECT
TO HOW FREQUENTLY A STOCKHOLDER VOTE TO APPROVE, IN A NON-BINDING VOTE,
THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS SHOULD OCCUR.

25

Executive Officers of the Company

Set forth below is certain information regarding each of our current executive officers other than Mr. Pedersen,
whose biographical information is presented under “Nominees for Election to the Board of Directors in 2020.”

Name and Title

Dale R. Gerard
Chief Financial
Officer

Scott R. Hardy
Chief Operating
Officer

Age

49

43

JT Hwang
Chief Technology
Officer

45

Principal Occupation and Other Information

Mr. Gerard was named our Chief Financial Officer in March 2020. Prior to
this, he served as Legacy Vivint Smart Home’s interim Chief Financial Officer
beginning October 2019 and our interim Chief Financial Officer beginning
January 2020. Prior to this, he served as Legacy Vivint Smart Home’s Senior
Vice President of Finance and Treasurer from September 2014 to October 2019
and Vice President of Finance and Treasurer from January 2013 to September
2014. Previously, he served as Legacy Vivint Smart Home’s Treasurer from
March 2010 to January 2013. Mr. Gerard holds a B.S. in Accounting and an
MBA from Purdue University.

Mr. Hardy has served as Legacy Vivint Smart Home’s Chief Operating Officer
since December 2016 and as our Chief Operating Officer since January 2020.
Prior to this, he served as Legacy Vivint Smart Home’s Senior Vice President,
Inside Sales from February 2014 to December 2016. He joined Legacy Vivint
Smart Home as Vice President, Business Analytics in 2013. Prior to joining
Legacy Vivint Smart Home, Mr. Hardy served as Principal at the Cicero
Group, LP, a consulting and market research firm, from 2011 to 2013, where
he led the firm’s strategy consulting practice. Mr. Hardy also served in senior
consulting roles at McKinsey and Company from 2006 to 2009 and Monitor
Group from 2000 to 2002, where he focused on growth strategy and sales and
marketing projects. From 2009 to 2011, Mr. Hardy held senior roles at Cisco,
an information technology company, including Director of Cisco’s
Telepresence Cloud business unit and Director of Product Management, and
starting in 2009 until their acquisition by Cisco in the same year, he led
strategy and business development for TANDBERG, a provider of video
conferencing systems. Mr. Hardy holds a B.S. in Economics from Brigham
Young University and an MBA from the Harvard Business School.

Mr. Hwang was appointed our Chief Technology Officer effective March
2020. Prior to this, he served as Legacy Vivint Smart Home’s Chief
Engineering Officer from February 2017 and our Chief Engineering Officer
from January 2020, Legacy Vivint Smart Home’s Chief Information Officer
from June 2010 to January 2013 and from August 2014 to February 2017, and
Legacy Vivint Smart Home’s Chief Technology Officer from March 2008 to
June 2010 and January 2013 to August 2014. He has over 19 years of
experience in the computer science field. Prior to joining Legacy Vivint Smart
Home, Mr. Hwang was Chief Architect at Netezza Corporation, a global
provider of data warehouse appliance solutions. He also served as Chief
Architect of Hewlett-Packard’s Advanced Solutions Lab. Mr. Hwang holds a
B.S. of science and a Master of Engineering, Computer Science from
Massachusetts Institute of Technology.

26

Name and Title

Age

Principal Occupation and Other Information

Patrick E. Kelliher
Chief Accounting
Officer

57

50

Shawn J. Lindquist
Chief Legal
Officer and
Secretary

Todd M. Santiago
Chief Revenue
Officer

47

Mr. Kelliher has served as Legacy Vivint Smart Home’s Chief Accounting
Officer since February 2014 and our Chief Accounting Officer since January
2020. Prior to this, he served as Legacy Vivint Smart Home’s Vice President
of Finance and Corporate Controller from March 2012 to February 2014. Prior
to joining Legacy Vivint Smart Home, Mr. Kelliher served as Senior Director
of Finance and Business Unit Controller of Adobe from November 2009 to
March 2012. Prior to Adobe, Mr. Kelliher was the Vice President of Finance
and Controller for Omniture, Inc. Before that he has served in various senior
finance roles at other high growth technology companies. Mr. Kelliher holds a
B.S. in Accounting and Finance from Northern Illinois University and an MBA
from the University of Chicago Graduate School of Business.

Mr. Lindquist has served as Legacy Vivint Smart Home’s Chief Legal Officer
and Secretary since May 2016 and our Chief Legal Officer and Secretary since
January 2020. From February 2014 to May 2016, Mr. Lindquist served as
Chief Legal Officer, Executive Vice President and Secretary of Legacy Vivint
Smart Home’s sister company, Vivint Solar. From February 2010 to February
2014, Mr. Lindquist served as Chief Legal Officer, Executive Vice President
and Secretary of Fusion-io, Inc., a leading provider of flash memory solutions
for application acceleration, which was acquired by Sandisk Corporation in
2014. From 2005 to 2010, Mr. Lindquist served as Chief Legal Officer, Senior
Vice President and Secretary of Omniture, Inc., through the completion and
integration of its merger with Adobe Systems Incorporated. Prior to Omniture,
Mr. Lindquist was a corporate and securities attorney at Wilson Sonsini
Goodrich & Rosati, P.C., the leading legal advisor to technology, life sciences
and other growth enterprises worldwide. Mr. Lindquist has also served as
in-house corporate and mergers and acquisitions counsel for Novell, Inc., a
software and services company, and as Vice President and General Counsel of
a privately held, venture-backed Company. Mr. Lindquist has also served as an
adjunct professor of law at the J. Reuben Clark Law School at Brigham Young
University. Mr. Lindquist holds a B.S. in Business Management and J.D. from
Brigham Young University.

Mr. Santiago has served as our Chief Revenue Officer since March 2020. Prior
to that, Mr. Santiago served as Legacy Vivint Smart Home’s Executive Vice
President, General Manager of Retail, which includes managing the
Company’s retail relationships, home builder initiatives and direct sales
platforms, since November 2018 and our Executive Vice President, General
Manager of Retail since January 2020. Prior to this, he served as Legacy Vivint
Smart Home’s Chief Revenue Officer from February 2013 to November 2018.
Prior to joining Legacy Vivint Smart Home, Mr. Santiago was President of
2GIG from December 2008 to March 2013 where he coordinated the
successful launch of Go!Control. Prior to joining 2GIG, Mr. Santiago was
Partner and General Manager of Signature Academies in Boise, ID and VP and
General Manager at NCH Corporation in Irving, TX. Mr. Santiago is the
brother-in-law of Mr. Pedersen. Mr. Santiago holds a B.A. in English from
Brigham Young University and an MBA from the Harvard Business School.

27

REPORT OF THE COMPENSATION COMMITTEE

The Compensation Committee has reviewed and discussed the following Compensation Discussion and Analysis
for Legacy Vivint Smart Home, Inc. and for Vivint Smart Home, Inc. with management. Based on its review and
discussion with management, the Compensation Committee recommended to the Board of Directors that the
Compensation Discussion and Analysis for Legacy Vivint Smart Home, Inc. and for Vivint Smart Home, Inc. be
included in this Proxy Statement.

Submitted by the Compensation Committee of the Board of Directors:

David F. D’Alessandro, Chair
Bruce McEvoy
Peter F. Wallace

28

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis for Legacy Vivint Smart Home, Inc.

As used herein, references to the “Company,” “we,” “our” and “us” are to Legacy Vivint Smart Home and its
subsidiaries which, following the merger, are wholly owned subsidiaries of Vivint Smart Home, Inc (“Vivint
Smart Home”). References to “New Vivint” are to Vivint Smart Home following the merger, except that
references to the “Company,” “we,” “our” and “us” in “—Compensation Actions Taken in 2020” are to Vivint
Smart Home. The compensation objectives and philosophy described in this section represent the compensation
objectives and philosophy of Vivint Smart Home going forward; moreover, the currently-serving named
executive officers of Legacy Vivint Smart Home are Vivint Smart Home’s current executive officers and their
compensation as described herein reflects their compensation as executive officers of Vivint Smart Home.

Introduction

Our executive compensation program is designed to attract and retain individuals with the qualifications to
manage and lead the Company as well as to motivate them to develop professionally and contribute to the
achievement of our financial goals and ultimately create and grow our overall enterprise value.

Our named executive officers (“NEOs”) for 2019 were:

• Todd R. Pedersen, our Chief Executive Officer;

• Dale R. Gerard, our Chief Financial Officer;

• Mark J. Davies, our former Chief Financial Officer;

• Alex J. Dunn, our former President;

• Matthew J. Eyring, our former Executive Vice President, General Manager of Inside Sales; and

• Todd M. Santiago, our Chief Revenue Officer.

Leadership Changes

Mr. Davies resigned from his position as the Company’s Chief Financial Officer, and Mr. Gerard was appointed
as interim Chief Financial Officer, effective as of October 14, 2019. Mr. Gerard was appointed as Chief Financial
Officer of Vivint Smart Home, effective as of March 2, 2020. Todd M. Santiago was promoted to Chief Revenue
Officer of Vivint Smart Home, effective as of March 2, 2020.

Mr. Dunn stepped down from his position as our President and as President of Vivint Smart Home effective
March 2, 2020 and Mr. Eyring ceased to serve as our Executive Vice President, General Manager of Inside Sales
and Executive Vice President, General Manager of Inside Sales of Vivint Smart Home effective March 13, 2020.
In connection with his departure, Mr. Dunn also resigned as a director and officer of the Company and of Vivint
Smart Home, effective as of March 2, 2020 and from all positions as an employee of the Company and of Vivint
Smart Home, effective March 13, 2020. In connection with their departures we entered into separation
agreements with Messrs. Dunn and Eyring. The terms of such separation agreements are described under
“Compensation Actions Taken in 2020-Separation Agreements with Departing Executive Officers” below.

Comparability of 2019 Compensation

The Company is closely monitoring the impact of the coronavirus (COVID-19) pandemic on its results of
operations, financial condition and liquidity, which impact may be material, and proactively taking steps to
ensure the health, safety, and well-being of its customers, employees and communities and to mitigate the effects
of the pandemic on the Company’s business. The impact of the COVID-19 pandemic was not a factor in 2019

29

compensation decisions; however it is expected to be a factor in 2020 compensation decisions. For example, for
2020, we have suspended annual merit-based salary increases for all officers and employees, including our
NEOs. We have also suspended our 401(k) matching program, effective May 2, 2020.

Executive Compensation Objectives and Philosophy

Our primary executive compensation objectives are to:

•

•

•

attract, retain and motivate senior management leaders who are capable of advancing our mission and
strategy and ultimately, creating and maintaining our long-term equity value. Such leaders must engage
in a collaborative approach and possess the ability to execute our business strategy in an industry
characterized by competitiveness and growth;

reward senior management in a manner aligned with our financial performance; and

align senior management’s interests with our equity owners’ long-term interests through equity
participation and ownership.

To achieve our objectives, we deliver executive compensation through a combination of the following
components:

• Base salary;

• Cash bonus opportunities;

• Long-term incentive compensation;

• Broad-based employee benefits;

•

•

Supplemental executive perquisites; and

Severance benefits.

Base salaries, broad-based employee benefits, supplemental executive perquisites and severance benefits are
designed to attract and retain senior management talent. We also use annual cash bonuses and long-term equity
awards to promote performance-based pay that aligns the interests of our NEOs with the long-term interests of
our equity-owners and to enhance executive retention.

Compensation Determination Process

In 2019, the compensation committee of the board of directors of our subsidiary, APX Group Holdings, Inc. (the
“APX Group Compensation Committee”) assisted the board of directors of APX Group Holdings, Inc. ( the
“APX Group board of directors”) in overseeing Legacy Vivint Smart Home’s executive compensation program.
In connection with the closing of the Merger, Vivint Smart Home’s Board formed a new compensation
committee (the “Vivint Smart Home Compensation Committee”) to assist Vivint Smart Home’s Board in
overseeing the Company’s executive compensation program going forward.

In 2019, Messrs. Pedersen and Dunn generally participated in discussions and deliberations with the APX Group
Compensation Committee and the APX Group board of directors regarding the determinations of annual cash
incentive awards for our executive officers. Specifically, they made recommendations to the APX Group
Compensation Committee and/or the APX Group board of directors regarding the performance factors to be used
under our annual bonus plan and the amounts of annual cash incentive awards. Messrs. Pedersen and Dunn did
not participate in discussions or determinations regarding their individual compensation.

Role of Compensation Consultant

In December 2018, Legacy Vivint Smart Home engaged FW Cook & Co., Inc. (“FW Cook”) to advise the APX
Group Compensation Committee in 2019 in connection with a review of the employment agreements of Messrs.

30

Pedersen and Dunn and make recommendations to the APX Group Compensation Committee on the selection of
companies for inclusion in a compensation peer group for 2019 (the “Compensation Peer Group”). FW Cook also
assisted the APX Group Compensation Committee in developing a framework for the Company’s equity
program and guidelines for future equity grants, and provided advice regarding the equity grants made to the
Company’s executive officers on February 29, 2020 under the Vivint Smart Home, Inc. 2020 Omnibus Incentive
Plan (the “Plan”). For additional details regarding these equity grants, please see “—Compensation Actions
Taken in 2020—Equity Grants” below.

Use of Competitive Data

We do not target a specific market percentile when making executive compensation decisions; however, we
believe that information regarding compensation practices at similar companies is a useful tool to help maintain
practices that accomplish our executive compensation objectives. In 2019, as noted above, Legacy Vivint Smart
Home engaged FW Cook to assist and make recommendations regarding the selection of companies to be
included in the Compensation Peer Group. The constituents of the Compensation Peer Group represent
companies operating in broadly similar or related industries that fall within a reasonable range with us in certain
metrics, including revenue, EBITDA and total enterprise value. The companies included in the Compensation
Peer Group are listed below:

Akamai Technologies
Black Knight
Endurance Intl.
FireEye

Fitbit
Garmin
IMAX Corp.
j2 Global

Logitech Intl.
Match Group
Nu Skin Enterprises
Nuance Communications

Rollins
ServiceMaster Global
Waste Management
Zillow Group

In 2019, in addition to the Compensation Peer Group data, Legacy Vivint Smart Home reviewed proprietary
technology company survey data, size-adjusted to our revenue. The identity of individual companies comprising
the survey data is not available to or considered by us in the evaluation process.

In 2019, Legacy Vivint Smart Home used the information from both the Compensation Peer Group and the
survey data as one factor to determine whether its compensation levels are competitive, and to make any
necessary adjustments to reflect executive performance and its performance. As a part of this process, FW Cook
measured Legacy Vivint Smart Home’s target pay levels for the NEOs versus the competitive data within each
compensation component and in the aggregate. In order to evaluate the retentive and alignment power of their
existing ownership stakes, FW Cook also prepared an analysis of the carried interest levels of Legacy Vivint
Smart Home’s NEOs versus executives serving in similar positions at the Compensation Peer Group.

Going forward, the Compensation Committee intends to periodically review the Compensation Peer Group to
ensure that it remains an appropriate comparator frame for evaluating our executive compensation practices.

Employment Agreements

On August 7, 2014, Messrs. Pedersen and Dunn entered into employment agreements with a subsidiary of
Legacy Vivint Smart Home. These employment agreements contained the same material terms as, and
superseded, those they had entered into previously with our parent, 313 Acquisition. On March 4, 2019, a
subsidiary of Legacy Vivint Smart Home entered into amended and restated employment agreements with
Messrs. Pedersen and Dunn and on March 2, 2020 we entered into a new employment agreement with
Mr. Pedersen. On March 8, 2016, Messrs. Davies, Eyring and Santiago entered into employment agreements with
a subsidiary of Legacy Vivint Smart Home. On March 2, 2020, we entered into an employment agreement with
Mr. Gerard and a new employment agreement with Mr. Santiago. A full description of the material terms of the
employment agreements we entered into with Messrs. Pedersen, Gerard and Santiago is discussed below under
“—Compensation Actions Taken in 2020”. A full description of the material terms of the employment

31

agreements a subsidiary of Legacy Vivint Smart Home entered into with Messrs. Pedersen, Gerard and Santiago
as in effect during 2019 is discussed below under “—Narrative Disclosure to Summary Compensation Table and
2019 Grants of Plan—Based Awards.”.

Compensation Elements

The following is a discussion and analysis of each component of our executive compensation program:

Base Salary

Annual base salaries compensate our executives, including our NEOs, for fulfilling the requirements of their
respective positions and provide them with a predictable and stable level of cash income relative to their total
compensation.

The APX Group Compensation Committee believes that the level of an executive’s base salary should reflect
such executive’s performance, experience and breadth of responsibilities, salaries for similar positions within our
industry and any other factors relevant to that particular job. The APX Group Compensation Committee, with the
assistance of our Human Resources Department, also used the experience, market knowledge and insight of its
members in evaluating the competitiveness of current salary levels.

In the sole discretion of the APX Group Compensation Committee, base salaries for our executives may be
periodically adjusted to take into account changes in job responsibilities or competitive pressures.

In consideration of the above, in 2019, the APX Group board of directors determined to increase each NEO’s
base salary as shown below:

Name

Base Salary
prior to
March 4, 2019
($)

Todd R. Pedersen . . . . . . . . . . . . . . . . . . . . . .
Alex J. Dunn . . . . . . . . . . . . . . . . . . . . . . . . . .

700,194
700,194

Name

Dale R. Gerard . . . . . . . . . . . . . . . . . . . . . . . . .
Mark J. Davies . . . . . . . . . . . . . . . . . . . . . . . . .
Matthew J. Eyring . . . . . . . . . . . . . . . . . . . . . .
Todd M. Santiago . . . . . . . . . . . . . . . . . . . . . .

Base Salary
prior to
April 1, 2019
($)

358,182
636,540
636,540
636,540

Base Salary
Effective as of
March 4, 2019
($)

1,021,200
1,021,200

Base Salary
Effective as of
April 1, 2019
($)

412,000
655,636
655,636
655,636

Name

Base Salary
prior to
October 14, 2019
($)

Base Salary
Effective as of
October 14, 2019
($)

Dale R. Gerard . . . . . . . . . . . . . . . . . . . . . . . . .

412,000

532,000

Name

Base Salary
prior to
March 2, 2020
($)

Base Salary
Effective as of
March 2, 2020
($)

Dale R. Gerard . . . . . . . . . . . . . . . . . . . . . . . . .

532,000

655,636

The increases in Messrs. Pedersen’s and Dunn’s base salaries were made in connection with the amendment and
restatement of their respective employment agreements and in consideration of certain changes in the terms of
their employment arrangements, including the elimination of an annual payment intended to be used to reimburse
the Company for the costs of their personal use of the company airplane, as reflected in their amended and

32

restated employment agreements. The 2019 increases in the base salaries of Messrs. Davies, Eyring and Santiago
reflect a 3% increase in their base salaries approved by the APX Group board of directors. The APX Group board
of directors determined, at their discretion, to increase Mr. Gerard’s base salary from $358,182 to $412,000
effective as of April 1, 2019. Effective October 14, 2019, in connection with his appointment as interim Chief
Financial Officer, the APX Group Compensation Committee approved an additional $10,000 per month in
compensation to increase Mr. Gerard’s annual base salary to $532,000. Effective March 2, 2020, in connection
with his appointed as Chief Financial Officer, the APX Group Compensation Committee approved an additional
$10,303 per month in compensation to increase Mr. Gerard’s annual base salary to $655,636.

The “Summary Compensation Table” and corresponding footnotes to the table show the base salary earned by
each NEO during fiscal 2019 as well as the base salary adjustments for each of our NEOs made during fiscal
2019.

Bonuses

Cash bonus opportunities are available to various managers, directors and executives, including our NEOs, to
motivate their achievement of short-term performance goals and tie a portion of their cash compensation to
performance.

Fiscal 2019 Management Bonus

On March 4, 2019, the APX Group board of directors adopted an Incentive Compensation Plan (the “Cash Bonus
Plan”). Our Cash Bonus Plan allowed the APX Group Compensation Committee to provide annual cash incentive
awards to selected employees, including our NEOs, based upon performance goals established by the APX
Group Compensation Committee. On February 29, 2020, we assumed the Cash Bonus Plan and granted the
authority to administer the Cash Bonus Plan to the Vivint Smart Home Compensation Committee.

In 2019, pursuant to the Cash Bonus Plan, the NEOs were eligible to receive an annual cash incentive award,
75% of which was based on achievements of performance objectives determined by the APX Group
Compensation Committee. As provided in their respective employment agreements, the target bonus amount for
each of Messrs. Pedersen and Dunn was 100% of his base salary at the end of the performance period minus
$300,000 and the target bonus amount for each of Messrs. Davies, Eyring and Santiago was 60% of his base
salary at the end of the performance period; the target bonus amount for Mr. Gerard was 50% of his salary earned
during the performance period.

To ensure the focus and accountability of the NEOs on and for their varying responsibilities within the
organization, the APX Group Compensation Committee determined to apply different performance measures
depending on the NEO’s responsibilities. For the NEOs at the corporate level (Messrs. Pedersen, Dunn, Davies
and Gerard), 75% of the bonus opportunity was based on company-wide goals. For the NEOs who are heads of
our business units (Messrs. Eyring and Santiago), 60% of the bonus opportunity was based on business unit
specific goals and 15% of the bonus opportunity was based on company-wide goals. For all of the NEOs, 25% of
the bonus opportunity was discretionary as the APX Group Compensation Committee determined to retain
discretion to reward other Company accomplishments not anticipated at the beginning of the year.

The actual bonus amounts to be paid to the NEOs at the corporate level for fiscal 2019 performance was
calculated by multiplying each NEO’s bonus potential target by a weighted achievement factor based on our
actual achievement relative to the company-wide performance objectives and the discretionary component. The
APX Group Compensation Committee chose performance metrics that are indicators of our strategic growth and
the strength of our overall financial results. The company-wide performance objectives were company-wide
Adjusted EBITDA (defined as net income (loss) before interest, taxes, depreciation, amortization, non-cash
compensation, MDR fees, and certain other non-recurring expenses or gains) (15% of the total award
opportunity) and the weighted average of the business unit-level performance objectives, as described in greater
detail below (60% of the total award opportunity).

33

The business unit performance objectives consisted of Subscriber lifetime value growth (defined as the product
of New Subscribers, Service Margin and Average Customer Life, plus LTV upgrade revenues, less Net
Subscriber Acquisition Costs and Customer Financing Fees), Service Cost (defined as the average monthly
service costs incurred during the period (both period and capitalized service costs), including monitoring,
customer service, field service and other service support costs, less total non-recurring Smart Home Services
billings for the period divided by average monthly Total Subscribers for the same period), Attrition (defined as
the aggregate number of cancelled smart home and security subscribers during the prior 12 month period divided
by the monthly weighted average number of Total Subscribers based on the Total Subscribers at the beginning
and end of each month of a given period). Subscribers are considered canceled when they terminate in
accordance with the terms of their contract, are terminated by us or if payment from such subscribers is deemed
uncollectible. If a sale of a service contract to third parties occurs, or a subscriber relocates but continues their
service, we do not consider this as a cancellation. If a subscriber transfers their service contract to a new
subscriber, we do not consider this as a cancellation for purposes of measuring achievement of certain milestones
associated with business unit initiatives. The achievement factor with respect to the business unit objectives for
the NEOs at the corporate level was calculated as the weighted average of (1) the weighted average of the
achievement factors associated with the actual achievement of our Direct to Home, Inside Sales and Customer
Experience business units against the Subscriber lifetime value growth targets for such business units (44% of the
total award opportunity), (2) the achievement factor associated with the actual achievement of our Customer
Experience business unit against the Service Cost target (6% of the total award opportunity), (3) the achievement
factor associated with the actual achievement of our Customer Experience business unit against the Attrition
target (4% of the total award opportunity), (4) the weighted average of the achievement factors associated with
the actual achievement of our Retail and Customer Experience business units against certain milestones, as
described in greater detail below (6% of the total award opportunity).

The table below sets forth the weighting of each component of the annual incentive award opportunity for the
NEOs at the corporate level:

Weighted Average Business Unit Performance

Subscriber lifetime value growth . . . . . . . . . . . . . . . . . .
Service Cost
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Attrition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Initiatives/Pilot lifetime value . . . . . . . . . . . . . . . . . . . . .

Company-wide Performance

Company-wide Adjusted EBITDA . . . . . . . . . . . . . . . . .
Board Discretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Weighting

44%
6%
4%
6%

15%
25%
100%

The achievement factor with respect to the company-wide Adjusted EBITDA component was determined by
calculating our actual achievement against the company-wide Adjusted EBITDA performance target based on the
pre-established scale set forth in the following table:

% Attainment of Performance Target

Less than 95% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
95% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
105% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
110% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
115% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
120% or greater . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Achievement
Factor

0
50%
100%
150%
200%
250%
300%

34

Based on the pre-established scale set forth above, no cash incentive amount would be paid to the NEOs with
respect to the company-wide Adjusted EBITDA component of the award unless our actual performance for 2019
was at or above 95% of the performance target. If performance was 120% or more of the performance target,
then the achievement factor with respect to the company-wide Adjusted EBITDA component of the award would
be a maximum of 300%. For performance percentages between the levels set forth in the table above, the
resulting achievement factor would be adjusted on a linear basis. The company-wide Adjusted EBITDA
performance target for 2019 was $410 million.

The achievement factor with respect to the business unit-level performance objective components were
determined by calculating the weighted average of our business units’ actual achievement against the targets set
for such business units. For our Direct to Home, Inside Sales and Customer Experience business units, the
achievement factors were based on the pre-established scale set forth in the following table:

Direct to
Home

Inside Sales

Customer Experience

Subscriber
lifetime value
growth as a
percentage of
target
(60%) (1)

Subscriber
lifetime value
growth as a
percentage of
target
(60%) (1)

Subscriber
lifetime value
growth of
Certain BU
Initiatives as a
percentage
of target
(10%) (1)

Install Base
Revenue as a
percentage of
target
(10%) (1)

Service Cost
as a
percentage of
target
(25%) (1)

Attrition as a
percentage of
target
(15%) (1)

% Attainment of Performance Target

Less than 95%
95%
100%
104%
108%
113%

Less than 95%
95%
100%
104%
108%
113%

Less than 60%
60%
100%
140%
180%
220%

Less than 50% Greater than 103% Greater than 104%
104%
100%
98%
96%
94%

103%
100%
99%
97%
96%

50%
100%
150%
200%
250%

117% or greater

117% or greater

260% or greater

300% or greater

94% or less

92% or less

Achievement Factor

0 . . . . . . . . . . . . . . . . . . .
50% . . . . . . . . . . . . . . . . .
100% . . . . . . . . . . . . . . . .
150% . . . . . . . . . . . . . . . .
200% . . . . . . . . . . . . . . . .
250% . . . . . . . . . . . . . . . .
300% . . . . . . . . . . . . . . . .

(1) Represents the percentage of total bonus for the respective business unit.

For performance percentages between the levels set forth in the table above at each of the business units, the
resulting achievement factor would be adjusted on a linear basis. The APX Group Compensation Committee
believed and the Vivint Smart Home Compensation Committee believe that the Direct to Home, Inside Sales and
Customer Experience performance targets provided reasonably achievable, but challenging, goals for the
participants at those business units.

The achievement factor associated with the performance of our Retail business unit was based on such business
unit’s accomplishment of certain key milestones related to subscriber growth from expansion into additional
retail partners and lead generation sources, achieving certain cost and cash flow targets, and achieving stated
milestones associated with new products and channels.

These milestones were not assigned any particular weightings. Accordingly, the Vivint Smart Home
Compensation Committee determined the achievement factor based on the overall achievement of our Retail
business unit against the various key milestones, with the weighting of the milestones determined in the Vivint
Smart Home Compensation Committee’s discretion. The APX Group Compensation Committee believed and the
Vivint Smart Home Compensation Committee believes that the Retail business unit performance objectives
provided reasonably achievable, but challenging, goals for Mr. Santiago and other participants at the Retail
business unit.

No cash incentive amount would be paid to the NEOs at the corporate level with respect to the business unit
component of the award unless at least one business unit’s actual achievement was at or above the minimum
level of performance corresponding to an achievement factor above 0 with respect to at least one of such business
unit’s targets. The achievement factor associated with the business unit component of the award would be a
maximum of 300% for significant outperformance.

35

The actual bonus amounts to be paid to Mr. Eyring for fiscal 2019 performance were calculated by multiplying
his bonus potential target by a weighted achievement factor based on our actual achievement relative to the
company-wide Adjusted EBITDA objective, the achievement of our Inside Sales business unit relative to the
Inside Sales performance objectives, as described in greater detail above, and the discretionary component.

The table below sets forth the weighting of each component of the annual incentive award opportunity for
Mr. Eyring:

Inside Sales Business Unit Performance

Subscriber lifetime value growth . . . . . . . . . . . . . . . . . .

60%

Company-wide Performance

Company-wide Adjusted EBITDA . . . . . . . . . . . . . . . . .
Board Discretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15%
25%
100%

Weighting

The actual bonus amounts to be paid to Mr. Santiago for fiscal 2019 performance were calculated by multiplying
his bonus potential target by a weighted achievement factor based on our actual achievement relative to
company-wide Adjusted EBITDA objective, the achievement of our Retail business unit relative to the Retail
performance objectives, as described in greater detail above, and the discretionary component.

The table below sets forth the weighting of each component of the annual incentive award opportunity for
Mr. Santiago:

Retail Business Unit Performance

Achievement of key milestones . . . . . . . . . . . . . . . . . . .

60%

Company-wide Performance

Company-wide Adjusted EBITDA . . . . . . . . . . . . . . . . .
Board Discretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15%
25%
100%

Weighting

Based on our actual achievement, we determined the overall weighted achievement factor for our NEOs at the
corporate level as set forth in the table below.

Weighted Average Business Unit Performance

Subscriber lifetime value growth . . . . . . . . . . .
Service Cost . . . . . . . . . . . . . . . . . . . . . . . . . . .
Attrition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Initiatives/Pilot lifetime value . . . . . . . . . . . . .

Company-wide Performance

Company-wide Adjusted EBITDA . . . . . . . . .
Board Discretion . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Achievement
Factor

Weighting

Weighted
Achievement
Factor

80%
300%
— %
58%

130%
100%

44%
6%
4%
6%

15%
25%
100%

35%
18%
— %
3%

20%
25%
101%

36

Based on our actual achievement, we determined the overall weighted achievement factor for Mr. Eyring as set
forth in the table below.

Achievement
Factor

Weighting

Weighted
Achievement
Factor

Inside Sales Business Unit Performance

Subscriber lifetime value growth . . . . . . . . . . .

75%

60%

Company-wide Performance

Company-wide Adjusted EBITDA . . . . . . . . .
Board Discretion . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

130%
100%

15%
25%
100%

45%

20%
25%
90%

Based on our actual achievement, we determined the overall weighted achievement factor for Mr. Santiago as set
forth in the table below.

Achievement
Factor

Weighting

Weighted
Achievement
Factor

Retail Business Unit Performance

Achievement of key milestones . . . . . . . . . . . .

15%

60%

Company-wide Performance

Company-wide Adjusted EBITDA . . . . . . . . .
Board Discretion . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

130%
100%

15%
25%
100%

9%

20%
25%
54%

Notwithstanding the performance of our Retail Business Unit against the Retail Business Unit objectives, the
Vivint Smart Home Compensation Committee, in its discretion and in consideration of the achievement of other
objectives in 2019, including but not limited to the launch of multiple retail partnerships and the successful
completion of the Merger, determined to adjust Mr. Santiago’s weighted achievement factor to 100%. In
addition, the Vivint Smart Home Compensation Committee in its discretion determined to adjust Mr. Gerard’s
weighted achievement factor to 146% in light of his successful leadership as interim Chief Financial Officer,
while simultaneously leading the Company’s Treasury function and the Merger.

The following table illustrates the calculation of the amounts earned by each of our NEOs (other than
Mr. Davies, who forfeited his annual cash incentive award in connection with his departure from the Company)
pursuant to the Cash Bonus Plan for performance in 2019. The discretionary portion of the actual amounts earned
by our NEOs pursuant to Cash Bonus Plan is disclosed in the “Bonus” column of the Summary Compensation
Table under the “2019” designation, while the remaining amounts earned by the NEOs at the corporate level are
disclosed in the “Non-Equity Incentive Plan Compensation” column.

Name

Salary ($)

Target Bonus
%

Target Bonus
Amount ($)

Achievement
Factor

Bonus Paid ($)

Todd R. Pedersen . . . . . . . . . . . . . . . . . . . . . 1,021,199
1,021,199
Alex J. Dunn . . . . . . . . . . . . . . . . . . . . . . . . .
532,000
Dale R. Gerard . . . . . . . . . . . . . . . . . . . . . . .
655,636
Matthew J. Eyring . . . . . . . . . . . . . . . . . . . .
655,636
Todd M. Santiago . . . . . . . . . . . . . . . . . . . . .

100%
100%
50%
60%
60%

721,199
721,199
221,000(1)
393,382
393,382

101%
101%
146%
90%
100%

728,411
728,411
323,210
354,043
393,382

(1) Mr. Gerard’s target bonus was calculated based on a base salary of $412,000 for the first nine months of 2019 and a base

salary of $532,000 for the last three months of 2019.

Sign-On Bonuses

From time to time, we may award sign-on bonuses in connection with the commencement of an NEO’s
employment with us. Sign-on bonuses are used only when necessary to attract highly skilled individuals to the

37

Company. Generally, sign-on bonuses are used to incentivize candidates to leave their current employers or may
be used to offset the loss of unvested compensation they may forfeit as a result of leaving their current
employers.

Long-Term Incentive Compensation

313 Acquisition LLC Equity Awards

313 Acquisition granted long-term equity incentive awards designed to promote our interest by providing these
executives with the opportunity to acquire equity interests as an incentive for their remaining in our service and
aligning the executives’ interests with those of the Company’s ultimate equity holders. The long-term equity
incentive awards were in the form of Class B Units.

The Class B Units were profits interests having economic characteristics similar to SARs and represented the
right to share in any increase in the equity value of 313 Acquisition. Therefore, the Class B Units only had value
to the extent there was an appreciation in the value of our business from and after the applicable date of grant. In
addition, the vesting of two-thirds of the Class B Units were initially subject to Blackstone achieving minimum
internal rates of return and multiples on invested capital on its investment in Class A units of 313 Acquisition
(the “Class A Units”), as described further below.

The Class B Units granted to our NEOs were designed to motivate them to focus on efforts that would increase
the value of our equity while enhancing their retention. The specific sizes of the equity grants made were
determined in light of Blackstone’s practices with respect to management equity programs at other private
companies in its portfolio and the executive officer’s position and level of responsibility with us.

The Class B Units were initially divided into a time-vesting portion (one-third of the Class B Units granted), a
2.0x exit-vesting portion (one-third of the Class B Units granted), and a 3.0x exit-vesting portion (one-third of
the Class B Units granted). In June 2018, the APX Group board of directors and the board of managers of 313
Acquisition approved a modification to the vesting terms of the Class B Units (the “Modification”), designed to
motivate and retain our employees and align their interests with the interests of the Company. Following such
modification, the Class B Units were divided into two time-vesting portions (each one-third of the Class B Units
granted) and a 2.0x exit-vesting portion (one-third of the Class B Units granted). Unvested Class B Units were
not entitled to distributions from the Company. The incremental fair value in connection with this modification is
reflected in the “Stock Awards” column of the Summary Compensation Table for 2018. For additional
information regarding our Class B Units, see “Narrative Disclosure to Summary Compensation Table and Grants
of Plan-Based Awards-Equity Awards.”

The initial award of Class B Units granted to Mr. Davies in connection with the commencement of his
employment in 2013 contained the following different economic terms: Mr. Davies’ Class B Units would not
entitle him to receive any distributions in respect of such units unless and until the cumulative value of such
foregone distributions attributable to each Class B Unit equaled the fair market value of a Class B Unit on the
date of the grant of such Class B Unit (such foregone amount, the “Delayed Amount Per Class B Unit”). At that
point, Mr. Davies (together with the other holders of Class B Units subject to similar foregone distributions)
would become entitled to receive pro rata distributions of all subsequent amounts (to the exclusion of other
holders who did not have similar rights) until he had received distributions per Class B Unit equal to the Delayed
Amount Per Class B Unit. Thereafter, Mr. Davies would become entitled to receive the same amounts with
respect to his Class B Units as other holders of Class B Units receive with respect to their Class B Units. In
connection with his departure from the Company in October 2019, Mr. Davies forfeited his unvested Class B
Units and the Company did not exercise any call rights associated with his vested Class B Units.

Another key component of our long-term equity incentive program was that at the time of Blackstone’s
acquisition of us (the “2012 Blackstone Acquisition”), certain of our NEOs and other eligible employees were

38

provided with the opportunity to invest in Class A Units on the same general terms as Blackstone and other
co-investors. The Class A Units are equity interests, have economic characteristics that are similar to those of
shares of common stock in a corporation and have no vesting schedule. We consider this investment opportunity
an important part of our long-term equity incentive program because it encourages equity ownership and aligns
the NEOs’ financial interests with those of our ultimate equity holders. Each of Messrs. Pedersen, Gerard, Dunn
and Santiago, when presented with the opportunity, chose to invest in Class A Units.

Vivint Group, Inc. Stock Appreciation Rights

The Company’s indirect subsidiary, Vivint Group, awarded SARs, representing the right to share in any increase
in the equity value of Vivint Group, to Mr. Gerard, pursuant to the Vivint Group, Inc. Amended and Restated
2013 Omnibus Incentive Plan (the “Vivint Group Plan”). The purpose of the SARs was to attract and retain
personnel and provide an opportunity to acquire an equity interest of Vivint Group. The SARs were subject to
vesting conditions, consistent with the Class B Units referenced above.

In connection with the Merger in January 2020, the Class B Units and SARs held by our NEOs were treated as
discussed below under “—Treatment of Equity Incentive Awards in Connection with the Merger”.

2018 Retention Awards

In 2018, we approved a retention program designed to motivate and retain our employees. Pursuant to this
program the APX Group Compensation Committee approved the grant of retention awards to Messrs. Davies,
Eyring, Santiago and Gerard.

Mr. Gerard was granted a retention award in the amount of $1.0 million, payable as follows: (i) $333,333.33
payable in June 2018; (ii) $333,333.33 payable in June 2019; and (iii) $333,333.34 payable in June 2020, subject
to continued employment and good standing with the Company or its subsidiaries through each payment date.
Each of Messrs. Davies, Eyring and Santiago was granted a retention award in the amount of $2.5 million,
payable as follows: (i) $833,333.33 payable in August 2018; (ii) $833,333.33 payable in August 2019; and (iii)
$833,333.34 payable in August 2020, subject to continued employment and good standing with the Company or
its subsidiaries through each payment date.

If Messrs. Gerard’s or Santiago’s employment is terminated by the Company other than for Cause (as defined in
his employment agreement or retention award agreement, as applicable), including due to death or disability,
prior to any remaining payment date, he will receive the full remaining amount of the retention award, payable
within two and one half months following his termination date subject to his (or his estate’s, as applicable),
execution of an effective release of claims in favor of the Company. He will not be entitled to receive any
remaining amount of his retention award if (i) he terminates his employment with the Company for any reason,
or (ii) his employment is terminated by the Company for Cause, in either case at any time prior to the applicable
eligibility date set forth above.

Benefits and Perquisites

We provide to all of our employees, including our NEOs, employee benefits that are intended to attract and retain
employees while providing them with retirement and health and welfare security. Broad-based employee benefits
include:

•

•

a 401(k) savings plan;

paid vacation, sick leave and holidays;

• medical, dental, vision and life insurance coverage; and

•

employee assistance program benefits.

39

Currently, all participants are eligible for matching under our 401(k) savings plan. Under this matching program,
we match an employee’s contributions to the 401(k) savings plan dollar-for-dollar up to 1% of such employee’s
eligible earnings and $0.50 for every $1.00 for the next 5% of such employee’s eligible earnings. The maximum
match available under the 401(k) plan is 3.5% of the employee’s eligible earnings. For employees who have been
employed by us for less than two years, matching contributions vest on the second anniversary of their date of
hire. Our matching contributions to our employees who have been employed by us for two years or more are
always fully vested. Effective as of May 2, 2020, we have suspended our 401(k) matching program.

At no cost to the employee, we provide an amount of basic life insurance and basic accidental death and
dismemberment insurance valued at 1x times their basic annual earnings up to a maximum of $250,000 ($50,000
minimum).

We also provide our NEOs with specified perquisites and personal benefits that are not generally available to all
employees, such as personal use of our Company leased aircraft (subject to the terms and limits set forth in our
corporate aircraft policy), use of a company vehicle, financial advisory services, reimbursement for health
insurance premiums, enhanced employee cafeteria benefits, country club memberships, excess liability insurance
premiums, alarm system fees, event tickets, fuel expenses, relocation assistance and, in certain circumstances,
reimbursement for personal travel. In addition, as to Messrs. Pedersen and Dunn, perquisites have included
personal use of Company personnel, however Messrs. Pedersen and Dunn reimburse the Company for the full
costs of such personal use. Each of Messrs. Pedersen and Dunn were also provided with an annual fringe benefit
allowance of $300,000 under the previous terms of their employment agreements, which were amended and
restated March 4, 2019. Under their amended and restated employment agreements, Messrs. Pedersen and Dunn
no longer receive such fringe benefit allowance. We also reimburse our NEOs for taxes incurred in connection
with certain of these perquisites.

With respect to event tickets, we believe there is no incremental cost to us associated with the personal use by
our NEOs and their guests of (i) tickets to various sporting and entertainment events that we have acquired at no
additional cost in connection with our corporate sponsorships of various organizations (ii) our corporate suite at
Vivint Smart Home Arena in Salt Lake City, Utah, which is leased for business-related entertainment and paid
for seasonally rather than individually by event or (iii) other tickets to various sporting and entertainment events
that are paid for seasonally rather than individually by event. Accordingly, no amounts other than reimbursement
for taxes incurred related to these items are included in the compensation of our NEOs in the “Summary
Compensation Table” below.

In addition, we have entered into a time-sharing agreement with Messrs. Pedersen and Dunn governing their
personal use of the Company leased aircraft. Mr. Pedersen pays, and Mr. Dunn paid, for personal flights an
amount equal to the aggregate variable cost to the Company for such flights, up to the maximum authorized by
Federal Aviation Regulations. The aggregate variable cost for this purpose includes fuel costs, out-of-town
hangar costs, landing fees, airport taxes and fees, customs fees, travel expenses of the crew, any “deadhead”
segments of flights to reposition corporate aircraft and other related rental fees. In addition, family members and
friends of our NEOs have, in limited circumstances, accompanied the NEOs on business travel on the Company
leased aircraft for which we have generally incurred de minimis incremental costs.

We provide these perquisites and personal benefits in order to further our goal of attracting and retaining our
executive officers. The aggregate incremental cost to the Company of these benefits and perquisites are reflected
in the “All Other Compensation” column of the “Summary Compensation Table” and the accompanying footnote
in accordance with the SEC rules.

Severance Arrangements

Our Board believes that providing severance benefits to our NEOs is critical to our long-term success, because
severance benefits act as a retention device that helps secure an executive’s continued employment and

40

dedication to the Company. Messrs. Pedersen, Dunn, Gerard, Davies, Eyring and Santiago have or had severance
arrangements, which are or were included in their employment agreements. Mr. Pedersen is and Mr. Dunn was
eligible to receive severance benefits if his employment is/was terminated for any reason other than voluntary
resignation or willful misconduct. The severance payments to our NEOs are contingent upon the affected
executive’s execution of a release and waiver of claims, which contains non-compete, non-solicitation and
confidentiality provisions. See “—Potential Payments Upon Termination or Change in Control” for descriptions
of these arrangements.

Mr. Eyring was, and Mr. Santiago is, eligible to receive severance benefit in the event of a termination of
employment without “cause” (as defined below under “—Narrative Disclosure to Summary Compensation Table
and Grants of Plan-Based Awards—Employment Agreements” and “—Compensation Discussion and Analysis
for Legacy Vivint Smart Home, Inc.—Compensation Elements—Bonuses—2018 Retention Awards”) and other
than by reason of death or while he was/is disabled. See “—Potential Payments Upon Termination or Change in
Control” for descriptions of these arrangements.

For a description of the severance benefits Mr. Gerard is entitled to receive in the event of his termination as
provided in his employment agreement, see “—Compensation Actions Taken in 2020-Employment
Agreements”.

Mr. Davies resigned from his position as the Company’s Chief Financial Officer, effective October 14, 2019.
Mr. Davies did not receive any severance or other benefit payments as a result of his departure.

In connection with their departures from the Company in 2020, Messrs. Dunn and Eyring entered into separation
agreements with the Company. The terms of such separation agreements are described below under
“Compensation Actions Taken in 2020-Separation Agreements with Departing Executive Officers.”

Treatment of Equity Incentive Awards in Connection with the Merger

Vesting/Modifications. As of immediately prior to the effective time of the Merger (the “effective time”),
313 Acquisition and Legacy Vivint Smart Home modified the vesting schedule of each Company Group Class B
Unit (as defined in the Merger Agreement) and Company Group SAR (as defined in the Merger Agreement) that
would vest if Blackstone received cash proceeds in respect of its Class A Units equal to 2.0x Blackstone’s
cumulative invested capital in respect of the Class A Units at such time (the “2.0x Company Group Equity
Awards”) such that each 2.0x Company Group Equity Award will instead vest, subject to the holder’s continued
employment on the applicable vesting date (or event), (i) in equal 25% annual installments on each of the first
four anniversaries of the closing date of the Merger or (ii) if earlier, in full upon either (x) a Change of Control
(as defined in the applicable Company Group Stock Plan (as defined in the Merger Agreement)) or
(y) Blackstone receiving cash proceeds in respect of its Class A Units equal to 2.0x Blackstone’s cumulative
invested capital in respect of the Class A Units at such time (the “2.0x Modification”).

Vested Company Group Class B Units. As of immediately prior to the effective time, each vested Company

Group Class B Unit, including those held by our NEOs (other than Messrs. Pedersen and Dunn) and directors,
was redeemed by 313 Acquisition for shares of common stock of Vivint Solar, Inc. (“VSLR common stock”) and
Legacy Vivint Smart Home common stock, with an equivalent value as the Company Group Class B Unit so
redeemed, in a manner determined by the board of managers of 313 Acquisition (the “313 Board”), pursuant to
the terms and conditions of the Company Group Stock Plans (as defined in the Merger Agreement) and the
limited liability company agreement of 313 Acquisition (the “313 LLCA”), assuming a hypothetical liquidation
of 313 Acquisition. The number of shares of VSLR common stock and Legacy Vivint Smart Home common
stock issued with respect to each vested Company Group Class B Unit in such redemptions was determined on a
pro rata basis using the relative value of the shares of VSLR common stock and Legacy Vivint Smart Home
common stock held by 313 Acquisition as of the effective time. Holders of shares of Legacy Vivint Smart Home
common stock received in such redemptions were entitled to receive the merger consideration in accordance with

41

the Merger Agreement. To the extent that the deemed unit price of such vested Company Group Class B Unit
was equal to or in excess of the fair market value of a Class A Unit as of the time of such redemptions, such
vested Company Group Class B Unit was redeemed for $0.00.

Unvested Company Group Class B Units. As of immediately prior to the effective time, each unvested
Company Group Class B Unit, including those held by our NEOs (other than Messrs. Pedersen and Dunn) and
directors, was redeemed by 313 Acquisition for a number of shares of Company Restricted Stock, with an
equivalent value as the Company Group Class B Units so redeemed, in a manner determined by the 313 Board in
accordance with the terms of the Company Group Stock Plans and the 313 LLCA, assuming a hypothetical
liquidation of 313 Acquisition. Such shares of Company Restricted Stock were subject to the same vesting terms
and conditions as the corresponding Company Group Class B Units, as modified pursuant to the 2.0x
Modification. As of the effective time, each such share of Company Restricted Stock was automatically, without
any action on the part of the holder thereof, cancelled and converted into a number of shares of our Class A
Common Stock equal to the exchange ratio, rounded to the nearest whole share of our Class A common stock
(after such conversion, “Rollover Restricted Stock” and together with the Rollover RSUs and the Rollover SARs,
the “Rollover Equity Awards”). To the extent that the deemed unit price of an unvested Company Group Class B
Unit was equal to or in excess of the fair market value of a Class A Unit as of the time of such redemptions, such
unvested Company Group Class B Unit was redeemed for $0.00.

Company Group RSUs. As of the effective time, each Company Group RSU (as defined in the Merger
Agreement) held by our directors, to the extent then outstanding and unsettled, without any action on the part of
the holder thereof, was automatically cancelled and converted into an RSU entitling the holder thereof to receive
upon settlement a number of shares of our Class A common stock equal to the product of (x) the number of
shares of VGI common stock subject to such Company Group RSU as of immediately prior to the effective time,
multiplied by (y) 0.0864152412 (the “VGI exchange ratio”), rounded down to the nearest whole number of
shares of our Class A common stock (after such conversion, “Rollover RSUs”).

Company Group SARs. As of the effective time, each Company Group SAR, including those held by
Mr. Gerard and our directors, to the extent then outstanding and unexercised, without any action on the part of
the holder thereof, was automatically cancelled and converted into a SAR with respect to a number of shares of
our Class A common stock equal to the product of (x) the number of shares of VGI common stock subject to
such Company Group SAR as of immediately prior to the effective time, multiplied by (y) the VGI exchange
ratio, rounded down to the nearest whole number of shares of our Class A common stock, with a strike price per
share of Mosaic Class A common stock equal to the quotient obtained by dividing (i) the per share strike price of
such Company Group SAR as of immediately prior to the effective time by (ii) the VGI exchange ratio, rounded
up to the nearest whole cent (after such conversion, “Rollover SARs”).

Rollover Equity Awards. Any shares of our Class A common stock issuable under Rollover Equity Awards,

other than the awards held by Messrs. Pedersen and Dunn, are subject to restrictions on transfer until the first
anniversary of the closing date of the Merger, unless otherwise agreed to by the Company and the applicable
holder. Each Rollover Equity Award is subject to the Vivint Smart Home, Inc. 2020 Omnibus Incentive Plan and
to the same terms and conditions, including, without limitation, any vesting conditions (as modified by the 2.0x
Modification), as had applied to the corresponding Company Group Equity Award as of immediately prior to the
effective time, except for such terms rendered inoperative by reason of the merger, subject to such adjustments as
reasonably determined by our Board to be necessary or appropriate to give effect to the conversion or the merger.
Holders of outstanding Rollover Equity Awards have the contingent right to receive earnout shares, or have the
terms and conditions of such Rollover Equity Awards adjusted, if, from the consummation of the Merger until
the fifth anniversary thereof, the volume-weighted average price of our Class A common stock exceeds certain
thresholds.

Treatment of Equity Awards Held by Messrs. Pedersen, and Dunn. As of immediately prior to the effective

time, the Company Group Class B Units, whether or not vested, held by Messrs. Pedersen and Dunn (the

42

“Holdback Executives”) were converted into a number of Class A Units (the “Converted Class A Units”), in
accordance with the terms and conditions of the Company Group Stock Plans and the 313 LLCA, with an
equivalent value and subject to the same vesting terms and conditions as the corresponding Company Group
Class B Units (as modified pursuant to the 2.0x Modification). As of immediately following the effective time,
the Converted Class A Units held by the Holdback Executives (in addition to any other Class A Units held by the
Holdback Executive) were automatically reclassified into a number of vested and unvested units designed to
track 313 Acquisition’s interests in the VSLR common stock, our Class A common stock, common stock of
Vivint Wireless, Inc. (“VW”) and its other property, in each case held as of the effective time, subject to the same
vesting terms and conditions as the corresponding Converted Class A Units, as applicable (the “tracking units”).
The number of each class of tracking unit to be issued to the Holdback Executives was determined on a pro rata
basis using the relative value of the shares of VSLR common stock, our Class A common stock and VW
common stock and other property held by 313 Acquisition as of immediately following the effective time. On the
first anniversary of the closing date of the merger, 10% of any then-vested tracking units held by the Holdback
Executives (other than other property tracking units), less any amounts previously sold by, or distributed to,
Holdback Executives in connection with sales of shares of VSLR common stock, Mosaic Class A common stock
and VW common stock by 313 Acquisition, will be redeemed by 313 Acquisition for the shares of VSLR
common stock, our Class A common stock and VW common stock underlying such tracking units in accordance
with the terms and conditions of the 313 LLCA. Following the second anniversary of the closing date of the
merger, upon written request to 313 Acquisition by a Holdback Executive, 313 Acquisition will promptly redeem
all (or any portion) of the then-vested tracking units (other than other property tracking units) held by the
Holdback Executives for the shares of VSLR common stock, our Class A common stock and VW common stock
underlying such tracking units in accordance with the terms and conditions of the 313 LLCA. 313 Acquisition
will have no obligation to redeem any other property tracking units at any time and may redeem such tracking
units, in its sole discretion, in accordance with the terms and conditions of the 313 LLCA. No unvested tracking
units held by the Holdback Executives will be redeemed until they become vested.

Post-Merger Modification. On February 29, 2020, our Board approved a further modification (the
“Modification”) of the vesting terms of the Rollover Restricted Stock and Rollover SARs granted to certain
officers and employees of the Company and its subsidiaries, including Messrs. Gerard, Eyring and Santiago, that
was outstanding as of the Merger and as of February 29, 2020 (the “Outstanding Equity”). The Modification
provides that in addition to the previous vesting terms and conditions, subject to the continued employment of the
holder of the Outstanding Equity, on January 17, 2021, all then-outstanding and unvested Outstanding Equity
shall become vested.

Compensation Actions Taken in 2020

Equity Awards

On February 29, 2020, the Company approved grants under the Plan of time-vesting restricted stock units (the
“RSUs”) and performance-vesting restricted stock units (the “PSUs”) (each representing the right to receive one
share of Class A common stock of the Company upon the settlement of each restricted stock unit) to each of
Messrs. Pedersen, Gerard and Santiago under the Plan, effective as of, and subject to such individual’s continued
employment with the Company or its subsidiaries (including the Company) on March 24, 2020, the date that the
Company executed and filed an effective registration statement on Form S-8 with the SEC in order to register the
offer and sale of shares of Class A common stock of the Company pursuant to the Plan (such date, the “grant
date”). Mr. Pedersen is eligible to be granted 585,366 RSUs and 585,366 PSUs on the grant date, Mr. Gerard is
eligible to be granted 342,439 RSUs and 184,390 PSUs on the grant date and Mr. Santiago is eligible to be
granted 396,341 RSUs and 213,415 PSUs on the grant date.

The RSUs granted to each of the executives will vest, subject to continued employment on each applicable
vesting date, with respect to 25% of the restricted stock units on each of the first four anniversaries of January 17,
2020.

43

The PSUs have a one-year performance period beginning on January 1, 2020 and ending on December 31, 2020
and vest based upon the Company’s achievement of specified performance goals through fiscal year end 2020
and the passage of time. The PSUs performance goals are based on the Company’s Adjusted EBITDA, Net Cash
and Total Subscribers performance. The total number of restricted stock units subject to the PSU awards eligible
to vest will be based on the level of achievement of the performance goals and ranges from 0% (if below
threshold performance) up to 100% (for target or above target performance). Fifty percent (50%) of such PSUs
eligible to vest will vest on the date the Vivint Smart Home Compensation Committee certifies in writing the
achievement of the performance metrics (the “determination date”) and the remaining 50% of such PSUs will
vest on the first anniversary of the determination date, in each case, subject to continued employment on the
applicable vesting date.

For purposes of the PSU awards:

Adjusted EBITDA shall mean, with respect to fiscal year 2020, the Adjusted EBITDA which is publicly
disclosed in (or otherwise calculated in a manner consistent with) the Company’s earnings release for fiscal year
2020 or as otherwise determined by the audit committee of the Company’s Board;

Net Cash shall mean, with respect to fiscal year 2020, the amount of net cash provided by or used in financing
activities for fiscal year 2020, excluding any equity proceeds, taxes paid related to vesting of equity awards,
return of capital or re-financing fees, or as otherwise determined by the audit committee of the Company’s
Board; and

Total Subscribers shall mean, with respect to fiscal year 2020, the aggregate number of active smart home and
security subscribers at the end of fiscal year 2020, which is publicly disclosed in (or otherwise calculated in a
manner consistent with) the Company’s earnings release for fiscal year 2020 or as otherwise determined by the
audit committee of our Board.

Employment Agreements

On March 2, 2020, the Company entered into employment agreements with each of Messrs. Pedersen and
Santiago, in each case, effective March 2, 2020, in order to reflect the assignment of each of the Amended and
Restated Employment Agreement between Mr. Pedersen and APX dated as of March 4, 2019 (the “Pedersen
Employment Agreement”) and the Employment Agreement between Mr. Santiago and APX, dated as of
March 8, 2016 (the “Santiago Employment Agreement”) from APX to Vivint Smart Home. In addition, the
Santiago Employment Agreement was updated to reflect Mr. Santiago’s current annual base salary of $655,636
and annual target bonus opportunity equal to sixty percent (60%) of Mr. Santiago’s base salary. Except as set
forth above, the terms and conditions of the Pedersen Employment Agreement and Santiago Employment
Agreement remain unchanged. For a summary of the material terms of each of the Pedersen Employment
Agreement and the Santiago Employment Agreement, see “Narrative Disclosure to Summary Compensation
Table and Grants of Plan-Based Awards-Employment Agreements”.

On March 2, 2020, the Company entered into an employment agreement with Mr. Gerard. The principal terms of
such agreement are summarized below.

The employment agreement with Mr. Gerard provides for a term ending on March 2, 2021, which extends
automatically for additional one-year periods unless either party elects not to extend the term. Under the
employment agreement, Mr. Gerard is eligible to receive a minimum base salary, and an annual bonus award
with a target amount equal to a percentage of his base salary. Mr. Gerard’s current base salary is $655,636, and
he is eligible to earn an annual bonus award with a target amount equal to 60% of his base salary at the end of the
performance period. If the employment of Mr. Gerard terminates for any reason, Mr. Gerard is entitled to
receive: (1) any base salary accrued through the date of termination; (2) reimbursement of any unreimbursed
business expenses properly incurred by the executive; and (3) such employee benefits, if any, as to which the
executive may be entitled under Vivint Smart Home’s employee benefit plans (the payments and benefits
described in (1) through (3) being “accrued rights”).

44

If the employment of Mr. Gerard is terminated by the Company without “cause” (as defined below) and other
than by reason of death or while he is disabled (any such termination, a “qualifying termination”), Mr. Gerard is
entitled to the accrued rights and, conditioned upon execution and non-revocation of a release and waiver of
claims in favor of Vivint Smart Home and its affiliates, and continued compliance with the non-compete,
non-solicitation, non-disparagement, and confidentiality provisions set forth in the employment agreements:

•

•

•

a pro rata portion of his target annual bonus based upon the portion of the fiscal year during which
Mr. Gerard was employed (the “pro rata bonus”);

a lump-sum cash payment equal to 150% of Mr. Gerard’s then-current base salary plus 150% of the
actual bonus Mr. Gerard received in respect of the immediately preceding fiscal year (or, if a
termination of employment occurs prior to any annual bonus becoming payable under his employment
agreement, the target bonus for the immediately preceding fiscal year); and

a lump-sum cash payment equal to the cost of the health and welfare benefits for Mr. Gerard and his
dependents, at the levels at which the executive received benefits on the date of termination, for 18
months (the “COBRA payment”).

For purposes of Mr. Gerard’s employment agreement, the term “cause” means the executive’s continued failure
to substantially perform his employment duties for a period of 10 days following written notice from Vivint
Smart Home; any dishonesty in the performance of the executive’s employment duties that is materially injurious
to Vivint Smart Home; act(s) on the executive’s part constituting either a felony or a misdemeanor involving
moral turpitude; the executive’s willful malfeasance or misconduct in connection with his employment duties
that causes substantial injury to us; or the executive’s material breach of the restrictive covenants set forth in the
employment agreements. Each of the foregoing events is subject to specified notice and cure periods.

In the event of Mr. Gerard’s termination of employment due to death or disability, he will only be entitled to the
accrued rights, the pro rata bonus payment, and the COBRA payment.

Mr. Gerard is also entitled to participate in all employee benefit plans, programs and arrangements made
available to other executive officers generally.

Mr. Gerard’s employment agreement also contains restrictive covenants, including an indefinite covenant on
confidentiality of information, and covenants related to non-competition and non-solicitation of Vivint Smart
Home’s employees and customers and affiliates at all times during employment, and for 18 months after any
termination of employment.

Separation Agreements with Departing Executive Officers

The Company and Mr. Dunn entered into a Separation Agreement (the “Dunn Separation Agreement”), effective
March 2, 2020, and on March 13, 2020, Mr. Dunn entered into a Release and Waiver of Claims in favor of the
Company (the “Dunn Release”). Pursuant to the Dunn Separation Agreement, Mr. Dunn is entitled to:

•

subject to non-revocation of the Dunn Release and, in respect of items (ii)-(iv) listed below, continued
compliance with the Dunn Restrictive Covenants (as defined below), the following payments and
benefits to which Mr. Dunn is entitled pursuant to the Amended and Restated Employment Agreement,
dated as of March 4, 2019, by and between Mr. Dunn and APX (the “Dunn Employment Agreement”),
in connection with a termination without “Cause”:

•

•

a lump sum cash severance payment equal to $143,845.86, in respect of a pro rata portion of
Mr. Dunn’s annual target bonus in respect of 2020, payable within 10 days of Mr. Dunn’s
departure date;

a lump sum cash payment equal to $2,042,399.64, which is equal to 200% of Mr. Dunn’s base
salary, payable within 55 days after Mr. Dunn’s departure date;

45

•

•

a lump sum cash payment equal to $1,456,822, which is equal to 200% of Mr. Dunn’s annual
bonus for 2019, payable within 55 days after Mr. Dunn’s departure date; and

a lump sum cash payment equal to $31,838.00, which is equal to the monthly COBRA costs for
providing health and welfare benefits for Mr. Dunn and his dependents for 24 months, payable
within 55 days after Mr. Dunn’s departure date.

In addition, subject to (i) Mr. Dunn’s continued compliance with the Dunn Restrictive Covenants and
(ii) non-revocation of the Dunn Release, (A) the Company shall pay an amount equal to $168,265.00, on behalf
of Mr. Dunn, in respect of the amount required to buy out Mr. Dunn’s Company-leased automobile; Mr. Dunn
shall be permitted to retain such automobile and (B) 313 Acquisition shall cause each of the unvested tracking
units in 313 Acquisition held by an affiliate of Mr. Dunn to become vested as of the effective date of the Dunn
Release (such tracking units, the “Accelerated Units”); provided, however that if (x) Mr. Dunn voluntarily
terminates the advisory arrangement described below or the Company terminates such advisory arrangement for
“cause” or Mr. Dunn fails to perform the advisory services as requested by the Company or (y) Mr. Dunn
breaches the Dunn Restrictive Covenants, the affiliate of Mr. Dunn will forfeit all rights with respect to the
Accelerated Units (including any property distributed in respect of such Accelerated Units). The Dunn Separation
Agreement provides that, notwithstanding anything to the contrary set forth in the 313 LLCA, (i) on or following
January 17, 2021, the affiliate of Mr. Dunn will be able to request, in writing, a redemption of a number of
tracking units in respect of 313 Acquisition’s interests in the Class A Common Stock of the Company (the
“Company Units”) and a number of tracking units in respect of 313 Acquisition’s interests in the common stock
of Vivint Solar, Inc. (the “VSLR Units”) equal to (x) up to 50% of the total number of Company Units and VSLR
Units held by the affiliate of Mr. Dunn as of the date of his departure minus (y) the number of Company Units
and VSLR Units previously redeemed by 313 Acquisition and (ii) on or following January 17, 2022, the affiliate
of Mr. Dunn may request, in writing, a redemption of any Company Units or VSLR Units then held by such
affiliate, in each case in accordance with the terms set forth in the 313 LLCA and upon such request, 313
Acquisition shall promptly redeem such Company Units and/or VSLR Units in accordance with the terms of the
313 LLCA.

The Dunn Separation Agreement also contains an agreement by Mr. Dunn that he will remain subject to any
restrictive covenants between Mr. Dunn and the Company or any of its subsidiaries or affiliates including those
set forth in the Dunn Employment Agreement and the Management Subscription Agreement (Incentive Units),
dated as of November 16, 2012 between Mr. Dunn and 313 Acquisition (collectively, the “Dunn Restrictive
Covenants”). The Dunn Restrictive Covenants consists of 24-month post-departure (the “restricted period”)
non-compete, non-solicitation and non-disparagement provisions and an indefinite confidentiality provision.
Mr. Dunn has agreed that the restricted period shall continue for length of the advisory period discussed below
and for 24 months thereafter.

Pursuant to the Dunn Separation Agreement, Mr. Dunn also agreed to become an independent advisor to Vivint
Smart Home and its subsidiaries and affiliates for a period of 12 months following his departure date, unless
terminated earlier, for no additional consideration.

The Company and Mr. Eyring entered into a Separation Agreement (the “Eyring Separation Agreement”),
effective March 13, 2020, and Mr. Eyring executed a Release and Waiver of Claims in favor of the Company
(the “Eyring Release”) in connection therewith. Pursuant to the Eyring Separation Agreement, Mr. Eyring is
entitled to:

•

subject to non-revocation of the Eyring Release and, in respect of items (ii)-(iv) listed below, continued
compliance with the Eyring Restrictive Covenants (as defined below), the following payments and

46

benefits to which Mr. Eyring is entitled pursuant to the Employment Agreement, dated as of March 8,
2016, by and between Mr. Eyring and APX (the “Eyring Employment Agreement”), in connection with
a termination without “Cause”:

•

•

•

•

(i) a lump sum cash severance payment equal to $78,461.36, in respect of a pro rata portion of
Mr. Eyring’s annual target bonus in respect of 2020, payable within 10 days of Mr. Eyring’s
departure date;

(ii) a lump sum cash payment equal to $983,454.00, which is equal to 150% of Mr. Eyring’s base
salary, payable within 55 days after Mr. Eyring’s departure date;

(iii) a lump sum cash payment equal to $590,072.40, which is equal to 150% of Mr. Eyring’s
annual target bonus for 2019, payable within 55 days after Mr. Eyring’s departure date; and

(iv) a lump sum cash payment equal to $26,452.00, which is equal to the monthly COBRA costs
for providing health and welfare benefits for Mr. Eyring and his dependents for 18 months,
payable within 55 days after Mr. Eyring’s departure date.

In addition, subject to (i) Mr. Eyring’s continued compliance with the Eyring Restrictive Covenants and
(ii) non-revocation of the Eyring Release, (A) the Company shall pay an amount equal to $118.998.30, in respect
of the amount required to buy out Mr. Eyring’s Company-leased automobiles; Mr. Eyring shall be permitted to
retain such automobiles and (B) fifty percent (50%) of the 263,059 shares of restricted Class A common stock of
the Company Mr. Eyring currently holds (including the 51,359 shares restricted Class A common stock of the
Company Mr. Eyring received in respect of the Company’s achievement of a portion of the earnout related to the
Merger), rounded down to the nearest share, shall vest as of the effective date of the Eyring Release, subject to
forfeiture if Mr. Eyring breaches any of the Eyring Restrictive Covenants (and all other unvested equity held by
Mr. Eyring was forfeited for no consideration as of the departure date).

The Eyring Separation Agreement also contains an agreement by Mr. Eyring that he will remain subject to any
restrictive covenants between Mr. Eyring and the Company or any of its subsidiaries or affiliates including those
set forth in the Eyring Employment Agreement and the Management Subscription Agreement (Incentive Units),
dated as of July 12, 2013 between Mr. Eyring and 313 Acquisition (the “Eyring Restrictive Covenants”). The
Eyring Restrictive Covenants consists of 18-month post-departure non-compete, non-solicitation and
non-disparagement provisions and an indefinite confidentiality provision.

Anti-Hedging and Pledging Policies

The Company’s insider trading policy prohibits directors, officers, employees and agents (such as consultants
and independent contractors) of the Company from pledging Company securities as collateral for loans and from
engaging in transactions in publicly traded options, such as puts and calls, and other derivative securities with
respect to the Company’s securities. This prohibition extends to any hedging or similar transactions designed to
decrease the risks associated with holding Company securities.

47

Summary Compensation Table

The following table provides summary information concerning compensation paid or accrued by us to or on

behalf of our NEOs.

Name and Principal
Position

Year

Salary
($) (1)

Bonus
($) (2)

Stock
Awards
($)

Non-Equity
Incentive Plan
Compensation
($) (3)

All Other
Compensation
($) (4)

Total
($)

Todd R. Pedersen, . . . . . . . . . . . . . . 2019 959,468
2018 695,096
2017 674,469

Chief Executive Officer

180,300
105,030 2,670,732

— 548,111
770,213
— 822,558

—

910,502
1,035,452
1,012,282

2,598,381
5,276,523
2,509,309

Dale R. Gerard,

. . . . . . . . . . . . . . . . 2019 422,511

488,583

— 167,960

84,110

1,163,164

Chief Financial Officer

Mark J. Davies, (5) . . . . . . . . . . . . . 2019 559,715

833,333
Former Chief Financial Officer 2018 631,905 1,310,738
370,800

2017 613,154

—
455,167
—

—
—
—

Alex J. Dunn, . . . . . . . . . . . . . . . . . . 2019 959,468
2018 695,096
2017 674,469

Former President

180,300
105,030 2,670,732

— 548,111
770,213
— 822,558

—

124,391
138,504
127,267

661,679
889,305
877,021

1,517,439
2,536,314
1,111,221

2,349,558
5,130,376
2,374,048

Matthew J. Eyring,

. . . . . . . . . . . . . 2019 650,495

931,678
2018 631,905 1,310,738

— 255,698
—

596,000

101,925
107,724

1,939,796
2,646,367

Former Executive Vice

President,

General Manager of Inside

Sales

2017 613,154

370,800

—

—

100,618

1,084,572

Todd M. Santiago, . . . . . . . . . . . . . . 2019 650,495 1,112,634
2018 631,905 1,310,738

Executive Vice President,

596,000

— 114,081

General

Manager of Retail

2017 613,154

370,800

—

—

—

195,426
144,586

2,072,636
2,683,229

137,786

1,121,740

(1) Effective March 4, 2019, the base salaries of Messrs. Pedersen and Dunn were increased from $700,194 to $1,021,200.
Effective April 1, 2019 the base salaries of Messrs. Davies, Eyring and Santiago, from $636,540 to $655,636. The base
salary of Mr. Gerard increased from $358,182 to $412,000 effective April 1, 2019 and increased further to $532,000,
effective October 14, 2019.

(2) The amounts reported in this column for 2019 represent retention bonuses paid for Messrs. Gerard, Davies, Eyring and

Santiago as described in “—Compensation Discussion and Analysis for Legacy Vivint Smart Home, Inc.—
Compensation Elements—Bonuses—2018 Retention Awards” and the discretionary portion of the 2019 annual cash
incentive awards described above under “—Compensation Discussion and Analysis for Legacy Vivint Smart Home,
Inc.—Compensation Elements—Bonuses—Fiscal 2019 Management Bonus”.

(3) The amounts reported in this column for 2019 represent the incentive payouts to our NEOs under the 2019 annual cash
incentive awards described above under “—Compensation Discussion and Analysis for Legacy Vivint Smart Home,
Inc.—Compensation Elements—Bonuses—Fiscal 2019 Management Bonus”.

(4) Amounts reported under All Other Compensation for fiscal 2019 reflect the following:

(a)

as to Mr. Pedersen, $77,430 additional cash compensation paid to Mr. Pedersen pursuant to his prior employment
agreement, which was amended and restated March 4, 2019 (see “—Narrative Disclosure to Summary
Compensation Table and Grants of Plan Based Awards—Employment Agreements”), reimbursement for health
insurance premiums, excess liability insurance premiums, $23,124 in country club membership fees, $35,935 in
actual Company expenditures for use, including business use, of a Company car, alarm system fees, event tickets
(for which we incurred no incremental costs), fuel expenses, $93,750 in reimbursements for financial advisory
services provided to Mr. Pedersen, other miscellaneous personal benefits and $418,514 reimbursed for taxes with
respect to perquisites. In addition, Mr. Pedersen reimburses the Company for the aggregate variable costs associated
with his personal use of the Company leased aircraft in accordance with the time-sharing agreement described under
“Compensation Discussion and Analysis for Legacy Vivint Smart Home, Inc.—Compensation Elements—Benefits
and Perquisites.”

48

While maintenance costs are not included in the reimbursement amount under the time-sharing agreement, the
Company has determined it is appropriate to allocate a portion of the maintenance costs when calculating the
aggregate incremental cost associated with personal use of the Company aircraft for purposes of SEC disclosure.
Therefore, amounts reported also reflect $198,688 in maintenance costs allocated on the basis of the proportion of
personal use. In addition, family members and friends of Mr. Pedersen have, in limited circumstances, accompanied
him on business travel on the Company leased aircraft for which we incurred $20,185 of incremental costs;

(b) as to Mr. Gerard $27,809 in actual Company expenditures for use, including business use, of a Company car,

(c)

reimbursement for health insurance premiums, event tickets (for which we incurred no incremental costs), excess
liability insurance premiums, fuel expenses and $36,431 reimbursed for taxes owed with respect to perquisites;
as to Mr. Davies, $44,085 in actual Company expenditures for use, including business use, of a Company car,
reimbursement for health insurance premiums, country club membership fees, event tickets (for which we incurred
no incremental costs), excess liability insurance premiums, fuel expenses and $55,003 reimbursed for taxes owed
with respect to perquisites;

(d) as to Mr. Dunn, $77,430 additional cash compensation paid to Mr. Dunn pursuant to his prior employment
agreement, which was amended and restated March 4, 2019 (see “—Narrative Disclosure to Summary
Compensation Table and Grants of Plan Based Awards—Employment Agreements”), reimbursement for health
insurance premiums, excess liability insurance premiums, the value of meals in the Company cafeteria, country club
membership fees, $41,604 in actual Company expenditures for use, including business use, of a Company car, alarm
system fees, event tickets (for which we incurred no incremental costs) and Company paid personal travel, $93,750
in reimbursements for financial advisory services provided to Mr. Dunn, other miscellaneous personal benefits and
$276,198 reimbursed for taxes with respect to perquisites. In addition, Mr. Dunn reimburses the Company for the
aggregate variable costs associated with his personal use of the Company leased aircraft in accordance with the
time-sharing agreement described under “Compensation Discussion and Analysis for Legacy Vivint Smart Home,
Inc.—Compensation Elements—Benefits and Perquisites.” As discussed in footnote 6(a) above, amounts reported
reflect a similar allocation of $84,471 in maintenance costs associated with Mr. Dunn’s personal use of the
Company leased aircraft. In addition, family members and friends of Mr. Dunn have, in limited circumstances,
accompanied him on business travel on the Company leased aircraft for which we incurred $39,948 of incremental
costs;
as to Mr. Eyring, $32,154 in actual Company expenditures for use, including business use, of a Company car,
reimbursement for health insurance premiums, country club membership fees, event tickets (for which we incurred
no incremental costs), the value of meals in the Company cafeteria, excess liability insurance premiums, fuel
expenses, alarm system fees and $39,862 reimbursed for taxes owed with respect to perquisites; and
as to Mr. Santiago, $34,474 in actual Company expenditures for use, including business use, of a Company car,
alarm system fees, reimbursement for health insurance premiums, country club membership fees, event tickets (for
which we incurred no incremental costs), Company paid personal travel, the value of meals in the Company
cafeteria, excess liability insurance premiums, fuel expenses, and $99,454 reimbursed for taxes owed with respect to
perquisites. In addition, family members and friends of Mr. Santiago have, in limited circumstances, accompanied
him on business travel on the Company leased aircraft for which we incurred de minimis incremental costs.

(e)

(f)

(5)

In connection with his departure from the Company in October 2019, Mr. Davies forfeited his 2019 management bonus.

49

Grants of Plan-Based Awards in 2019

The following table provides supplemental information relating to grants of plan-based awards made to our

NEOs during 2019.

Name

Todd R. Pedersen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dale R. Gerard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mark J. Davies (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Alex Dunn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Matthew J. Eyring . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Todd M. Santiago . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards (1)

Threshold
($)

Target
($)

2,840
832
1,549
2,840
4,426
22,128

540,900
158,442
295,037
540,900
295,037
295,037

Maximum
($)

1,622,700
475,326
885,111
1,622,700
885,111
885,111

(1) Reflects the possible payouts of cash incentive compensation to our NEOs under the fiscal 2019 management bonus. The

actual amounts paid are reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary
Compensation Table and described in “Compensation Discussion and Analysis for Legacy Vivint Smart Home, Inc.—
Compensation Elements—Bonuses—Fiscal 2019 Management Bonuses”.

(2) Mr. Davies resigned from his position as the Company’s Chief Financial Officer, effective October 14, 2019 and was not

entitled to any future payout associated with the fiscal 2019 management bonus.

Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards

Employment Agreements

Employment Agreements with Messrs. Pedersen and Dunn

The employment agreements in effect in 2019 with our Chief Executive Officer (CEO), Todd Pedersen, and our
President, Alex Dunn, contain substantially similar terms. The principal terms of each of these agreements are
summarized below, except with respect to potential payments and other benefits upon specified terminations,
which are summarized below under “-Potential Payments Upon Termination or Change in Control.” We initially
entered into employment agreements with Messrs. Pedersen and Dunn on August 7, 2014 (the “2014
Employment Agreements”) and we amended and restated these employment agreements on March 4, 2019.

Each amended and restated employment agreement provides for a term ending on March 4, 2022 and extends
automatically for additional one-year periods unless either party elects not to extend the term. Under the
amended and restated employment agreements, each executive is eligible to receive a minimum base salary,
specified below, and an annual bonus based on the achievement of specified financial goals as determined by us.
If these goals are achieved, the executive may receive an annual incentive cash bonus as provided below.

Mr. Pedersen’s amended and restated employment agreement provides that he is to serve as CEO and is eligible
to receive a base salary originally set at $1,021,200, subject to periodic review and increase, but not decrease.
Mr. Pedersen is also eligible to receive a target bonus equal to the sum of (x) 100% of his annual base salary at
the end of the fiscal year minus (y) $300,000, if targets established by us are achieved.

Mr. Dunn’s amended and restated employment agreement provides that he is to serve as President and is eligible
to receive a base salary originally set at $1,021,200, subject to periodic review and increase, but not decrease.
Mr. Dunn is also eligible to receive a target bonus equal to the sum of (x) 100% of his annual base salary at the
end of the fiscal year minus (y) $300,000, if targets established by us are achieved.

In addition, each amended and restated employment agreement provides Messrs. Pedersen and Dunn with annual
reimbursements of up to $125,000 in respect of expenses incurred by the executive related to the engagement of a

50

financial advisor by the executive to provide the executive with customary financial advice. Any such
reimbursements to the executive will be considered taxable income to the executive and the executive will be
entitled to tax “gross up” payments in respect thereof.

Each executive officer is also entitled to participate in all employee benefit plans, programs and arrangements
made available to other executive officers generally.

Each of the amended and restated employment agreements also contains restrictive covenants, including an
indefinite covenant on confidentiality of information, and covenants related to non-competition and
non-solicitation of our employees and customers and affiliates at all times during employment, and for two years
after any termination of employment. These covenants are substantially the same as the covenants
Messrs. Pedersen and Dunn agreed to in connection with their receipt of Class B Units summarized below under
“-Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards-Equity Awards-
Restrictive Covenants”.

The amended and restated employment agreements are substantially identical to the 2014 Employment
Agreements that were in effect until March 4, 2019, except that:

•

•

the 2014 Employment Agreements provided for a term ending on November 16, 2017, with automatic
extensions for additional one-year periods unless either party elects not to extend the term;

the 2014 Employment Agreements provided for base salaries originally set at $500,000, subject to
annual review and increase, but not decrease, which base salaries were increased as set forth below:

Effective as of January 1,
2015 ($)

Effective as of July 25,
2016 ($)

Effective as of April 1,
2017 ($)

Effective as of April 1,
2018 ($)

525,000

660,000

679,800

700,194

• The 2014 Employment Agreements provided that Messrs. Pedersen and Dunn were each eligible to
receive a target bonus equal to the sum of (x) 100% of his annual base salary at the end of the fiscal
year;

•

•

the 2014 Employment Agreements provided for an annual payment equal to $300,000 per year, subject
to all applicable taxes and withholdings, intended to be used to reimburse the Company for the costs of
the executive’s personal use of the company airplane; and

the 2014 Employment Agreements provided for access to a financial advisor to provide the executive
with customary financial advice, subject to a combined aggregate cap of $250,000 on such professional
fees for Messrs. Pedersen and Dunn.

Mr. Dunn stepped down from his position as our President and President of Vivint Smart Home effective
March 2, 2020. In connection with his departure, Mr. Dunn also resigned as a director and officer of the
Company and of Vivint Smart Home, effective March 2, 2020 and from all positions as an employee of the
Company and of Vivint Smart Home, effective as of March 13, 2020.

Employment Agreements with Messrs. Davies, Eyring and Santiago

On March 8, 2016, we entered into employment agreements with certain of our officers, including
Messrs. Davies, Eyring and Santiago, containing substantially similar terms. The principal terms of each of these
agreements, as in effect in 2019, are summarized below.

The employment agreement with each of these NEOs provides or provided for a term ending on March 8, 2019,
which extends automatically for additional one-year periods unless either party elects not to extend the term.
Under the employment agreements, each executive is or was eligible to receive a minimum base salary, and an
annual bonus award with a target amount equal to a percentage of his base salary. Pursuant to the employment

51

agreements, the annual base salary of each of Messrs. Davies, Eyring and Santiago is or was $655,636, and each
of them is or was eligible to earn an annual bonus award with a target amount equal to 60% of their base salary at
the end of the performance period. Under their employment agreements, in the event of a termination for any
reason, the executive is or was entitled to receive: (1) any base salary accrued through the date of termination;
(2) reimbursement of any unreimbursed business expenses properly incurred by the executive; and (3) such
employee benefits, if any, as to which the executive may be entitled under the Company’s employee benefit plans
(the payments and benefits described in (1) through (3) being “accrued rights”).

In the event of a termination by us without “cause” (as defined below) and other than by reason of death or while
he is disabled (any such termination, a “qualifying termination”), each of Messrs. Davies, Eyring and Santiago is
or was entitled to the accrued rights and, conditioned upon execution and non-revocation of a release and waiver
of claims in favor of the Company and its affiliates, and continued compliance with the non-compete,
non-solicitation, non-disparagement, and confidentiality provisions set forth in the employment agreements:

•

•

•

a pro rata portion of his target annual bonus based upon the portion of the fiscal year during which the
executive was employed (the “pro rata bonus”);

a lump-sum cash payment equal to 150% of the executive’s then-current base salary plus 150% of the
actual bonus the executive received in respect of the immediately preceding fiscal year (or, if a
termination of employment occurs prior to any annual bonus becoming payable under his employment
agreement, the target bonus for the immediately preceding fiscal year); and

a lump-sum cash payment equal to the cost of the health and welfare benefits for the executive and his
dependents, at the levels at which the executive received benefits on the date of termination, for
18 months (the “COBRA payment”).

For purposes of their respective employment agreements, the term “cause” means the executive’s continued
failure to substantially perform his employment duties for a period of 10 days following written notice from the
Company; any dishonesty in the performance of the executive’s employment duties that is materially injurious to
the Company; act(s) on the executive’s part constituting either a felony or a misdemeanor involving moral
turpitude; the executive’s willful malfeasance or misconduct in connection with his employment duties that
causes substantial injury to us; or the executive’s material breach of the restrictive covenants set forth in the
employment agreements. Each of the foregoing events is subject to specified notice and cure periods.

In the event of the executive’s termination of employment due to death or disability, he will only be entitled to
the accrued rights, the pro rata bonus payment, and the COBRA payment.

Each executive officer is also entitled to participate in all employee benefit plans, programs and arrangements
made available to other executive officers generally.

Each of the employment agreements also contains restrictive covenants, including an indefinite covenant on
confidentiality of information, and covenants related to non-competition and non-solicitation of the Company’s
employees and customers and affiliates at all times during employment, and for 18 months after any termination
of employment.

On March 2, 2020 the Company entered into employment agreements with each of Messrs. Pedersen and
Santiago, in each case, effective March 2, 2020, in order to reflect the assignment of each of the Pedersen
Employment Agreement and the Santiago Employment Agreement from APX to the Company. In addition, the
Santiago Employment Agreement was updated to reflect Mr. Santiago’s current annual base salary of $655,636
and annual target bonus opportunity equal to sixty percent (60%) of Mr. Santiago’s base salary. Except as set
forth above, the terms and conditions of the Pedersen Employment Agreement and Santiago Employment
Agreement remain unchanged.

52

Mr. Eyring ceased to serve as our Executive Vice President, General Manager of Inside Sales and from the same
position at Vivint Smart Home effective March 13, 2020.

Employment Agreement with Mr. Gerard

On March 2, 2020, the Company entered into an employment agreement with Mr. Gerard. The terms of
Mr. Gerard’s employment agreement are summarized above under “Compensation Discussion and Analysis for
Legacy Vivint Smart Home, Inc.—Compensation Actions Taken in 2020.”

Equity Awards

Class B Unit Equity Awards

As a condition to receiving his Class B Units, each NEO was required to enter into a subscription agreement with
us and 313 Acquisition and to become a party to the limited liability company agreement of 313 Acquisition as
well as a securityholders agreement. These agreements generally govern the NEO’s rights with respect to the
Class B Units and contain certain rights and obligations of the parties thereto with respect to vesting, governance,
distributions, indemnification, voting, transfer restrictions and rights, including put and call rights, tag-along
rights, drag-along rights, registration rights and rights of first refusal, and certain other matters.

Vesting Terms

Following the Modification, the Class B Units were divided into two time-vesting portion (each 1/3 of the
Class B Units granted) and a 2.0x exit-vesting portion (1/3 of the Class B Units granted). Following the
Modification, the time-vesting Class B Units and the 2.0 exit-vesting Class B Units had the following vesting
terms:

• Time-Vesting Units: As to one of the time-vesting portions of the Class B Units (representing 1/2 of
the time-vesting Class B Units granted), twelve months after the initial “vesting reference date”, as
defined in the applicable subscription agreement, 20% of the NEO’s time-vesting Class B Units will
vest, subject to continued employment through such date. The “vesting reference date” for Messrs.
Pedersen and Dunn is November 16, 2012, the date of the grant of their Class B Units. The “vesting
reference” date for the Class B Units granted to Messrs. Gerard, Eyring and Santiago on August 12,
2013 is also November 16, 2012 and the “vesting reference date” for the Class B Units granted to
Mr. Davies on March 3, 2014 is November 4, 2013, which is the date he commenced employment with
us. The “vesting reference” date for the Class B Units granted to Messrs. Davies, Eyring, Gerard and
Santiago on September 20, 2016 is August 1, 2016 (July 31, 2016 for Mr. Santiago). Thereafter, an
additional 20% of the NEO’s time-vesting Class B Units will vest every year until he is fully vested,
subject to his continued employment through each vesting date. Notwithstanding the foregoing, these
time-vesting Class B Units will become fully vested upon a change of control (as defined in the
securityholders agreement) that occurs while the NEO is still employed by us. In addition, as to Messrs.
Pedersen and Dunn, these time-vesting Class B Units will also continue to vest for one year following a
termination by 313 Acquisition without “cause” (excluding by reason of death or disability) or
resignation by the executive for “good reason,” each as defined in the executive’s employment
agreement (any such termination, a “qualifying termination”). As to the other time-vesting portion of
the Class B Units (representing 1/2 of the time-vesting Class B Units granted which were originally
3.0x exit-vesting Class B Units which were converted into time-vesting Class B Units in accordance
with the Modification), such Class B Units become vested, subject to the applicable participant’s
continued employment with the Company or its subsidiaries through the applicable vesting date, with
respect to 20% of such Class B Units on each of the first five anniversaries of June 12, 2018; provided,
that in the event of a change of control during the applicable participant’s continued employment with
the Company or its subsidiaries, such Class B Units shall, to the extent not then vested or previously
forfeited or cancelled, become fully vested.

53

•

2.0x Exit-Vesting Units: The 2.0x exit-vesting Class B Units vest if the NEO is employed by us when
and if Blackstone receives cash proceeds in respect of its Class A Units equal to a return equal to 2.0x
Blackstone’s cumulative invested capital in respect of the Class A Units. In addition, as to
Messrs. Pedersen and Dunn, the 2.0x exit-vesting Class B Units will remain eligible to vest for one
year following a qualifying termination if a change of control occurs during such one-year period and,
as a result of such change of control, the 2.0x exit-vesting conditions are met. As to Messrs. Gerard,
Davies, Eyring and Santiago, the 2.0x exit-vesting Class B Units will remain eligible to vest for six
months following a termination by 313 Acquisition without “cause” (as defined for the purposes of the
employment agreement) and other than by reason of death or while he is disabled if the applicable
vesting criteria are satisfied during the six-month period. If the exit-vesting units do not become vested
following the end of the six-month period, they will be forfeited without consideration.

In connection with the Merger, the equity awards were treated as described under “—Compensation Discussion
and Analysis for Legacy Vivint Smart Home, Inc.—Treatment of Equity Incentive Awards in Connection with
the Merger” above.

Put Rights

Prior to an initial public offering, if an executive officer’s employment was terminated due to death or disability,
such executive had the right, subject to specified limitations and for a specified period following the termination
date, to cause 313 Acquisition to purchase on one occasion all, but not less than all, of such executive’s vested
Class B Units, in either case, at the fair market value of such units. The SARs granted to Mr. Gerard had
substantially similar put rights with respect to any equity issued in respect of an exercised SAR; provided, that
Mr. Gerard’s right to put such equity was with respect to the issuer of such equity (which could include, but was
not limited to 313 Acquisition). Following the Merger, the NEOs no longer have put rights with respect to the
Class B Units or the SARs, as applicable.

Call Rights Regarding Messrs. Pedersen’s and Dunn’s Class B Units

If Messrs. Pedersen or Dunn were terminated for any reason, or in the event of a restrictive covenant violation,
313 Acquisition (or if 313 Acquisition declined to exercise such right, The Blackstone Group Inc. (the
“Sponsor”)) had the right, for a specified period following the termination of such executive’s employment, to
purchase all of such executive’s vested Class B Units as follows:

Call Price

fair market value

Put Price

fair market value

Triggering Event

Death or Disability . . . . . . . . . . . . . . . . . . . .
Termination With Cause or Voluntary

Resignation When Grounds Exist for
Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Termination Without Cause or Resignation

For Good Reason . . . . . . . . . . . . . . . . . . .

Voluntary Resignation Without Good

lesser of (a) fair market value and (b) cost

fair market value

Reason Prior to November 16, 2014 . . . .

lesser of (a) fair market value and (b) cost

Voluntary Resignation on or After

November 16, 2014 . . . . . . . . . . . . . . . . .
Restrictive Covenant Violation . . . . . . . . . .

fair market value
lesser of (a) fair market value and (b) cost

N/A

N/A

N/A

N/A
N/A

Call Rights Regarding Other Executive Officers’ Class B Units and SARs

With respect to our other executive officers, if the executive officer was terminated for any reason, in the event
of a restrictive covenant violation or if the executive engages in any conduct that would be a violation of a
restrictive covenant set forth in the executive’s management unit subscription agreement but for the fact that the

54

conduct occurred outside the relevant periods (any such conduct “Competitive Activity”), then 313 Acquisition
(or if 313 Acquisition declined to exercise such right, the Sponsor) had the right, for a specified period following
the termination of such executive’s employment, to purchase all of such executive’s vested Class B Units as
follows:

Triggering Event

Death or Disability . . . . . . . . . . . . . . . . . . . .
Termination With Cause or Voluntary

Resignation When Grounds Exist for
Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Termination Without Cause . . . . . . . . . . . . .
Voluntary Resignation Prior to

November 16, 2014, or, if Later, the
Second Anniversary of Date of Hire . . . .

Voluntary Resignation on or After

November 16, 2014, or, if Later, the
Second Anniversary of Date of Hire . . . .
Restrictive Covenant Violation . . . . . . . . . .
Competitive Activity Not Constituting a

Restrictive Covenant Violation . . . . . . . .

Call Price

fair market value

Put Price

fair market value

lesser of (a) fair market value and (b) cost
fair market value

lesser of (a) fair market value and (b) cost

fair market value
lesser of (a) fair market value and (b) cost

fair market value

N/A
N/A

N/A

N/A
N/A

N/A

The SARs granted to Mr. Gerard had substantially similar repurchase rights with respect to any equity issued in
respect of an exercised SAR; provided, that (i) the right to repurchase such equity was held by the issuer of the
equity (or if such issuer declined to exercise such right, 313 Acquisition or the Sponsor) and (ii) the triggering
events with respect to voluntary resignations related to the second anniversary of the vesting start date for such
SARs as opposed to the later of November 16, 2014 and the second anniversary of the date of hire. Following the
merger, there are no longer call rights with respect to the Class B Units or the SARs, as applicable.

Restrictive Covenants

In addition, as a condition of receiving Class B Units, and in the case of Mr. Gerard, SARs, our executive officers
agreed to specified restrictive covenants, including an indefinite covenant on confidentiality of information, and
covenants related to non-disparagement, non-competition and non-solicitation of our employees and customers
and affiliates at all times during the NEO’s employment, and for specified periods after any termination of
employment as set forth in the subscription agreement (two years for Messrs. Pedersen and Dunn
and one-year non-compete and non-solicit periods and a three-year non-disparagement period for each of our
other NEOs).

Vivint Group SARs

The Company’s subsidiary, Vivint Group awarded SARs to Mr. Gerard, pursuant to the Vivint Group Plan. The
SARs are subject to vesting conditions consistent with the Class B Units described above.

Additional terms regarding the equity awards are summarized above under “—Compensation Discussion and
Analysis for Legacy Vivint Smart Home, Inc.—Compensation Elements—Long-Term Equity Compensation” and
under “Potential Payments Upon Termination or Change in Control” below.

55

Outstanding Equity Awards at 2019 Fiscal Year-End

Class B Unit Equity Awards and SARs

The following table provides information regarding outstanding equity awards for our NEOs as of

December 31, 2019.

Stock Awards

Option Awards

Number of
Securities
Underlying
Unexercised
Options -
Exercisable
(#) (4)

Number of
Securities
Underlying
Unexercised
Options -
Unexercisable
(#) (5)

Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#) (6)

Option
Exercise
Price
($)

Option
Expiration
Date

Number
of
Shares
or Units
of Stock
That
Have Not
Vested
(#) (1)

Market
Value of
Shares
or Units
of Stock
That
Have Not
Vested
($)

Grant
Date

Name

Class B Units
Todd R.

Pedersen . . . . . . 11/16/2012 5,623,059

Dale R. Gerard . . . 9/20/2016
7/12/2013

200,000
266,667

Mark J.

Davies (7) . . . . . 9/20/2016
3/3/2014

—
—

Alex J. Dunn . . . . . 11/16/2012 5,623,059

Matthew J.

Eyring . . . . . . . . 9/20/2016

340,000
7/12/2013 1,153,333

Todd M.

Santiago . . . . . . 9/20/2016

340,000
7/12/2013 1,153,333

(2)

(2)
(2)

(2)
(2)

(2)

(2)
(2)

(2)
(2)

Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested
($)

(2)

(2)
(2)

(2)
(2)

(2)

(2)
(2)

(2)
(2)

Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#) (3)

7,028,243

166,667
333,333

—
—

7,028,243

283,333
1,441,667

283,333
1,441,667

SARs

Dale R. Gerard . . .

6/8/2018

33,333

133,334

83,333

1.76

6/8/2028

(1) Consists of time-vesting Class B Units (including the 3.0x exit-vesting Class B Units which were converted into time-
vesting Class B Units pursuant to the Modification). The following provides information with respect to the vesting
schedules of the time-vesting Class B Units held by our NEOs:

• Mr. Pedersen—of these outstanding time-vesting Class B Units, all vest in four equal installments on June 12, 2020,

June 12, 2021, June 12, 2022 and June 12, 2023.

• Mr. Gerard—of these outstanding time-vesting Class B Units, 66,667 of the Class B Units granted on September 20,
2016 vest in two equal installments on August 1, 2020 and August 1, 2021, and 133,333 of the Class B Units granted
on September 20, 2016, and all of the Class B Units granted on July 12, 2013 vest in four equal installments on
June 12, 2020, June 12, 2021, June 12, 2022 and June 12, 2023.

• Mr. Dunn—of these outstanding time-vesting Class B Units, all vest in four equal installments on June 12, 2020,

June 12, 2021, June 12, 2022 and June 12, 2023.

• Mr. Eyring—of these outstanding time-vesting Class B Units, 113,333 of the Class B Units granted on September 20,
2016 vest in two equal installments on August 1, 2020 and August 1, 2021, and 226,667 of the Class B Units granted
on September 20, 2016 and all of the Class B Units granted on July 12, 2013 vest in four equal installments on
June 12, 2020, June 12, 2021, June 12, 2022 and June 12, 2023.

• Mr. Santiago—of these outstanding time-vesting Class B Units, 113,333 of the Class B Units granted on

September 20, 2016 vest in two equal installments on July 31, 2020 and July 31, 2021, and 226,667 of the Class B
Units granted on September 20, 2016 all of the Class B Units granted on July 12, 2013 vest in four equal installments
on June 12, 2020, June 12, 2021, June 12, 2022 and June 12, 2023.

56

Additional terms of these time-vesting Class B Units are summarized under “—Compensation Discussion and Analysis
for Legacy Vivint Smart Home, Inc.—Compensation Elements—Long-Term Equity Compensation,” “Narrative
Disclosure to Summary Compensation Table and Grants of Plan Based Awards Table—Equity Awards” and “Potential
Payments Upon Termination or Change in Control.” Vesting of the time-vesting Class B Units (including the 3.0x exit-
vesting Class B Units which were converted into time-vesting Class B Units pursuant to the Modification) will be
accelerated upon a change of control that occurs while the executive is still employed by us and, as to Messrs. Pedersen
and Dunn, will also continue to vest for one year following a qualifying termination, each as described under “Narrative
Disclosure to Summary Compensation Table and Grants of Plan-Based Awards—Equity Awards.”

(2) Because there was no public market for the Class B Units as of December 31, 2019, the market value of such units was

not determinable as of such date.

(3) Reflects 2.0x exit-vesting Class B Units. Unvested 2.0x exit-vesting Class B Units vest as described under the

“—Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards—Equity Awards” section
above. As to (i) Messrs. Pedersen and Dunn, the 2.0x exit-vesting Class B Units will remain eligible to vest for one year
following a qualifying termination if a change of control occurs during such one-year period and, as a result of such
change of control, the respective exit-vesting conditions are met, and (ii) as to Messrs. Gerard, Eyring and Santiago, 2.0x
exit-vesting Class B Units will remain outstanding and eligible to vest for a six-month period following a termination by
us without “cause” (as defined for the purposes of his employment agreement or award agreement, as applicable) and
other than by reason of death or while he is disabled if the applicable vesting criteria are satisfied during
the six-month period, each as described under “—Narrative Disclosure to Summary Compensation Table and Grants of
Plan-Based Awards—Equity Awards.”

(4) Reflects vested SARs.
(5) Reflects outstanding time-vesting SARs. Of these, all vest in four equal installments on June 12, 2020, June 12, 2021,

June 12, 2022 and June 12, 2023.

(6) Reflects 2.0x exit-vesting SARs. Unvested 2.0x exit-vesting SARs vest as described under the “—Narrative Disclosure

to Summary Compensation Table and Grants of Plan-Based Awards—Equity Awards” section above.

(7) Mr. Davies resigned from his position as the Company’s Chief Financial Officer, effective October 14, 2019. As a result

of Mr. Davies’ departure, all of his unvested Class B Units were forfeited.

Following the completion of the Merger, the NEOs owned the following outstanding equity awards of Vivint Smart
Home:

Mr. Gerard: 30,067 shares of Vivint Smart Home Class A common stock, 48,948 restricted shares of Vivint Smart Home
Class A common stock, 2,880 vested Vivint Smart Home SARs and 18,723 unvested Vivint Smart Home SARs. The
restricted shares of Vivint Smart Home Class A common stock held by Mr. Gerard vest as follows: (a) 27,193 vest in
four equal annual installments beginning on January 17, 2021 and (b) 21,755 vest in four equal annual installments
beginning on June 12, 2020, in each case, subject to acceleration upon a change in control of 313 Acquisition or in the
case of (b) if certain performance thresholds are achieved. The Vivint Smart Home SARs have an exercise price of
$20.41 and the unvested Vivint Smart Home SARs vest as follows: (a) 11,522 vest in four equal annual installments
beginning on June 12, 2020, and (b) 7,201 vest in four equal annual installments beginning on January 17, 2021, in each
case, subject to acceleration upon a change in control of Vivint Smart Home or in the case of (b) if certain performance
thresholds are achieved.

Mr. Eyring: 85,842 shares of Vivint Smart Home Class A common stock and 211,700 restricted shares of Vivint Smart
Home Class A common stock. The restricted shares of Vivint Smart Home Class A common stock held by Mr. Eyring
vest as follows: (a) 117,611 vest in four equal annual installments beginning on January 17, 2021 and (b) 94,089 vest in
four equal annual installments beginning on June 12, 2020, in each case, subject to acceleration upon a change in control
of 313 Acquisition or in the case of (b) upon achievement of certain performance thresholds.

Mr. Santiago: 241,598 shares of Vivint Smart Home Class A common stock and 211,700 restricted shares of Vivint
Smart Home Class A common stock. The restricted shares of Vivint Smart Home Class A common stock held by
Mr. Santiago vest as follows: (a) 117,611 vest in four equal annual installments beginning on January 17, 2021 and
(b) 94,089 vest in four equal annual installments beginning on June 12, 2020, in each case, subject to acceleration upon a
change in control of 313 Acquisition or in the case of (b) upon achievement of certain performance thresholds.

Messrs. Gerard, Eyring and Santiago are also entitled to receive the following number of shares of Vivint Smart Home
Class A common stock if, from the closing of the Merger until the fifth anniversary thereof, the volume-weighted
average price per share of the Vivint Smart Home Class A common stock exceeds certain thresholds as described below.

Mr. Gerard: 36,608 shares of Vivint Smart Home Class A common stock.

Mr. Eyring: 107,891 shares of Vivint Smart Home Class A common stock.

Mr. Santiago: 107,891 shares of Vivint Smart Home Class A common stock.

57

Of these shares, one-third was issued when the volume-weighted average price per share of the Vivint Smart Home
Class A Common Stock exceeded $12.50 for 20 trading days within 30 trading day period, one-third was issued when
the volume-weighted average price per share of the Vivint Smart Home Class A Common Stock exceeded $15.00 for
20 trading days within 30 trading day period, and one-third will be issued if the volume-weighted average price per share
of the Vivint Smart Home Class A Common Stock exceeds $17.50 for any 20 trading days within any 30 trading day
period. The issuance of such shares is/was subject to certain adjustments, including pro rata adjustments, set forth in the
Merger Agreement.

As discussed above, the Class B Units held by Messrs. Pedersen and Dunn prior to the Merger were converted into
Class A Units rather than equity of Vivint Smart Home.

Option Exercises and Stock Vested in 2019

The following table provides information regarding the equity held by our NEOs that vested during 2019.

Name

Class B Units

Todd R. Pedersen . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dale R. Gerard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mark J. Davies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Alex J. Dunn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Matt J. Eyring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Todd M. Santiago . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Stock Awards

Number of
Shares
or Units
Acquired
on Vesting
(#)

1,405,649
133,333
53,333
1,405,649
401,667
401,667

Value
Realized
on
Vesting
($)

(1)
(1)
(1)
(1)
(1)
(1)

(1) Because there was no public market for the Class B Units as of the applicable vesting date, the market value of such units

on the vesting date was not determinable.

Pension Benefits

We have no pension benefits for our executive officers.

Nonqualified Deferred Compensation

We have no nonqualified defined contribution or other nonqualified deferred compensation plans for our

executive officers.

Potential Payments Upon Termination or Change in Control

The following section describes the potential payments and benefits that would have been payable to our NEOs
under existing plans and contractual arrangements assuming (1) a termination of employment or (2) a change of
control occurred, in each case, on December 31, 2019, the last business day of fiscal 2019. The amounts shown
in the table do not include payments and benefits to the extent they are provided generally to all salaried
employees upon termination of employment and do not discriminate in scope, terms or operation in favor of the
NEOs. These include distributions of plan balances under our 401(k) savings plan and similar items.

Messrs. Pedersen and Dunn

Pursuant to their respective employment agreements, if Mr. Pedersen’s or Mr. Dunn’s employment terminates for
any reason, the applicable executive is entitled to receive: (1) any base salary accrued through the date of
termination; (2) any annual bonus earned, but unpaid, as of the date of termination; (3) reimbursement of any

58

unreimbursed business expenses properly incurred by the executive; and (4) such employee benefits, if any, as to
which the executive may be entitled under our employee benefit plans (the payments and benefits described in
(1) through (4) “accrued rights”).

If the employment of Messrs. Pedersen and Dunn is terminated by us without “cause” (as defined below) (other
than by reason of death or while he is disabled) or if either executive resigns with “good reason” (as defined
below) (any such termination, a “qualifying termination”), such executive is entitled to the accrued rights and,
conditioned upon execution and non-revocation of a release and waiver of claims in favor of us and our affiliates,
and continued compliance with the non-compete, non-solicitation, non-disparagement, and confidentiality
provisions set forth in the employment agreements and described above under “—Narrative Disclosure to
Summary Compensation Table and Grants of Plan-Based Awards”:

•

•

•

a pro rata portion of his target annual bonus based upon the portion of the fiscal year during which the
executive was employed (the “pro rata bonus”);

a lump-sum cash payment equal to 200% of the executive’s then-current base salary plus 200% of the
actual bonus the executive received in respect of the immediately preceding fiscal year (or, if a
termination of employment occurs prior to any annual bonus becoming payable under his employment
agreement, the target bonus for the immediately preceding fiscal year); and

a lump-sum cash payment equal to the cost of the health and welfare benefits for the executive and his
dependents, at the levels at which the executive received benefits on the date of termination, for 24
months (the “COBRA payment”).

For purposes of the employment agreements of each of Messrs. Pedersen and Dunn, the term “cause” means the
executive’s continued failure to substantially perform his employment duties for a period of ten (10) days; any
dishonesty in the performance of the executive’s employment duties that is materially injurious to us; act(s) on
the executive’s part constituting either a felony or a misdemeanor involving moral turpitude; the executive’s
willful malfeasance or misconduct in connection with his employment duties that causes substantial injury to us;
or the executive’s material breach of any covenants set forth in the employment agreements, including the
restrictive covenants set forth therein. A termination for “good reason” is deemed to occur upon specified events,
including: a material reduction in the executive’s base salary; a material reduction in the executive’s authority or
responsibilities; specified relocation events; or our breach of any of the provisions of the employment
agreements. Each of the foregoing events is subject to specified notice and cure periods.

In the event of the executive’s termination of employment due to death or disability, he will only be entitled to
the accrued rights, the pro rata bonus payment, and the COBRA payment.

Mr. Dunn stepped down as President of the Company effective March 2, 2020. In connection with Mr. Dunn’s
departure, the Company entered into the Dunn Separation Agreement. A description of the payments and benefits
to which Mr. Dunn is entitled pursuant to the Dunn Separation Agreement is set forth under “Compensation
Discussion and Analysis for Legacy Vivint Smart Home, Inc.—Compensation Actions Taken in 2020—
Separation Agreements with Departing Executive Officers.”

Messrs. Eyring and Santiago

Pursuant to their respective employment agreements, if the employment of Messrs. Eyring or Santiago terminates
for any reason, the executive is entitled to receive: (1) any base salary accrued through the date of termination;
(2) reimbursement of any unreimbursed business expenses properly incurred by the executive; and (3) such
employee benefits, if any, as to which the executive may be entitled under the Company’s employee benefit plans
(the payments and benefits described in (1) through (3) being “accrued rights”).

If the employment of Messrs. Eyring or Santiago is terminated by us without “cause” (as defined below) and
other than by reason of death or while he is disabled (any such termination, a “qualifying termination”), such

59

executive is entitled to the accrued rights and, conditioned upon execution and non-revocation of a release and
waiver of claims in favor of the Company and its affiliates, and continued compliance with the non-compete,
non-solicitation, non-disparagement, and confidentiality provisions set forth in the employment agreements:

•

•

•

a pro rata portion of his target annual bonus based upon the portion of the fiscal year during which the
executive was employed (the “pro rata bonus”);

a lump-sum cash payment equal to 150% of the executive’s then-current base salary plus 150% of the
actual bonus the executive received in respect of the immediately preceding fiscal year (or, if a
termination of employment occurs prior to any annual bonus becoming payable under his employment
agreement, the target bonus for the immediately preceding fiscal year); and

a lump-sum cash payment equal to the cost of the health and welfare benefits for the executive and his
dependents, at the levels at which the executive received benefits on the date of termination, for 18
months (the “COBRA payment”).

Under the employment agreements for Messrs. Eyring, and Santiago, “cause” means the executive’s continued
failure to substantially perform his employment duties for a period of ten (10) days following written notice from
the Company; any dishonesty in the performance of the executive’s employment duties that is materially
injurious to the Company; act(s) on the executive’s part constituting either a felony or a misdemeanor involving
moral turpitude; the executive’s willful malfeasance or misconduct in connection with his employment duties
that causes substantial injury to us; or the executive’s material breach of the restrictive covenants set forth in the
employment agreements. Each of the foregoing events is subject to specified notice and cure periods.

In the event of the executive’s termination of employment due to death or disability, he will only be entitled to
the accrued rights, the pro rata bonus payment, and the COBRA payment.

Mr. Eyring ceased to serve as Executive Vice President and General Manager of the Company effective
March 13, 2020. In connection with Mr. Eyring’s departure, the Company entered into the Eyring Separation
Agreement. A description of the payments and benefits to which Mr. Eyring is entitled pursuant to the Eyring
Separation Agreement is set forth under “Compensation Discussion and Analysis for Legacy Vivint Smart Home,
Inc.—Compensation Actions Taken in 2020—Separation Agreements with Departing Executive Officers.”

60

The following table lists the payments and benefits that would have been triggered for Messrs. Pedersen, Gerard,
Dunn, Eyring and Santiago under the circumstances described below assuming that the applicable triggering event
occurred on December 31, 2019. Mr. Davies resigned from his position as the Company’s Chief Financial Officer,
effective October 14, 2019. He did not receive any severance or other benefit payments as a result of his departure.

Name
Todd R. Pedersen
Termination Without Cause or for

Good Reason . . . . . . . . . . . . . . . . . . .
Change of Control . . . . . . . . . . . . . . . . .
Death or Disability . . . . . . . . . . . . . . . .
Dale R. Gerard
Termination Without Cause or for

Good Reason . . . . . . . . . . . . . . . . . . .
Change of Control . . . . . . . . . . . . . . . . .
Death or Disability . . . . . . . . . . . . . . . .
Mark J. Davies (5)
Termination Without Cause or for

Good Reason . . . . . . . . . . . . . . . . . . .
Change of Control . . . . . . . . . . . . . . . . .
Death or Disability . . . . . . . . . . . . . . . .
Alex J. Dunn
Termination Without Cause or for

Good Reason . . . . . . . . . . . . . . . . . . .
Change of Control . . . . . . . . . . . . . . . . .
Death or Disability . . . . . . . . . . . . . . . .
Matthew J. Eyring
Termination Without Cause or for

Good Reason . . . . . . . . . . . . . . . . . . .
Change of Control . . . . . . . . . . . . . . . . .
Death or Disability . . . . . . . . . . . . . . . .
Todd M. Santiago
Termination Without Cause or for

Cash
Severance
($) (1)

Prorated
Bonus
($) (2)

Continuation
of Health
Benefits
($) (3)

Accrued
But
Unused
Vacation
($)

Value of
Accelerated
Equity
($) (4)

Total
($)

3,792,885
—
—

721,200
—
721,200

31,838
—
31,838

—
—
—

—
—
—

333,333
—
333,333

—
—
—

—
—
—

—
—
—

3,792,885
—
—

721,200
—
721,200

1,226,715
1,699,562
—
—
— 1,226,715

31,838
—
31,838

23,879
—
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

4,545,923
—
753,038

333,333
—
333,333

—
—
—

4,545,923
—
753,038

2,950,156
—
1,226,715

Good Reason . . . . . . . . . . . . . . . . . . .
Change of Control . . . . . . . . . . . . . . . . .
Death or Disability . . . . . . . . . . . . . . . .
(1) Messrs. Pedersen and Dunn’s cash severance reflects a lump sum cash payment equal to the sum of (x) 200% of the

1,226,715
1,699,562
—
—
— 1,226,715

23,879
—
—

2,950,156
—
1,226,715

—
—
—

—
—
—

executive’s base salary of $1,021,200 and (y) 200% of the executive’s respective actual annual bonus paid for the
preceding fiscal year. For fiscal 2018, Messrs. Pedersen and Dunn each received an annual bonus of $875,243. Messrs.
Eyring and Santiago’s cash severance reflects a lump sum cash payment equal to the sum of (x) 150% of the executive’s
base salary of $655,636 and (y) 150% of the executive’s respective actual annual bonus paid for the preceding fiscal
year. For fiscal 2018, Messrs. Eyring and Santiago each received an annual bonus of $477,405.

(2) For Messrs. Pedersen, Dunn, Eyring and Santiago the amounts reflect the executive’s target bonus for the 12 completed
months of employment for the 2019 fiscal. For Messrs. Gerard, Eyring and Santiago amounts also reflect their retention
bonuses as described in “—Compensation Discussion and Analysis for Legacy Vivint Smart Home, Inc.—Compensation
Elements—Bonuses—2018 Retention Awards”.

(3) For Messrs. Pedersen and Dunn reflects the cost of providing the executive officer with continued health and welfare

benefits for the executive and his dependents under COBRA for 24 months and assuming 2019 rates. For Messrs. Eyring
and Santiago reflects the cost of providing the executive officer with continued health and welfare benefits for the
executive and his dependents under COBRA for 18 months and assuming 2019 rates.

(4) Upon a change of control each of Messrs. Pedersen’s, Gerard’s, Dunn’s, Eyring’s and Santiago’s unvested time-vesting
Class B Units (including the 3.0x exit-vesting Class B Units that were converted to time-vesting Class B Units pursuant
to the Modification) would become immediately vested. However, because there was no public market for the Class B
Units as of December 31, 2019, the market value of such Class B Units was not determinable. In addition, the unvested
2.0x exit-vesting Class B Units would vest upon a change of control if the exit-vesting hurdle is met. Amounts reported
assume that the exit-vesting Class B Units do not vest upon a change of control.

(5) Mr. Davies resigned from his position as the Company’s Chief Financial Officer, effective October 14, 2019. Mr. Davies

did not receive any severance or other benefit payments as a result of his departure.

61

Messrs. Gerard, Davies, Eyring and Santiago

In addition, as described above under “—Narrative Disclosure to Summary Compensation Table and Grants of
Plan-Based Awards—Equity Awards—Restrictive Covenants,” as a condition of receiving their Class B Units
(and in the case of Mr. Gerard, his SARs), Messrs. Gerard, Davies, Eyring and Santiago agreed to specified
restrictive covenants for specified periods upon a termination of employment, including an indefinite covenant
on confidentiality of information, and one-year non-competition and non-solicitation covenants and a three-year
non-disparagement covenant.

CEO Pay Ratio

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and
Item 402(u) of Regulation S-K (“Item 402(u)”), the Company is providing the following reasonable estimate of
the ratio of the median of the annual total compensation of all of our employees except Todd R. Pedersen, our
CEO, to the annual total compensation of Mr. Pedersen, calculated in a manner consistent with Item 402(u). For
2019, our last completed fiscal year:

• The median of the annual total compensation of all of our employees, excluding our CEO, was $34,973.

• The annual total compensation of our CEO was $2,598,381.

Based on this information, the ratio of the annual total compensation of our CEO to the median of the annual
total compensation of all of our employees except our CEO was 74 to 1.

We determined that, as of December 31, 2019, our employee population consisted of approximately 11,440 U.S.
employees and approximately 484 non-U.S. employees all of whom were located in Canada. As permitted by
Item 402(u), we excluded from our employee population for purposes of identifying our “median employee” the
approximately 484 non-U.S. employees located in Canada, who comprised in the aggregate of approximately 4%
of our of our total employees as of December 31, 2019. Our resulting employee population consisted of:
approximately 4,182 direct sellers, whose compensation is entirely commission-based and who work primarily
during the period from April to August; approximately 5,424 regular full-time and part-time employees;
approximately 1,340 seasonal employees, whose compensation is primarily based on the number of installations
they perform and who work primarily during the period from April to August; and approximately 494 of other
commission-based employees.

To identify our “median employee” from this employee population, we obtained from our internal employee tax
records total income paid in 2019 to each employee in the employee population, as reported in the 2019 tax form
applicable to such employee. We believe this consistently applied compensation measure reasonably reflects
annual compensation across our employee base. We annualized the total income amounts paid to any permanent
employees in the employee population who were employed by us for less than the full fiscal year. We then
ranked the resulting income paid to all of the employees in the employee population other than our CEO to
determine our median employee. Once we identified our median employee, we combined all of the elements of
such employee’s compensation for 2019 in accordance with the requirements of Item 402(c)(2)(x) of
Regulation S-K for the Summary Compensation Table. With respect to the annual total compensation of our
CEO, we used the amount reported in the “Total” column of our Summary Compensation Table set forth above.

Compensation Discussion and Analysis for Vivint Smart Home, Inc. (f/k/a Mosaic Acquisition Corp.)

Unless the context otherwise requires, all references in this section to the “Company,” “we,” “us,” or “our” refer to
the business of Vivint Smart Home, Inc. (f/k/a Mosaic Acquisition Corp.) prior to the consummation of the Merger.

As of December 31, 2019, the Company had three officers, David M. Maura (Chairman, President and CEO),
William H. Mitchell (CFO) and Edward Albert III (COO), two of whom (Mr. Maura and Mr. Albert) received no
compensation for their services as officers of the Company. The Company had no other officers or employees.
Concurrently with the completion of the Merger, the Company’s officers resigned from their respective positions.

62

We entered into an agreement with an affiliate of Mosaic Sponsor, LLC, pursuant to which we paid such affiliate
a total of $16,875 per month for office space and related support services. Upon completion of the Merger, we
ceased paying these monthly fees.

The Company entered into a services agreement (the “Services Agreement”) with CFO Bullpen LLC, a New
Hampshire limited liability company wholly owned by Mr. Mitchell. Under the Services Agreement,
Mr. Mitchell provided services to us as our Chief Financial Officer until the completion of the Merger. Per the
Services Agreement, we paid a monthly retainer of $5,000 which commenced on the closing of our initial public
offering. The Services Agreement also provided that we would make a deferred cash payment to him upon
completion of our initial business combination, liquidation or Mr. Mitchell’s termination of engagement,
whichever occurred first, equal to $330.00 multiplied by the number of hours Mr. Mitchell had worked to such
date, less the total amount of the $5,000 monthly retainer already paid to CFO Bullpen LLC. Additionally, we
agreed to issue common stock to CFO Bullpen LLC upon completion of our initial business combination equal to
17.895 shares per hour Mr. Mitchell had worked for us up to the date of such combination with such shares
delivered on the six-month anniversary of such date. CFO Bullpen LLC had to have been engaged by the
Company on the date of our initial business combination or liquidation (as applicable) to receive the foregoing
equity awards; however, the agreement provided that CFO Bullpen LLC would remain eligible to receive such
awards if the consulting relationship was terminated by the Company without Cause or by CFO Bullpen LLC for
Good Reason (as such terms are defined in the Services Agreement and described below).

Per the Services Agreement, “Cause” is generally defined as (i) the willful and continuing refusal of Mr. Mitchell
to follow the lawful directives of the Company’s CEO or board of directors, provided such directives are
consistent with Mr. Mitchell’s title and position; (ii) conduct that is intentional and known by Mr. Mitchell to be
materially harmful or potentially materially harmful to the Company’s best interest; (iii) gross negligence in the
performance of, or willful disregard of, Mr. Mitchell’s obligations under the agreement; (iv) Mr. Mitchell’s
conviction of any felony; (v) Mr. Mitchell’s commission of any act of dishonesty or moral turpitude which, in the
good-faith opinion of our board of directors, is materially detrimental to the Company; or (vi) any material
breach by CFO Bullpen LLC or Mr. Mitchell of the agreement. Per the Services Agreement, “Good Reason” is
generally defined as (i) any material breach by the Company of its obligations under the agreement; (ii) a
significant diminution of Mitchell’s position as the Chief Financial Officer of the Company without CFO
Bullpen LLC’s consent; or (iii) a failure by the company to obtain a written agreement from any successor or
assign of Mosaic to assume the material obligations under the agreement upon the consummation of a business
combination.

Pursuant to the Services Agreement, upon completion of the Merger we became obligated to issue to CFO
Bullpen LLC 10,069 shares of our common stock.

Summary Compensation Table

The following table sets forth compensation that the Company’s CEO and CFO earned during the fiscal year

ended December 31, 2019 and 2018.

Name and Principal Position

David M. Maura . . . . . . . . . .
Chairman, President &

Chief Executive Officer

William H. Mitchell

. . . . . . .

Chief Financial Officer

Year

2019
2018
2017

2019
2018
2017

Salary
($) (1)

Bonus
($)

Stock
Awards
($)

Option
Awards
($)

Non-Equity
Incentive Plan
Compensation
($)

All Other
Compensation
($)

Total
($)

— —
— —
— —

55,000 —
60,000 —
15,000

—
—
—

—
—

—
—
—

—
—

—
—
—

—
—

—
—
—

0
0
0

—
—
42,915

55,000
60,000
57,915

(1) For Mr. Mitchell, this amount represents the $5,000 monthly retainer fee paid to CFO Bullpen LLC for Mr. Mitchell’s

services, commencing on our public offering.

63

Grants of Plan-Based Awards in 2019

We made no grants of plan-based awards in 2019.

Outstanding Equity Awards at 2019 Year End

We did not grant any equity awards to any of our executives or officers during the fiscal years ending
December 31, 2019, 2018 and 2017, and none of our executives or officers held any outstanding equity as of
December 31, 2019.

Option Exercises and Stock Vested in 2019

None.

2019 Pension Benefits

We did not offer pension benefits to any of our executives or officers during the fiscal years ending
December 31, 2019, 2018 and 2017.

2019 Non-Qualified Deferred Compensation

Name

Executive
Contributions
in Last FY ($)

Registrant
Contributions
in Last FY ($)

Aggregate
Earnings in
Last FY ($)

Aggregate
Withdrawals/
Distributions in
Last FY ($)

Aggregate
Balance at Last
FYE ($)(1)

David M. Maura . . . . . . . . . . . . . . . . . . .
William H. Mitchell

Deferred cash payment . . . . . . . . . .

—

—

—

—

—

—

—

—

—

42,915

(1) Represents the deferred cash payment payable to Mr. Mitchell upon completion of our initial business combination,

liquidation or Mr. Mitchell’s termination of engagement, whichever occurs first, pursuant to the Services Agreement as
described above under “Compensation Discussion and Analysis for Vivint Smart Home, Inc. (f/k/a Mosaic Acquisition
Corp.” The amount in this column was previously reported in the “All Other Compensation” column of the Summary
Compensation Table for 2017.

Potential Payments upon Termination or Change in Control

The description of the Services Agreement set forth under “Compensation Discussion and Analysis for Vivint
Smart Home, Inc. (f/k/a Mosaic Acquisition Corp.)” is incorporated herein by reference. Pursuant to the Services
Agreement, Mr. Mitchell would have been entitled to a deferred cash payment in the amount of $42,915 had our
engagement with CFO Bullpen LLC terminated for any reason. In addition, had our initial business combination
occurred on December 31, 2019 and we had not terminated CFO Bullpen LLC for “cause” (as defined in the
Services Agreement), we would have become obligated to issue 9,653 shares of our common stock to CFO
Bullpen LLC, which had a value of $99,329 based on the closing price of our common stock on December 31,
2019.

We had no arrangements with Mr. Maura providing for payments upon his termination or a change in control

64

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information known to the Company regarding the beneficial ownership of the
Company’s common stock as of April 21, 2020, after giving effect to the Merger, by:

•

•

•

•

each person who is known by the Company to be the beneficial owner of more than five percent (5%)
of the outstanding shares of any class of the Company’s common stock;

each named executive officer of the Company;

each current executive officer and director of the Company; and

all current executive officers and directors of the Company, as a group.

Beneficial ownership for the purposes of the following table is determined in accordance with the rules and
regulations of the SEC. A person is a “beneficial owner” of a security if that person has or shares “voting power,”
which includes the power to vote or to direct the voting of the security, or “investment power”, which includes
the power to dispose of or to direct the disposition of the security or has the right to acquire such powers within
60 days.

The beneficial ownership percentages set forth in the table below are based on 177,901,334 shares of common
stock issued and outstanding as of April 21, 2020 and do not take into account the issuance of any shares of
common stock upon the exercise of warrants to purchase up to 17,433,224 shares of common stock that remain
outstanding.

Unless otherwise noted in the footnotes to the following table, and subject to applicable community property
laws, the persons and entities named in the table have sole voting and investment power with respect to their
beneficially owned common stock and preferred stock.

Number of Shares of
Common Stock
Beneficially Owned

Percentage of
Outstanding Common
Stock

Name of Beneficial Owners

5% Stockholders:
Blackstone(1) . . . . . . . . . . . . . . . . . . . .
Fortress Mosaic Sponsor LLC and

affiliates(2) . . . . . . . . . . . . . . . . . . . .
Fayerweather Fund Eiger, L.P.(3) . . . .
Solamere V Investment, LLC(4) . . . . .
Executive Officers and Directors:
Todd R. Pedersen(5) . . . . . . . . . . . . . . .
William H. Mitchell . . . . . . . . . . . . . . .
Edward Albert III . . . . . . . . . . . . . . . . .
David F. D’Alessandro(6)
. . . . . . . . . .
Paul S. Galant . . . . . . . . . . . . . . . . . . . .
David M. Maura(7) . . . . . . . . . . . . . . . .
Bruce McEvoy(8) . . . . . . . . . . . . . . . . .
Jay D. Pauley . . . . . . . . . . . . . . . . . . . .
Joseph S. Tibbetts, Jr. . . . . . . . . . . . . . .
Peter F. Wallace(8) . . . . . . . . . . . . . . . .
All directors and executive officers

107,732,472

28,127,227
14,929,315
10,653,389

—
—
—
43,944
1,760
6,698,430
—
—
1,760
—

as a group (13 individuals) . . . . . . .

1,064,541

*

Indicates less than 1 percent.

65

60.6%

15.6%
8.4%
6.0%

—
—
—
*
*
3.7%
—
—
*
—

0.6%

(1) Represents 97,732,472 shares held by 313 Acquisition, 9,995,784 shares held by BCP Voyager Holdings LP, and

4,216 shares held by Blackstone Family Investment Partnership VI L.P. Acquisition LLC is managed by a board of
managers and Blackstone Capital Partners VI L.P. (“BCP VI”), as managing member. The members of the board of
managers of 313 Acquisition are Peter Wallace, Bruce McEvoy, Jay D. Pauley, Todd R. Pedersen, Paul S. Galant and
David F. D’Alessandro. Blackstone Management Associates VI L.L.C. is the general partner of each of BCP VI and BCP
Voyager Holdings LP. BMA VI L.L.C. is the sole member of Blackstone Management Associates VI L.L.C. BCP VI
Side-by-Side GP L.L.C. is the general partner of Blackstone Family Investment Partnership VI L.P. Blackstone
Holdings III L.P. is the managing member of BMA VI L.L.C and the sole member of BCP VI Side-by-Side GP L.L.C.
The general partner of Blackstone Holdings III L.P. is Blackstone Holdings III GP L.P. The general partner of
Blackstone Holdings III GP L.P. is Blackstone Holdings III GP Management L.L.C. The sole member of Blackstone
Holdings III GP Management L.L.C. is The Blackstone Group Inc. The sole holder of the Class C common stock of The
Blackstone Group Inc. is Blackstone Group Management L.L.C. Blackstone Group Management L.L.C. is wholly owned
by Blackstone’s senior managing directors and controlled by its founder, Stephen A. Schwarzman. Each of the
Blackstone entities described in this footnote and Stephen A. Schwarzman (other than to the extent it or he directly holds
securities as described herein) may be deemed to beneficially own the shares directly or indirectly controlled by such
Blackstone entities or him, but each disclaims beneficial ownership of such shares. The address of each of such
Blackstone entities and Mr. Schwarzman is c/o The Blackstone Group Inc., 345 Park Avenue, New York, New York
10154. In addition to funds affiliated with Blackstone, principal holders of limited liability company interests in
313 Acquisition include entities affiliated with Summit Partners L.P., Todd Pedersen and Alex Dunn. The address of
313 Acquisition is 4931 North 300 West, Provo, Utah 84604.

(2) Based on a Schedule 13D/A filed with the Securities and Exchange Commission on March 13, 2020 by Fortress

Investment Group LLC and the other parties named therein, 17,357,339 shares are held by Fortress Mosaic Investor
LLC, 2,631,579 shares are held by Fortress Mosaic Anchor LLC, and 5,171,642 shares are held by Fortress Mosaic
Sponsor LLC (Fortress Mosaic Sponsor LLC also holds Private Warrants that entitle it to purchase 2,966,667 shares).
Fortress Mosaic Holdings LLC is the sole owner of each of Fortress Mosaic Sponsor LLC, Fortress Mosaic Anchor LLC
and Fortress Mosaic Investor LLC. FIG LLC controls, indirectly through investment funds managed or advised by
controlled affiliates of FIG LLC, 100% of the equity interests of Fortress Mosaic Holdings LLC. Fortress Operating
Entity I LP is the sole owner of FIG LLC. FIG Corp. is the general partner of Fortress Operating Entity I LP. Fortress
Investment Group LLC is the sole owner of FIG Corp. The address of Fortress Mosaic Investor LLC and each of the
entities listed above is 1345 Avenue of the Americas, New York, New York 10105.

(3) Represents 14,187,648 shares and Private Warrants exercisable for 741,667 shares. The general partner of Fayerweather

Fund Eiger, L.P. is Fayerweather Management, LLC. The managing members of Fayerweather Management, LLC are
Andrew Stevenson and Howard Stevenson. Each of these individuals exercises shared voting and investment power over
the shares held of record by Fayerweather Fund Eiger, L.P. The address for Fayerweather Fund Eiger, L.P. is 138 Mt.
Auburn Street, Cambridge, Massachusetts 02138.

(4) Solamere V Investment, LLC is an affiliate of Solamere Capital, LLC. The address for Solamere V Investment, LLC is

c/o 137 Newbury Street, 7th Floor, Boston, Massachusetts 02116.

(5) Mr. Pedersen sits on the board of managers and is a member of 313 Acquisition, but does not have individual investment

or voting control over the shares beneficially owned by 313 Acquisition.

(6) Reflects shares, including 15,246 restricted shares, held by a limited liability company controlled by Mr. D’Alessandro.
Includes: (a) 435,066 shares held directly by Mr. Maura, (b) Public Warrants held directly by Mr. Maura exercisable for
(7)
159,633 shares, (c) 3,878,731 shares held by Mosaic Sponsor, LLC that Mr. Maura may be deemed to beneficially own,
and (d) Private Warrants held by Mosaic Sponsor, LLC exercisable for 2,225,000 shares that Mr. Maura may be deemed
to beneficially own. Mr. Maura is the sole member of Mosaic Strategic Capital LLC, which is the sole member of
Mosaic Sponsor, LLC. The address for Mr. Maura and each of the foregoing entities is c/o David M. Maura, 1525-B The
Greens Way, Suite 100, Jacksonville Beach, Florida 32250.

(8) Messrs. McEvoy and Wallace are each employees of affiliates of Blackstone and members of the board of managers of
313 Acquisition, but each disclaims beneficial ownership of shares beneficially owned by Blackstone and its affiliates.
Messrs. McEvoy and Wallace are each employees of affiliates of the Blackstone entities described above, but each
disclaims beneficial ownership of the limited liability company interests in 313 Acquisition beneficially owned by such
Blackstone entities. The address for Messrs. McEvoy and Wallace is c/o The Blackstone Group Inc., 345 Park Avenue,
New York, New York 10154.

66

TRANSACTIONS WITH RELATED PERSONS

In connection with the Merger, the Company adopted a formal written policy for the review and approval of
transactions with related persons. Such policy requires, among other things, that:

•

•

any related person transaction, and any material amendment or modification to a related person
transaction, must be reviewed and approved or ratified by an approving body comprised of the
disinterested and independent members of the Board or any committee of the Board, provided that a
majority of the members of the Board or such committee, respectively, are disinterested; and

any employment relationship or transaction involving an executive officer and any related
compensation must be approved by the compensation committee of the Board or recommended by the
compensation committee to the Board for its approval.

In connection with the review and approval or ratification of a related person transaction:

• management must disclose to the approving body the name of the related person and the basis on which
the person is a related person, the related person’s interest in the transaction, the material terms of the
related person transaction, including the business purpose of the transaction, the approximate dollar
value of the amount involved in the transaction, the approximate dollar value of the amount of the
related person’s interest in the transaction and all the material facts as to the related person’s direct or
indirect interest in, or relationship to, the related person transaction;

• management must advise the approving body as to whether the related person transaction complies
with the terms of the Company’s agreements, including the agreements governing the Company’s
material outstanding indebtedness, that limit or restrict the Company’s ability to enter into a related
person transaction;

• management must advise the approving body as to whether the related person transaction will be
required to be disclosed in applicable filings under the Securities Act of 1933, as amended (the
“Securities Act”) or the Exchange Act, and related rules, and, to the extent required to be disclosed,
management must ensure that the related person transaction is disclosed in accordance with such
statutes and related rules; and

• management must advise the approving body as to whether the related person transaction may

constitute a “personal loan” for purposes of Section 402 of the Sarbanes-Oxley Act.

In addition, the related person transaction policy provides that the approving body, in connection with any
approval of a related person transaction involving a non-employee director or director nominee, should consider
whether such transaction would compromise the director or director nominee’s status as an “independent” or
“non-employee” director, as applicable, under the rules and regulations of the SEC and any exchange on which
the Company’s securities are listed.

The related person transaction policy also contains a standing approval for certain transactions with or related to
Blackstone, including, without limitation: (1) transactions in which Blackstone may have a direct or indirect
material interest entered into or in effect at the effective time of the Merger; (2) transactions involving the
Company’s securities in which Blackstone serves as an underwriter, placement agent, initial purchaser, financial
advisor or in a similar capacity, and the fees and commissions received by Blackstone for such services are no
greater (on a per security basis) than those received by other underwriters, placement agents, initial purchasers,
financial advisors or persons performing in a similar capacity in the transaction or that would be received by an
unaffiliated third party; and (3) the purchase or sale of products or services involving a Blackstone portfolio
company, provided that (a) the appropriate officers of the Company reasonably believe the transaction to be on
market terms and the subject products or services are of a type generally made available to other customers of the
subject Blackstone portfolio company or (b) the aggregate value involved in such purchase or sale is expected to
be less than $5 million over five years.

67

Registration Rights Agreement

In connection with the execution of the Merger Agreement, the Company entered into a registration rights
agreement with 313 Acquisition, certain stockholders of 313 Acquisition, Legacy Vivint Smart Home, Mosaic
Sponsor LLC and Fortress Mosaic Sponsor LLC (collectively, the “Investors”) and certain other stockholders of
Company, which provides for customary “demand” and “piggyback” registration rights for certain stockholders.
The registration rights agreement became effective upon the consummation of the Merger. Under the registration
rights agreement, the Company agreed to provide to Blackstone an unlimited number of “demand” registration
rights and to provide to other Investors customary “piggyback” registration rights. The registration rights
agreement also provides that the Company will pay all expenses relating to such registrations, with the exception
of underwriters’, brokers’ and dealers’ discounts and commissions applicable to shares sold for the account of a
registration rights holder, and indemnify the registration rights holders against (or make contributions in respect
of) certain liabilities which may arise under the Securities Act.

Stockholders Agreement

In connection with the execution of the Merger Agreement, Legacy Vivint and the Company entered into a
stockholders agreement (the “Stockholders Agreement”) with the Investors, which provides for certain rights,
including director appointment and board observer rights, for certain stockholders. The Stockholders Agreement
became effective upon the consummation of the Merger.

Under the Stockholders Agreement, the Company agreed to nominate a number of individuals designated by
Blackstone for election as its directors at any meeting of its stockholders (each a “Blackstone Director”) such
that, following the election of any directors and taking into account any director continuing to serve as such
without the need for re-election, the number of Blackstone Directors serving as its directors will be equal to:
(1) if the 313 Acquisition Entities together continue to beneficially own at least 50% of the shares of its Class A
common stock entitled to vote generally in the election of directors as of the record date for such meeting, the
lowest whole number that is greater than 50% of the total number of directors comprising the Board; (2) if the
313 Acquisition Entities together continue to beneficially own at least 40% (but not more than 50%) of the shares
of the Company’s Class A common stock entitled to vote generally in the election of directors as of the record
date for such meeting, the lowest whole number that is at least 40% of the total number of directors comprising
the Board; (3) if the 313 Acquisition Entities together continue to beneficially own at least 30% (but less than
40%) of the shares of the Company’s Class A common stock entitled to vote generally in the election of directors
as of the record date for such meeting, the lowest whole number that is at least 30% of the total number of
directors comprising the Board; (4) if the 313 Acquisition Entities together continue to beneficially own at least
20% (but less than 30%) of the shares of the Company’s Class A common stock entitled to vote generally in the
election of directors as of the record date for such meeting, the lowest whole number that is at least 20% of the
total number of directors comprising the Board; and (5) if the 313 Acquisition Entities together continue to
beneficially own at least 5% (but less than 20%) of the shares of the Company’s Class A common stock entitled
to vote generally in the election of directors as of the record date for such meeting, the lowest whole number that
is at least 10% of the total number of directors comprising the Board.

Under the Stockholders Agreement, the Company agreed to nominate one director designated by Fortress (the
“Fortress Director”) to the Board so long as Fortress beneficially owns at least 50% of the shares of the
Company’s Class A common stock it owns immediately following the consummation of the Merger; provided
that the Fortress designee must be (A) Andrew McKnight, (B) Max Saffian or (C) another senior employee or
principal of Fortress who is acceptable to a majority of the members of the Board. Additionally, so long as
Fortress beneficially owns at least 50% of the shares of the Company’s Class A common stock it owns
immediately following the consummation of the merger, Fortress shall have the right to appoint a representative
(the “Fortress Observer”) who will have the right to attend meetings of the Board and receive information given
to the Company’s directors, subject to certain customary exceptions, including to preserve confidentiality
obligations or privilege. The Fortress Observer will not have any voting rights.

68

Under the Stockholders Agreement, the Company agreed to nominate one director designated by the Summit
Designator (as defined in the Stockholders Agreement) (the “Summit Director” and together with the Blackstone
Directors and the Fortress Director, the “Sponsor Directors”) to the Board so long as the Summit Holders (as
defined in the Stockholders Agreement) beneficially own at least 50% of the shares of the Company’s Class A
common stock they own immediately following the consummation of the Merger. In the case of a vacancy on the
Board created by the removal or resignation of a Sponsor Director, the Company agreed to nominate an
individual designated by Blackstone or Fortress, as applicable, for election to fill the vacancy.

Support and Services Agreement

In connection with the 2012 Blackstone Acquisition, a subsidiary of Legacy Vivint Smart Home entered into a
support and services agreement with Blackstone Management Partners L.L.C. (“BMP”), an affiliate of
Blackstone. Under the support and services agreement, Legacy Vivint Smart Home agreed to reimburse BMP for
any out-of-pocket expenses incurred by BMP and its affiliates and to indemnify BMP and its affiliates and
related parties, in each case, in connection with the transactions involving Blackstone and the provision of
services under the support and services agreement. In connection with the execution of the Merger Agreement,
the parties to the support and services agreement entered into an amended and restated support and services
agreement with BMP as described below.

In addition, under this agreement, Legacy Vivint Smart Home engaged BMP to provide, directly or indirectly,
monitoring, advisory and consulting services that may be requested by Legacy Vivint Smart Home in the
following areas: (1) advice regarding the structure, distribution and timing of debt and equity offerings and
advice regarding relationships with its lenders and bankers, (2) advice regarding the structuring and
implementation of equity participation plans, employee benefit plans and other incentive arrangements for certain
of its key executives, (3) general advice regarding dispositions and/or acquisitions, (4) advice regarding the
strategic direction of the Legacy Vivint Smart Home business and such other advice directly related or ancillary
to the above advisory services as may be reasonably requested by Legacy Vivint Smart Home. Under this
agreement, these services will generally be provided until the first to occur of (a) the tenth anniversary of the
closing date of the 2012 Blackstone Acquisition (November 16, 2022), (b) the date of a first underwritten public
offering of shares of common stock of Legacy Vivint Smart Home or its controlling holding company, as
applicable, listed on the New York Stock Exchange or Nasdaq’s national market system for aggregate proceeds
of at least $150 million (an “IPO”) and (c) the date upon which Blackstone owns less than 9.9% of Legacy Vivint
Smart Home’s common stock or that of Legacy Vivint Smart Home’s direct or indirect controlling parent and
such stock has a fair market value (as determined by Blackstone) of less than $25 million (each of the events
specified in clauses (a) through (c) above, the “Exit Date”).

The monitoring fee payable for monitoring services in any fiscal year of Legacy Vivint Smart Home’s was equal
to the greater of (1) a minimum base fee of $2.7 million (the “Minimum Annual Fee”), subject to adjustment as
summarized below if Legacy Vivint Smart Home engages in a business combination or disposition that is
“significant” (as defined in the support and services agreement) and (2) the amount of the monitoring fee paid in
respect of the immediately preceding fiscal year, without regard to the post-fiscal year “true-up” adjustment
described in the paragraph below (which will not yet have occurred at the time the annual monitoring fee is paid).
The adjusted monitoring fee for any fiscal year of the surviving company is referred to as the “Monitoring Fee”
for such fiscal year.

In the case of a significant business combination or disposition, if 1.5% of Legacy Vivint Smart Home’s pro
forma consolidated EBITDA (as defined in the support and services agreement) after giving effect to the business
combination or disposition exceeds (in the case of a business combination) or is less than (in the case of a
disposition) the then-current Monitoring Fee, the Monitoring Fee for the year in which the significant business
combination or disposition occurs will be adjusted upward or downward, respectively, by the amount of such
excess or shortfall, with such adjustment prorated based on the remaining full or partial fiscal quarters remaining
in Legacy Vivint Smart Home’s then-current fiscal year. Legacy Vivint Smart Home will pay upward

69

adjustments to the Monitoring Fee promptly upon availability of the pro forma income statement prepared in
respect of such business combination. Downward adjustments to the Monitoring Fee will be effected through a
rebate of the fee paid to BMP in that fiscal year. Subsequently, the Minimum Annual Fee applicable to full fiscal
years following any significant business combination or disposition will be equal to 1.5% of Legacy Vivint
Smart Home’s pro forma consolidated EBITDA after giving effect to the business combination or disposition
(subject to further adjustments for subsequent significant business combinations and dispositions). However, in
all cases (including in the case of a current-year rebate described above), the Monitoring Fee will always be at
least $2.7 million and in no event will a rebate for a downward adjustment result in BMP retaining a monitoring
fee of less than $2.7 million for monitoring services in respect of any particular fiscal year.

In addition to the adjustments to the Minimum Annual Fee and the Monitoring Fee in connection with significant
business combinations or dispositions and the related payments or rebates described above, there may be other
adjustments to the Monitoring Fee based on projected consolidated EBITDA and a post-fiscal year “true-up.” If
1.5% of Legacy Vivint Smart Home’s projected consolidated EBITDA, as first presented to the company’s board
by senior management during the last third of such fiscal year, is projected to exceed the amount of the
monitoring fee already paid to BMP in respect of monitoring services due to be rendered during that fiscal year,
Legacy Vivint Smart Home will pay BMP the amount of such excess as an upward adjustment to the Monitoring
Fee within two business days of such presentation. Following the completion of each applicable fiscal year and
within deadlines required by our revolving credit facility, Legacy Vivint Smart Home’s chief financial officer
will certify to BMP the amount of Legacy Vivint Smart Home’s consolidated EBITDA for such fiscal year. If
1.5% of such certified consolidated EBITDA is greater than the Monitoring Fee previously paid to BMP for
monitoring services rendered during that fiscal year (including the adjustment in respect of projected EBITDA
described above), Legacy Vivint Smart Home will, jointly and severally, pay BMP the amount of such excess
within two business days of such certification. If 1.5% of such certified consolidated EBITDA is less than the
monitoring fee previously paid to BMP for services rendered during that fiscal year (including the adjustment in
respect of projected consolidated EBITDA described above), the amount of such shortfall will be applied as a
credit against the next payment by us of the Monitoring Fee to BMP. However, BMP will always be entitled to
retain the Minimum Annual Fee as then in effect and BMP will have no obligation to rebate any amount that
would result in BMP having been paid Monitoring Fees for monitoring services in an amount less than the
Minimum Annual Fee applicable to the relevant fiscal year.

Amended and Restated Support and Services Agreement

In connection with the execution of the Merger Agreement, the Company and the parties to the support and
services agreement entered into an amended and restated support and services agreement with BMP. The
amended and restated support and services agreement became effective upon the consummation of the Merger
and amended and restated the existing support and services agreement to, upon the consummation of the merger,
(a) eliminate the requirement to pay a milestone payment to BMP upon the occurrence of an IPO, (b) for any
fiscal year beginning after the consummation of the merger, (i) eliminate the Minimum Annual Fee and
(ii) decrease the “true-up” of the annual Monitoring Fee payment to BMP to 1% of consolidated EBITDA and
(c) upon the earlier of (1) the completion of Legacy Vivint Smart Home’s fiscal year ending December 31, 2021
or (2) the date upon which Blackstone owns less than 5% of the voting power of all of the shares of capital stock
entitled to vote generally in the election of directors of Vivint Smart Home’s or its direct or indirect controlling
parent, and such stake has a fair market value (as determined by Blackstone) of less than $25 million (the “Exit
Date”), the annual Monitoring Fee payment to BMP otherwise payable in connection with the agreement will
cease and no other milestone payment or other similar payment will be owed by the Company to BMP.

Under the amended and restated support and services agreement, BMP had made available to Legacy Vivint
Smart Home its portfolio operations group to provide support services customarily provided by Blackstone’s
portfolio operations group to Blackstone’s private equity portfolio companies of a type and amount determined
by such portfolio services group it its sole discretion to be warranted and appropriate. BMP may, at any time,
choose not to provide any such services. Such services will be provided without charge, other than for the
reimbursement of related out-of-pocket expenses incurred by BMP and its affiliates.

70

Portfolio Operations Support and Other Services

Under the amended and restated support and services agreement, the Company and Legacy Vivint Smart Home
have, through the Exit Date (or an earlier date determined by BMP), engaged BMP to arrange for Blackstone’s
portfolio operations group to provide support services customarily provided by Blackstone’s portfolio operations
group to Blackstone’s private equity portfolio companies of a type and amount determined by such portfolio
services group to be warranted and appropriate. Such services are provided without charge, other than for the
reimbursement of out-of-pocket expenses as set forth in the amended and restated support and services
agreement.

Investor Securityholders’ Agreement

In connection with the closing of the Blackstone Acquisition, 313 Acquisition and APX Group Holdings, Inc.
entered into a Securityholders’ Agreement (the “Securityholders’ Agreement”) with the Investors. The
Securityholders’ Agreement governs certain matters relating to ownership of 313 Acquisition and APX Group
Holdings, Inc. including with respect to the election of directors of our parent companies, transfer of shares,
including tag-along rights and drag-along rights, other special corporate governance provisions and registration
rights (including customary indemnification provisions).

Other Transactions with Blackstone

Blackstone Advisory Partners L.P., an affiliate of Blackstone, participated as one of the initial purchasers of the
$810 million term loan incurred by APX Group Holdings, Inc. in September 2018 (the “ 2024 Term Loan”),
APX Group Holdings, Inc.’s 8.50% senior secured notes due 2024 (“the 2024 notes”) and APX Group Holdings,
Inc.’s 6.75% senior secured notes due 2027 (“the 2027 notes”) and received $1.9 million of total fees associated
with these transactions.

In addition, GSO Capital Partners, an affiliate of Blackstone, is a participating lender in the Term Loan and
receives proportional interest payments of the outstanding debt held. As of December 31, 2019, GSO Capital
Partners holds $103.6 million of outstanding aggregate principal of the Term Loan.

During the year ended December 31, 2019 the Company agreed to reimburse Blackstone for $1.8 million of
certain other fees incurred by Blackstone for activities related to the Company and the full amount was included
in accrued expenses and other current liabilities as of December 31, 2019.

Agreements with Solar

The Company is a party to a number of agreements with its sister company, Vivint Solar. Historically, some of
those agreements related to Solar’s use of certain of Legacy Vivint Smart Home’s information technology and
infrastructure services; however, Vivint Solar stopped using such services in July 2017. In August 2017, Legacy
Vivint Smart Home entered into a sales dealer agreement with Vivint Solar, pursuant to which each company
agreed to act as a non-exclusive dealer for the other party to market, promote and sell each other’s products.
During the year ended December 31, 2019 Legacy Vivint Smart Home charged $9.2 million of net expenses to
Vivint Solar in connection with these agreements. The balance due from Vivint Solar in connection with these
agreements and other expenses paid on Vivint Solar’s behalf was $2.2 million at December 31, 2019.

On March 3, 2020, the Company and Vivint Solar amended and restated the sales dealer agreement to, among
other things, add exclusivity obligations for both companies in certain territories and jurisdictions, expand the
types of services each company is permitted to render thereunder, and to permit use of the services offered by
Amigo, a wholly owned subsidiary of the Company, in connection with the submission and processing of leads
generated pursuant to the agreement. The amended and restated agreement has a one-year term, which
automatically renews for successive one-year terms unless terminated earlier by either party upon 90 days’ prior
written notice.

71

On March 3, 2020, the Company and Vivint Solar entered into a recruiting services agreement pursuant to which
each company has agreed to assist the other in recruiting sales representatives to its direct-to-home sales force.
The parties will pay each other certain fees for these services which will be calculated in accordance with the
terms of the agreement. The Company and Vivint Solar have also agreed under the terms of the agreement not to
solicit for employment any member of the other’s executive or senior management team, any dealer, or any of
the other’s employees who primarily manage sales, installation or services of the other’s products and services.
Such obligations will continue throughout the term of the agreement.

On March 3, 2020, Amigo entered into a Subscriber Generation Agreements with Vivint Solar and the Company
to facilitate the use of the Amigo application for the submission and processing of leads generated pursuant to the
amended and restated sales dealer agreement.

In connection with the amendment and restatement of the sales dealer agreement and the execution of the
recruiting services agreement, the Company and Vivint Solar terminated the Marketing and Customer Relations
Agreement, dated September 30, 2014 (as amended from time to time) and the Non-Competition Agreement,
dated September 30, 2014 (as amended from time to time), in each case effective as of March 3, 2020.

Transactions with Executive Officers

In each year from 2015 through 2019, Legacy Vivint Smart Home entered into one-year lease agreements with
Axis Aviation LLC (“Axis Aviation”), a company owned by Mr. Pedersen through a trust, for use of an airplane
hangar at the Provo, Utah airport. Such lease agreements are terminable by either party on 90 days’ prior written
notice without penalty. Payments to Axis Aviation in the year ended December 31, 2019 pursuant to such lease
agreements totaled $67,500.

Transactions with Fortress

Certain funds managed by affiliates of Fortress currently hold: (i) a $175 million face amount position the 2024
Term Loan, (ii) a $72.5 million face amount position in APX Group Holdings, Inc.’s 7.625% senior notes due
2023 (the “the 2023 notes”), and (iii) a $10 million face amount position in the 2024 notes.

STOCKHOLDER PROPOSALS FOR THE 2021 ANNUAL MEETING

If any stockholder wishes to propose a matter for consideration at our 2021 Annual Meeting of Stockholders (the
“2021 Annual Meeting”), the proposal should be mailed by certified mail return receipt requested, to our
Secretary, Vivint Smart Home, Inc., 4900 North 300 West Provo, Utah 84604. To be eligible under the SEC’s
stockholder proposal rule (Rule 14a-8(e) of the Exchange Act) for inclusion in our proxy statement for the 2021
Annual Meeting, a proposal must be received by our Secretary on or before December 28, 2020. Failure to
deliver a proposal in accordance with this procedure may result in it not being deemed timely received.

In addition, our Bylaws permit stockholders to nominate candidates for director and present other business for
consideration at our annual meeting of stockholders. To make a director nomination or present other business for
consideration at the 2021 Annual Meeting, you must submit a timely notice in accordance with the procedures
described in our Bylaws. To be timely, a stockholder’s notice must be delivered to the Secretary at the principal
executive offices of our Company not less than 90 days nor more than 120 days prior to the first anniversary of
the preceding year’s annual meeting. Therefore, to be presented at our 2021 Annual Meeting, such a proposal
must be received on or after December 28, 2020, but not later than January 27, 2021. In the event that the date of
the 2021 Annual Meeting is advanced by more than 20 days, or delayed by more than 70 days, from the
anniversary date of this year’s Annual Meeting of Stockholders, notice by the stockholder to be timely must be
so delivered not earlier than the 120th day prior to the 2021 Annual Meeting and not later than the close of
business on the later of the 90th day prior to the 2021 Annual Meeting or the tenth day following the day on
which public announcement of the date of the 2021 Annual Meeting is first made. Any such proposal will be
considered timely only if it is otherwise in compliance with the requirements set forth in our Bylaws.

72

HOUSEHOLDING OF PROXY MATERIALS

SEC rules permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy
statements and notices with respect to two or more stockholders sharing the same address by delivering a single
proxy statement or a single notice addressed to those stockholders. This process, which is commonly referred to
as “householding,” provides cost savings for companies by reducing printing and mailing costs and helps the
environment by conserving natural resources. Some brokers household proxy materials, delivering a single proxy
statement or notice to multiple stockholders sharing an address unless contrary instructions have been received
from the affected stockholders. Once you have received notice from your broker that they will be householding
materials to your address, householding will generally continue until you are notified otherwise or until you
revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to
receive a separate proxy statement or notice, or if your household is receiving multiple copies of these documents
and you wish to request that future deliveries be limited to a single copy, please notify your broker. You can also
request prompt delivery of a copy of the proxy statement and annual report by contacting us in writing at Vivint
Smart Home, Inc., 4900 North 300 West Provo, Utah 84604 or by telephone at (801) 221-6724.

The Board does not know of any other matters to be brought before the meeting. If other matters are presented,
the proxy holders have discretionary authority to vote all proxies in accordance with their best judgment.

OTHER BUSINESS

By Order of the Board of Directors,

Shawn J. Lindquist
Secretary

We make available, free of charge on our website, all of our filings that are made electronically with the
SEC, including Forms 10-K, 10-Q and 8-K. To access these filings, go to our website (www.vivint.com) and
click on “Financial Information” under the “Investor Relations” heading. Copies of our Annual Report on
Form 10-K for the year ended December 31, 2019, including financial statements and schedules thereto,
filed with the SEC, are also available without charge to stockholders upon written request addressed to:

Vivint Smart Home, Inc.
4900 North 300 West
Provo, Utah 84604
Attention: Secretary

73

EXHIBIT 16.1
LETTER FROM WITHUMSMTIH+BROWN, PC TO
THE U.S. SECURITIES AND EXCHANGE COMMISSION

April 23, 2020

Office of the Chief Accountant
Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549

Ladies and Gentlemen:

We have read the statements of Vivint Smart Home, Inc. (formally known as Mosaic Acquisition Corp.) included
under Proposal No. 2 – Ratification of Independent Registered Public Accounting Firm (“Proposal No. 2”) of
Schedule 14A. We agree with the statements concerning our Firm under Proposal No. 2. We are not in a position
to agree or disagree with other statements contained therein.

Very truly yours,

/s/ WithumSmith+Brown, PC

New York, New York

74

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)
È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2019
OR

‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM

TO

Commission File Number 001-38246

Vivint Smart Home, Inc.

(Exact name of Registrant as specified in its Charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

4931 North 300 West, Provo, Utah
(Address of principal executive offices)

98-1380306
(I.R.S. Employer
Identification No.)

84604
(Zip Code)

Registrant’s telephone number, including area code: (801) 377-9111
Securities registered pursuant to Section 12(b) of the Act:
Trading
Symbol(s)
VVNT

Name of each exchange on which registered
New York Stock Exchange

VVNT WS

New York Stock Exchange

Title of each class
Class A common stock, par value $0.0001
per share
Warrants, each exercisable for one share
of Class A common stock at an exercise
price of $11.50 per share

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ‘ NO È
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. YES ‘ NO È
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. YES È NO ‘
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was
required to submit such files). YES È NO ‘
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 definition of “large accelerated filer”, “accelerated filer”, and “smaller reporting
company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ‘
Non-accelerated filer ‘

È
Accelerated filer
Small reporting company ‘
Emerging growth company ‘

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ‘ NO È
At June 28, 2019, the last business day of the Registrant’s most recently completed second fiscal quarter, the aggregate market value of the
Registrant’s Class A common stock outstanding, other than shares held by persons who may be deemed affiliates of the Registrant, was
$351,900,000 (based on the closing sales price of the Class A common stock on June 28, 2019 of $10.20).
As of March 11, 2020, there were 177,862,355 shares of Class A common stock, $0.0001 par value per share, issued and outstanding.
Documents Incorporated by Reference: None.

TABLE OF CONTENTS

PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 4. Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART II

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of

Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . .

Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure . . . . . . .

Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 13. Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . .

Item 14. Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 15. Exhibits, Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page

5

5

21

52

52

52

52

53

53

55

56

79

79

79

79

81

81

81

88

89

91

98

99

99

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

106

[This page intentionally left blank] 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This annual report on Form 10-K includes forward-looking statements regarding, among other things, our

plans, strategies and prospects, both business and financial. These statements are based on the beliefs and
assumptions of our management. Although we believe that our plans, intentions and expectations reflected in or
suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or
realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks,
uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning
our possible or assumed future actions, business strategies, events or results of operations, are forward-looking
statements. These statements may be preceded by, followed by or include the words “believes,” “estimates,”
“expects,” “projects,” “forecasts,” “may,” “will,” “should,” “seeks,” “plans,” “scheduled,” “anticipates” or
“intends” or similar expressions.

Factors that could cause actual results to differ from those implied by the forward-looking statements in this
annual report on Form 10-K are more fully described in the “Risk Factors” section of this annual report on Form
10-K. The risks described in the “Risk Factors” are not exhaustive. Other sections of this annual report on Form
10-K describe additional factors that could adversely affect our business, financial condition or results of
operations. New risk factors emerge from time to time and it is not possible for us to predict all such risk factors,
nor can we assess the impact of all such risk factors on our business or the extent to which any factor or
combination of factors may cause actual results to differ materially from those contained in any forward-looking
statements. All forward-looking statements attributable to us or persons acting on our behalf are expressly
qualified in their entirety by the foregoing cautionary statements. We undertake no obligations to update or revise
publicly any forward-looking statements, whether as a result of new information, future events or otherwise,
except as required by law.

In addition, statements of belief and similar statements reflect our beliefs and opinions on the relevant
subject. These statements are based upon information available to us as of the date of this annual report on Form
10-K, and while we believe such information forms a reasonable basis for such statements, such information may
be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive
inquiry into, or review of, all potentially available relevant information. These statements are inherently
uncertain and you are cautioned not to unduly rely upon these statements.

Market, ranking and industry data used throughout this annual report on Form 10-K, including statements
regarding subscriber acquisition costs, attrition and subscriber additions, is based on the good faith estimates of
the Company’s management, which in turn are based upon the review of internal surveys, independent industry
surveys and publications and other third party research and publicly available information. These data involve a
number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. While
the Company is not aware of any misstatements regarding the industry data presented herein, its estimates
involve risks and uncertainties and are subject to change based on various factors, including those discussed
under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” in this annual report on Form 10-K.

WEBSITE AND SOCIAL MEDIA DISCLOSURE

We use our website (www.vivint.com), our company blog (blog.vivint.com), corporate Twitter and
Instagram accounts (@VivintHome), and our corporate Facebook account (VivintHome) as channels of
distribution of company information. The information we post through these channels may be deemed material.
Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings
and public conference calls and webcasts. In addition, you may automatically receive e-mail alerts and other
information about the Company when you enroll your e-mail address by visiting the “Email Alerts” section of
our website at www.investors.vivint.com. The contents of our website and social media channels are not,
however, a part of this report.

BASIS OF PRESENTATION

On January 17, 2020 (the “Closing Date”), Vivint Smart Home, Inc. (f/k/a Mosaic Acquisition Corp.) (the

“Company”) consummated the previously announced merger pursuant to that certain Agreement and Plan of
Merger, dated September 15, 2019, by and among the Company, Maiden Merger Sub, Inc., a subsidiary of the
Company (“Merger Sub”), and Legacy Vivint Smart Home, Inc. (f/k/a Vivint Smart Home, Inc.) (“Legacy Vivint
Smart Home”), as amended by Amendment No. 1 to the Agreement and Plan of Merger (the “Amendment” and
as amended, the “Merger Agreement”), dated as of December 18, 2019, by and among the Company, Merger Sub
and Legacy Vivint Smart Home.

Pursuant to the terms of the Merger Agreement, a business combination between the Company and Legacy

Vivint Smart Home was effected through the merger of Merger Sub with and into Legacy Vivint Smart Home,
with Legacy Vivint Smart Home surviving as the surviving company (the “Merger”). At the effective time of the
Merger (the “Effective Time”), each stockholder of Legacy Vivint Smart Home received 84.5320916792 shares
of the Company’s Class A common stock, par value $0.0001 per share (the “Common Stock”), for each share of
Legacy Vivint Smart Home common stock, par value $0.01 per share (the “Legacy Vivint Smart Home common
stock”), that such stockholder owned. Pursuant in each case to a Subscription Agreement entered into in
connection with the Merger Agreement, certain investment funds managed by affiliates of Fortress Investment
Group LLC (“Fortress”) and certain investment funds affiliated with The Blackstone Group Inc. (such investment
funds, collectively, “Blackstone”) purchased, respectively, 12,500,000 and 10,000,000 newly-issued shares of
Common Stock (such purchases, the “Fortress PIPE” and the “Blackstone PIPE,” respectively, and together, the
“PIPE”) concurrently with the completion of the Merger (the “Closing”) on the Closing Date for an aggregate
purchase price of $125,000,000 and $100,000,000, respectively.

In connection with the execution of the Amendment, the Company entered into a Subscription and Backstop

Agreement (the “Fortress Subscription and Backstop Agreement”) with Fortress, pursuant to which Fortress
committed to (i) purchase $50,000,000 in aggregate purchase price of shares of Mosaic’s Common Stock in the
open market, subject to applicable law, (ii) backstop redemptions by subscribing for a number of shares of
newly-issued shares of Mosaic’s Common Stock at a purchase price per share equal to the per-share value of the
Company’s trust account at the time of any such redemptions and (iii) subscribe for up to $50,000,000 (less the
aggregate purchase price of the shares purchased by it in the open market and to backstop redemptions) in
aggregate purchase price of newly-issued shares of Mosaic’s Common Stock at a purchase price of $10.00 per
share to be issued at the election of the Company at the Closing. On the Closing Date, pursuant to the Fortress
Subscription and Backstop Agreement, Fortress purchased 2,698,753 shares of Common Stock for an aggregate
of approximately $27.8 million.

In addition, the Company entered into an additional subscription agreement (the “Additional Forward
Purchaser Subscription Agreement”) with one of the forward purchasers (the “Forward Purchaser”). Pursuant to
the Additional Forward Purchaser Subscription Agreement, immediately prior to the Effective Time, the Forward
Purchaser purchased from the Company 5,000,000 shares of Common Stock at a purchase price of $10.00 per
share. As consideration for the additional investment, 25% of Mosaic Sponsor LLC’s shares of the Company’s
Class F Common Stock, par value $0.0001 per share (the “Founder Shares”) and private placement warrants (the
“private placement warrants”) were forfeited to the Company and the Company issued to the Forward Purchaser
an equal number of shares of Common Stock and warrants concurrently with the Closing.

In connection with the Closing, the registrant changed its name from Mosaic Acquisition Corp. to Vivint
Smart Home, Inc. The Company’s Common Stock is now listed on the NYSE under the symbol “VVNT” and
warrants to purchase the Common Stock at an exercise price of $11.50 per share are listed on the NYSE under
the symbol “VVNT WS”. The audited financial statements included herein are those of Mosaic Acquisition Corp.
prior to the consummation of the Merger and the name change. Prior to the Merger, the Company neither
engaged in any operations nor generated any revenue. Until the Merger, based on the Company’s business

2

activities, it was a “shell company” as defined under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”).

The audited consolidated financial statements of Legacy Vivint Smart Home, which is considered the

Company’s accounting predecessor, are included in Amendment No. 2 to the Company’s Current Report on
Form 8-K, which is anticipated to be filed with the Securities and Exchange Commission (the “SEC”) on or
about March 13, 2020.

As used in this annual report on Form 10-K, unless otherwise noted or the context otherwise requires:
•

references to “Vivint Smart Home”, “we,” “us,” “our” and “the Company” are to Vivint Smart Home,
Inc. (f/k/a Mosaic Acquisition Corp.) and its consolidated subsidiaries;
references to “Legacy Vivint Smart Home” are to Legacy Vivint Smart Home, Inc. and subsidiaries
prior to the close of the Merger (f/k/a Vivint Smart Home, Inc.);
references to “2GIG” are to 2GIG Technologies, Inc., our former affiliate;
references to “Acquisition LLC” or “313 Acquisition” are to 313 Acquisition LLC, the Company’s
indirect parent;
references to “AMRU” are to average monthly revenue per user, which consists of Total MR (as
defined below) divided by average monthly Total Subscribers (as defined below) during a given
period;
references to “APX” are to APX Group, Inc., a wholly-owned subsidiary of the Company;
references to the “Consumer Financing Program” or “CFP” are to the program, launched in the first
quarter of 2017 under the Vivint Flex Pay plan, pursuant to which we offer to qualified customers in
the United States an opportunity to finance the purchase of Products (as defined below) and installation
fees in connection with the services through a third-party financing provider;
references to “Average Subscriber Lifetime” are to 100% divided by our expected long-term
annualized attrition rate multiplied by 12 months;
references to “DTH” are to our direct to home sales channels;
references to “Notes” are to the 8.75% Senior Notes due 2020 (“2020 notes”), 8.875% Senior Secured
Notes due 2022 (“2022 private placement notes”), 7.875% Senior Secured Notes due 2022 (“2022
notes”), 7.625% Senior Notes due 2023 (“2023 notes”), 8.500% Senior Notes due 2024 (“2024 notes”)
and 6.75% Senior Secured Notes due 2027 (“2027 notes”). See “Management’s Discussion and
Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources”;
references to “NIS” are to our national inside sales channels;
references to “Products” are to our offering of smart home equipment including a proprietary control
panel, door and window sensors, door locks, security cameras and smoke alarms;
references to “Revolving Credit Facility” are to the senior secured revolving credit facility. See
“Management’s Discussion and Analysis of Financial Condition and Results of Operations- Liquidity
and Capital Resources-Revolving Credit Facility”;
references to “RICs” are to retail installment contracts offered under the Vivint Flex Pay plan with
respect to the purchase of Products and installation fees to certain of our customers who do not qualify
for the CFP but qualify under our historical underwriting criteria;
references to “Services” are to our offering of smart home and security services;
references to “Smart Home as a Service,” or “SHaaS” are to our business model which generates
subscription-based, high margin recurring revenue from customers who sign up for our Smart Home
Services;
references to “Smart Home Operating System” are to the combination of the software inside our
Products and our cloud-based software and mobile apps;
references to “Smart Home Pros” or “SHPs” are to our full-time smart home professionals who service
our customers;

•

•
•

•

•
•

•

•
•

•
•

•

•

•
•

•

•

3

•

•

•

•

•

•

•

•

•

•

•

references to “Smart Home Services” are to our offering of smart home services combining Products
and related installation, Services and our proprietary back-end cloud platform software;

references to “Solar” or “Vivint Solar” are to Vivint Solar, Inc., our affiliate;

references to “Sponsor” are to certain investment funds affiliated with The Blackstone Group Inc.;

references to “Net Subscriber Acquisition Costs per New Subscriber” are to the net cash cost to create
new smart home and security subscribers during a given 12 month period divided by New Subscribers
for that period. These costs include commissions, Products, installation, marketing, sales support and
other allocations (general and administrative and overhead); less upfront payment received from the
sale of Products associated with the initial installation, and installation fees. These costs exclude
capitalized contract costs and upfront proceeds associated with contract modifications;

references to “Total Bookings” are to the total monthly Service revenue for New Subscribers
multiplied by Average Subscriber Lifetime, plus total Product revenue to be recognized over the
contract term from New Subscribers.

references to “Total MR” are to the average monthly total revenue recognized during the period;

references to “Total Subscribers” are to the aggregate number of active smart home and security
subscribers at the end of a given period, excluding subscribers acquired under pilot programs;

references to “Total Backlog” are to total unrecognized Product revenue plus total Service revenue
expected to be recognized over the remaining Subscriber Lifetime for Total Subscribers;

references to “Vivint Assist” are to our AI-driven smart home automation and assistance software that
uses the data from our devices and partner devices;

references to the “Vivint Flex Pay” or “Flex Pay” plan are to the plan, introduced in January 2017,
under which we launched the Consumer Financing Program and began to offer RICs as well as the
option to pay in full at the time of purchase; and

references to “Vivint Smart Home App” or “Smart Home App” are to our application available on both
Android and iOS which allows users to automate, control and monitor their smart home experience.

4

PART I

References in this Annual Report to “we,” “us,” “company” or “our company” are to Vivint Smart Home,

Inc. (f/k/a Mosaic Acquisition Corp.), a Delaware corporation, and its subsidiaries. References to
“management” or our “management team” are to our officers and directors. References to our “SPAC
sponsors” are to Mosaic Sponsor, LLC, a Delaware limited liability company, and to Fortress Mosaic Sponsor
LLC, a Delaware limited liability company, collectively. References to our “initial stockholders” are to the
holders of our Founder Shares prior to our Initial Public Offering (as defined below).

Item 1. Business.

Introduction

We are a smart home technology company. Our mission is to redefine the home experience through
intelligently designed cloud-enabled solutions delivered to every home by people who care. Our brand name,
Vivint, represents “to live intelligently”, and our solutions help our subscribers do just that.

During the year ended December 31, 2019 and prior to the Merger, we were a blank check company. We
were originally incorporated as a Cayman Islands exempted blank check company and formed for the purpose of
effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business
combination with one or more businesses. Effective December 21, 2018, we changed our jurisdiction of
incorporation from Cayman Islands to the State of Delaware. Prior to the Merger, we neither engaged in any
operations nor generated any revenue. Until the Merger, based on our business activities, the Company was a
“shell company” as defined under the Exchange Act of 1934 (the “Exchange Act”) because we had no operations
and nominal assets consisting almost entirely of cash.

In August 2017, our SPAC sponsors purchased an aggregate of 8,625,000 of our Founder Shares, for an
aggregate purchase price of $25,000, or approximately $0.003 per share, with each SPAC sponsor purchasing an
equal number of Founder Shares. In October 2017, our SPAC sponsors transferred an aggregate of 30,000
Founder Shares to one of our independent directors for their original purchase price.

On October 23, 2017, we completed our initial public offering (the “Initial Public Offering”) of 34,500,000
units at a price of $10.00 per unit (the “units”), generating gross proceeds of $345,000,000. At the Initial Public
Offering, each unit consisted of one of the Company’s Class A ordinary shares, par value $0.0001 per share, and
one-third of one warrant. Each whole warrant entitles the holder thereof to purchase one Class A ordinary share
at a price of $11.50 per share, subject to certain adjustments.

Concurrently with the completion of the Initial Public Offering, our SPAC sponsors purchased an aggregate

of 5,933,334 warrants (the “private placement warrants”) at a price of $1.50 per warrant, or $8,900,001 in the
aggregate, with each SPAC sponsor purchasing an equal number of warrants. The purchase price of the private
placement warrants was added to the net proceeds of the Initial Public Offering and placed in a trust account (the
“trust account”) such that the trust account held $345,000,000 at the time of closing of the Initial Public Offering.
Each whole private placement warrant entitles the holder thereof to purchase one Class A ordinary share at a
price of $11.50 per share, subject to certain adjustments.

On December 5, 2017, we announced that, commencing December 8, 2017, holders of the 34,500,000 units

sold in the Initial Public Offering could elect to separately trade the Class A ordinary shares and the warrants
included in the units. Those units not separated continued to trade on the New York Stock Exchange (the
“NYSE”) under the symbol “MOSC.U” and the Class A ordinary shares and warrants that were separated traded
under the symbols “MOSC” and “MOSC WS,” respectively.

Upon our domestication in the State of Delaware on December 21, 2018, each of our outstanding Class A

ordinary shares and Class F ordinary shares became, by operation of law, one share of Class A common stock or

5

Class F common stock, respectively. Consequently, each holder of a unit, Class A ordinary share, Class F
ordinary share or warrant immediately prior to the domestication now held a unit, share of Class A common
stock, share of Class F common stock or warrant representing the same proportional equity interest in the
Company as that shareholder held prior to the domestication and representing the same class of security. The
Company’s units, common stock and warrants were listed for trading on the NYSE under the symbols
“MOSC.U,” “MOSC” and “MOSC WS,” respectively.

Recent Developments

On the Closing Date, we consummated the Merger. At the Effective Time, each stockholder of Legacy
Vivint Smart Home received 84.5320916792 shares of our Common Stock for each share of Legacy Vivint Smart
Home common stock.

Pursuant in each case to a Subscription Agreement entered into in connection with the Merger Agreement,

Fortress and Blackstone completed the Fortress PIPE and the Blackstone PIPE, respectively. The Founder Shares
automatically converted into Common Stock at Closing, on a one-for-one basis, subject to adjustment. The
private placement warrants will expire five years after the Closing or earlier upon redemption or liquidation.

On the Closing Date, pursuant to the Fortress Subscription and Backstop Agreement, Fortress purchased

2,698,753 shares of Common Stock for an aggregate of approximately $27.8 million.

In addition, pursuant to the Additional Forward Purchaser Subscription Agreement, immediately prior to the
Effective Time, the Forward Purchaser purchased from us 5,000,000 shares of Common Stock at a purchase price
of $10.00 per share. As consideration for the additional investment, 25% of Mosaic Sponsor LLC’s Founder
Shares and private placement warrants were forfeited to us and we issued to the Forward Purchaser an equal
number of shares of Common Stock and warrants concurrently with the Closing.

In connection with the Closing, we changed our name from Mosaic Acquisition Corp. to Vivint Smart
Home, Inc. Our Common Stock is now listed on the NYSE under the symbol “VVNT” and warrants to purchase
the Common Stock at an exercise price of $11.50 per share are listed on the NYSE under the symbol “VVNT
WS”.

Business strategy after the merger

Creating a true smart home experience requires an end-to-end platform designed to drive broad consumer

adoption. Our smart home platform is comprised of the following five pillars: (1) our Smart Home Operating
System, (2) our AI-driven smart home automation and assistance software, Vivint Assist, (3) our portfolio of
proprietary, internally developed smart devices, (4) our curated yet extensible partner-neutral ecosystem, and
(5) our people delivering tech-enabled premium services, including consultative selling, professional installation,
and support.

Our leading smart home platform currently has over 1.5 million subscribers and manages over 20 million

in-home devices, with the Legacy Vivint Smart Home platform processing over 1.5 billion home activity events
each day, as of December 31, 2019. Using our solution, subscribers are able to interact with all aspects of their
home with their voice or any mobile device-anytime, anywhere. They can engage with people at their front door;
view live and recorded video inside and outside their home; control thermostats, locks, lights, and garage doors;
and proactively manage the comings and goings of family, friends, and strangers. Our subscribers engage with
our smart home apps approximately seven times per day on average.

The smart home market is an expanding global opportunity and in the very early stages of broad consumer

adoption. We believe the smart home market is experiencing rapid evolution, which can be divided into three
phases. The first phase is represented by the proliferation of stand-alone smart devices. The second phase takes

6

those devices and connects them to the home. The third and final phase, which we believe is the most pivotal
phase in the market’s evolution, takes smart home technology and applies it to create a continually learning,
automated, seamlessly integrated smart home experience.

The connected home, the second phase, has a multitude of devices and an operating system to coordinate
them all within a single unified system. But integrating numerous different devices from different manufacturers
that were not designed to work together is difficult, and often results in an experience that is complex,
inconsistent, and unreliable. Moreover, DIY solutions put a large burden on homeowners to accurately and
correctly install and support so many devices themselves. And while whole-home automation is possible, it
requires users to write individual rules for each and every circumstance. Mass adoption of the connected home by
those other than technology enthusiasts has been limited. Our software within the devices, in the cloud, and in
our app all work together to help mainstream consumers simply and easily manage their homes.

We believe that we are in a critical transition period from the second phase to the third phase where the key
challenges related to the connected home offerings are overcome by a smart home experience, which we enable
through our end-to-end smart home platform.

In this third phase, a smart home continuously learns and adapts to user behavior and preferences and
delivers a more automated, personalized experience, powered by artificial intelligence technology. To achieve
broad consumer adoption, we believe that smart home solutions must deliver a truly intelligent experience, not
just a remote control of the home. Our cloud-enabled software solution understands the state of the home and its
occupants, interacts with users to enable awareness and control, and takes coordinated action with minimal user
effort. We believe that Vivint is best positioned to capitalize on the mass market opportunity of the smart home.

Our technology and people are the foundation of our business model. Our trained professionals educate
consumers on the value and affordability of a smart home, customize a solution for their homes and needs, teach
them how to use our platform and enhance their experience, and provide ongoing tech-enabled services to
manage, monitor, and support their smart home. We have developed proprietary technology that enables our
people to provide these consultative sales, installation, and support services to our subscribers more effectively
and efficiently, delivering a powerful end-to-end smart home experience.

Legacy Vivint Smart Home has developed and launched over 10 proprietary devices since 2010, all
designed to seamlessly integrate into a comprehensive smart home solution. These devices are the critical end
points of the smart home experience, and our broad device portfolio enables our subscribers to achieve a
comprehensive experience, across the entire home. The software inside these devices, in combination with our
cloud-based software and mobile apps, comprises the Smart Home Operating System that knits these elements
together to intuitively enable otherwise complex use cases that help address real-world problems. We also allow
a select number of third-party stand-alone devices into our ecosystem if doing so enhances the smart home
experience for our subscribers. These may be devices that have a large installed base or that have unique
capabilities, such as voice assistants. In particular, we will often include competing stand-alone devices in our
ecosystem to offer our subscribers with choices. Regardless, we ensure that all partner devices are seamlessly
integrated into our Smart Home Operating System, and that we are able to manage and support them as well as
our own proprietary devices. Our subscribers trust us to professionally install, monitor, and support our devices.
As of December 31, 2019, on average each Legacy Vivint Smart Home subscriber had over 14 devices
strategically placed in their home. Because our Smart Home Pros install the right devices in the right places in
the home, we are able to collect superior data and generate unique insights, to improve the smart home
experience for our users. We believe we are able to provide a much more complete picture of home activity than
any of our competitors.

Our AI-driven smart home automation and assistance software, Vivint Assist, uses the data from our devices
and partner devices to enable our subscribers to have a true smart home experience. We believe that we have the
broadest, deepest, and purest home activity dataset, which we use to understand the state of the home in real

7

time. This enables us to intelligently manage the residence on the homeowners’ behalf, while still keeping them
informed and in full control. Moreover, our software learns from every interaction, enriching our platform and
making the smart home experience smarter. We believe that no other company is as well positioned to capitalize
on the opportunity to make the true smart home a reality.

The smart home requires an operating system that is always-on, reliable, able to process large streams of
incoming data, and protected by enterprise-trade security. Our Smart Home Operating System does all of this,
while delivering a seamless and intuitive end-user experience. In addition to dedicated in-home touchscreens and
our comprehensive integrations with voice-control devices, we provide apps for Android and iOS mobile
devices, as well as a web-based application for access from desktop and laptop computers. Leveraging software
running in the home, in the cloud, and on users’ mobile devices, our operating system manages real-time
communications across the system, executes rule-based actions and notifications, and provides a means for users
to interact with their homes anywhere, anytime, and on any device. We deliver new functionality continually,
deploying weekly updates to our software. We also push firmware updates to smart home devices throughout the
year to deliver new functionality and improve device performance. We believe that continuously improving the
smart home experience both increases the lifetime value of our current subscribers and attracts new subscribers.

Our Smart Home as a Service (“SHaaS”) business model generates subscription-based, high-margin

recurring revenue from subscribers who sign up for our smart home services. We continue to focus on
technology, service, and business model innovation to provide superior customer experience, from the time of
first contact to the day-to-day experience.

In 2017, Legacy Vivint Smart Home made a strategic decision to offer Vivint Flex Pay to consumers as a
part of its business model innovation, providing benefits to both our subscribers and our company. Vivint Flex
Pay provides greater subscriber accessibility by enabling qualified customers to purchase smart home devices
with unsecured financing either through a third party financing partner or through us, in most cases at
zero-percent annual percentage rate (“APR”) for qualified customers. The launch of Vivint Flex Pay has enabled
Legacy Vivint Smart Home to expand its market opportunity by reducing upfront cash required to acquire new
subscribers. Vivint Flex Pay has also improved our unit economics, reduced our balance sheet risk, and improved
the capital efficiency of our business. Today, Vivint Flex Pay is an important driver of our subscriber retention
strategy. Vivint Flex Pay has also improved our subscriber economics. Legacy Vivint Smart Home had an
Average Subscriber Lifetime of 92 months (approximately 8 years), as of December 31, 2019, based on its
expected long-term annualized attrition rate of 13%.

Our go-to-market strategy is based on directly educating consumers about the value and benefits of a smart

home experience. We reach consumers through a variety of highly efficient customer acquisition channels,
including our direct-to-home, inside sales, and retail partnerships programs. We continue to scale these efforts
through our proprietary operations technology, by launching new and innovative products and services, and by
building out our consultative sales channels. Our nationwide sales and service footprint covers 98% of U.S. zip
codes. We continue to strengthen our relationships with existing subscribers by offering them the ability to use
Vivint Flex Pay to finance upgrades of their existing system and to add new devices and features to their smart
homes as our portfolio of offerings expands.

As of December 31, 2019 and 2018, Mosaic Acquisition Corp. had net income of $4.2 million and

$5.3 million, respectively.

As of December 31, 2019 and 2018, Legacy Vivint Smart Home had over 1.5 million and 1.4 million
subscribers, respectively, representing year-over-year growth of 7%. In 2019 and 2018, Legacy Vivint Smart
Home generated revenue of $1.2 billion and $1.1 billion, respectively along with a net loss of $395.9 million and
$472.6 million, respectively. As of December 31, 2019 and 2018, Legacy Vivint Smart Home had approximately
$3.3 billion and $3.1 billion of total aggregate principal debt outstanding, respectively.

8

Our Industry

The smart home market is large and growing rapidly. There were over 150 million households in the United

States and Canada in 2019. With over 1.5 million subscribers as of December 31, 2019, Legacy Vivint Smart
Home’s penetration into the smart home market was only 1% of our current total estimated addressable market in
the United States and Canada alone. Given the rapid pace of technological development in our industry, we
believe it is likely that the total addressable market will continue to expand. The ability to address the cost issue,
among other things, can potentially increase smart home penetration in the future.

To date the market has seen some early penetration from stand-alone devices with relatively narrow

capabilities. These products have attracted early adopters and technology enthusiasts but have not adequately met
the deeper need for a fully integrated smart home experience. These devices generally require do-it-yourself
installation, do not integrate well with other devices, and have been designed with a single use case in mind.
Generally, each device has its own mobile application, making installation and interoperability difficult for those
consumers who do attempt to further their journey and install more devices in their home. As more and more
devices have come to market, consumer demand for a central operating system that can better manage and
integrate those devices has grown.

The connected home has a multitude of devices and requires an operating system to coordinate them all
within a single unified system. But integrating many different devices from different manufacturers that were not
designed to work together is difficult, and often results in an experience that is complex, inconsistent, and
unreliable. Moreover, DIY solutions put a large burden on homeowners to install and support many devices
themselves. And while whole-home automation is possible, it requires users to write individual rules for each and
every circumstance. These DIY solutions also often require a high upfront cost, which can be prohibitively
expensive for certain customers. For these reasons, mass adoption of the connected home by those other than
technology enthusiasts has been limited.

As previously discussed, the next phase of the evolution of the connected home will be the smart home. Just

as Apple and iOS enabled entirely new kinds of applications and use cases for the smart phone, we believe that
our Smart Home Operating System will be the foundation for the full smart home experience and will enable
many new business models that are based on streamlining various experiences in and around the home in
innovative ways.

We believe there is a significant opportunity for companies to provide the end-to-end smart home

experience. A successful smart home company must be able to provide the following:

• An end-to-end solution with a comprehensive integration of technology and people;

• A cloud-enabled operating system that provides a seamless and intuitive smart home experience;

• A portfolio of compelling use cases orchestrated across multiple devices and leveraging artificial

intelligence for adaptive and personalized automation;

• A broad suite of smart devices designed to work as part of a comprehensive smart home;

• An extensible platform complete with deep partner integrations of popular stand-alone devices;

• Local professional services to educate consumers and to install and support devices in every home;

and

• A trusted relationship with consumers, who expect their sensitive home data to be kept private.

We believe that our fully integrated, end-to-end product, sales and service approach successfully addresses

these key points of friction, and positions us to drive broad consumer market adoption.

9

Our Smart Home Platform

We believe that our integrated, end-to-end approach successfully addresses the above requirements.

End-to-End Platform Built to Drive Broad Market Adoption

Our purpose-built platform has the components required to deliver on the promise of a true smart home

experience. Our technology and people are the foundation of our solution.

Our technology seamlessly integrates in-home devices and cloud-enabled services to deliver an experience
that addresses real-world problems. From answering the door remotely to automating the temperature settings in
a home environment, our smart home technology meets customers’ needs for convenience and control.

We believe that our purpose-built end-to-end platform best positions Vivint to deliver on the promise of

broad market smart home adoption.

Cloud-Enabled Smart Home Operating System

Our cloud-enabled Smart Home Operating System delivers a seamless, easy-to-use, and intuitive smart
home experience. Leveraging software running in the home, in the cloud, and on customers’ mobile devices, our
operating system securely manages real-time communications across the system, executes rules and notifications
triggered by defined home-related events, and provides a means for users to interact with their homes from
around the globe. In addition to dedicated in-home touchscreens and our comprehensive integrations with voice-
control devices, we provide apps for Android and iOS mobile devices, as well as a web-based application for
access from desktop and laptop computers.

Providing a seamless experience covering a multitude of separate devices is of critical importance in
moving beyond individual devices to a more comprehensive solution that can help address real-world problems.
For instance, when someone comes to the front door, the homeowner may want to let them into the house. This
requires a doorbell camera, lighting, locks, the security system, and possibly a garage door controller and interior
cameras to all work gracefully together. Our Smart Home Operating System does just this, enabling a multitude
of use cases in a simple and intuitive fashion. Moreover, it helps ensure that all of the mundane tasks of device
management - security, firmware upgrades, telemetry, diagnostics, and more - are taken care of, so that the
system is as reliable as possible.

Legacy Vivint Smart Home began installing comprehensive connected home solutions in 2010, and these
quickly became the choice of the majority of Legacy Vivint Smart Home’s new subscribers and the clear focus of
the company. We believe that our experience in this space - understanding consumers and the challenges of
making a connected home into something seamless and reliable - sets us apart from our competitors.

Software-Enabled Smart Home Devices

Legacy Vivint Smart Home has developed and launched over 10 proprietary smart home devices since
2010. These devices are the end points of the smart home experience we offer. The software inside these devices,
combined with our cloud-based software and mobile apps, enables our Smart Home Operating System to collect
and combine end-point data into complex use cases that help consumers to address real-world problems. In
particular, our devices are designed to work as part of a comprehensive system, with features and capabilities that
only make sense in that context, and which are often not present on devices designed primarily for individual
purchase and use.

Using the Smart Hub or the Vivint Smart Home App, our subscribers can connect to and communicate with
their in-home devices, either from within the home or on-the-go. The Vivint Element Thermostat makes sure that

10

the home environment is both comfortable and energy efficient, while the Vivint Smart Drive provides users with
24/7 DVR and personalized, local cloud storage. Our range of other devices, including cameras, door and
window sensors, motion sensors, tilt sensors, glass break detectors, key fobs, medical pendants, carbon monoxide
detectors, flood sensors, and lamp modules extend the smart home experience to every part of the home,
connecting users to their environments in new ways.

Our subscribers trust us to professionally install, monitor, and currently support an average of over 14

devices strategically placed in each home. Because our Smart Home Pros install the right devices in the right
places, we are able to collect superior data and generate insights, enabling us to provide a much more complete
picture of home activity than any of our competitors and to improve the smart home experience for our users.

Our Curated Partner Ecosystem

We allow a limited number of stand-alone devices into our ecosystem if doing so enhances the smart home

experience for our subscribers. These may be devices that have a large installed base or that have unique
capabilities, such as voice assistants. Using the Google Home and Amazon Alexa integrations for example,
subscribers can talk to their Smart Home Operating System, asking the system to play their favorite songs, while
making sure that their garage doors are closed, and their locks are secured, along with other system functionality.
In particular, we will often include competing stand-alone devices in our ecosystem to offer our subscribers
choice.

Every device we support in our ecosystem is seamlessly integrated with both our Smart Home Operating

System and our tech-enabled services. This curated, partner-neutral ecosystem is designed to provide our
subscribers with a worry-free end-to-end experience from sale to installation through a lifetime of use and
support.

Because our platform is the hub for an easy-to-use, end-to-end smart home experience, partners have sought

us out and have enjoyed continued success through joint selling efforts. Through our ongoing partnership
program, both Amazon and Google have been able to sell a large amount of connected smart home devices. We
have found that enabling users to add their preferred devices only enhances their connected home experience.
Additionally, adding more devices in each home enables our system to gather and learn from even more data
points, leading to a better overall experience for users. Our partnerships with Google and Amazon are examples
of the neutral approach we take in building our ecosystem. As both companies create competing voice-control
platforms for a variety of tasks, we enable our subscribers to use either, or both, as part of their smart home. As
the smart home market develops further, we believe that our platform will form the core of the home ecosystem,
whereby businesses get new ways to streamline connections with customers in their living environments. In this
regard, we will not only own the system powering the smart home, but we will also form strategic partnerships
that will deepen the overall smart home experience. We expect these partnerships will help us protect and gain
more market share.

AI-Driven Smart Home Automation and Assistance Software

We believe that our AI-driven smart home automation and assistance software, Vivint Assist, is a key
differentiator that improves the customer experience and engagement by predicting and reacting to users’ needs,
we believe which ultimately accelerates consumer adoption.

Our AI-driven smart home automation and assistance software, Vivint Assist, uses the data from our devices

and our partner devices to enable our subscribers to have a true smart home experience. We have a relatively
consistent set of devices installed across our subscribers’ homes and are focused on building high-performing
models for Vivint Assist to understand the state of the home and to take or suggest action on the customer’s
behalf. This in turn provides us with the opportunity to use feedback from our customers’ response to this
interaction to further refine our models.

11

We believe that we have the broadest, deepest, and purest home activity dataset, which we use to understand

the state of the home in real time. That enables us to intelligently manage the residence on the homeowners’
behalf, while still keeping them informed and in full control. Vivint Assist processes home events such as
interactions with lights, locks, thermostats, touchscreens, voice-control devices, and door and motion sensors;
thermodynamic data such as interior and exterior temperature and heating/cooling duty cycles; location data from
mobile devices; and users’ interactions with Vivint Assist itself.

Moreover, our software learns from every interaction, enriching our platform and making the smart home

experience smarter. We believe that no other company is as well positioned as Vivint to capitalize on the
opportunity to make the true smart home a reality.

Local Tech-Enabled Services to Educate, Manage and Support the Smart Home

Our trained professionals educate consumers on the value and affordability of a smart home, customize a

solution for their homes and needs, teach them how to use our platform and enhance their experience, and
provide ongoing tech-enabled services to manage, monitor, and support their smart home. We have developed
proprietary technology that enables our people to provide these consultative sales, installation, and support
services to our subscribers more effectively and efficiently, delivering a powerful end-to-end smart home
experience. Our teams bring significant domain expertise when it comes to troubleshooting and fixing issues that
may arise within a smart home across devices and platforms. Our direct relationship gives us a real-time view
into their smart home needs, which provides us with a distinct competitive advantage that enhances our agility
and responsiveness to consumer needs. Our end-to-end platform allows us to be our customers’ trusted support
system.

Our People and Culture

We are the company that we are today because of the people that make up our team. We are proud of the

culture we have built around innovation and subscriber centricity. Innovation also permeates our subscriber-
centric approach.

When it comes to creating a smart home experience, we believe many individuals want and need the help of
professional installation teams to set up the technology and to ensure that it is fully functional, which is why our
installation teams are a vital part of Vivint’s service. Whether our tech-enabled Smart Home Pros connect with
our customers on the phone or in-person, these individuals do their best to inform consumers on how Vivint can
help customize their living environments to meet their unique smart home needs. In contrast to DIY programs,
we provide a premium experience complete with ongoing tech-enabled service and support.

Many companies can make a sale, but few are able to provide a continuous, end-to-end experience over
time. Providing the best possible smart home experience is what drives us as a company, and that is why we are
focused on continually educating and supporting our subscribers-for the long-run. Providing a truly
comprehensive and customizable smart home experience requires ongoing tech-enabled support, which we
provide through our consultative sales, professional installation and customer support teams. These teams exist
because we want to ensure that our subscribers are cared for over the duration of their time with Vivint, which for
Legacy Vivint Smart Home was approximately 8 years, on average, as of December 31, 2019.

High-Performing Scalable Economic Model

We believe our end-to-end solution, long-term customer relationships, and subscription-based, high-margin

recurring revenues drive significant long-term value.

Our business is driven by the acquisition of new subscribers and by managing and retaining our existing

subscriber base. The acquisition of new subscribers requires significant upfront investment, which in turn

12

generates predictable, high-margin recurring revenue (with approximately 74% net service margins for Legacy
Vivint Smart Home for the year ended December 31, 2019) from our cloud-enabled smart home solutions. This
high-visibility, high-margin revenue comes from selling our solution and accompanying smart home devices to
our subscribers. Therefore, we focus our investment decisions on acquiring new subscribers in the most cost-
effective manner while striving to maximize existing subscriber retention and lifetime.

We drive long-term subscriber retention through our high-quality subscriber experience, from the time of

first contact to day-to-day use. For example, our subscribers engage with our smart home apps on average seven
times per day. To provide even greater subscriber accessibility and affordability to the platform and improve our
cash flow economics, Legacy Vivint Smart Home launched Vivint Flex Pay in 2017. Vivint Flex Pay enables
qualified subscribers to purchase smart home devices with unsecured financing either through a third-party
financing partner or through us, in most cases at zero percent APR.

We have made it a primary focus to retain our existing subscribers. Our retention improves as our

subscribers enter into longer term contracts. Although there are costs to acquiring new subscribers, because we
operate on a recurring revenue-based model, acquiring subscribers results in cumulative value generation that
compounds and accrues over time.

We will continue investing in innovative technologies that we believe will make our platform more valuable

and engaging for subscribers, and we intend to continue investing in new subscriber acquisition channels to
further improve the economics of our business model. We will also continue working to improve the lifetime
value of our customers and the unit economics of our business by continually enhancing the smart home
experience.

Our Customers

Legacy Vivint Smart Home had over 1.5 million subscribers in North America as of December 31, 2019.

Our business is not dependent on any single subscriber or a few subscribers, the loss of which would have a
material adverse effect on the respective market or on us as a whole. No individual subscriber accounted for
more than 1% of Legacy Vivint Smart Home’s consolidated 2019 revenue.

Privacy and Security

Our subscribers use our products and services to provide them with peace of mind for the things that matter

most to them-their families and homes. This requires our devices to be professionally installed and deployed
throughout their homes, and requires our solutions to collect and manage information about our subscribers’
home activity. Much of the information that our technology manages on our subscribers’ behalf, including sensor
data, video, and the insights gleaned by our AI-driven smart home automation and assistance software, Vivint
Assist, is sensitive and private, and we take our responsibility to protect this information seriously. Most
importantly, we use this data and the insights we generate from it to improve the smart home experience. Our
subscribers trust us to help them manage their homes, which we consider a unique relationship that we strive to
strengthen.

Subscriber Contracts

We seek to ensure that our subscribers understand our smart home experience, along with the key terms of
their contracts by conducting two surveys with every subscriber. The first survey is conducted live via a digital
interface prior to the execution of the contract and professional installation, and the second survey is conducted
after the installation is completed. Each survey is recorded and stored in our subscriber relationship management
and billing system software, or CRM software, enabling easy access and review.

13

Types of Contracts

When signing up for our services, subscribers currently have three options to pay for their products and
associated installation: payment-in-full, or consumer financing either through our CFP provided to qualified U.S.
subscribers in partnership with our third-party financing providers, or under RICs. For those who choose to pay
in full at the time of signing, we receive cash (paid by the customer through various means, including check,
automated clearing house debit, or credit or debit card) for the full amount of the purchase of products and
related installation. We also receive recurring revenue for Services on a month-to-month basis from these
subscribers. In 2019, 69% of new subscribers opted to sign up under the CFP. When a subscriber signs up under
this program, we receive cash from the third-party financing provider for the subscriber’s purchase of products
and the related installation costs. For certain third-party provider loans, we pay a monthly fee based on either the
average daily outstanding balance of the loans or the number of outstanding loans, depending on the third-party
financing provider. Additionally, we share in liabilities for credit losses depending on the credit quality of the
customer. For other third-party loans, we receive net proceeds (net of fees and expected losses) for which we
have no further obligation to the third-party. We believe that the CFP helps to make the smart home experience
more affordable and approachable for qualified customers, and it also helps to preserve the health of our balance
sheet. Our last financing option is a RIC, which is available to U.S. subscribers who do not qualify for the CFP
based on their credit profile, and all Canadian subscribers. When a customer signs up for a RIC, we record a note
receivable from the customer for the purchase of products and related installation, minus risk-adjusted imputed
interest, and this revenue is deferred and recognized over the life of the contract. We are planning to add
additional financing partners in order to maximize the number of subscribers who are able to obtain financing
through third-party partners and to move this risk off our balance sheet.

Term and Termination

Historically, Legacy Vivint Smart Home has generally offered contracts to subscribers that range in length

from 36 to 60 months, subject to automatic monthly renewal after the expiration of the initial term. Since the
beginning of 2013, a majority of these new subscribers have entered into 60-month contracts. As a result, the
average initial contract length for Legacy Vivint Smart Home subscribers has increased over time, reaching an
average of 51 months as of December 31, 2019. Subscribers have a right of rescission period prescribed by
applicable law during which such subscriber may cancel the contract without penalty or obligation. Generally,
these rescission periods range from 3 to 15 days, depending on the jurisdiction in which a subscriber resides. As a
company policy we provide new subscribers 70 years of age and older a 30-day right of rescission. If the
subscriber rescinds during the applicable rescission period under the terms of the contract, the subscriber is
required to return the applicable equipment. Once the applicable rescission period expires, the subscriber is
responsible for the monthly services fees under the contract.

Other Terms

We provide our subscribers with maintenance free of charge for the first 120 days. After 120 days, we will
repair or replace defective smart home devices without charge, but we typically bill the subscriber a charge for
each service visit. If a utility or governmental agency requires a change to our platform or tech-enabled service
after installation of the system, the subscriber may be charged for the equipment and labor associated with the
required change. We also charge certain subscribers a monthly fee related to the cost of maintaining our cellular
communication network.

We do not provide insurance or warrant that the system will prevent a burglary, fire, hold-up or any such
other event. Our contracts limit our liability to a maximum of $2,000 per event and, where permissible, provide a
one-year statute of limitations to file an action against us. We may cease or suspend tech-enabled monitoring and
repair service due to, among other things, work stoppages, weather, phone service interruption, government
requirements, subscriber bankruptcy or non-payment by subscribers after we have given notice that their service
is being canceled due to such non-payment.

14

Sales and Marketing

We acquire subscribers primarily through our DTH and NIS channels. We are currently testing out multiple
retail partnerships to determine the optimal format for this channel. Regardless of channel, our tech-enabled sales
professionals always take a consultative approach to the sales process, educate potential subscribers on the
benefits of smart home technology, and tailor a solution that serves each subscriber’s needs. This consultative
sales process has enabled us to achieve a high adoption rate of our smart home solutions. We are continually
evaluating ways to improve subscriber acquisition efficiency across all of our sales channels. For the year ended
December 31, 2019, Legacy Vivint Smart Home acquired over 300,000 new subscribers. Of these new
subscribers, 57% joined through Legacy Vivint Smart Home’s DTH, and 43% were brought on through NIS.

Marketing Strategy

We leverage the Vivint brand across all our channels. We invest in certain marketing strategies which
amplify the brand and awareness of our solutions, including through general paid media outlets. Vivint also has
exclusive brand naming rights for the Vivint Smart Home Arena, home of the NBA’s Utah Jazz.

Direct to Home Sales

Our direct to home tech-enabled sales team is comprised of up to 4,500 representatives at our peak selling
season working across select markets throughout North America. DTH representatives visit consumers in their
homes, providing interested individuals with an in-depth description of our offerings. They benefit from our
recruiting and training programs designed to promote sales productivity. Markets are selected each year based on
a number of factors, including demographics, population density and our past experience selling in these markets.
Because expenses associated with our direct to home sales channels are directly correlated with new subscriber
acquisition, the majority of the costs associated with this channel are variable and can scale with customer
acquisition. We also have a program whereby a number of direct-to-home sales representatives reside in certain
select markets and sell in those markets on a year round basis. We expect the number of new subscriber contracts
generated through this program to continue to increase over time.

National Inside Sales

Our NIS channel provides a consultative experience for consumers who contact us. Driven by increasing

brand awareness and marketing effectiveness, the number of new subscribers acquired by Legacy Vivint Smart
Home through this channel in 2019 increased 3% compared to 2018.

The NIS team utilizes leads generated through multiple sources, both digital and traditional, including paid,

organic and local search and display advertising. We believe that we will continue to experience growth in this
channel as Vivint’s brand awareness improves and customers’ understanding of the smart home increases.
Customers originated through the Legacy Vivint Smart Home NIS channel has grown as a percentage of our total
originations from approximately 10% in 2009 to approximately 43% for the year ended December 31, 2019.

Retail

We are currently running multiple retail partnerships pilot programs, with the goal of adding an additional

subscriber acquisition channel that will allow us to offer a consultative sales experience while preserving our unit
economics. Our retail partnership pilots are built primarily on a variable-cost model. Through these pilots, we
hope to reach additional consumers that have not yet considered purchasing Products and Services, those that
have already purchased other smart home products that have not met their expectations, and those that want to
experience and buy smart home solutions in a traditional retail setting. Given the success of our existing DTH
and NIS efforts, our retail pilots are built to provide interested subscribers with a strong understanding of the
technology and service components of our smart home experience, in a retail setting, on a scalable, variable-cost
basis.

15

Operations

Our end-to-end solution includes a dedication to providing a smart home experience, complete with tech-
enabled service and support. We have structured our organization and our operations in a way that allows us to
maximize efficiency and prioritize the subscriber experience, which is why we have built a successful brand and
generated high subscriber satisfaction ratings over time.

In-Home Service

We deploy full-time in-home tech-enabled service professionals (“Smart Home Pros”) throughout North

America to provide prompt tech-enabled service to our subscribers, on an as-needed basis. Our in-home service
professionals are highly trained to address maintenance and service issues. Using our proprietary, in-house sales
and service technologies - TechGenie - they are able to schedule service and installation appointments in real-
time, thus maximizing subscriber satisfaction and minimizing friction in the subscriber relationship. This
dimension of our offering personalized in-home support is key to our end-to-end solution, and we believe that
providing personalized smart home service will be an integral part of meeting the needs of the broader consumer
market.

Customer Service and Monitoring

Our tech-enabled customer service centers operate around the clock, year-round, without exception. All
employees who work in customer service undergo training on billing and service-related questions. Customer
service representatives are required to pass background checks and, depending upon their job function, may
require licensing.

Our two central monitoring facilities are located in Utah and Minnesota and are fully able to be primary

backups for each other and operate 24 hours a day, 7 days a week, year-round-including on holidays. All
professionals who work in our monitoring facilities undergo comprehensive training and are required to pass
background checks and, in certain cases, licensing tests or other checks to obtain the required licensing.

Billing and Collections

Our billing and collections representatives are located in our Utah offices. We cross-train these
representatives to also handle general customer service inquiries with the goal of improving the customer
experience and to increase personnel flexibility. Billing and collections representatives are also required to pass
background checks and, depending upon their job function, may also require licensing by the state of Utah. A
majority of our subscribers pay electronically either via ACH, credit or debit card. A subscriber who pays
electronically is generally placed on a billing cycle based on their contract origination date and, in certain
instances, the subscriber may choose their billing date. Our subscribers billed via direct invoice can be billed on
any day of the month, with payment due 15 days subsequent to the invoice date. Subscribers are billed in advance
for their monthly services based on their billing cycle and not calendar month. In those jurisdictions where we
are entitled to do so by law, we charge late fees to subscribers whose accounts are more than 10 days past due.

Key Systems

We utilize an integrated subscriber relationship management and billing system software, based on a well-

established enterprise-scale cloud solution (“CRM software”). This CRM software allows us to scale our
business, providing the flexibility to accommodate the multiple customer support and billing models resulting
from the continued expansion in our product and service offerings over time. The CRM software enables one-call
resolution and allows for operational efficiency by not requiring the entry of data multiple times, thus improving
data accuracy. Additionally, the data is replicated to both a reporting and a business intelligence server to reduce
processing time, as well as to an offsite server used for disaster recovery purposes.

16

We also utilize an enterprise resource planning software (“ERP”), primarily to manage financial accounting,

inventory and supply chain functions of our business. Similar to the CRM software, the ERP allows us to scale
our operations to accommodate the continued expansion of our business models and product and service
offerings. The ERP also provides improved security and automated system controls.

Suppliers

We provide our services through a panel installed in our subscribers’ homes. Since early 2014, nearly all
new subscribers, including those contracted through Legacy Vivint Smart Home, are using the Vivint SkyControl
panel. From 2010 through 2014, 2GIG Go!Control was Legacy Vivint Smart Home’s primary panel. As of
December 31, 2019, approximately 88% of Legacy Vivint Smart Home’s subscriber base use SkyControl panels
and 12% use 2GIG Go!Control panels.

In 2013, Legacy Vivint Smart Home completed the sale of 2GIG Technologies, Inc., or 2GIG. In connection

with the 2GIG sale, 2GIG assigned to Legacy Vivint Smart Home their intellectual property rights in the
SkyControl Panel and certain peripheral equipment. This proprietary equipment is a critical component of our
current smart home and security offerings, and we expect it to remain a critical component of our future offerings
as well. In addition, at the time of the 2GIG sale Legacy Vivint Smart Home entered into a five-year supply
agreement with 2GIG, pursuant to which they would be the exclusive provider of Legacy Vivint Smart Home’s
control panel requirements and certain peripheral equipment, subject to certain exceptions, during the term. This
agreement was completed in April 2018.

We license certain communications infrastructure, software and services from Alarm.com to support
subscribers with the Go!Control panel. These Go!Control panels are connected to Alarm.com’s hosted platform.
Alarm.com also provides an interface to enable these subscribers to access their systems remotely. We also
license certain intellectual property from Alarm.com for our subscribers using the SkyControl panel.

Generally, our hardware device suppliers maintain a stock of devices and key components to cover any
minor supply chain disruptions. Where possible we also utilize dual sourcing methods to minimize the risk of a
disruption from a single supplier. However, we also rely on a number of sole source and limited source suppliers
for critical components of our solution. Replacing any sole source or limited source suppliers could require the
expenditure of significant resources and time to redesign and resource these products.

Research and Development

Our innovation center headquartered in Lehi, Utah and our research and development office in Boston,
Massachusetts, focus on the research and development of new Products and Services, both within and beyond our
existing offerings. Our professionals are trained in our proprietary innovation management process, from
subscriber needs assessment to Product and Service launch. Our innovation center includes people with expertise
in all aspects of the development process, including hardware development, software development, design, and
quality assurance.

By focusing on innovation, and continually enhancing our Product and Service offerings, we believe we can
increase new subscriber originations, subscriber usage and subscriber satisfaction, thereby potentially increasing
revenue per subscriber and lowering subscriber attrition.

We expect to continue introducing new, innovative devices and software features. We design these new

Products and, where appropriate, leverage partnerships for their manufacture.

By vertically integrating the development and design of our Products and Services with our existing sales

and customer service activities, we believe we are able to more quickly respond to market needs, and better
understand our subscribers’ interactions and engagement with our Products and Services. This provides critical
data enabling us to improve the power, usability and intelligence of these Products and Services.

17

Intellectual Property

Patents, trademarks, copyrights, trade secrets, and other proprietary rights are important to our business and

we continuously refine our intellectual property strategy to maintain and improve our competitive position. We
seek to protect new intellectual property to safeguard our ongoing technological innovations and strengthen our
brand, and we believe 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.

Our portfolio of U.S. and foreign patents consist of over 150 issued patents and over 400 pending patent

applications that relate to a variety of smart home, security and other technologies utilized in our business. We
also own a portfolio of trademarks, including domestic and foreign registrations for Vivint, and are a licensee of
various patents, from our third-party suppliers and technology partners.

Because of the importance that subscribers place on reputation and trust when making a decision on a smart
home provider, our brand is critical to our business. Patents related to individual products or technologies extend
for varying periods dependent on the date of patent filing or grant and the legal term for patents in the various
countries where we have sought patent protection. Trademark rights may potentially extend for longer periods of
time and are dependent upon national laws and use of the marks.

Competition

The smart home industry is highly competitive and fragmented. Our major competitors range from large-cap

technology companies, which predominantly offer DIY devices to expand their core market opportunity, to
companies that are focused on singular smart home experiences (e.g., security focused), to industrial and
telecommunications companies that are offering connected home experiences. Historically, the vast majority of
companies have not offered comprehensive smart home solutions that meet the growing requirements of
households. In many cases, companies have launched DIY or standalone devices to enhance their existing
offerings, leading to partial or incomplete smart home experiences. Certain features of our platform compete with
companies that fall into the following categories:

• Large technology companies: Amazon, Apple, Google and Microsoft

•

•

Security-based offerings: ADT, Alarm.com, Brinks Home Security, FrontPoint, Johnson Controls
International plc., SimpliSafe, and STANLEY Convergent Security Solutions

Industrial and smart hardware companies: Arlo, Control4, Honeywell, Resideo and Samsung

• Telecommunications Companies: Comcast Corporation, Cox Communications, Rogers

Communications, and Time Warner Cable

We believe we compete effectively with each of our competitors listed above. However, we expect
competition to intensify in the future. We face increasing competition from competitors that are building their
own smart home platforms, such as Amazon, Apple and Google, as well as from companies that offer single-
point connected devices. With Legacy Vivint Smart Home having installed more than 2.5 million smart home
and security systems , we believe we are well positioned to compete with them because we benefit from more
than 20 years of experience; our efficient direct-to-home and inside sales channels; integrated smart home
platform; innovative products; and our award-winning customer service.

In addition, several of our competitors have greater name recognition, much longer operating histories, more

and better-established subscriber relationships, larger sales forces, larger marketing and software development
budgets, and significantly greater resources than we do. Therefore, it is possible that we may not compete
favorably with respect to certain of the foregoing factors.

18

We also compete with numerous smaller regional and local providers. We also face, or may in the future
face, competition from other providers of information and communication products and services, a number of
which have significantly greater capital and other resources than we do.

Companies in our industry compete primarily on the basis of price in relation to the quality of the devices

and tech-enabled services they provide. The company’s brand and reputation, market visibility, service and
product capabilities, quality, price, efficient direct-to-home sales channel, and the ability to identify and sell to
prospective subscribers, are all factors that contribute to competitive success in the smart home industry. We
emphasize the quality of the service we provide, rather than focusing primarily on price competition. We believe
we compete effectively against other national, regional and local companies offering smart home and security
alarm monitoring services by offering our subscribers an integrated smart home, along with an attractive value
proposition, and our proven, award-winning customer service.

Government Regulations

United States

We are subject to a variety of laws, regulations and licensing requirements of federal, state and local

authorities.

We are also required to obtain various licenses and permits from state and local authorities in connection

with the operation of our businesses. The majority of states regulate in some manner the sale, installation,
servicing, monitoring or maintenance of smart home and electronic security systems. In the states that do regulate
such activity, our company and our employees are typically required to obtain and maintain licenses,
certifications or similar permits from the state as a condition to engaging in the smart home and security services
business.

In addition, a number of local governmental authorities have adopted ordinances regulating the activities of

security service companies, typically in an effort to reduce the number of false alarms in their jurisdictions.
These ordinances attempt to reduce false alarms by, among other things, requiring permits for individual
electronic security systems, imposing fines (on either the subscriber or the company) for false alarms,
discontinuing police response to notification of an alarm activation after a subscriber has had a certain number of
false alarms, and requiring various types of verification prior to dispatching authorities.

Our sales and marketing practices are regulated by the federal, state and local agencies. These laws and
regulations typically place restrictions on the manner in which products and services can be advertised and sold,
and to provide residential purchasers with certain rescission rights. In certain circumstances, consumer protection
laws also require the disclosure of certain information in the contract with our subscriber and, in addition, may
prohibit the inclusion of certain terms or conditions of sale in such contracts. Many local governments regulate
direct-to-home sales activities and contract terms and require that salespeople and the company on whose behalf
the salesperson is selling obtain licenses to carry on business in that municipality.

In addition, the CFP and RICs are subject to federal and state laws. These laws primarily require that
consumer financing contracts include or be accompanied by certain prescribed disclosures, but these laws also
may place limitations on particular fees and charges, and require licensing or registration of the party extending
consumer credit. Citizens and any other financing partners providing third-party consumer financing under
Vivint Flex Pay are responsible for compliance with such laws applicable to Vivint Flex Pay, and we are
responsible for compliance with such federal and state laws regulating RICs.

Canada

Companies operating in the smart home and electronic security service industry in Canada are subject to
provincial regulation of their business activities, including the regulation of direct-to-home sales activities and

19

contract terms and the sale, installation and maintenance of smart home and electronic security systems. Most
provinces in Canada regulate direct-to-home sales activities and contract terms and require that salespeople and
the company on whose behalf the salesperson is selling obtain licenses to carry on business in that province.
Consumer protection laws in Canada also require that certain terms and conditions be included in the contract
between the service provider and the subscriber.

A number of Canadian municipalities require subscribers to obtain licenses to use electronic security alarms

within their jurisdiction. Municipalities also commonly require entities engaged in direct-to-home sales within
their municipality to obtain business licenses.

Seasonality

Our DTH sales are seasonal in nature with a substantial majority of our new customer originations occurring

during a sales season from April through August. We make investments in the recruitment of our DTH sales
force and the inventory prior to each sales season. We experience increases in net subscriber acquisition costs
during these time periods.

The management of our sales channels has historically resulted in a consistent sales pattern that enables us

to more accurately forecast customer originations.

Employees

As of December 31, 2019, Legacy Vivint Smart Home had approximately 5,750 full-time employees,

excluding its seasonal direct to home installation technicians, sales representatives and certain other support
professionals. As of December 31, 2019, a very small minority of Legacy Vivint Smart Home’s employees were
represented by a labor union. We believe that we generally have good relationships with our employees. The
majority of our full-time employees are located in cities within Utah, with additional locations in Boston,
Massachusetts Las Vegas, Nevada; Tampa Florida; and South Eagan, Minnesota. Employees located outside of
these areas are comprised primarily of our full-time Smart Home Pros, who service our customers and are located
in all states in the United States (except New Hampshire, Rhode Island and Vermont), as well as the majority of
Canadian provinces.

Information About Our Executive Officers

See “Item 10. Directors, Executive Officers and Corporate Governance” for information about our executive
officers.

Available Information

Our principal executive offices are located at 4931 North 300 West, Provo, Utah 84604. Our internet

address is www.vivint.com.

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and proxy

statements for our shareholders’ meetings, as well as any amendments to those reports, are available free of
charge through our internet website as soon as reasonably practicable after we file them with the SEC. You can
learn more about us by reviewing our SEC filings on the investor relations page of our website.

20

The SEC also maintains a website at www.sec.gov that contains reports, proxy statements and other

information about SEC registrants, including us.

References to our website and the SEC’s website in this report are provided as a convenience and do not
constitute, and should not be viewed as, incorporation by reference of the information contained on, or available
through, such websites. Such information should not be considered a part of this report, unless otherwise
expressly incorporated by reference in this report.

Item 1A. Risk Factors.

An investment in our securities involves a high degree of risk. You should consider carefully all of the risks

described below, together with the other information contained in this Annual Report on Form 10-K, before
making a decision to invest in our securities. If any of the following events occur, our business, financial
condition and operating results may be materially adversely affected. In that event, the trading price of our
securities could decline, and you could lose all or part of your investment.

Risks Relating to Our Business and Industry

Our industry is highly competitive.

We operate in a highly competitive industry. We face, and may in the future face, competition from other

providers of information and communication products and services, including cable and telecommunications
companies, Internet service providers, large technology companies singular experience companies, industrial and
smart hardware companies, and others that may have greater capital and resources than we do. We also face
competition from large residential security companies that have or may have greater capital and other resources
than us. Competitors that are larger in scale and have greater resources may benefit from greater economies of
scale and other lower costs that permit them to offer more favorable terms to consumers (including lower service
costs) than we offer, causing such consumers to choose to enter into contracts with such competitors. For
instance, cable and telecommunications companies are expanding into the smart home and security industries and
are bundling their existing offerings with automation and monitored security services. In some instances, it
appears that certain components of such bundled offerings are significantly underpriced and, in effect, subsidized
by the rates charged for the other product or services offered by these companies. These bundled pricing
alternatives may influence subscribers’ desire to subscribe to our services at rates and fees we consider
appropriate. These competitors may also benefit from greater name recognition and superior advertising,
marketing, promotional and other resources. To the extent that such competitors utilize any competitive
advantages in markets where our business is more highly concentrated, the negative impact on our business may
increase over time. In addition to potentially reducing the number of new subscribers we are able to originate,
increased competition could also result in increased subscriber acquisition costs and higher attrition rates that
would negatively impact us over time. The benefit offered to larger competitors from economies of scale and
other lower costs may be magnified by an economic downturn in which subscribers put a greater emphasis on
lower cost products or services. In addition, we face competition from regional competitors that concentrate their
capital and other resources in targeting local markets.

We also face potential competition from do-it-yourself, or DIY, systems, which enable consumers to install

their own systems and monitor and control their home over the Internet without the need for a subscription
agreement with a service provider. Improvements in these systems may result in more subscribers choosing to
take on the responsibility for installation, maintenance, and management of connected home systems themselves.
In addition, consumers may prefer individual device solutions that provide more narrowly targeted functionality
instead of a more comprehensive integrated smart home solution. Pricing pressure or improvements in
technology and shifts in consumer preferences towards DIY and/or individual solutions could adversely impact
our subscriber base or pricing structure and have a material and adverse effect on our business, financial
condition, results of operations and cash flows.

21

Cable and telecommunications companies actively targeting the smart home market and expanding into the
monitored security space, and large technology companies expanding into the smart home market could result in
pricing pressure, a shift in subscriber preferences towards the services of these companies and a reduction in our
market share. 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 subscribers or in our inability to attract new subscribers and have
an adverse effect on our business, financial condition, results of operations and cash flows.

We rely on long-term retention of subscribers and subscriber attrition can have a material adverse effect on

our results.

We incur significant upfront costs to originate new subscribers. Accordingly, our long-term performance is

dependent on our subscribers remaining with us for several years after the initial term of their contracts. One
reason for attrition occurs when subscribers move and do not reconnect. Subscriber moves are impacted by
changes in the housing market. See “-Our business is subject to macroeconomic, microeconomic and
demographic factors that may negatively impact our results of operations.” Some other factors that can increase
subscriber attrition include problems experienced with the quality of our Products or Services, unfavorable
general economic conditions, adverse publicity and the preference for lower pricing of competitors’ products and
services. In addition, we generally experience an increased level of subscriber cancellations in the months
surrounding the expiration of such subscribers’ initial contract term. If we fail to retain our subscribers for a
sufficient period of time, our profitability, business, financial condition, results of operations and cash flows
could be materially and adversely affected. Our inability to retain subscribers for a long term could materially
and adversely affect our business, financial condition, cash flows or results of operations.

Litigation, complaints or adverse publicity or unauthorized use of our brand name could negatively impact

our business, financial condition and results of operations.

From time to time, we engage in the defense of, and may in the future be subject to, certain investigations,
claims and lawsuits arising in the ordinary course of our business. For example, Legacy Vivint Smart Home has
been named as a defendant in putative class actions alleging violations of wage and hour laws, the Telephone
Consumer Protection Act, common law privacy and consumer protection laws. From time to time Legacy Smart
Home’s subscribers have communicated and may in the future communicate complaints to organizations such as
the Better Business Bureau, regulators, law enforcement or the media. Any resulting actions or negative
subscriber sentiment or publicity could reduce the volume of our new subscriber originations or increase attrition
of existing subscribers. Any of the foregoing may materially and adversely affect our business, financial
condition, cash flows or results of operations.

Given our relationship with Vivint Solar and the fact that Vivint Solar uses our registered trademark,
“Vivint”, in its name pursuant to a licensing agreement, our subscribers and potential subscribers may associate
us with any problems experienced with Vivint Solar or adverse publicity related to Vivint Solar’s business. We
may not be able to take remedial action to cure any issues Vivint Solar has with its subscribers, and our
trademark, brand and reputation may be adversely affected.

Unauthorized use of our brand name by third parties may also adversely affect our business and reputation,
including the perceived quality and reliability of our Products and Services. We rely on trademark law, internal
policies and agreements with our employees, subscribers, business partners and others to protect the value of our
brand name. Despite our precautions, we cannot provide assurance that those procedures are sufficiently effective
to protect against unauthorized third-party use of our brand name. We may not be successful in investigating,
preventing or prosecuting all unauthorized third-party use of our brand name. Future litigation with respect to
such unauthorized use could also result in substantial costs and diversion of our resources. These factors could
adversely affect our reputation, business, financial condition, results of operations and cash flows.

22

We are highly dependent on our ability to attract, train and retain an effective sales force and other key

personnel.

Our business is highly dependent on our ability to attract, train and retain an effective sales force, especially

for our peak April through August sales season. In addition, because sales representatives become more
productive as they gain experience, retaining those individuals is very important for our success. If we are unable
to attract, train and retain an effective sales force, our business, financial condition, cash flows or results of
operations could be adversely affected. In addition, our business is dependent on our ability to attract and retain
other key personnel in other critical areas of our business. If we are unable to attract and retain key personnel in
our business, it could adversely affect our business, financial condition, cash flows and results of operations.

Our operations depend upon third-party providers of telecommunication technologies and services.

Our operations depend upon third-party cellular and other telecommunications providers to communicate
signals to and from our subscribers in a timely, cost-efficient and consistent manner. The failure of one or more
of these providers to transmit and communicate signals in a timely manner could affect our ability to provide
services to our subscribers. There can be no assurance that third-party telecommunications providers and signal-
processing centers will continue to transmit and communicate signals to or from our third-party providers and the
monitoring stations without disruption. Any such disruption, particularly one of a prolonged duration, could have
a material adverse effect on our business. In addition, failure to renew contracts with existing providers or to
contract with other providers on commercially acceptable terms or at all may adversely impact our business.

Certain elements of Legacy Vivint Smart Home’s operating model have historically relied on our
subscribers’ continued selection and use of traditional landline telecommunications to transmit signals to and
from our subscribers. There is a growing trend for consumers to switch to the exclusive use of cellular, satellite
or internet communication technology in their homes, and telecommunication providers may discontinue their
landline services in the future. In addition, many of our subscribers who use cellular communication technology
for their systems use products that rely on older 2G and 3G technologies, and certain telecommunication
providers have discontinued 2G services in certain markets, and these and other telecommunication providers are
expected to discontinue 2G and 3G services in other markets in the future. The discontinuation of landline, 2G,
3G and any other services by telecommunications providers in the future would require our subscriber’s system
to be upgraded to alternative, and potentially more expensive, technologies. This could increase our subscriber
attrition rates and slow our new subscriber originations. To maintain our subscriber base that uses components
that are or could become obsolete, we may be required to upgrade or implement new technologies, including by
offering to subsidize the replacement of subscribers’ outdated systems at our expense. Any such upgrades or
implementations could require significant capital expenditures and also divert management’s attention and other
important resources away from our customer service and new subscriber origination efforts.

We depend on third-party providers of internet access services that may impair, degrade or otherwise block

our services that could lead to additional expenses or loss of users.

Our interactive services are accessed through the internet and our security monitoring services are
increasingly delivered using internet-based technologies. In addition, our distributed cloud storage solution,
including the Vivint Smart Drive, is dependent upon internet services for shared storage. Some providers of
broadband access may take measures that affect their subscribers’ ability to use these products and services, such
as degrading the quality of the data packets we transmit over their lines, giving those packets low priority, giving
other packets higher priority than ours, blocking our packets entirely or attempting to charge their subscribers
more for using our services or terminating the subscriber’s contract.

The Federal Communications Commission (“FCC”) released an order that became effective on June 11,
2018, that repeals most of the rules that the agency previously had in place that prevented providers of broadband
internet access services from impairing, degrading or blocking services provided by third parties to us. The prior

23

rules prohibiting impairment, degradation and blocking, are commonly referred to as “network neutrality” rules.
Numerous parties have appealed the FCC order which is before the U.S. Court of Appeals for the District of
Columbia. We cannot predict whether the FCC order will be upheld, reversed or remanded, nor the timing of the
appellate court’s resolution of the appeal.

Following the adoption of the FCC’s order reversing the network neutrality rules, a number of states have

passed network neutrality laws. The laws vary by state both in substance and in scope. There is legal uncertainty
as to whether states have authority to pass laws that would conflict with the recent FCC order due to the interstate
nature of internet communications and for other reasons. We cannot predict whether state laws that are
interpreted to conflict with the FCC’s order will survive judicial scrutiny if challenged.

The largest providers of broadband internet access services have publicly stated that network neutrality rules

are not required as they would not engage in some of the practices that the rules prohibit. While it is difficult to
predict what would occur in the absence of such rules, it is possible that as a result of the lack of network
neutrality rules, we could incur greater operating expenses which could harm our results of operations. While we
think it is unlikely and that other laws may be implicated should broadband internet access providers
affirmatively interfere with the delivery of our services that rely on broadband internet connections, interference
with our services by broadband internet access service providers for using our products and services could cause
us to lose existing subscribers, impair our ability to attract new subscribers and materially and adversely affect
our business, financial condition, results of operations and cash flows.

Changes in laws or regulations that impact our underlying providers of telecommunications services could

adversely impact our business

Telecommunications service providers are subject to extensive regulation in the markets where we operate
or may expand in the future. Changes in the applicable laws or regulations affecting telecommunication services
could require us to change the way we operate, which could increase costs or otherwise disrupt our operations,
which in turn could adversely affect our business, financial condition, cash flows or results of operations.

We must successfully upgrade and maintain our information technology systems.

We rely on various information technology systems to manage our operations. As necessary, we implement

modifications and upgrades to these systems, and replace certain of our legacy systems with successor systems
with new functionality.

There are inherent costs and risks associated with modifying or changing these systems and implementing

new systems, including 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. For example, Legacy Vivint
Smart Home encountered issues associated with the implementation of its integrated customer resource
management, or CRM, system in 2014, which resulted in an immaterial error in our financial statements for the
quarter ended June 30, 2014. This error was corrected during the quarter ended September 30, 2014. As a result
of the issues encountered associated with the CRM implementation, Legacy Vivint Smart Home also issued a
significant number of billing-related subscriber credits during the year ended December 31, 2014, which reduced
its revenue. While management seeks to identify and remediate issues, we can provide no assurance that our
identification and remediation efforts will be successful or that we will not encounter additional issues as we
complete the implementation of these and other 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 an adverse effect on our business, cash flows and operations.

24

Privacy and data protection concerns, laws, and regulations relating to privacy, and data protection and

information security could have a material adverse effect on our business.

In the course of our operations, we gather, process, transmit and store subscriber information, including

personal, payment, credit and other confidential and private information. We may use this information for
operational and marketing purposes in the course of operating our business.

Our collection, retention, transfer and use of this information are governed by U.S. and foreign laws and
regulations relating to privacy, data protection and information security, industry standards and protocols, or it
may be asserted that such industry standards or protocols apply to us. The regulatory framework for privacy and
information security issues worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable
future. In North America, federal and various state and provincial governmental bodies and agencies have
adopted or are considering adopting laws and regulations limiting, or laws and regulations regarding the
collection, distribution, use, disclosure, storage, and security of certain categories of information. Some of these
requirements include obligations of companies to notify individuals of security breaches involving particular
personal information, which could result from exploitation of a vulnerability in our systems or services or
breaches experienced by our service providers and/or partners. For example, the State of California recently
enacted the California Consumer Privacy ACT (“CCPA”), became effective on January 1, 2020. The CCPA
expands the scope of what is considered “personal information” and creates new data access and opt-out rights
for consumers, which creates new requirements for us and other companies that operate in California. We are
also subject to state and federal laws and regulations regarding telemarketing and other telephonic
communications and state and federal laws regarding unsolicited commercial emails, as well as regulations
relating to automated telemarketing calls, texts or SMS messages.

Many jurisdictions have established their own data security and privacy legal and regulatory frameworks
with which we or our vendors or partners must comply to the extent our operations expand into these geographies
or the laws and regulations in these frameworks otherwise may be interpreted to apply to us. Laws and
regulations in these jurisdictions apply broadly to the collection, use, storage, disclosure and security of data that
identifies or may be used to identify or locate an individual, such as names, email addresses and, in some
jurisdictions, internet protocol addresses. We are also bound by contractual requirements relating to privacy, data
protection and information security, and may agree to additional contractual requirements addressing these
matters from time to time.

Our compliance with these various requirements increases our operating costs, and additional laws,

regulations, standards or protocols (or new interpretations of existing laws, regulations, standards or protocols) in
these areas may further increase our operating costs and adversely affect our ability to effectively market our
Products and Services. In view of new or modified legal obligations relating to privacy, data protection or
information security, or any changes in their interpretation, we may find it necessary or desirable to
fundamentally change our business activities and practices or to expend significant resources to modify our
products and services and otherwise adapt to these changes. We may be unable to make such changes and
modifications in a commercially reasonable manner or at all, and our ability to develop new services and features
could be limited.

Further, our failure or perceived failure to comply with any of these laws, regulations, standards, protocols
or other obligations could result in a loss of subscriber data, fines, sanctions and other liabilities and additional
restrictions on our collection, transfer or use of subscriber data. In addition, our failure to comply with any of
these laws, regulations, standards, protocols or other obligations could result in a material adverse effect on our
reputation, subscriber attrition, new subscriber origination, financial condition, cash flows or results of
operations.

If our security controls are breached or unauthorized or inadvertent access to subscriber information or
other data or to control or view systems are otherwise obtained, our services may be perceived as insecure, we

25

may lose existing subscribers or fail to attract new subscribers, our business may be harmed, and we may
incur significant liabilities.

Use of our solutions involves the storage, transmission and processing of personal, payment, credit and
other confidential and private information of our subscribers, and may in certain cases permit access to our
subscribers’ homes or property or help secure them. We also maintain and process other confidential and
proprietary information in our business, including our employees’ and contractors’ personal information and
confidential business information. We rely on proprietary and commercially available systems, software, tools
and monitoring to protect against unauthorized use or access of the information we process and maintain. Our
services and the networks and information systems we utilize in our business are at risk for breaches as a result of
third-party action, employee, vendor or partner error, malfeasance, or other factors. For example, Legacy Vivint
Smart Home has experienced instances of its employees, contractors and other third parties improperly accessing
its and/or its subscribers’ systems and information in violation of Legacy Vivint Smart Home’s internal policies
and procedures.

Criminals and other nefarious actors are using increasingly sophisticated methods, including cyberattacks,

phishing, social engineering and other illicit acts to capture, access or alter various types of information, to
engage in illegal activities such as fraud and identity theft, and to expose and exploit potential security and
privacy vulnerabilities in corporate systems and websites. Unauthorized intrusion into the portions of our systems
and networks and data storage devices that process and store subscriber confidential and private information, the
loss of such information or the deployment of malware or other harmful code to our services or our networks or
systems may result in negative consequences, including the actual or alleged malfunction of our products or
services. In addition, third parties, including our partners and vendors, could also be sources of security risks to
us in the event of a failure of their own security systems and infrastructure. The threats we and our partners and
vendors face continue to evolve and are difficult to predict due to advances in computer capabilities, new
discoveries in the field of cryptography and new and sophisticated methods used by criminals. There can be no
assurances that our defensive measures will prevent cyber-attacks or that we will discover network or system
intrusions or other breaches on a timely basis or at all. We cannot be certain that we will not suffer a compromise
or breach of the technology protecting the systems or networks that house or access our Products and Services or
on which we or our partners or vendors process or store personal information or other sensitive information or
data, or that any such incident will not be believed or reported to have occurred. Any such actual or perceived
compromises or breaches to systems, or unauthorized access to our subscribers’ data, Products or systems, or
acquisition or loss of, data, whether suffered by us, our partners or vendors or other third parties, whether as a
result of employee error or malfeasance or otherwise, could harm our business. They could, for example, cause
interruptions in operations, loss of data, loss of confidence in our services and products and damage to our
reputation, and could limit the adoption of our services and products. They could also subject us to costs,
regulatory investigations and orders, litigation, contract damages, indemnity demands and other liabilities and
materially and adversely affect our subscriber base, sales, revenues and profits. Any of these could, in turn, have
a material adverse impact on our business, financial condition, cash flows or results of operations.

Further, if a high profile security breach occurs with respect to another provider of smart home solutions,
our subscribers and potential subscribers may lose trust in the security of our services or in the smart home space
generally, which could adversely impact our ability to retain existing subscribers or attract new ones. Even in the
absence of any security breach, subscriber concerns about security, privacy or data protection may deter them
from using our service. Our insurance policies covering errors and omissions and certain security and privacy
damages and claim expenses may not be sufficient to compensate for all potential liability. Although we maintain
cyber liability insurance, we cannot be certain that our coverage will be adequate for liabilities actually incurred
or that insurance will continue to be available to us on economically reasonable terms, or at all.

Our Vivint Flex Pay plan is a new business model that may subject us to additional risks.

In 2017, Legacy Vivint Smart Home introduced Vivint Flex Pay, which allowed subscribers to finance the
purchase of their Products and related installation through our Vivint Flex Pay plan. Under Vivint Flex Pay we

26

offer to our qualified subscribers an opportunity to finance through a third party the purchase of Products and
related installation used in connection with our Smart Home Services. We offer certain of our subscribers who do
not qualify for third-party financing and all Canadian subscribers the opportunity to finance their purchase of
Products and related installation under a RIC, which is financed by us. Under Vivint Flex Pay, subscribers pay
separately for the Products and our Smart Home Services. As an alternative to the financing offered under these
programs, subscribers are able to purchase the Products by check, ACH, credit or debit card, and pay in full at the
time of installation.

There can be no assurance that the Vivint Flex Pay plan will be successful. If this plan is not favorably
received by subscribers or is otherwise not performing as intended by us, it could have an adverse effect on our
business, subscriber growth rate, financial condition and results of operations. In addition, reductions in
consumer lending and/or the availability of consumer credit under the Vivint Flex Pay plan could limit the
number of subscribers with the financial means to purchase the Products and thus limit the number of subscribers
who are able to subscribe to our Smart Home Services. There is no assurance that our current providers of
consumer financing, or any other companies that may in the future offer financing to our subscribers will
continue to provide subscribers with access to credit or that credit limits under such arrangements will be
sufficient. In addition, a severe disruption in the global financial markets could impact the providers of
installment loans under the Vivint Flex Pay plan and such instability could also affect the ability of subscribers to
access financing under the Vivint Flex Pay plan or otherwise. Such restrictions or limitations on the availability
of consumer credit or unfavorable reception of the Vivint Flex Pay plan by potential subscribers could have a
material adverse impact on our business, results of operations, financial condition and cash flows.

In addition, the Vivint Flex Pay plan subjects us to additional regulatory requirements and compliance

obligations. In particular, the Vivint Flex Pay plan may require that we be licensed as a lender in certain
jurisdictions in which we operate. We face the risk of increased consumer complaints, potential supervision,
examinations or enforcement actions by federal and state licensing and regulatory agencies and/or penalties for
violation of financial services, consumer protections and other applicable laws and regulations. For example, in
2019, Legacy Vivint Smart Home received a subpoena in connection with an investigation by the U.S.
Department of Justice (“DOJ”) concerning potential violations of the Financial Institutions Reform, Recovery
and Enforcement Act (“FIRREA”). Legacy Vivint Smart Home also has received a civil investigative demand
from the staff of the Federal Trade Commission (“FTC”) concerning potential violations of the Fair Credit
Reporting Act (“FCRA”) and the “Red Flags Rule” thereunder, and the Federal Trade Commission Act (“FTC
Act”). The Company has cooperated, and intends to continue to cooperate, with any government requests or
inquiries. The outcome of these proceedings cannot be predicted at this time. If any proceedings or investigations
were to be determined adversely against us or resulted in legal actions, claims, regulatory proceedings,
enforcement actions, or judgments, fines, or settlements involving a payment of material amounts, or if
injunctive relief were issued against us, our business, financial condition and results of operations could be
materially adversely affected.

We currently offer RICs in all of the jurisdictions in which we operate and therefore are subject to
regulation by state and local authorities for the use of RICs. We provide intensive training to our employees
regarding sales practices and the content of our RICs and strive to comply in all material respects with these
laws; however, we cannot be certain that our employees will abide by our policies and applicable laws, which
violations could have a material and adverse impact on our business. We also offer RICs to our Canadian
subscribers, and as a result are subject to additional regulatory requirements in Canada. In the future, we may
elect to offer installment loans and other financial services products similar to the Consumer Financing Program
directly to qualified subscribers. If we elect to offer such financial services directly, this may further expand our
regulatory and compliance obligations. In addition, as Vivint Flex Pay evolves, we may become subject to
additional regulatory requirements and compliance obligations.

27

We are subject to payment related risks.

We accept payments using a variety of methods, including check, credit card, debit card, direct debit from a
subscriber’s bank account and consumer invoicing. For existing and future payment options that we offer to our
subscribers, we may become subject to additional regulations, compliance requirements and fraud. For certain
payment methods, including credit and debit cards, we pay interchange and other fees, which may increase over
time and raise our operating costs and lower profitability. We rely on third parties to provide payment-processing
services, including the processing of credit cards, debit cards and electronic checks, and it could disrupt our
business if these companies become unwilling or unable to provide these services to us. We are also subject to
payment card association operating rules, including data security rules, certification requirements and rules
governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for
us to comply. If we fail to comply with these rules or requirements, or if our data security systems are breached
or compromised, we may be liable for card issuing banks’ costs, subject to fines and higher transaction fees, and
lose our ability to accept credit and debit card payments from our subscribers, process electronic funds transfers,
or facilitate other types of online payments, and our business and operating results could be adversely affected.
See “- Privacy and data protection concerns, and laws and regulations relating to privacy, data protection and
information security, could have a material adverse effect on our business” and “- If our security controls are
breached or unauthorized or inadvertent access to subscriber information or other data is otherwise obtained, our
services may be perceived as insecure, we may lose existing subscribers or fail to attract new subscribers, our
business may be harmed, and we may incur significant liabilities.”

We may fail to obtain or maintain necessary licenses or otherwise fail to comply with applicable laws and

regulations.

Our business focuses on contracts and transactions with residential subscribers and therefore is subject to a
variety of laws, regulations and licensing requirements that govern our interactions with residential consumers,
including those pertaining to privacy and data security, consumer financial and credit transactions, home
improvements, warranties and door-to-door solicitation. We are a licensed service provider in each market where
such licensure is required and we are responsible for every subscriber installation. Our business may become
subject to additional such requirements in the future. In certain jurisdictions, we are also required to obtain
licenses or permits to comply with standards governing marketing and sales efforts, installation of equipment or
servicing of subscribers, monitoring station employee selection and training and to meet certain standards in the
conduct of our business. These laws and regulations are dynamic and subject to potentially differing
interpretations, and various legislative and regulatory bodies may expand current laws or regulations, or enact
new laws and regulations, regarding these matters. We strive to comply with all applicable laws and regulations
relating to our interactions with residential subscribers. 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. Our non-compliance with any such law or regulations could also expose us to claims,
proceedings, litigation and investigations by private parties and regulatory authorities, as well as substantial fines
and negative publicity, each of which may materially and adversely affect our business. We have incurred, and
will continue to incur, significant expenses to comply with such laws and regulations, and increased regulation of
matters relating to our interactions with residential consumers could require us to modify our operations and
incur significant additional expenses, which could have an adverse effect on our business, financial condition and
results of operations. If we expand the scope of our products or services, or our operations in new markets, we
may be required to obtain additional licenses and otherwise maintain compliance with additional laws,
regulations or licensing requirements.

Changes in these laws or regulations or their interpretation, as well as new laws, regulations or licensing
requirements which may be enacted, could dramatically affect how we do business, acquire subscribers, and
manage and use information we collect from and about current and prospective subscribers and the costs
associated therewith. For example, certain U.S. municipalities have adopted, or are considering adopting, laws,
regulations or policies aimed at reducing the number of false alarms, including: (1) subjecting companies to fines
or penalties for transmitting false alarms, (2) imposing fines on subscribers for false alarms or (3) imposing
limitations on law enforcement response. These measures could adversely affect our future operations and

28

business by increasing our costs, reducing subscriber satisfaction or affecting the public perception of the
effectiveness of our products and services. In addition, federal, state and local governmental authorities have
considered, and may in the future consider, implementing consumer protection rules and regulations, which
could impose significant constraints on our sales channels.

Regulations have been issued by the Federal Trade Commission (the “FTC”), Federal Communications
Commission (the “FCC”), and Canadian Radio-Television and Telecommunications Commission (the “CRTC”)
that place restrictions on direct-to-home marketing, telemarketing, email marketing and general sales practices.
These restrictions include, but are not limited to, limitations on methods of communication, requirements to
maintain a “do not call” list, cancellation rights and required training for personnel to comply with these
restrictions.

The FTC regulates both general sales practices 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.”
The CRTC has enforcement authority under the Canadian Anti-Spam Law, or CASL, which prohibits the sending
of commercial emails without prior consent of the recipient or an existing business relationship and sets forth
rules governing the sending of commercial emails. CASL allows for a private right of action for the recovery of
damages or provides for enforcement by CRTC permitting the recovery of significant civil penalties, costs and
attorneys’ fees in the event that regulations are violated. Similarly, most of the statutes and regulations in the
United States allow a private right of action for the recovery of damages or provide for enforcement by the FTC,
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. Any new or changed laws, regulations or licensing
requirements, or the interpretation of such laws, regulations or licensing requirements could have a material
adverse effect on our business, financial condition, cash flows or results of operations. We strive to comply with
all such applicable regulations, but cannot assure you that we or third parties that we may 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 such third parties expressly require them to
comply with all such regulations and to indemnify us for their failure to do so, we cannot assure you that the
FTC, FCC, CRTC, private litigants or others will not attempt to hold us responsible for any unlawful acts
conducted by such third parties or that we could successfully enforce or collect upon such indemnities.
Additionally, certain FCC rulings and/or 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. Both the FCC and the FTC 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 restricts 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.

We may fail to comply with import and export, bribery and money laundering laws, regulations and

controls.

We conduct our business in the U.S. and Canada and source our Products in Thailand, Vietnam, Mexico,

Taiwan, China, Malaysia and the United States. We are subject to regulation by various federal, state, local and
foreign governmental agencies, including, but not limited to, agencies and regulatory bodies or authorities
responsible for monitoring and enforcing product safety and consumer protection laws, data privacy and security
laws and regulations, employment and labor laws, workplace safety laws and regulations, environmental laws
and regulations, antitrust laws, federal securities laws and tax laws and regulations.

We are subject to the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Foreign Corrupt

Practices Act of 1977, as amended, the U.S. Travel Act, and possibly other anti-bribery laws, including those that

29

comply with the Organization for Economic Cooperation and Development, or OECD, Convention on
Combating Bribery of Foreign Public Officials in International Business Transactions and other international
conventions. Anti-corruption laws are interpreted broadly and prohibit our company from authorizing, offering,
or providing directly or indirectly improper payments or benefits to recipients in the public or private-sector.
Certain laws could also prohibit us from soliciting or accepting bribes or kickbacks. We can be held liable for the
corrupt activities of our employees, representatives, contractors, partners and agents, even if we did not explicitly
authorize such activity. Although we have implemented policies and procedures designed to ensure compliance
with anti-corruption laws, there can be no assurance that all of our employees, representatives, contractors,
partners, and agents will comply with these laws and policies.

Our operations require us to import from Thailand, Vietnam, Mexico, Taiwan, China, Malaysia and export

to Canada, which geographically stretches our compliance obligations. We are also subject to anti-money
laundering laws such as the USA PATRIOT Act and may be subject to similar laws in other jurisdictions. Our
Products are subject to export control and import laws and regulations, including the U.S. Export Administration
Regulations, U.S. Customs regulations, and various economic and trade sanctions regulations administered by the
U.S. Treasury Department’s Office of Foreign Assets Controls. We may also be subject to import/export laws
and regulations in other jurisdictions in which we conduct business or source our Products. If we fail to comply
with these laws and regulations, we and certain of our employees could be subject to substantial civil or criminal
penalties, including the possible loss of export or import privileges; fines, which may be imposed on us and
responsible employees or managers; and, in extreme cases, the incarceration of responsible employees or
managers.

Changes in laws that apply to us could result in increased regulatory requirements and compliance costs
which could harm our business, financial condition, cash flows and results of operations. In certain jurisdictions,
regulatory requirements may be more stringent than in the United States. Noncompliance with applicable
regulations or requirements could subject us to whistleblower complaints, investigations, sanctions, settlements,
mandatory product recalls, enforcement actions, disgorgement of profits, fines, damages, civil and criminal
penalties or injunctions, suspension or debarment from contracting with certain governments or other customers,
the loss of export privileges, multi-jurisdictional liability, reputational harm, and other collateral consequences. If
any governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal
litigation, our business, financial condition, cash flows and results of operations could be materially harmed. In
addition, responding to any action will likely result in a materially significant diversion of management’s
attention and resources and an increase in defense costs and other professional fees.

The policies of the U.S. Government may adversely impact our business, financial condition and results of

operations.

Certain changes in U.S. social, political, regulatory and economic conditions or in laws and policies
governing foreign trade, manufacturing, development and investment could adversely affect our business.
General trade tensions between the U.S. and China escalated in 2018, with three rounds of U.S. tariffs on Chinese
goods taking effect in July, August, and September 2018, each followed by a round of retaliatory Chinese tariffs
on U.S. goods. If duties on existing tariffs are raised or if additional tariffs are announced, many of our inbound
products to the United States would be subject to tariffs assessed in the cost of goods as imported. If these duties
are imposed on such products, we may be required to raise our prices, which may result in the loss of subscribers
and harm our operating performance. Alternatively, we may seek to shift production outside of China, resulting
in additional costs and disruption to our operations. Additionally, the current administration continues to signal
that it may alter trade agreements and terms between China and the United States, including limiting trade with
China, and may impose additional tariffs on imports from China.

On December 22, 2017, the U.S. President signed into law the “Tax Cuts and Jobs Act” (the “Act”). Among

other changes, the Act imposes limitations on the deductibility of interest. Moreover, the effects of the Act are
not yet entirely clear and will depend on, among other things, additional regulatory and administrative guidance,

30

as well as any statutory technical corrections that are subsequently enacted, which could have an adverse effect
on the U.S. federal income taxation of us and our subsidiaries’ operations.

While there is currently a substantial lack of clarity and uncertainty around the likelihood, timing and details

of any such policies and reforms, such policies and reforms may materially and adversely affect our business,
financial condition and results of operations and the value of our securities.

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. In most cases this is
accomplished through contracts with private guard companies, which increases the overall cost of monitoring. 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.

Increased adoption of laws purporting to characterize certain charges in our subscriber contracts as

unlawful, may adversely affect our operations.

If a subscriber cancels prior to the end of the initial term of the contract, other than in accordance with the
contract, we may, under the terms of the subscriber contract, charge the subscriber the amount that would have
been paid over the remaining term of the contract. Several states have adopted, or are considering adopting, laws
restricting the charges that can be imposed upon contract cancellation prior to the end of the initial contract term.
Such initiatives could negatively impact our business and have a material adverse effect on our business,
financial condition, cash flows or results of operations. Adverse rulings regarding these matters could increase
legal exposure to subscribers against whom such charges have been imposed and increase the risk that certain
subscribers may seek to recover such charges from us through litigation or otherwise. In addition, the costs of
defending such litigation and enforcement actions could have an adverse effect on our business, financial
condition, cash flows or results of operations.

Our new Products and Services may not be successful.

Legacy Vivint Smart Home launched its first smart home Products and Services beginning in 2010. Since

that time Legacy Vivint Smart Home has launched a number of other offerings. We anticipate launching
additional Products and Services in the future. These Products and Services and the new Products and Services
we may launch in the future may not be well-received by our subscribers, may not help us to generate new
subscribers, may adversely affect the attrition rate of existing subscribers, may increase our subscriber
acquisition costs and may increase the costs to service our subscribers. For example, during the year ended
December 31, 2015 Legacy Vivint Smart Home recorded restructuring and asset impairment charges for its
wireless internet business totaling $59.2 million, which resulted in $52.5 million of asset impairment charges
related to write downs of its network assets, subscriber acquisition costs, certain intellectual property and
goodwill and $5.1 million in net restructuring charges related to employee severance and termination benefits as
well as write offs of certain vendor contracts. Any profits we may generate from these or other new Products or
Services may be lower than profits generated from our other Products and Services and may not be sufficient for
us to recoup our development or subscriber acquisition costs incurred. New Products and Services may also have
lower gross margins, particularly to the extent that they do not fully utilize our existing infrastructure. In
addition, new Products and Services may require increased operational expenses or subscriber acquisition costs
and present new and difficult technological and intellectual property challenges that may subject us to claims or
complaints if subscribers experience service disruptions or failures or other quality issues. To the extent our new
Products and Services are not successful, it could have a material adverse effect on our business, financial
condition, cash flows or results of operations.

31

Our new retail strategy may subject us to additional risks.

Historically, Legacy Vivint Smart Home has primarily originated subscribers through its direct-to-home and

inside sales channels. However, in 2017 Legacy Vivint Smart Home developed a new strategy to enter into the
retail channel in order to expand its reach to the broad consumer market. For example, on May 4, 2017, Legacy
Vivint Smart Home announced an agreement with Best Buy, pursuant to which the parties had agreed to jointly
market and sell smart home products and services. In July 2018, as part of certain cost reduction initiatives, the
goal of which was to reduce certain of its general and administrative, subscriber service, and sales support fixed
costs, Legacy Vivint Smart Home agreed in principle to end the co-branded Best Buy Smart Home by Vivint
arrangement and in December 2018 it formally terminated its relationship with Best Buy. We continue to explore
other retail strategy opportunities and may devote significant management attention, substantial capital and other
resources in connection with such efforts. However, despite these efforts and expenses, we may not be able to
establish retail distribution channels for our products and services.

The technology we employ may become obsolete, which could require significant capital expenditures.

Our industry is subject to continual technological innovation. Our Products and Services interact with the

hardware and software technology of systems and devices located at our subscribers’ property. We may be
required to implement new technologies or adapt existing technologies in response to changing market
conditions, subscriber preferences, industry standards or inability to secure necessary intellectual property
licenses, which could require significant capital expenditures. It is also possible that one or more of our
competitors could develop a significant technological advantage that allows them to provide additional or
superior products or services, or to lower their price for similar products or services, that could put us at a
competitive disadvantage. Our inability to adapt to changing technologies, market conditions or subscriber
preferences in a timely manner could have a material adverse effect on our business, financial condition, cash
flows or results of operations.

Our future operating and financial results are uncertain.

Prior growth rates in revenues and other operating and financial results of Legacy Vivint Smart Home

should not be considered indicative of our future performance. Our future performance and operating results
depend on, among other things: (1) our ability to renew and/or upgrade contracts with existing subscribers and
maintain subscriber satisfaction with existing subscribers, (2) our ability to generate new subscribers, including
our ability to scale the number of new subscribers generated through inside sales and other channels, (3) our
ability to increase the density of our subscriber base for existing service locations or continue to expand into new
geographic markets, (4) our ability to successfully develop and market new and innovative Products and
Services, (5) the level of product, service and price competition, (6) the degree of saturation in, and our ability to
further penetrate, existing markets, (7) our ability to manage growth, revenues, origination or acquisition costs of
new subscribers and attrition rates, the cost of servicing our existing subscribers and general and administrative
costs and (8) our ability to attract, train and retain qualified employees. If our future operating and financial
results suffer as a result of any of the other reasons mentioned above, or any other reasons, there could be a
material adverse effect on our business, financial condition, cash flows or results of operations.

There can be no assurance that we will be able to achieve or maintain profitability or positive cash flow

from operations.

Our ability to generate future positive operating results and cash flows depends, in part, on our ability to
generate new subscribers in a cost effective manner, while minimizing attrition of existing subscribers. New
subscriber acquisitions play a particularly important role in our financial model as they not only increase our
future operating cash flows, but also help to replace the cash flows lost as a result of subscriber attrition. If we
are unable to cost-effectively generate new subscribers or retain our existing subscribers, our business, operating
results and financial condition would be materially adversely affected. In addition, to drive its growth, Legacy

32

Vivint Smart Home has made significant upfront investments in subscriber acquisition costs, as well as
technology and infrastructure to support its growing subscriber base. As a result of these investments, Legacy
Vivint Smart Home has incurred losses and used significant amounts of cash to fund operations. As our business
scales we expect recurring revenue to increase due to growth in our total subscribers. If such increase occurs, a
greater percentage of our net acquisition costs for new subscribers may be funded through revenues generated by
our existing subscriber base. We also expect the number of new subscribers to decrease as a percentage of our
total subscribers as our business scales, which we believe, along with the expected growth in recurring revenue,
will improve operating results and operating cash flows over time. Our ability to improve our operating results
and cash flows, however, is subject to a number of risks and uncertainties and there can be no assurance that we
will achieve such improvements. To the extent the number of new subscribers does not decrease as a percentage
of our total subscribers or we do not reduce the percentage of our revenue used to support new investments, we
will continue to incur losses and require a significant amount of cash to fund our operations, which in turn could
have a material adverse effect on our business, cash flows, operating results and financial condition.

Our business is subject to economic and demographic factors that may negatively impact our results of

operations.

Our business is generally dependent on national, regional and local economic conditions.

Historically, both the U.S. and worldwide economies have experienced cyclical economic downturns, some

of which have been prolonged and severe. These economic downturns have generally coincided with, and
contributed to, increased energy costs, concerns about inflation, slower economic activity, decreased consumer
confidence and spending, reduced corporate profits and capital spending, adverse business conditions and
liquidity concerns. These conditions and concerns result in a decline in business and consumer confidence and
increased unemployment.

Where disposable income available for discretionary spending is reduced (due to, for example, higher

housing, energy, interest or other costs or where the perceived wealth of subscribers has decreased) and
disruptions in the financial markets adversely impact the availability and cost of credit, our business may
experience increased attrition rates, a reduced ability to originate new subscribers and reduced consumer demand.

For instance, recoveries in the housing market increase the occurrence of relocations, which may lead to

subscribers disconnecting service and not contracting with us in their new homes. We cannot predict the timing
or duration of any economic slowdown or the timing or strength of a subsequent economic recovery, worldwide
or in the specific markets where our subscribers are located.

Furthermore, any deterioration in new construction and sales of existing single-family homes could reduce
opportunities to originate new subscribers and increase attrition among our existing subscribers. Such downturns
in the economy in general, and the housing market in particular may negatively affect our business.

In addition, unfavorable shifts in population and other demographic factors may cause us to lose subscribers

as people migrate to markets where we have little or no presence, or if the general population shifts into a less
desirable age, geographic or other demographic group from our business perspective.

Our inside sales and retail channels depend on third parties and other sources that we do not control to
generate leads that we then convert into subscribers. If our third-party partners and lead generators are not
successful in generating leads for our inside sales and retail sales channels, if the quality of those leads
deteriorates, or if we are unable to generate leads through other sources that are cost effective and can be
successfully converted into subscribers, it could have a material adverse effect on our financial condition, cash
flows or results of operations.

Also, our subscribers consist largely of homeowners, who are subject to economic, credit, financial and

other risks, as applicable. These risks could materially and adversely affect a subscriber’s ability to make

33

required payments to us on a timely basis. Any such decrease or delay in subscriber payments may have a
material adverse effect on us. As a result of financial distress, subscribers may apply for relief under bankruptcy
and other laws relating to creditors’ rights. In addition, subscribers may be subject to involuntary application of
such bankruptcy and other laws relating to creditors’ rights. The bankruptcy of a subscriber could adversely
affect our ability to collect payments, to protect our rights and otherwise realize the value of our contract with the
subscriber. This may occur as a result of, among other things, application of the automatic stay, delays and
uncertainty in the bankruptcy process and potential rejection of such subscriber contracts. Our subscribers’
inability to pay, whether as a result of economic or credit issues, bankruptcy or otherwise, could have a material
adverse effect on our financial condition, cash flows or results of operations.

We depend on a limited number of suppliers to provide our Products and Services. Our product suppliers, in

turn, rely on a limited number of suppliers to provide significant components and materials used in our
products. A change in our existing preferred supply arrangements or a material interruption in supply of
products or third party services could increase our costs or prevent or limit our ability to accept and fill orders
for our products and services.

We obtain important components of our systems from several suppliers. Should such suppliers cease to

manufacture the products we purchase from them or become unable to timely deliver these products in
accordance with our requirements, or should such other suppliers choose not to do business with us, we may be
required to locate alternative suppliers. We also rely on a number of sole or limited source suppliers for critical
components of our solution. Replacing sole source suppliers or our limited source suppliers could require the
expenditure of significant resources and time to redesign and resource these products. In addition, any financial
or other difficulties our suppliers face may have negative effects on our business. We may be unable to locate
alternate suppliers on a timely basis or to negotiate the purchase of control panels or other equipment on
favorable terms, if at all. In addition, our equipment suppliers, in turn, depend upon a limited number of outside
unaffiliated suppliers for key components and materials used in our control panels and other equipment. If any of
these suppliers cease to or are unable to provide components and materials in sufficient quantity and of the
requisite quality, especially during our summer selling season when a large percentage of our new subscriber
originations occur, and if there are not adequate alternative sources of supply, we could experience significant
delays in the supply of equipment. Any such delay in the supply of equipment of the requisite quality could
adversely affect our ability to originate subscribers and cause our subscribers not to continue, renew or upgrade
their contracts or to choose not to purchase such Products or Services from us. This would result in delays in or
loss of future revenues and could have a material adverse effect on our business, financial condition, cash flows
or results of operations. Also, if previously installed components and materials were found to be defective, we
might not be able to recover the costs associated with the recall, repair or replacement of such products, across
our installed subscriber base, and the diversion of personnel and other resources to address such issues could
have a material adverse effect on our financial condition, cash flows or results of operations.

Currency fluctuations could materially and adversely affect us and we have not hedged this risk.

Historically, a small portion of Legacy Vivint Smart Home’s revenue has been denominated in Canadian

Dollars. For the year ended December 31, 2019, before intercompany eliminations, approximately $72.2 million
of its revenues were denominated in Canadian Dollars. As of December 31, 2019, $290.5 million of Legacy
Vivint Smart Home’s total assets and $259.9 million of its total liabilities were denominated in Canadian Dollars.
In the future, we expect to continue generating revenue denominated in Canadian Dollars and other foreign
currencies. Accordingly, we may be materially and adversely affected by currency fluctuations in the U.S. Dollar
versus these currencies. Weaker foreign currencies relative to the U.S. Dollar may result in lower levels of
reported revenues with respect to foreign currency-denominated subscriber contracts, net income, assets,
liabilities and accumulated other comprehensive income on our U.S. Dollar-denominated financial statements.
We have not historically hedged against this exposure. Foreign exchange rates are influenced by many factors
outside of our control, including but not limited to: changing supply and demand for a particular currency,
monetary policies of governments (including exchange-control programs, restrictions on local exchanges or

34

markets and limitations on foreign investment in a country or on an investment by residents of a country in other
countries), changes in balances of payments and trade, trade restrictions and currency devaluations and
revaluations. Also, governments may from time to time intervene in the currency markets, directly and by
regulation, to influence prices directly. As such, these events and actions are unpredictable. The resulting
volatility in the exchange rates for the other currencies could have a material adverse effect on our financial
condition and results of operations.

We rely on certain third-party providers of licensed software and services integral to the operations of our

business.

Certain aspects of the operation of our business depend on third-party software and service providers. We

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, our subscribers with Go!Control panels
utilize technology hosted by Alarm.com to access their systems remotely through a smart phone application or
through a web interface. With regard to licensed software technology, we are, to a certain extent, dependent upon
the ability of third parties to maintain, enhance or develop their software and services on a timely and cost-
effective basis, to meet industry technological standards and innovations to deliver software and services that are
free of defects or security vulnerabilities, and to ensure their software and services are free from disruptions or
interruptions. Further, these third-party services and software licenses may not always be available to us on
commercially reasonable terms or at all.

If our agreements with third-party software or services vendors are not renewed or the third-party software
or services become obsolete, fail to function properly, are incompatible with future versions of our products or
services, are defective or otherwise fail to address our needs, there is no assurance that we would be able to
replace the functionality provided by the third-party software or services with software or services from
alternative providers. Furthermore, even if we obtain licenses to alternative software or services that provide the
functionality we need, we may be required to replace hardware installed at our monitoring stations and at our
subscribers’ homes, including security system control panels and peripherals, to affect our integration of or
migration to alternative software products. Any of these factors could have a material adverse effect on our
financial condition, cash flows or results of operations.

We are highly dependent on the proper and efficient functioning of our computer, data backup, information

technology, telecom and processing systems, platform and our redundant monitoring stations.

Our ability to keep our business operating is highly dependent on the proper and efficient operation of our
computer systems, information technology systems, telecom systems, data- processing systems and subscriber
software platform. Although we have redundant central monitoring facilities, backup computer and power
systems and disaster recovery tests, if there is a catastrophic event, natural disaster, security breach, negligent or
intentional act by an employee or other extraordinary event, we may be unable to provide our subscribers with
uninterrupted services.

Furthermore, because computer and data backup and processing systems are susceptible to malfunctions and

interruptions, we cannot guarantee that we will not experience service failures in the future. A significant or
large-scale malfunction or interruption of any computer or data backup and processing system could adversely
affect our ability to keep our operations running efficiently and respond to alarm system signals. We do not have
a backup system for our subscriber software platform. If a malfunction results in a wider or sustained disruption,
it could have a material adverse effect on our reputation, business, financial condition, cash flows or results of
operations.

35

We are subject to unionization and labor and employment laws and regulations, which could increase our

costs and restrict our operations in the future.

Currently, a very small minority of our employees are represented by a union. As we continue to grow, and
enter different regions, unions may make further attempts to organize all or part of our employee base. If more or
all of our workforce were to become unionized, and the terms of the collective bargaining agreement were
significantly different from our current compensation arrangements, it could increase our costs and adversely
impact our profitability. Additionally, responding to such organization attempts distracts our management and
results in increased legal and other professional fees; and, labor union contracts could put us at increased risk of
labor strikes and disruption of our operations.

Our business is subject to a variety of employment laws and regulations and may become subject to
additional such requirements in the future. Although we believe we are in material compliance with applicable
employment laws and regulations, in the event of a change in requirements, we may be required to modify our
operations or to utilize resources to maintain compliance with such laws and regulations. Moreover, we may be
subject to various employment-related claims, such as individual or class actions or government enforcement
actions relating to alleged employment discrimination, employee classification and related withholding, wage-
hour disputes, labor standards or healthcare and benefit issues. Our failure to comply with applicable
employment laws and regulations and related legal actions against us, may affect our ability to compete or have a
material adverse effect on our business, financial condition, cash flows or results of operations.

The loss of our senior management could disrupt our business.

The success of our business depends upon the skills, experience and efforts of our key executive personnel

and employees. Legacy Vivint Smart Home’s founder and our Chief Executive Officer, Todd Pedersen, and other
members of our senior management have been and will continue to be integral to the continuing evolution of our
business. There is significant competition for executive personnel with experience in the smart home and security
industry and our sales channels. 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. For example, in 2019,
Legacy Vivint Smart Home’s then Chief Financial Officer left the Company to pursue another opportunity. In
addition, we may not be able to fill new positions or vacancies created by expansion or turnover. We do not and
do not currently 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
could have a material adverse effect on our business, financial condition, cash flows or results of operations.

If we are unable to acquire necessary intellectual property or adequately protect our intellectual property,

we could be competitively disadvantaged.

Our intellectual property, including our patents, trademarks, copyrights, trade secrets and other proprietary

rights, constitutes a significant part of our value. Our success depends, in part, on our ability to protect our
proprietary technology, brands and other intellectual property against dilution, infringement, misappropriation
and competitive pressure by defending our intellectual property rights. To protect our intellectual property rights,
we rely on a combination of patent, trademark, copyright and trade secret laws of the United States, Canada and
other countries and a combination of confidentiality procedures, contractual provisions and other methods, all of
which offer only limited protection. In addition, we make efforts to acquire rights to intellectual property
necessary for our operations. However, there can be no assurance that these measures will be successful in any
given case, particularly in those countries where the laws do not protect our proprietary rights as fully as in the
United States.

We own a portfolio of issued U.S. patents and pending U.S. and foreign patent applications that relate to a

variety of smart home, security and wireless Internet technologies utilized in our business. We may file
additional patent applications in the future in the United States and internationally. The process of obtaining

36

patent protection is expensive and time-consuming, and we may not be able to prosecute all necessary or
desirable patent applications at a reasonable cost or in a timely manner all the way through to the successful
issuance of a patent. We may choose not to seek patent protection for certain innovations and may choose not to
pursue patent protection in certain jurisdictions. In addition, issuance of a patent does not guarantee that we have
an absolute right to practice the patented invention.

If we fail to acquire the necessary intellectual property rights or adequately protect or assert our intellectual

property rights, competitors may dilute our brands or manufacture and market similar products and services or
convert our subscribers, which could adversely affect our market share and results of operations. We may not
receive patents or trademarks for all our pending patent and trademark applications, and existing or future patents
or licenses may not provide competitive advantages for our products and services. Furthermore, it is possible that
our patent applications may not issue as granted patents, that the scope of our issued patents will be insufficient
or not have the coverage originally sought, or that our issued patents will not provide us with any competitive
advantages. Our competitors may challenge, invalidate or avoid the application of our existing or future
intellectual property rights that we obtain or license. In addition, patent rights may not prevent our competitors
from developing, using or selling products or services that are similar to or address the same market as our
products and services. The loss of protection for our intellectual property rights could reduce the market value of
our brands and our products and services, reduce new subscriber originations or upgrade sales to existing
subscribers, lower our profits, and could have a material adverse effect on our business, financial condition, cash
flows or results of operations.

Our policy is to require our employees that were hired to develop material intellectual property included in

our products to execute written agreements in which they assign to us their rights in potential inventions and
other intellectual property created within the scope of their employment (or, with respect to consultants and
service providers, their engagement to develop such intellectual property), but we cannot assure you that we have
adequately protected our rights in every such agreement or that we have executed an agreement with every such
party. Finally, in order to benefit from the protection of patents and other intellectual property rights, we must
monitor and detect infringement, misappropriation or other violations of our intellectual property rights and
pursue infringement, misappropriation or other claims in certain circumstances in relevant jurisdictions, all of
which are costly and time-consuming. As a result, we may not be able to obtain adequate protection or to
effectively enforce our issued patents or other intellectual property rights.

In addition to patents and registered trademarks, we rely on trade secret rights, copyrights and other rights to

protect our unpatented proprietary intellectual property and technology. Despite our efforts to protect our
proprietary technologies and our intellectual property rights, unauthorized parties, including our employees,
consultants, service providers or subscribers, may attempt to copy aspects of our products or obtain and use our
trade secrets or other confidential information. We generally enter into confidentiality agreements with our
employees and third parties that have access to our material confidential information, and generally limits access
to and distribution of our proprietary information and proprietary technology through certain procedural
safeguards. These agreements may not effectively prevent unauthorized use or disclosure of our intellectual
property or technology, could be breached or otherwise may not provide meaningful protection for our trade
secrets and know-how related to the design, manufacture or operation of our products and may not provide an
adequate remedy in the event of unauthorized use or disclosure. We cannot assure you that the steps taken by us
will prevent misappropriation of our intellectual property or technology or infringement of our intellectual
property rights. Competitors may independently develop technologies or products that are substantially
equivalent or superior to our solutions or that inappropriately incorporate our proprietary technology into their
products or they may hire our former employees who may misappropriate our proprietary technology or misuse
our confidential information. In addition, if we expand the geography of our service offerings, the laws of some
foreign countries where we may do business in the future do not protect intellectual property rights and
technology to the same extent as the laws of the United States, and these countries may not enforce these laws as
diligently as government agencies and private parties in the United States.

37

From time to time, legal action by us may be necessary to enforce our patents and other intellectual property
rights, to protect our trade secrets, to determine the validity and scope of the intellectual property rights of others
or to defend against claims of infringement, misappropriation or invalidity. Such litigation could result in
substantial costs and diversion of resources and could negatively affect our business, operating results and
financial condition. If we are unable to protect our intellectual property and technology, we may find ourselves at
a competitive disadvantage to others who need not incur the additional expense, time and effort required to create
the innovative products that have enabled us to be successful to date.

From time to time, we are subject to claims for infringing, misappropriating or otherwise violating the
intellectual property rights of others, and will be subject to such claims in the future, which could have an
adverse effect on our business and operations.

We cannot be certain that our products and services or those of third parties that we incorporate into our
offerings do not and will not infringe the intellectual property rights of others. Many of our competitors and
others may now and in the future have significantly larger and more mature patent portfolios than we have. From
time to time, we are subject to claims based on allegations of infringement, misappropriation or other violations
of the intellectual property rights of others, including litigation brought by special purpose or so-called
“non-practicing” entities that focus solely on extracting royalties and settlements by enforcing intellectual
property rights and against whom our patents may therefore provide little or no deterrence or protection.
Regardless of their merits, intellectual property claims divert the attention of our personnel and are often time-
consuming and expensive. In addition, to the extent claims against us are successful, we may have to pay
substantial monetary damages (including, for example, treble damages if we are found to have willfully infringed
patents and increased statutory damages if we are found to have willfully infringed copyrights) or discontinue or
modify certain products or services that are found to infringe another party’s rights or enter into licensing
agreements with costly royalty payments. Defending against claims of infringement, misappropriation or other
violations or being deemed to be infringing, misappropriating or otherwise violating the intellectual property
rights of others could impair our ability to innovate, develop, distribute and sell our current and planned products
and services. We have in the past and will continue in the future to seek one or more licenses to continue offering
certain products or services, which could have a material adverse effect on our business, financial condition, cash
flows or results of operations. For example, we are one of several respondents in a patent matter pending before
the U.S. International Trade Commission seeking an injunction against the continued importation of certain of
our hardware. Legacy Vivint Smart Home has also been named as a defendant in related U.S. District Court cases
alleging patent infringement in which the plaintiff seeks unspecified money damages. We believe that the
allegations in each of these matters are without merit and intend to vigorously defend against the claims;
however, there can be no assurance regarding the ultimate outcome of these matters.

In some cases, we indemnify our channel partners against claims that our products infringe, misappropriate

or otherwise violate the intellectual property rights of third parties. Such claims could arise out of our
indemnification obligation with our channel partners and end-subscribers, whom we typically indemnify against
such claims. Furthermore, because of the substantial amount of discovery required in connection with intellectual
property litigation, there is a risk that some of our confidential information could be compromised by the
discovery process. Although claims of this kind have not materially affected our business to date, there can be no
assurance material claims will not arise in the future.

Although third parties may offer a license to their technology or other intellectual property, the terms of any
offered license may not be acceptable, and the failure to obtain a license or the costs associated with any license
could cause our business, financial condition and results of operations to be materially and adversely affected. In
addition, some licenses may be non-exclusive, and therefore our competitors may have access to the same
technology licensed to us. If a third party does not offer us a license to its technology or other intellectual
property on reasonable terms, or at all, we could be enjoined from continued use of such intellectual property. As
a result, we may be required to develop alternative, non-infringing technology, which could require significant
time (during which we could be unable to continue to offer our affected products, subscriptions or services),

38

effort, and expense and may ultimately not be successful. Furthermore, a successful claimant could secure a
judgment or we may agree to a settlement that prevents us from distributing certain products, providing certain
subscriptions or performing certain services or that requires us to pay substantial damages, royalties or other fees.
Any of these events could harm our business, financial condition and results of operations.

Our solutions contain third-party open-source software components, and failure to comply with the terms of

the underlying open-source software licenses could restrict our ability to sell our products and subscriptions.

Certain of our solutions contain software modules licensed to us by third-party authors under “open-source”

licenses. The use and distribution of open-source software may entail greater risks than the use of third-party
commercial software, as open-source licensors generally do not provide warranties or other contractual
protections regarding infringement claims or the quality of the code.

Some open-source licenses contain requirements that we make available the source code for modifications

or derivative works we create based upon the type of open-source software we use. If we combine our proprietary
software with open-source software in a certain manner, we could, under certain open-source licenses, be
required to release the source code of our proprietary software to the public. This would allow our competitors to
create similar products with lower development effort and time and ultimately could result in a loss of sales for
us.

Although we monitor our use of open-source software and try to ensure that none is used in a manner that
would require us to disclose our proprietary source code or that would otherwise breach the terms of an open-
source agreement, the terms of many open-source licenses have not been interpreted by U.S. courts, and there is a
risk that these licenses could be construed in ways that could impose unanticipated conditions or restrictions on
our ability to commercialize solutions incorporating such software. Moreover, we cannot assure you that our
processes for controlling our use of open-source software in our solutions will be effective. From time to time,
we may face claims from third parties asserting ownership of, or demanding release of, the open-source software
or derivative works that we developed using such software (which could include our proprietary source code), or
otherwise seeking to enforce the terms of the applicable open-source license. These claims could result in
litigation. If we are held to have breached the terms of an open-source software license, we could be required to
seek licenses from third parties to continue offering our products on terms that are not economically feasible, to
re-engineer our products, to discontinue the sale of our products if re- engineering could not be accomplished on
a timely or cost-effective basis, or to make generally available, in source code form, our proprietary code, any of
which could adversely affect our business, results of operations and financial condition.

If we fail to maintain effective internal control over financial reporting at a reasonable assurance level, we
may not be able to accurately report our financial results, which could have a material adverse effect on our
operations, investor confidence in our business and the trading prices of our securities.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial
reporting such that there is a reasonable possibility that a material misstatement of a company’s annual or interim
financial statements will not be prevented or detected on a timely basis. If material weaknesses in our internal
controls are discovered, they may adversely affect our ability to record, process, summarize and accurately report
timely financial information and, as a result, our financial statements may contain material misstatements or
omissions.

In addition, it is possible that control deficiencies could be identified by our management or by our

independent registered public accounting firm in the future or may occur without being identified. Such a failure
could result in regulatory scrutiny, and cause investors to lose confidence in our reported financial condition, lead
to a default under our indebtedness and otherwise have a material adverse effect on our business, financial
condition, cash flow or results of operations.

39

Product or service defects or shortfalls in subscriber service could have an adverse effect on us.

Our inability to provide Products, Services or subscriber service in a timely manner or defects with our
Products or Services, including products and services of third parties that we incorporate into our offerings, could
adversely affect our reputation and subject us to claims or litigation. In addition, our inability to meet
subscribers’ expectations with respect to our Products, Services or subscriber service could increase attrition
rates or affect our ability to generate new subscribers and thereby have a material adverse effect on our business,
financial condition, cash flow or results of operations.

We are exposed to greater risk of liability for employee acts or omissions or system failure, than may be

inherent in other businesses.

The nature of the Products and Services we provide potentially exposes us greater risks of liability for
employee acts or omissions or system failures than may be inherent in other businesses. If subscribers believe
that they incurred losses as a result of our action or inaction, the subscribers (or their insurers) have and could in
the future bring claims against us. Although our service contracts contain provisions limiting our liability for
such claims, no assurance can be given that these limitations will be enforced, and the costs of such litigation or
the related settlements or judgments could have a material adverse effect on our financial condition. In addition,
there can be no assurance that we are adequately insured for these risks. Certain of our insurance policies and the
laws of some states may limit or prohibit insurance coverage for punitive or certain other types of damages or
liability arising from gross negligence. If significant uninsured damages are assessed against us, the resulting
liability could have a material adverse effect on our business, financial condition, cash flows or results of
operations.

Future transactions could pose risks.

We frequently evaluate strategic opportunities both within and outside our existing lines of business. We

expect from time to time to pursue additional business opportunities and may decide to eliminate or acquire
certain businesses, products or services or expand into new channels or industries. Such acquisitions or
dispositions could be material. For example, in August 2014, Legacy Vivint Smart Home acquired Space
Monkey, a distributed cloud storage technology solution company; in 2019 Legacy Vivint Smart Home
completed a spin-off of its wireless internet business and in 2020 we consummated the Merger. There are various
risks and uncertainties associated with potential acquisitions and divestitures, including: (1) availability of
financing; (2) difficulties related to integrating previously separate businesses into a single unit, including
product and service offerings, distribution and operational capabilities and business cultures; (3) general business
disruption; (4) managing the integration process; (5) diversion of management’s attention from day-to-day
operations; (6) assumption of costs and liabilities of an acquired business, including unforeseen or contingent
liabilities or liabilities in excess of the amounts estimated; (7) failure to realize anticipated benefits and synergies,
such as cost savings and revenue enhancements; (8) potentially substantial costs and expenses associated with
acquisitions and dispositions; (9) potential increases in compliance costs; (10) failure to retain and motivate key
employees and (11) difficulties in applying our internal control over financial reporting and disclosure controls
and procedures to an acquired business. Any or all of these risks and uncertainties, individually or collectively,
could have material adverse effect on our business, financial condition, cash flow or results of operations. We
can offer no assurance that any such strategic opportunities will prove to be successful. Among other negative
effects, our pursuit of such opportunities could cause our cost of investment in new subscribers to grow at a faster
rate than our recurring revenue and fees collected at the time of installation. Additionally, any new product or
service offerings could require developmental investments or have higher cost structures than our current
arrangements, which could reduce operating margins and require more working capital. Moreover, expansion
into any new industry or channel could result in higher compliance costs as we may become subject to laws and
regulations to which we are not currently subject.

40

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 December 31, 2019, Legacy Vivint Smart Home had approximately $1.0 billion of goodwill and
identifiable intangible assets. Goodwill and other identifiable intangible assets are recorded at fair value on the
date of acquisition. In addition, as of December 31, 2019, Legacy Vivint Smart Home had $1.2 billion of
capitalized contract costs, net. 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 intellectual property, reduced sales of certain products or services
incorporating 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 position and results of operations.

Insurance policies may not cover all of our operating risks and a casualty loss beyond the limits of our

coverage could negatively impact our business.

We are subject to all of the operating hazards and risks normally incidental to the provision of our products

and services and business operations. In addition to contractual provisions limiting our liability to subscribers and
third parties, we maintain insurance policies in such amounts and with such coverage and deductibles as required
by law and that we believe are reasonable and prudent. See “-We are exposed to greater risk of liability for
employee acts or omissions or system failure, than may be inherent in other businesses.” Nevertheless, such
insurance may not be adequate to protect us from all the liabilities and expenses that may arise from claims for
personal injury, death or property damage arising in the ordinary course of our business and current levels of
insurance may not be able to be maintained or available at economical prices. If a significant liability claim is
brought against us that is not covered by insurance, then we may have to pay the claim with our own funds,
which could have a material adverse effect on our business, financial condition, cash flows or results of
operations.

Our business is concentrated in certain markets.

Our business is concentrated in certain markets. As of December 31, 2019, Legacy Vivint Smart Home’s
subscribers in Texas and California represented approximately 19% and 9%, respectively, of our total subscriber
base. Accordingly, our business and results of operations are particularly susceptible to adverse economic,
weather and other conditions in such markets and in other markets that may become similarly concentrated.

Catastrophic events may disrupt our business.

Unforeseen events, or the prospect of such events, including war, terrorism and other international conflicts,

public health issues including health epidemics or pandemics, such as the recent emergence of a novel
coronavirus (COVID-19), and natural disasters such as fire, hurricanes, earthquakes, tornados or other adverse
weather and climate conditions, whether occurring in the United States, Canada or elsewhere, could disrupt our
operations, disrupt the operations of suppliers or subscribers or result in political or economic instability. These
events could reduce demand for our products and services, make it difficult or impossible to receive equipment
from suppliers or impair our ability to market our products and services and/ or deliver products and services to
subscribers on a timely basis. Any such disruption could also damage our reputation and cause subscriber
attrition. We could be subject to claims or litigation with respect to losses caused by such disruptions. Our
property and business interruption insurance may not cover a particular event at all or be sufficient to fully cover
our losses. With respect to COVID-19, we cannot presently estimate the overall operational and financial impact
to our business that may result from the recent global outbreak of COVID-19, which could be material to our

41

2020 results, and which is highly dependent on the breadth and duration of the outbreak and could be affected by
other factors we are not currently able to predict, including new information which may emerge concerning the
severity of COVID-19, the success of actions taken to contain or treat COVID-19, and reactions by consumers,
companies, governmental entities and capital markets. Any widespread growth in infections, or travel
restrictions, quarantines or site closures imposed as a result of COVID-19, could, among other things, require the
company to implement mandatory work-from-home protocols resulting in additional expenses and strain on the
business as well as adversely impact the ability of our employees to staff call centers, or enter homes to sell or
install new systems or repair existing systems.

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

Some insurers provide a reduction in premium rates for insurance policies written on homes that have
monitored electronic security systems. There can be no assurance that insurance companies will continue to offer
these rate reductions. If these incentives were reduced or eliminated, homeowners who otherwise may not feel
the need for our products or services would be removed from our potential subscriber pool, which could hinder
the growth of our business, and existing subscribers may choose to cancel or not renew their contracts, which
could increase our attrition rates. In either case, our results of operations and growth prospects could be adversely
affected.

Legacy Vivint Smart Home has recorded net losses in the past and we may experience net losses in the

future.

Legacy Vivint Smart Home has recorded consolidated net losses of $395.9 million, $472.6 million, and
$410.2 million in the years ended December 31, 2019, 2018, and 2017, respectively. We may likely continue to
record net losses in future periods.

The nature of Legacy Vivint Smart Home’s business requires the application of complex revenue and expense
recognition rules, and the current legislative and regulatory environment affecting generally accepted accounting
principles is uncertain. Significant changes in current principles could affect Vivint Smart Home’s financial
statements going forward and changes in financial accounting standards or practices may cause adverse,
unexpected financial reporting fluctuations and harm Vivint Smart Home’s operating results.

The accounting rules and regulations that Legacy Vivint Smart Home must comply with are complex and
subject to interpretation by the Financial Accounting Standards Board (“FASB”), the SEC and various bodies
formed to promulgate and interpret appropriate accounting principles. Recent actions and public comments from
the FASB and the SEC have focused on the integrity of financial reporting and internal controls. In addition,
many companies’ accounting policies are being subject to heightened scrutiny by regulators and the public.
Further, the accounting rules and regulations are continually changing in ways that could materially impact the
Company’s financial statements. For example, in May 2014, the FASB issued ASU No. 2014-09, Revenue from
Contracts with Customers (Topic 606), as amended, which superseded nearly all existing revenue recognition
guidance. Legacy Vivint Smart Home adopted the new standard effective January 1, 2018, utilizing a modified
retrospective approach with the cumulative effect of initially applying the new standard recognized at the date of
initial application and providing certain additional disclosures.

Risks Relating to Our Indebtedness

Our substantial indebtedness could adversely affect our financial condition.

We have substantial indebtedness. Net cash interest paid by Legacy Vivint Smart Home for the years ended

December 31, 2019 and 2018 related to its indebtedness (excluding finance leases) totaled $250.4 million and

42

$236.7 million, respectively. Legacy Vivint Smart Home’s net cash from operating activities for the years ended
December 31, 2019 and 2018, before these interest payments, was an inflow of $28.8 million and an inflow of
$16.2 million, respectively. Accordingly, its net cash from operating activities for the years ended December 31,
2019 and 2018 was insufficient to cover these interest payments.

As of December 31, 2019, Legacy Vivint Smart Home had approximately $3.3 billion aggregate principal
amount of total debt outstanding, all of which was issued or borrowed by APX and guaranteed by APX Group
Holdings, Inc. and by substantially all of APX’s domestic subsidiaries, $2.4 billion of which was secured debt,
which requires significant interest and principal payments. Subject to the limits contained in the agreements
governing our existing indebtedness, we may be able to incur substantial additional debt from time to time to
finance working capital, capital expenditures, investments or acquisitions, or for other purposes. If we do so, the
risks related to our high level of debt could increase. Specifically, our high level of debt could have important
consequences, including the following:

• making it more difficult for us to satisfy our obligations with respect to our debt;

•

•

•

•

•

•

•

limiting our ability to obtain additional financing to fund future working capital, capital expenditures,
acquisitions or other general corporate requirements;

requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of
other purposes, thereby reducing the amount of cash flows and future borrowings available for working
capital, capital expenditures (including subscriber acquisition costs), acquisitions and other general
corporate purposes;

increasing our vulnerability to general adverse economic and industry conditions;

exposing us to the risk of increased interest rates as certain of our borrowings are at variable rates of
interest;

limiting our flexibility in planning for and reacting to changes in the industry in which we compete;

placing us at a disadvantage compared to other, less leveraged competitors; and

increasing our cost of borrowing.

We may be able to incur significant additional indebtedness in the future.

Despite our current level of indebtedness, we may be able to incur substantially more debt and enter into
other transactions, which could further exacerbate the risks to our financial condition described above. As of
December 31, 2019, Legacy Vivint Smart Home had $32.1 million of availability under the revolving credit
facility (after giving effect to $11.1 million of letters of credit outstanding and $245.0 million of borrowings). We
are still permitted to add, in addition to the revolving credit facility, incremental facilities of up to $225 million,
subject to certain conditions being satisfied. Under both the Term Loan Agreement and revolving credit facility,
up to $60 million may be incurred on the same “superpriority” basis as the revolving credit facility. Moreover,
although the debt agreements governing our existing indebtedness contain restrictions on the incurrence of
additional indebtedness and entering into certain types of other transactions, these restrictions are subject to a
number of qualifications and exceptions. Additional indebtedness incurred in compliance with these restrictions
could be substantial. These restrictions also do not prevent us from incurring obligations, such as trade payables,
that do not constitute indebtedness as defined under our debt instruments. To the extent new debt is added to our
current debt levels, the substantial leverage risks described in the previous risk factor would increase. In addition,
the exceptions to the restrictive covenants permit us to enter into certain other transactions.

Accordingly, subject to market conditions, we opportunistically seek to access the credit and capital markets
from time to time, whether to refinance or retire our existing indebtedness, for the investment in and operation of
our business, or for other general corporate purposes. Such transactions may take the form of new or amended
senior secured credit facilities, including term or revolving loans, secured or unsecured notes and/or other

43

instruments or indebtedness. These transactions may result in an increase in our total indebtedness, secured
indebtedness and/or debt service costs.

Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service

obligations to increase significantly.

Borrowings under our revolving credit facility are at variable rates of interest and expose us to interest rate
risk. If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even
though the amount borrowed remained the same, and our net income and cash flows, including cash available for
servicing our indebtedness, would correspondingly decrease.

We may be unable to service our indebtedness.

Our ability to make scheduled payments on and to refinance our indebtedness depends on and is subject to
our financial and operating performance, which in turn is affected by general and regional economic, financial,
competitive, business and other factors beyond our control, including the availability of financing in the
international banking and capital markets. We cannot assure you that our business will generate sufficient cash
flow from operations or that future borrowings will be available to us in an amount sufficient to enable us to
service our debt, to refinance our debt or to fund our other liquidity needs (including funding subscriber
acquisition costs).

If we are unable to meet our debt service obligations or to fund our other liquidity needs, we will need to

restructure or refinance all or a portion of our debt, which could cause us to default on our debt obligations and
impair our liquidity. Any refinancing of our indebtedness could be at higher interest rates and may require us to
comply with more onerous covenants that could further restrict our business operations.

Moreover, in the event of a default, the holders of our indebtedness could elect to declare all the funds
borrowed to be due and payable, together with accrued and unpaid interest. The lenders under our revolving
credit facility could also elect to terminate their commitments thereunder, cease making further loans, and
institute foreclosure proceedings against their collateral, and we could be forced into bankruptcy or liquidation. If
we breach our covenants under our revolving credit facility, we would be in default under our revolving credit
facility. The lenders could exercise their rights, as described above, and we could be forced into bankruptcy or
liquidation.

The debt agreements governing our existing indebtedness impose significant operating and financial
restrictions on us and our subsidiaries, which may prevent us from capitalizing on business opportunities.

The debt agreements governing our existing indebtedness impose significant operating and financial
restrictions on our subsidiaries party thereto. We expect to guarantee the obligations under the credit agreement
governing the revolving credit facility, the credit agreement governing the 2024 Term Loan and the debt
agreements governing the notes. These restrictions limit our ability to, among other things:

•

•

incur or guarantee additional debt or issue disqualified stock or preferred stock;

pay dividends and make other distributions on, or redeem or repurchase, capital stock;

• make certain investments;

•

•

incur certain liens;

enter into transactions with affiliates;

• merge or consolidate;

• materially change the nature of our business;

44

•

•

•

amend, prepay, redeem or purchase certain subordinated debt;

enter into agreements that restrict the ability of certain subsidiaries to make dividends or other
payments to us; and

transfer or sell assets.

In addition, our revolving credit facility requires that we maintain a consolidated first lien net leverage ratio

of not more than 5.35 to 1.0 on the last day of each applicable test period.

As a result of these restrictions, we are limited as to how we conduct our business and we may be unable to

raise additional debt or equity financing to compete effectively or to take advantage of new business
opportunities. The terms of any future indebtedness we may incur could include more restrictive covenants. We
cannot assure you that we will be able to maintain compliance with these covenants in the future and, if we fail to
do so, that we will be able to obtain waivers from the lenders and/or amend the covenants.

Our failure to comply with the restrictive covenants described above as well as other terms of our existing
indebtedness and/or the terms of any future indebtedness from time to time could result in an event of default,
which, if not cured or waived, could result in our being required to repay these borrowings before their due date.
If we are forced to refinance these borrowings on less favorable terms or cannot refinance these borrowings, our
results of operations and financial condition could be adversely affected.

Our failure to comply with the agreements relating to our outstanding indebtedness, including as a result of

events beyond our control, could result in an event of default that could materially and adversely affect our
results of operations and our financial condition.

If there were an event of default under any of the agreements relating to our outstanding indebtedness, the

holders of the defaulted debt could cause all amounts outstanding with respect to that debt to be due and payable
immediately. We cannot assure you that our assets or cash flows would be sufficient to fully repay borrowings
under our outstanding debt instruments if accelerated upon an event of default. Further, if we are unable to repay,
refinance or restructure our indebtedness under our secured debt, the holders of such debt could proceed against
the collateral securing that indebtedness. In addition, any event of default or declaration of acceleration under one
debt instrument could also result in an event of default under one or more of our other debt instruments.

Risks Relating to Ownership of Our Common Stock

If the Merger’s benefits do not meet the expectations of financial analysts, the market price of our Class A

common stock may decline.

The market price of the our Class A common stock may decline as a result of the Merger if we do not
achieve the perceived benefits of the Merger as rapidly, or to the extent anticipated by, financial analysts or the
effect of the Merger on our financial results is not consistent with the expectations of financial analysts.
Accordingly, holders of our Class A common stock may experience a loss as a result of a decline in the market
price of our Class A common stock. In addition, a decline in the market price of our Class A common stock could
adversely affect our ability to issue additional securities and to obtain additional financing in the future.

Our stock price may change significantly following the merger and you could lose all or part of your

investment as a result.

The trading price of our Class A common stock is likely to be volatile. The stock market recently has
experienced extreme volatility. This volatility often has been unrelated or disproportionate to the operating
performance of particular companies. You may not be able to resell your shares at an attractive price due to a
number of factors such as those listed in “—Risks Relating to Our Business and Industry” and the following:

•

results of operations that vary from the expectations of securities analysts and investors;

45

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

results of operations that vary from those of our competitors;

changes in expectations as to our future financial performance, including financial estimates and
investment recommendations by securities analysts and investors;

declines in the market prices of stocks generally;

strategic actions by us or our competitors;

announcements by us or our competitors of significant contracts, acquisitions, joint ventures, other
strategic relationships or capital commitments;

any significant change in our management;

changes in general economic or market conditions or trends in our industry or markets;

changes in business or regulatory conditions, including new laws or regulations or new interpretations
of existing laws or regulations applicable to our business;

future sales of our common stock or other securities;

investor perceptions or the investment opportunity associated with our common stock relative to other
investment alternatives;

the public’s response to press releases or other public announcements by us or third parties, including
New our filings with the SEC;

litigation involving us, our industry, or both, or investigations by regulators into our operations or those
of our competitors;

guidance, if any, that we provides to the public, any changes in this guidance or our failure to meet this
guidance;

the development and sustainability of an active trading market for our stock;

actions by institutional or activist stockholders;

changes in accounting standards, policies, guidelines, interpretations or principles; and

other events or factors, including those resulting from natural disasters, war, acts of terrorism or
responses to these events.

These broad market and industry fluctuations may adversely affect the market price of our Class A common

stock, regardless of our actual operating performance. In addition, price volatility may be greater if the public
float and trading volume of our Class A common stock is low.

In the past, following periods of market volatility, stockholders have instituted securities class action
litigation. If we were involved in securities litigation, it could have a substantial cost and divert resources and the
attention of executive management from our business regardless of the outcome of such litigation.

Because there are no current plans to pay cash dividends on our Class A common stock for the foreseeable

future, you may not receive any return on investment unless you sell your common stock for a price greater
than that which you paid for it.

We intend to retain future earnings, if any, for future operations, expansion and debt repayment and there
are no current plans to pay any cash dividends for the foreseeable future. The declaration, amount and payment
of any future dividends on shares of our Class A common stock will be at the sole discretion of our board of
directors. Our board of directors may take into account general and economic conditions, our financial condition
and results of operations, our available cash and current and anticipated cash needs, capital requirements,
contractual, legal, tax, and regulatory restrictions, implications on the payment of dividends by us to our

46

stockholders or by our subsidiaries to us and such other factors as our board of directors may deem relevant. In
addition, our ability to pay dividends is limited by covenants of our existing and outstanding indebtedness and
may be limited by covenants of any future indebtedness we incur. As a result, you may not receive any return on
an investment in our Class A common stock unless you sell our Class A common stock for a price greater than
that which you paid for it.

If securities analysts do not publish research or reports about our business or if they downgrade our stock

or our sector, stock price and trading volume could decline.

The trading market for our Class A common stock will rely in part on the research and reports that industry

or financial analysts publish about us or our business. We will not control these analysts. In addition, some
financial analysts may have limited expertise with our model and operations. Furthermore, if one or more of the
analysts who do cover us downgrade its stock or industry, or the stock of any of its competitors, or publish
inaccurate or unfavorable research about its business, the price of our stock could decline. If one or more of these
analysts ceases coverage of us or fails to publish reports on it regularly, we could lose visibility in the market,
which in turn could cause our stock price or trading volume to decline.

Future sales, or the perception of future sales, by us or our stockholders in the public market following the

Merger could cause the market price for our Class A common stock to decline.

The sale of shares of our Class A common stock in the public market, or the perception that such sales could

occur, could harm the prevailing market price of shares of our Class A common stock. These sales, or the
possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the
future at a time and at a price that we deem appropriate.

All shares issued in the Merger are freely tradable without registration under the Securities Act of 1933, as
amended (the “Securities Act”), and without restriction by persons other than our “affiliates” (as defined under
Rule 144 of the Securities Act, “Rule 144”), including our directors, executive officers and other affiliates
(including affiliates of Blackstone).

Holders of substantially all of Vivint Smart Home’s common stock and the SPAC sponsors have each

agreed, subject to certain exceptions, not to dispose of or hedge any of their common stock or securities
convertible into or exchangeable for shares of our Class A common stock during the period from the date of the
closing of the merger continuing through the date (i) in the case of Blackstone, six months after the closing date
of the merger, (ii) in the case of the Pedersen Holders, Dunn Holders, Summit Holders and Black Horse Holders
(each as defined in the stockholders agreement we entered into (the “Stockholders Agreement”) with the SPAC
sponsors, Blackstone and certain other parties thereto (collectively, the “Stockholder Parties”)), two years after
the closing date of the merger and (iii) for all other Stockholder Parties (as defined in the Stockholders
Agreement), one year after the closing date of the merger and (iii) in the case of all other applicable holders, one
year from the closing of the merger.

Upon the expiration or waiver of the lock-ups described above, shares held by 313 Acquisition, certain
stockholders of 313 Acquisition, us and the SPAC sponsors (collectively, the “Investors” and certain of our other
stockholders will be eligible for resale, subject to volume, manner of sale and other limitations under Rule 144.
In addition, pursuant to a registration rights agreement, the Investors and certain other stockholders have the
right, subject to certain conditions, to require us to register the sale of their shares of our Class A common stock
under the Securities Act. By exercising their registration rights and selling a large number of shares, these
stockholders could cause the prevailing market price of our Class A common stock to decline. These shares
covered by registration rights represent a substantial majority of our outstanding Class A common stock.

As restrictions on resale end or if these stockholders exercise their registration rights, the market price of

shares of our Class A common stock could drop significantly if the holders of these shares sell them or are

47

perceived by the market as intending to sell them. These factors could also make it more difficult for us to raise
additional funds through future offerings of our shares of Class A common stock or other securities.

The Company also intends to register all shares of Class A common stock that the Company may issue
under the Company’s 2020 Omnibus Incentive Plan, as well as any shares of Class A common stock underlying
restricted shares of Class A common stock, stock appreciation rights and restricted stock units that have been
granted to directors, executive officers and other employees of the Company as “substitute awards” pursuant to
such 2020 Omnibus Incentive Plan, all of which are subject to time-based vesting conditions. In addition, the
Company intends to register all shares of Class A common stock underlying the hypothetical stock appreciation
rights subject to each of the Company’s (i) Second Amended and Restated 2013 Long-Term Incentive Pool Plan
for Lead Technicians, (ii) Amended and Restated 2013 Long-Term Incentive Pool Plan for Regional
Technicians, (iii) Second Amended and Restated 2013 Long-Term Incentive Pool Plan for Sales Managers and
(iv) Second Amended and Restated 2013 Long-Term Incentive Pool Plan for Regional Managers. Following
registration of such shares and subject to the expiration of applicable lock-up and vesting restrictions, they can be
freely sold in the public market upon issuance, subject to volume limitations applicable to affiliates.

In the future, we may also issue our securities in connection with investments or acquisitions. The amount

of shares of our Class A common stock issued in connection with an investment or acquisition could constitute a
material portion of our then-outstanding shares of Class A common stock. Any issuance of additional securities
in connection with investments or acquisitions may result in additional dilution to our stockholders.

Anti-takeover provisions in our organizational documents could delay or prevent a change of control.

Certain provisions of our amended and restated certificate of incorporation and amended and restated

bylaws may have an anti-takeover effect and may delay, defer or prevent a merger, acquisition, tender offer,
takeover attempt or other change of control transaction that a stockholder might consider in our best interest,
including those attempts that might result in a premium over the market price for the shares held by our
stockholders.

These provisions provide for, among other things:

•

•

•

•

•

•

•

the ability of our board of directors to issue one or more series of preferred stock;

advance notice for nominations of directors by stockholders and for stockholders to include matters to
be considered at our annual meetings;

certain limitations on convening special stockholder meetings;

limiting the ability of stockholders to act by written consent;

providing that our board of directors is expressly authorized to make, alter or repeal our bylaws;

the removal of directors only for cause and only upon the affirmative vote of holders of at least 66
2/3% of the shares of common stock entitled to vote generally in the election of directors if the
Stockholder Parties and their affiliates hold less than 30% of our outstanding shares of Class A
common stock; and

that certain provisions may be amended only by the affirmative vote of at least 30% of the shares of
Class A common stock entitled to vote generally in the election of directors if the Stockholder Parties
and their affiliates hold less than 30% of our outstanding shares of Class A common stock.

These anti-takeover provisions could make it more difficult for a third party to acquire us, even if the third-

party’s offer may be considered beneficial by many of our stockholders. As a result, our stockholders may be
limited in their ability to obtain a premium for their shares. These provisions could also discourage proxy
contests and make it more difficult for you and other stockholders to elect directors of your choosing and to
cause us to take other corporate actions you desire.

48

Our amended and restated certificate of incorporation designates the Court of Chancery of the State of
Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by
our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes
with us or our directors, officers, employees or stockholders.

Our amended and restated certificate of incorporation provides that, subject to limited exceptions, any
(1) derivative action or proceeding brought on behalf of us, (2) action asserting a claim of breach of a fiduciary
duty owed by any director, officer, stockholder or employee to us or our stockholders, (3) action asserting a
claim arising pursuant to any provision of the DGCL or our amended and restated certificate of incorporation or
our amended and restated bylaws or (4) action asserting a claim governed by the internal affairs doctrine shall, to
the fullest extent permitted by law, be exclusively brought in the Court of Chancery of the State of Delaware or,
if such court does not have subject matter jurisdiction thereof, another state or federal court located within the
State of Delaware. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital
stock shall be deemed to have notice of and to have consented to the provisions of our certificate of incorporation
described above. This 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 employees. Alternatively, if a court were to
find these provisions of our amended and restated certificate of incorporation inapplicable to, or unenforceable in
respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated
with resolving such matters in other jurisdictions, which could adversely affect our business and financial
condition.

Certain significant Company stockholders whose interests may differ from those of Company public
stockholders will have the ability to significantly influence the Company’s business and management.

Pursuant to the Stockholders Agreement that became effective at the Closing, Blackstone has the right to

designate nominees for election to the Company’s Board at any meeting of its stockholders. The number of
Blackstone Designees (as defined in the Stockholders Agreement) will be equal to (i) a majority of the total
number of directors in the event that 313 Acquisition, Blackstone and their respective affiliates (collectively, the
“313 Acquisition Entities”) beneficially own in the aggregate 50% or more of the outstanding shares of Class A
common stock, (ii) 40% of the total number of directors in the event that the 313 Acquisition Entities beneficially
own in the aggregate more than 40%, but not 50% or more, of the outstanding shares of Class A common stock,
(iii) 30% of the total number of directors in the event that the 313 Acquisition Entities beneficially own in the
aggregate more than 30%, but not more than 40%, of the outstanding shares of Class A common stock, (iv) 20%
of the total number of directors in the event that the 313 Acquisition Entities beneficially own in the aggregate
more than 20%, but not more than 30%, of the outstanding shares of Class A common stock and (v) 10% of the
total number of directors in the event that the 313 Acquisition Entities beneficially own in the aggregate more
than 5%, but not more than 20% of the outstanding shares of Class A common stock.

Under the Stockholders Agreement, the Company agreed to nominate one director designated by Fortress

Mosaic Investor LLC to the Company’s Board (the “Fortress Designee”) so long as the Fortress Holders (as
defined in the Stockholders Agreement) beneficially own at least 50% of the shares of the Company’s Class A
common stock the Fortress Holders own immediately following the consummation of the Merger; provided that
the Fortress Designee must be an employee or principal of The SoftBank Vision Fund unless otherwise agreed in
writing by the Blackstone Designator (as defined in the Stockholders Agreement) and the Company.

Under the Stockholders Agreement, the Company agreed to nominate one director designated by the
Summit Designator (as defined in the Stockholders Agreement) to the Company’s Board so long as the Summit
Holders (as defined in the Stockholders Agreement) beneficially own at least 50% of the shares of the
Company’s Class A Common Stock they own immediately following the consummation of the Merger.

Accordingly, the persons party to the Stockholders Agreement will be able to significantly influence the

approval of actions requiring Board approval through their voting power. Such stockholders will retain

49

significant influence with respect to the Company’s management, business plans and policies, including the
appointment and removal of its officers. In particular, the persons party to the Stockholder Agreement could
influence whether acquisitions, dispositions and other change of control transactions are approved.

Affiliates of Blackstone control us, and their interests may conflict with ours or yours in the future.

Affiliates of Blackstone beneficially own approximately 57% of our Class A common stock. For so long as
Blackstone continues to own a significant percentage of our Class A common stock, Blackstone will still be able
to significantly influence the composition of our board of directors and the approval of actions requiring
stockholder approval. Accordingly, for such period of time, Blackstone will have significant influence with
respect to our management, business plans and policies, including the appointment and removal of our officers.
In particular, for so long as Blackstone continues to own a significant percentage of our Class A common stock,
Blackstone will be able to cause or prevent a change of control of us or a change in the composition of our board
of directors and could preclude any unsolicited acquisition of us. The concentration of ownership could deprive
you of an opportunity to receive a premium for your shares of common stock as part of a sale of us and
ultimately might affect the market price of our Class A common stock. In addition, Blackstone may have an
interest in pursuing acquisitions, divestitures and other transactions that, in its judgment, could enhance its
investment, even though such transactions might involve risks to you. For example, Blackstone could cause us
make acquisitions that increase our indebtedness or cause us to sell revenue-generating assets. In certain
circumstances, acquisitions of debt at a discount by purchasers that are related to a debtor can give rise to
cancellation of indebtedness income to such debtor for U.S. federal income tax purposes. So long as Blackstone
continues to own a significant amount of our combined voting power, even if such amount is less than 50%,
Blackstone will continue to be able to strongly influence or effectively control our decisions.

Notwithstanding Blackstone’s control of or substantial influence over us, we may from time to time enter

into transactions with Blackstone and its affiliates, or enter into transactions in which Blackstone or its affiliates
otherwise have a direct or indirect material interest. We have adopted a formal written policy for the review and
approval of transactions with related persons.

Certain of our stockholders, including Blackstone, the SPAC sponsors and affiliates of Summit Partners,

L.P., may engage in business activities which compete with us or otherwise conflict with our interests.

Blackstone, the SPAC sponsors, affiliates of Summit Partners, L.P. and certain other Stockholder Parties are

in the business of making investments in companies and may from time to time acquire and hold interests in
businesses that compete directly or indirectly with us. Our amended and restated certificate of incorporation
provide that none of the Stockholder Parties, any of their respective affiliates or any director who is not
employed by us (including any non-employee director who serves as one of our officers in both his director and
officer capacities) or his or her affiliates will have any duty to refrain from engaging, directly or indirectly, in the
same business activities or similar business activities or lines of business in which we operate. The Stockholder
Parties also may pursue acquisition opportunities that may be complementary to our business and, as a result,
those acquisition opportunities may not be available to us.

We are a “controlled company” within the meaning of the rules of the NYSE and the rules of the SEC. As a
result, we qualify for, and intend to rely on, exemptions from certain corporate governance requirements that
would otherwise provide protection to stockholders of other companies.

Blackstone controls a majority of the voting power of our outstanding Class A common stock. As a result,
we are a “controlled company” within the meaning of the corporate governance standards of the NYSE. Under
these rules, a company of which more than 50% of the voting power is held by an individual, group or another
company is a “controlled company” and may elect not to comply with certain corporate governance
requirements, including:

•

the requirement that a majority of our board of directors consist of “independent directors” as defined
under the rules of the NYSE;

50

•

•

•

the requirement that we have a compensation committee that is composed entirely of independent
directors with a written charter addressing the committee’s purpose and responsibilities;

the requirement that we have a nominating and corporate governance committee that is composed
entirely of independent directors with a written charter addressing the committee’s purpose and
responsibilities; and

the requirement for an annual performance evaluation of the compensation and nominating and
corporate governance committees.

We intend to utilize some or all of these exemptions. As a result, our nominating and corporate governance
committee and compensation committee may not consist entirely of independent directors and such committees
will not be subject to annual performance evaluations. 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
NYSE.

In addition, on June 20, 2012, the SEC passed final rules implementing provisions of the Dodd-Frank Wall

Street Reform and Consumer Protection Act of 2010 pertaining to compensation committee independence and
the role and disclosure of compensation consultants and other advisers to the compensation committee. The
SEC’s rules direct each of the national securities exchanges (including the NYSE on which we list our common
stock) to develop listing standards requiring, among other things, that:

•

•

•

compensation committees be composed of fully independent directors, as determined pursuant to new
independence requirements;

compensation committees be explicitly charged with hiring and overseeing compensation consultants,
legal counsel and other committee advisors; and

compensation committees be required to consider, when engaging compensation consultants, legal
counsel or other advisors, certain independence factors, including factors that examine the relationship
between the consultant or advisor’s employer and us.

As a “controlled company”, we are not subject to these compensation committee independence

requirements.

Legacy Vivint Smart Home’s transformation into a listed public company will increase our costs and may
disrupt the regular operations of its business.

Legacy Vivint Smart Home has operated as a privately owned company and expects to incur additional
legal, regulatory, finance, accounting, investor relations and other administrative expenses as a result of having
publicly traded common stock. In addition, while we are currently in compliance with portions of the Sarbanes-
Oxley Act of 2002 (the “Sarbanes-Oxley Act”), we were required under the Sarbanes-Oxley Act, as well as rules
adopted by the SEC and the NYSE, to implement specified corporate governance practices that did not apply to
Legacy Vivint Smart Home as a private company.

We are required to ensure that we have the ability to prepare financial statements on a timely basis that fully

comply with all SEC reporting requirements and maintain effective internal controls over financial reporting.

The additional demands associated with being a public company may disrupt regular operations of our

business by diverting the attention of some of our senior management team away from revenue producing
activities to management and administrative oversight, adversely affecting our ability to attract and complete
business opportunities and increasing the difficulty in both retaining professionals and managing and growing
our businesses. In addition, failure to comply with any laws or regulations applicable to us as a public company
may result in legal proceedings and/or regulatory investigations, and may cause reputational damage. Any of
these effects could harm our business, financial condition and results of operations.

51

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

Our headquarters, and one of our two monitoring facilities, are located in Provo, Utah. These premises are

under leases expiring between December 2024 and June 2028. Additionally, we lease the premises for a separate
monitoring station located in Eagan, Minnesota. We also have facility leases in Lehi, Utah; Logan, Utah; Santa
Clara, California; Boston, Massachusetts; and various other locations throughout the United States and Canada
for research and development, call center, warehousing, recruiting, and training purposes. We believe that these
facilities are adequate for our current needs and that suitable additional or substitute space will be available as
needed to accommodate any expansion of our operations.

Item 3. Legal Proceedings.

We are engaged in the defense of certain claims and lawsuits arising out of the ordinary course and conduct
of our business and have certain unresolved claims pending, the outcomes of which are not determinable at this
time. Our subscriber contracts include exculpatory provisions and other liability limitations. We also have
insurance policies covering certain potential losses where such coverage is available and cost effective. In our
opinion, any liability that might be incurred by us upon the resolution of any claims or lawsuits will not, in the
aggregate, have a material adverse effect on our financial condition or results of operations.

Item 4. Mine Safety Disclosures.

None.

52

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities.

Market Information.

The Company’s Common Stock and warrants were historically quoted on NYSE under the symbols
“MOSC” and “MOSC.WS,” respectively. On January 21, 2020, the Company’s Common Stock and warrants
were listed on the NYSE under the new trading symbols of “VVNT” and “VVNT WS”, respectively.

Holders

Although there are a larger number of beneficial owners, on March 10, 2020, there were 483 holders of

record of our Common Stock and 4 holders of record of our warrants.

Dividends

We have not paid any cash dividends on our common stock to date. The payment of cash dividends in the

future will be dependent upon our revenues and earnings, if any, capital requirements and general financial
condition. The payment of any cash dividends will be within the discretion of our board of directors. In addition,
our board of directors is not currently contemplating and does not anticipate declaring any share dividends in the
foreseeable future. Further, if we incur any indebtedness, our ability to declare dividends may be limited by
restrictive covenants we may agree to in connection therewith.

Securities Authorized for Issuance Under Equity Compensation Plans

As of December 31, 2019, we did not have any securities authorized for issuance under equity compensation

plans. In connection with the Merger, our shareholders approved the Vivint Smart Home, Inc. 2020 Omnibus
Incentive Plan.

The graph below compares the cumulative total return for our common stock from October 19, 2017 (the
first day on which our units began trading) through December 31, 2019 with the comparable cumulative return of
two indices: the S&P 500 Index and the Russell 2000 Index. The graph assumes $100 invested on October 19,
2017 in each of our units and the two indices presented.

53

COMPARISON OF CUMULATIVE TOTAL RETURN*

Among Mosaic Acquisition Corp., the S&P 500 Index, and the Russell 2000 Index

COMPARISON OF CUMULATIVE TOTAL RETURN*
Among Mosaic Acquisition Corp., the S&P 500 Index, and the Russell 2000 Index

$130

$125

$120

$115

$110

$105

$100

$95

$90

$85
10/19/2017

12/31/2017

12/31/2018

12/31/2019

S&P 500

MOSAIC ACQUISTION CORP.

RUSSELL 2000

* $100 invested on October 19, 2017 in stock or index, including reinvestment of dividends.

Mosaic Acquisition Corp.
S&P 500
RUSSELL 2000

10/19/2017
$  100.00
$  100.00
$  100.00

12/31/2017
$  101.50
$    97.84
$  102.23

12/31/2018
$    98.20
$  104.90
$    89.78

12/31/2019
$   102.85
$   126.10
$   111.08

54

Item 6. Selected Financial Data.

The following table sets forth selected historical financial information derived from the audited financial
statements of Mosaic Acquisition Corp. prior to the Merger included elsewhere in this report for the years ended
December 31, 2019 and 2018, and the period from July 26, 2017 (inception) through December 31, 2017. You
should read the following selected financial data in conjunction with “Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and the financial statements and the related notes
appearing elsewhere in this report.

For the years ended December 31,

2019

2018

For the Period from
July 26, 2017 (inception)
through December 31, 2017

Statements of Operations Data:
Total interest income . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average shares outstanding of Class A

$

$

7,184,341
(2,982,238)

4,202,103

$

$

6,187,823
(921,021)

5,266,802

common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

34,500,000

34,500,000

Basic and diluted net income per share, Class A . . . . . .

0.14

$

0.16

$

$

$

—
216,687

(216,687)

34,500,000

0.00

Weighted average shares outstanding of Class F

common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8,625,000

8,625,000

8,625,000

Basic and diluted net loss per share, Class F . . . . . . . . .

(0.07)

(0.01)

(0.03)

Cash Flow Data:
Net cash used in operating activities . . . . . . . . . . . . . . .
Net cash provided by (used in) investing activities . . . .
Net cash provided by financing activities . . . . . . . . . . .
Balance Sheets Data (end of period):

$ (2,799,262) $
$
$
2,589,684
— $
$

(785,870)
750,000

—

(368,319)
$
$(345,000,000)
$ 346,296,707

December 31,

2019

2018

2017

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . .
Cash and investments held in Trust Account
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Class A common stock subject to possible

682,940 $

$
$355,032,480
$355,933,229
$ 12,459,304

892,518
$350,437,823
$351,443,016
$ 12,171,194

$
928,388
$ 345,000,000
$ 346,221,811
$ 12,216,791

redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . .

$338,473,920
5,000,005
$

$334,271,820
5,000,002
$

$ 329,005,010
5,000,010
$

55

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

References to the “Company,” “our,” “us” or “we” refer to Vivint Smart Home, Inc. (f/k/a Mosaic
Acquisition Corp.) The following discussion and analysis of the Company’s financial condition and results of
operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere
in this report. Certain information contained in the discussion and analysis set forth below includes forward-
looking statements that involve risks and uncertainties, including but not limited to those in the “Risk Factors”
section of this Annual Report on Form 10-K.

Overview

Until January 17, 2019, we were a blank check company, originally incorporated as a Cayman Islands

exempted company on July 26, 2017 and formed for the purpose of effecting a merger, share exchange, asset
acquisition, share purchase, reorganization or similar business combination with one or more businesses.
Effective December 21, 2018, we changed our jurisdiction of incorporation from Cayman Islands to the State of
Delaware.

On January 17, 2020 (the “Closing Date”), we consummated the previously announced merger pursuant to

that certain Agreement and Plan of Merger, dated September 15, 2019, by and among the Company, Maiden
Merger Sub, Inc., a subsidiary of the Company (“Merger Sub”), and Legacy Vivint Smart Home, Inc. (f/k/a
Vivint Smart Home, Inc.) (“Legacy Vivint Smart Home”), as amended by Amendment No. 1 to the Agreement
and Plan of Merger (the “Amendment” and as amended, the “Merger Agreement”), dated as of December 18,
2019, by and among the Company, Merger Sub and Legacy Vivint Smart Home.

Pursuant to the terms of the Merger Agreement, a business combination between the Company and Legacy

Vivint Smart Home was effected through the merger of Merger Sub with and into Legacy Vivint Smart Home,
with Legacy Vivint Smart Home surviving as the surviving company (the “Merger”). At the effective time of the
Merger (the “Effective Time”), each stockholder of Legacy Vivint Smart Home received 84.5320916792 shares
of the Company’s Class A common stock, par value $0.0001 per share (the “Common Stock”), for each share of
Legacy Vivint Smart Home common stock, par value $0.01 per share (the “Legacy Vivint Smart Home common
stock”), that such stockholder owned. Pursuant in each case to a Subscription Agreement entered into in
connection with the Merger Agreement, certain investment funds managed by affiliates of Fortress Investment
Group LLC (“Fortress”) and certain investment funds affiliated with The Blackstone Group Inc. (such investment
funds, collectively, “Blackstone”) purchased, respectively, 12,500,000 and 10,000,000 newly-issued shares of
Common Stock (such purchases, the “Fortress PIPE” and the “Blackstone PIPE,” respectively, and together, the
“PIPE”) concurrently with the completion of the Merger (the “Closing”) on the Closing Date for an aggregate
purchase price of $125,000,000 and $100,000,000, respectively.

In connection with the execution of the Amendment, the Company entered into a Subscription and Backstop

Agreement (the “Fortress Subscription and Backstop Agreement”) with Fortress, pursuant to which Fortress
committed to (i) purchase $50,000,000 in aggregate purchase price of shares of Mosaic’s Common Stock in the
open market, subject to applicable law, (ii) backstop redemptions by subscribing for a number of shares of
newly-issued shares of Mosaic’s Common Stock at a purchase price per share equal to the per-share value of the
Company’s trust account at the time of any such redemptions and (iii) subscribe for up to $50,000,000 (less the
aggregate purchase price of the shares purchased by it in the open market and to backstop redemptions) in
aggregate purchase price of newly-issued shares of Mosaic’s Common Stock at a purchase price of $10.00 per
share to be issued at the election of the Company at the Closing. On the Closing Date, pursuant to the Fortress
Subscription and Backstop Agreement, Fortress purchased 2,698,753 shares of Common Stock for an aggregate
of approximately $27.8 million

In addition, the Company entered into an additional subscription agreement (the “Additional Forward
Purchaser Subscription Agreement”) with one of the forward purchasers (the “Forward Purchaser”). Pursuant to
the Additional Forward Purchaser Subscription Agreement, immediately prior to the Effective Time, the Forward

56

Purchaser purchased from the Company 5,000,000 shares of Common Stock at a purchase price of $10.00 per
share. As consideration for the additional investment, 25% of Mosaic Sponsor LLC’s shares of the Company’s
Class F Common Stock, par value $0.0001 per share (the “Founder Shares”) and private placement warrants (the
“private placement warrants”) were forfeited to the Company and the Company issued to the Forward Purchaser
an equal number of shares of Common Stock and warrants concurrently with the Closing.

In connection with the Closing, the registrant changed its name from Mosaic Acquisition Corp. to Vivint
Smart Home, Inc. The audited financial statements included herein are those of the Company prior to the Merger.
Prior to the Merger, the Company neither engaged in any operations nor generated any revenue. Until the
Merger, based on the Company’s business activities, it was a “shell company” as defined under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). The audited consolidated financial statements of
Legacy Vivint Smart Home, which is considered the Company’s accounting predecessor, are included in
Amendment No. 2 to the Company’s Current Report on Form 8-K, which is anticipated to be filed with the
Securities and Exchange Commission (the “SEC”) on or about March 13, 2020.

Following the Merger, we are a smart home technology company. Our purpose-built platform has all the
components required to deliver on the promise of a true smart home experience. Our smart home platform is
comprised of the following five pillars: (1) our Smart Home Operating System, (2) our AI-driven smart home
automation and assistance software, Vivint Assist, (3) our portfolio of proprietary, internally developed smart
devices, (4) our curated yet extensible partner-neutral ecosystem, and (5) our people delivering tech-enabled
premium services, including consultative selling, professional installation, and support.

Legacy Vivint Smart Home was founded by our CEO Todd Pedersen in 1999 and has grown to become one

of the largest smart home solutions providers in North America with over 1.5 million subscribers as of
December 31, 2019, managing over 20 million devices and processing over 1.5 billion home-related events on a
daily basis. Our nationwide sales and service footprint covers 98% of U.S. zip codes.

Our culture and our history are characterized by a spirit of continuous innovation, resulting in the
development of cutting-edge proprietary smart home devices and tech-enabled services for the smart home.
Consistent with our Vivint brand name, which represents ‘to live intelligently’, our solution allows subscribers to
live intelligently and to enjoy the benefits of a smart home. Our approach has focused on putting the subscriber
experience first, which we do by presenting our subscribers with the right combination of technology and
support, delivered by people who care.

Our go-to-market strategy is based on directly educating consumers about the value and benefits of a smart

home experience. We reach consumers through a variety of efficient customer acquisition channels, including
our direct-to-home, national inside sales, and retail partnership programs. We continue to scale these efforts
through our proprietary operations technology, by launching new and innovative Products and Services, and by
building out our consultative sales channels. We continue to strengthen our relationships with existing
subscribers by offering them the ability to use Vivint Flex Pay to finance an upgrade of their existing system and
to add new devices and features to their smart homes as our portfolio of offerings expands.

As of December 31, 2019 and 2018, Mosaic Acquisition Corp. had net income of $4.2 million and

$5.3 million, respectively.

As of December 31, 2019 and 2018, Legacy Vivint Smart Home had over 1.5 million and 1.4 million
subscribers, respectively, representing year-over-year growth of 7%. In 2019 and 2018, Legacy Vivint Smart
Home generated revenue of $1.2 billion and $1.1 billion, respectively along with a net loss of $395.9 million and
$472.6 million, respectively. As of December 31, 2019 and 2018, Legacy Vivint Smart Home had approximately
$3.3 billion and $3.0 billion of total debt outstanding, respectively.

57

Refinancing Transactions

Recent Developments

On February 14, 2020, APX completed its offering of $600.0 million aggregate principal amount of 6.75%

senior secured notes due 2027 (the “2027 Notes”) in a private placement.

Concurrently with the 2027 Notes offering, APX amended and restated the credit agreements governing our

existing revolving credit facility and existing term loan credit facility (the “Concurrent Refinancing
Transactions”). In connection therewith, APX, among other things, (i) extended the maturity date with respect to
certain commitments under the revolving credit facility and increased the aggregate commitments in respect of
the revolving credit facility to $350.0 million and (ii) extended the maturity date with respect to the loans
outstanding under the term loan facility and increased the aggregate principal amount of term loans outstanding
under the term loan credit facility to $950.0 million.

APX used the net proceeds from the 2027 Notes offering and Concurrent Refinancing Transactions, together

with the proceeds from the Merger, to (i) redeem all of APX’s outstanding 8.750% Senior Notes due 2020 (the
“2020 Notes Redemption”), (ii) redeem all of APX’s outstanding 8.875% Senior Secured Notes due 2022 (the
“2022 Private Placement Notes Redemption”), (iii) refinance in full the existing borrowings under APX’s
existing term loan facility and existing revolving credit facility, (iv) redeem $223.0 million aggregate principal
amount of APX’s outstanding 7.875% Senior Secured Notes due 2022 (the “Existing 7.875% Notes Redemption”
and, together with the 2020 Notes Redemption and the 2022 Private Placement Notes Redemption, the
“Redemptions”) and (v) pay the related accrued interest, fees and expenses related thereto. APX irrevocably
deposited funds with the applicable trustee and/or paying agent to effect the Redemptions and to satisfy and
discharge all of APX’s remaining obligations under the indenture governing APX’s 8.750% Senior Notes due
2020 and the note purchase agreement governing APX’s 8.875% Senior Secured Notes due 2022. Vivint intends
to use any remaining net proceeds for general corporate purposes, which may include repayment of additional
indebtedness.

Wireless Internet Business

On July 31, 2019, in an effort to deliver additional cost savings and cash-flow improvements, Legacy Vivint

Smart Home completed a spin-off of its wireless internet business. In connection with the spin-off, the equity
interests of Vivint Wireless, Inc. were distributed to the stockholders of Legacy Vivint Smart Home pro rata
based on their respective holdings.

Our Business Model After the Merger

Our business is driven by the acquisition of new subscribers and by servicing and growing sales from our
existing subscriber base. The acquisition of new subscribers requires significant upfront investment, which in
turn generates high-margin recurring revenue from our cloud-enabled smart home solutions. We generate this
revenue from selling our solution and accompanying smart home devices to our subscribers. Therefore, we focus
our investment decisions on acquiring new subscribers in the most cost-effective manner, while striving to
maximize existing subscriber retention and lifetime value.

Legacy Vivint Smart Home has experienced significant historical subscriber growth. For example, its Total

Subscribers increased by 95% from December 31, 2013 to December 31, 2019. To drive this growth, Legacy
Vivint Smart Home has made significant upfront investments in its various sales channels, as well as technology
and infrastructure to support its growing subscriber base. As a result of these investments, Legacy Vivint Smart
Home has incurred losses and used significant amounts of cash to fund operations.

58

As we scale our business a greater percentage of our net acquisition costs for New Subscribers may be
funded through revenues generated by our existing subscriber base. Although we anticipate the absolute number
of new subscribers to grow over time, we expect the number of new subscribers to decrease as a percentage of
our Total Subscribers. We believe this decrease in new subscribers as a percentage of the total, along with the
expected growth in revenue, will improve our operating results and operating cash flows over time. Our ability to
improve our operating results and cash flows, however, is subject to a number of risks and uncertainties as
described in greater detail elsewhere in this filing and there can be no assurance that we will achieve such
improvements. To the extent that we do not scale our business efficiently, we will continue to incur losses and
require a significant amount of cash to fund our operations, which in turn could have a material adverse effect on
our business, cash flows, operating results and financial condition.

We seek to increase our average monthly revenue per user, or AMRU, by continually innovating and
offering new smart home solutions that further leverage the investments made to date in our existing platform
and sales channels. Since 2010, Legacy Vivint Smart Home has successfully expanded its smart home
platform, which has allowed it to charge higher recurring subscription fees and generate higher smart home
device revenue from new subscribers for these additional offerings. For example, the introduction of Legacy
Vivint Smart Home’s proprietary Vivint Smart Hub, Vivint SkyControl Panel, Vivint Glance Display, Vivint
Smart Drive, Vivint Doorbell Camera, Vivint Ping Camera, Vivint Outdoor Camera, Vivint Element
Thermostat, Vivint Smart Sensor and Vivint Motion Sensor has expanded its smart home platform. Due to the
high rate of adoption of additional smart home devices and tech-enabled services, Legacy Vivint Smart
Home’s AMRU has increased from $56.14 in 2013 to $64.44 for the year ended December 31, 2019, an
increase of 15%.

Our SHaaS business model generates subscription-based, high-margin recurring revenue from subscribers

who contract for our Smart Home Services. We continue to focus on technology, service, and business model
innovation to provide superior subscriber experience, from the time of first contact to the day-to-day experience.

In 2017, Legacy Vivint Smart Home made a strategic decision to offer Vivint Flex Pay to the market as

a part of its business model innovation, providing benefits to both its subscribers and the company. Vivint
Flex Pay provides greater subscriber accessibility and affordability by enabling qualified subscribers to
purchase our Products and related installation through unsecured financing provided either by a third party
financing partner or by us, in most cases at zero-percent APR. Under the Consumer Financing Program (the
“CFP”), qualified subscribers are eligible for installment loans of up to $4,000 for either 42 or 60 months.
These installment loans are between the subscriber and Citizens Bank, N.A., or Citizens, as the exclusive
third party provider of the installment loans under Vivint Flex Pay. Customers not eligible for the CFP, but
who qualify under the Company’s underwriting criteria, may enter into a RIC directly with Vivint. Because
we directly fund Product purchases financed through RICs, the mix of financing methods between CFP and
RICs affects the amount of cash we receive at the time of subscriber origination to offset this upfront
investment.

Pursuant to the agreement between Citizens (the “CFP Agreement”) and Legacy Vivint Smart Home, we
pay a monthly fee to Citizens based on the average daily outstanding balance of the loans provided by Citizens
to our subscribers, and we share with Citizens the liability for credit losses, with our company being
responsible for between 5% to 100% of lost principal balances, depending on factors specified in the CFP
Agreement. Additionally, we are responsible for reimbursing Citizens for the credit card transaction fees
associated with these loans. The present value of the estimated total fees owed by us to Citizens, based on
current loans outstanding, are recorded as a derivative liability on our consolidated balance sheet. The initial
term of the CFP Agreement is five years, subject to automatic, one-year renewals unless terminated by either
party in accordance with its terms. Because the Vivint Flex Pay plan separates payments for our smart home
devices from payments for our Smart Home Services, under the plan agreements, following the expiration of
the term of subscribers’ initial contract term, annual revenues will primarily be limited to fees from our

59

Services. Thus, our revenues and margins are expected to be lower over the life of the subscriber than under
our historical service contracts.

The launch of Vivint Flex Pay enables us to accelerate the acquisition of new subscribers and expand our
market opportunity by reducing upfront cash requirements associated with new subscriber acquisitions. Vivint
Flex Pay also improves our unit economics, increases contract length, reduces our balance sheet risk, and
increases the capital efficiency of our business. Today, Vivint Flex Pay is the significant driver of our subscriber
retention strategy. Our retention improves as our subscribers enter into longer term contracts. Vivint Flex Pay has
also improved Legacy Vivint Smart Home’s subscriber economics with an Average Subscriber Lifetime of 92
months (approximately 8 years) as of December 31, 2019. If our expected long-term annualized attrition rate
increases by 1% to 14%, Average Subscriber Lifetime would decrease to approximately 85 months. Conversely,
if our expected attrition decreases by 1% to 12%, our Average Subscriber Lifetime would increase to
approximately 98 months. Although there are costs to acquiring new subscribers, because we operate on a
recurring revenue-based model, acquiring subscribers results in cumulative value generation that compounds and
accrues over time.

We expect to continue investing in innovative technologies that will make our platform more valuable and

engaging for subscribers, and we expect to continue investing in our subscriber acquisition channels to further
improve the economics of our business model.

Recurring services for our subscriber contracts are billed directly to the subscriber in advance, generally

monthly, pursuant to the terms of subscriber contracts and recognized ratably over the service period. Because
we view the sale of our subscription and the accompanying devices as a single, combined performance
obligation, we recognize these revenues together, ratably, generally over the course of the contract. We operate in
a single, reportable segment.

Key Factors Affecting Operating Results following the Merger

Our future operating results and cash flows are dependent upon a number of opportunities, challenges and

other factors, including our ability to efficiently grow our subscriber base, expand our Product and Service
offerings to generate increased revenue per user, provide high quality Products and subscriber service to
maximize subscriber lifetime value and improve the leverage of our business model.

Market factors and disruptions in global markets may also affect our future operating results and cash flows.
For example, we cannot presently estimate the overall operational and financial impact of the coronavirus disease
(COVID-19), which could be material to our 2020 results, and which is highly dependent on the breadth and
duration of the outbreak and could be affected by other factors we are not currently able to predict.

Key factors affecting our operating results include the following:

Subscriber Lifetime

Our ability to retain subscribers has a significant impact on our financial results, including revenues,

operating income, and operating cash flows. Because we operate a business built on recurring revenues,
subscriber lifetime is a key determinant of our operating success. Legacy Vivint Smart Home’s Average
Subscriber Lifetime was 92 months (approximately 8 years) as of December 31, 2019. If our expected long-term
annualized attrition rate increases by 1% to 14%, Average Subscriber Lifetime would decrease to approximately
86 months. Conversely, if our expected attrition decreases by 1% to 12%, our Average Subscriber Lifetime
would increase to approximately 100 months. A portion of the subscriber base can be expected to cancel its
service every year. Subscribers may choose not to renew or may terminate their contracts for a variety of reasons,
including, but not limited to, relocation, cost, switching to a competitor’s service or service issues. We analyze
our retention by tracking the number of subscribers who remain as a percentage of the monthly average number
of subscribers at the end of each 12 month period. We caution investors that not all companies, investors and
analysts in our industry define retention in this manner.

60

The table below presents Legacy Smart Home’s subscriber data for the years ended December 31, 2019,

2018 and 2017:

Year ended December 31,

2019

2018

2017

Beginning balance of subscribers . . . . . . . . . . . . . . .
New subscribers . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Attrition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,444,822
316,403
(208,684)

1,292,698
322,574
(170,450)

1,146,746
279,735
(133,783)

Ending balance of subscribers . . . . . . . . . . . . . . . . . .

1,552,541

1,444,822

1,292,698

Monthly average subscribers . . . . . . . . . . . . . . . . . . .

1,502,310

1,380,741

1,214,696

Attrition rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13.9%

12.3%

11.0%

Historically, Legacy Vivint Smart Home has experienced an increased level of subscriber cancellations in
the months surrounding the expiration of such subscribers’ initial contract term. Attrition in any twelve month
period may be impacted by the number of subscriber contracts reaching the end of their initial term in such
period. Attrition in the twelve months ended December 31, 2019, reflects the effect of the 2014 60-month, 2015
42-month and 2016 42-month contracts reaching the end of their initial contract term. Attrition in the twelve
months ended December 31, 2018 reflects the effect of the 2013 60-month, 2014 60-month and 2015 42-month
contracts reaching the end of their initial contract term. We believe this trend in cancellations at the end of the
initial contract term is comparable to other companies within our industry.

Our subscribers are the foundation of our recurring revenue-based model. Our operating results are affected

by the level of our net acquisition costs to generate those subscribers and the value of Products and Services
purchased by them. A reduction in net subscriber acquisition costs or an increase in the total value of Products or
Services purchased by a new subscriber increases the life-time value of that subscriber, which in turn, improves
our operating results and cash flows over time.

The net upfront cost of adding incremental subscribers is a key factor impacting our ability to scale. Vivint

Flex Pay has made it more affordable to accelerate the growth in New Subscribers. Prior to Vivint Flex Pay,
Legacy Vivint Smart Home recovered the cost of equipment installed in subscribers’ homes over time through
their monthly service billings. From the introduction of Vivint Flex Pay in early 2017 through December 31,
2019, 14% of Legacy Vivint Smart Home subscribers have financed their equipment purchases through RICs,
which we fund through Legacy Vivint Smart Home’s balance sheet. We expect the percentage of subscriber
contracts financed through RICs to continue decreasing over time. In addition, since the introduction of Vivint
Flex Pay in 2017, 100% of new Legacy Vivint Smart Home subscribers have either opted to use this program to
finance their equipment costs or paid for their equipment themselves at the time of contract origination. This has
greatly reduced the net cost per acquisition, as well as the balance sheet impact of acquiring subscribers. Moving
forward, we will continue to explore ways to grow our subscriber base in a cost-effective manner through our
existing sales and marketing channels, through the growth of our financing programs, as well as through strategic
partnerships and new channels, as these opportunities arise.

We believe the Vivint Flex Pay program will result in higher retention, more revenue per user, and thus
greater subscriber lifetime values. Existing subscribers are also able to use Vivint Flex Pay to upgrade their
systems or to add new products and services, which we believe further increases subscriber lifetime value. This
positively impacts our operating performance, and we anticipate that adding additional financing partners to the
Vivint Flex Pay program, both in the United States and Canada, will generate additional revenue growth and a
subsequent increase in subscriber lifetime value.

61

Sales and Marketing Efficiency

Our continued ability to attract and sign new subscribers in a cost-effective manner across the United States

and Canada will be a key determinant of our future operating performance. Because our direct-to-home and
national inside sales channels are currently our primary means of subscriber acquisition, we have invested
heavily in scaling these teams. There is a lag in the productivity of new hires, which we anticipate will improve
over the course of their tenure, impacting our subscriber acquisition rates and overall operating success. These
Smart Home Pros are instrumental to subscriber growth in the regions we cover, and their continued productivity
is vital to our future success.

Generating subscriber growth through these investments in our sales teams depends, in part, on our ability to
launch cost-effective marketing campaigns, both online and offline. This is particularly true for our NIS channel,
because NIS fields inbound requests from subscribers who find us using online search and submitting our on-site
contact form. Our marketing campaigns attract potential subscribers and successfully build awareness of our
brand across all our sales channels. We also believe that building brand awareness is important to countering the
competition we face from other companies in the geographies we serve, particularly in those markets where our
direct-to-home sales representatives are present. We expect to scale our retail channel through several pilot
programs. Similar to the delay between the hiring of a Smart Home Pro and the resulting revenue generation, we
anticipate that our retail efforts will take time to reach capacity. Once they do, we hope to accelerate subscriber
acquisition and revenue growth by scaling this channel, while maintaining our unit economics.

Expansion of Platform Monetization

As smart home technology develops, we will continue expanding the breadth and depth of our offerings to

reflect the growing needs of our subscriber base and focus on expanding our platform through the addition of
new smart home experiences and use cases. As a result of Legacy Vivint Smart Home’s investments to date, our
smart home platform is active in over 1.5 million households. We will continue to develop our Smart Home
Operating System to include new complex automation capabilities, use case scenarios, and comprehensive device
integrations. The Legacy Vivint Smart Home platform supports over 20 million connected devices, as of
December 31, 2019.

With each new Product, Service, or feature we add to our platform, we create an opportunity to generate

revenue, either through sales to our existing subscribers or through the acquisition of new subscribers. As a
result, we anticipate that offering a broader range of smart home experiences will allow us to grow revenue,
because it improves our ability to offer tailored service packages to subscribers with different needs. This is the
rationale behind our addition of Carguard, a service that expands our smart home experience beyond the four
walls of the home. We believe this expansion of our Product and Service offerings will allow us to build our
subscriber base, while maintaining or improving margins.

Whether we upsell existing subscribers or acquire new ones, expansion of our platform and corresponding

monetization strategies directly impacts our revenue growth and our average revenue per user, and therefore, our
operating results.

Subscribers who contract for a smart home are signing up for our combined proprietary smart home devices
and tech-enabled service offerings. At the time of signing, subscribers choose the subscription-based service that
matches their smart home needs. Because our revenue and operating margins are determined by which package a
subscriber signs up for, ensuring that new subscribers choose the appropriate service offering is a major
determinant of our operating success. Additionally, because we cover 98% of US zip codes, our service costs
greatly impact our operating margins. Over time, as our organization grows, we achieve economies of scale on
our service costs. While we anticipate that our service costs per subscriber will decline over time, an
unanticipated increase in service costs could negatively impact our profitability moving forward.

62

Investment in Future Projects

Legacy Vivint Smart Home has made significant investments in the development of our organization, and

we expect to leverage these investments to continue expanding our Product and Service offerings over time,
including integration with third party products to drive future revenue. Our ability to expand our smart home
platform and to monetize the platform as it develops will significantly impact our operating performance and
profitability in the future.

We believe that the smart home of the future will be an ecosystem in which businesses will seek to deliver

products and services to subscribers in a way that addresses the individual subscriber’s lifestyle and needs. As the
smart home becomes the setting for the delivery of a wide range of these products and services, including
healthcare, entertainment, home maintenance, elder care, beauty, and consumer goods, we hope to become the
hub of this ecosystem and the strategic partner of choice for the businesses delivering these products and
services.

Our success in connecting with business partners who integrate with our Smart Home Operating System in

order to reach and interact with our subscriber base will be a key determinant of our continued operating success.
We expect that additional partnerships will generate incremental revenue, because we will share in the revenue
generated by each partner-provided product or service sale that occurs as a result of integration with our smart
home platform. If we are able to continue expanding our curated set of partnerships with influential companies,
as we already have with Google, Amazon, and Philips, we believe that this will help us to increase our revenue
and resulting profitability.

Our ability to introduce a full suite of high-quality innovative new offerings that further expands our
existing smart home platform will affect our ability to retain, grow and further monetize our subscriber base.
Furthermore, we believe that by vertically integrating the development and design of our Products and Services
with our existing sales and subscriber service activities allows us to more quickly respond to market needs, and
better understand our subscribers’ interactions and engagement with our Products and Services. This provides
critical data that we expect to enable us to continue improving the power, usability and intelligence of these
Products and Services. We expect to continue investing in technologies that will make our platform more
valuable and engaging for subscribers.

Key Performance Measures After the Merger

In evaluating our results, we review several key performance measures discussed below. We believe that the

presentation of such metrics is useful to our investors and lenders because they are used to measure the value of
companies such as ours with recurring revenue streams. After the Merger, our management uses these metrics to
analyze its continuing operations and to monitor, assess, and identify meaningful trends in the operating and
financial performance of the company.

Total Subscribers

Total subscribers is the aggregate number of active smart home and security subscribers at the end of a

given period.

Total Monthly Revenue

Total monthly revenue, or Total MR, is the average monthly total revenue recognized during the period.

Average Monthly Revenue per User

Average monthly revenue per user, or AMRU, is Total MR divided by average monthly Total Subscribers

during a given period.

63

Total Monthly Service Revenue

Total monthly service revenue, or MSR, is the contracted recurring monthly service billings to our smart

home and security subscribers, based on the Total Subscribers number as of the end of a given period.

Average Monthly Service Revenue per User

Average monthly service revenue per user, or AMSRU, is Total MSR divided by Total Subscribers at the

end of a given period.

Attrition Rate

Attrition rate is the aggregate number of canceled smart home and security subscribers during the prior 12

month period divided by the monthly weighted average number of Total Subscribers based on the Total
Subscribers at the beginning and end of each month of a given period. Subscribers are considered canceled when
they terminate in accordance with the terms of their contract, are terminated by us or if payment from such
subscribers is deemed uncollectible (when at least four monthly billings become past due). If a sale of a service
contract to third parties occurs, or a subscriber relocates but continues their service, we do not consider this as a
cancellation. If a subscriber transfers their service contract to a new subscriber, we do not consider this as a
cancellation.

Average Subscriber Lifetime

Average subscriber lifetime, in number of months, is 100% divided by our expected long-term annualized

attrition rate (which is currently estimated at 13%) multiplied by 12 months.

Net Service Cost per Subscriber

Net service cost per subscriber is the average monthly service costs incurred during the period (both period

and capitalized service costs), including monitoring, customer service, field service and other service support
costs, less total non-recurring Smart Home Services billings for the period divided by average monthly Total
Subscribers for the same period.

Net Service Margin

Net service margin is the monthly average MSR for the period, less total average net service costs for the

period divided by the monthly average MSR for the period.

New Subscribers

New subscribers is the aggregate number of net new smart home and security subscribers originated during

a given period. This metric excludes new subscribers acquired by the transfer of a service contract from one
subscriber to another.

Net Subscriber Acquisition Costs per New Subscriber

Net subscriber acquisition costs per New Subscriber is the net cash cost to create new smart home and

security subscribers during a given 12 month period divided by New Subscribers for that period. These costs
include commissions, Products, installation, marketing, sales support and other allocations (general and
administrative and overhead); less upfront payment received from the sale of Products associated with the initial
installation, and installation fees. These costs exclude capitalized contract costs and upfront proceeds associated
with contract modifications.

64

Total Monthly Service Revenue for New Subscribers

Total Monthly Service Revenue for New Subscribers is the contracted recurring monthly service billings to

our New Subscribers during the prior 12 month period.

Total Bookings

Total bookings is Total Monthly Service Revenue for New Subscribers multiplied by Average Subscriber
Lifetime, plus total Product revenue to be recognized over the contract term from New Subscribers during the
prior 12 month period.

Total Backlog

Total backlog is total unrecognized Product revenue plus total Service revenue expected to be recognized

over the remaining subscriber lifetime for Total Subscribers.

Results of Operations

Our entire activity from inception up to December 31, 2019 related to our formation, commencement of the
Initial Public Offering, entering into forward purchase agreements, and, since the offering, our activity has been
limited to the search for a prospective initial business combination, which we completed on January 17, 2020.
For the year ended December 31, 2019, we incurred expenses as a result of being a public company (for legal,
financial reporting, accounting and auditing compliance), as well as for due diligence expenses.

For the year ended December 31, 2019, we had a net income of approximately $4.2 million, which consisted

of approximately $1.3 million in general and administrative expenses, approximately $195,000 in franchise tax
expense, approximately $1.5 million in income tax expense, offset by approximately $7.2 million in interest
income.

For the year ended December 31, 2018, we had a net income of approximately $5.3 million, which consisted

of approximately $871,000 in general and administrative expenses, approximately $5,500 in franchise tax
expense, approximately $44,000 in income tax expense, offset by approximately $6.2 million in interest income.

A discussion of our results of operations for the period from July 26, 2017 (inception) through December 31,

2017 has been omitted from this Form 10-K, but may be found in “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K
for the year ended December 31, 2018, which specific discussion is incorporated by reference herein.

65

Unaudited Quarterly Results of Operations:

The following tables present the unaudited quarterly consolidated results of operations of Mosaic
Acquisition Corp. for the four quarters ended December 31, 2019 and 2018. This unaudited quarterly
consolidated information has been prepared on the same basis as our audited consolidated financial statements
and, in the opinion of management, the statement of operations data includes all adjustments, consisting of
normal recurring adjustments, necessary for the fair presentation of the results of operations for these periods.
You should read these tables in conjunction with our audited consolidated financial statements and related notes
located elsewhere in this annual report on Form 10-K. The results of operations for any quarter are not
necessarily indicative of the results of operations for a full year or any future periods.

December 31, 2019 September 30, 2019 June 30, 2019 March 31, 2019

Statements of Operations Data:
Total interest income . . . . . . . . . . . . . . . . $1,282,414
Loss from operations . . . . . . . . . . . . . . . .
(387,871)
Net income . . . . . . . . . . . . . . . . . . . . . . . . $ 633,255

$1,735,331
(666,452)
$ 714,960

$2,125,942 $2,040,654
(243,459)
$1,475,886 $1,378,002

(216,537)

December 31, 2018 September 30, 2018 June 30, 2018 March 31, 2018

Statements of Operations Data:
Total interest income . . . . . . . . . . . . . . . . $1,952,287
(357,126)
Loss from operations . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . $1,550,711

$1,626,620
(157,497)
$1,469,123

$1,444,095 $1,164,821
(206,442)
$1,288,589 $ 958,379

(155,506)

Liquidity and Capital Resources

As of December 31, 2019, Mosaic Acquisition Corp. had $682,940 of cash and cash equivalents. Unless
noted otherwise, the below discussion of liquidity and capital resources refers to Legacy Vivint Smart Home
prior to the closing of the Merger and to Vivint Smart Home after the closing of the Merger.

Legacy Vivint Smart Home’s primary source of liquidity has historically been cash from operations,
proceeds from issuances of debt securities, borrowings under our credit facilities and, to a lesser extent, capital
contributions. As of December 31, 2019, Legacy Vivint Smart Home had $4.5 million of cash and cash
equivalents and $32.1 million of availability under our revolving credit facility (after giving effect to
$11.1 million of letters of credit outstanding and $245.0 million of borrowings). Subsequent to December 31,
2019 we used the net proceeds from the 2027 Notes offering and Concurrent Refinancing Transactions, together
with the proceeds from the Merger, to (i) redeem all of the 2020 Notes, (ii) redeem all of the 2022 Private
Placement Notes , (iii) refinance in full the existing borrowings under the existing term loan facility and existing
revolving credit facility, (iv) redeem $223.0 million aggregate principal amount of the 2022 Notes and (v) pay
the related accrued interest, fees and expenses related thereto.

As market conditions warrant, we and our equity holders, including Blackstone, its affiliates and members

of our management, may from time to time, seek to purchase our outstanding debt securities or loans, in privately
negotiated or open market transactions, by tender offer or otherwise. Subject to any applicable limitations
contained in the agreements governing our indebtedness, any purchases made by us may be funded by the use of
cash on our balance sheet or the incurrence of new secured or unsecured debt, including additional borrowings
under our revolving credit facility. The amounts involved in any such purchase transactions, individually or in
the aggregate, may be material. Any such purchases may be with respect to a substantial amount of a particular
class or series of debt, with the attendant reduction in the trading liquidity of such class or series. In addition, any
such purchases made at prices below the “adjusted issue price” (as defined for U.S. federal income tax purposes)
may result in taxable cancellation of indebtedness income to us, which amounts may be material, and in related
adverse tax consequences to us. Depending on conditions in the credit and capital markets and other factors, we
will, from time to time, consider various financing transactions, the proceeds of which could be used to refinance

66

our indebtedness or for other purposes. As examples, Legacy Smart Home recently entered into the following
financing transactions:

•

•

In September 2018, Legacy Vivint Smart Home borrowed $810 million under the 2024 Term Loan B
(the “2024 Term Loan B”). We used a portion of the net proceeds from the borrowings under the 2024
Term Loan B to redeem in full the entire $269.5 million outstanding aggregate principal amount of the
existing 2019 notes and pay the related accrued interest and redemption premium, to repurchase
approximately $250.7 million aggregate principal amount of the 2020 notes, and to pay fees and
expenses related to the Term Loan Agreement, and

In May 2019, Legacy Vivint Smart Home issued $225 million aggregate principal amount of 2024
notes. We used the net proceeds from the 2024 notes offering to redeem $225 million aggregate
principal amount of our 2020 notes, and to pay the related accrued interest and to pay all fees and
expenses related thereto.

Cash Flow and Liquidity Analysis

Our cash flows provided by operating activities include recurring monthly billings, cash received from the

sale of Products to our customers that either pay-in-full at the time of installation or finance their purchase of
Products under the Consumer Financing Program and other fees received from the customers we service. Cash
used in operating activities includes the cash costs to monitor and service our subscribers, a portion of subscriber
acquisition costs, interest associated with our debt and general and administrative costs. Historically, Legacy
Vivint Smart Home financed subscriber acquisition costs through our operating cash flows, the issuance of debt
and, to a lesser extent, through the issuance of equity and sale of contracts to third parties. Currently, the upfront
proceeds under Vivint Flex Pay, and those that are paid-in-full at the time of the sale of Products, offset a portion
of the upfront investment associated with subscriber acquisition costs.

Sales from our direct-to-home channel are seasonal in nature. We make investments in the recruitment of
our direct-to-home sales representatives, inventory and other support costs for the April through August sales
period prior to each sales season. We experience increases in capitalized contract costs, as well as costs to
support the sales force throughout North America, prior to and during this time period. The incremental
inventory purchased to support the direct-to-home sales season is generally consumed prior to the end of the
calendar year in which it is purchased.

Cash Flows from Operating Activities

We generally reinvest the cash flows from our recurring monthly billings and cash received from the sale of

Products associated with the initial installation into our business, primarily to (1) maintain and grow our
subscriber base, (2) expand our infrastructure to support this growth, (3) enhance our existing Smart Home
Service offerings, (4) develop new Smart Home Service offerings and (5) expand into new sales channels. These
investments are focused on generating new subscribers, increasing the revenue from our existing subscriber base,
enhancing the overall quality of service provided to our subscribers, and increasing the productivity and
efficiency of our workforce and back-office functions necessary to scale our business.

Legacy Vivint Smart Home’s outstanding debt as of December 31, 2019 was approximately $3.3 billion.

Net cash interest paid for the years ended December 31, 2019, 2018 and 2017 related to this indebtedness
(excluding finance leases) totaled $250.4 million, $236.7 million and $203.4 million, respectively. Legacy Vivint
Smart Home’s net cash from operating activities for the years ended December 31, 2019, 2018 and 2017, before
these interest payments, was an inflow of $28.8 million, an inflow of $16.2 million and an outflow of
$105.9 million, respectively. Accordingly, Legacy Vivint Smart Home’s net cash from operating activities for the
years ended December 31, 2019, 2018 and 2017 was insufficient to cover these interest payments. For additional
information regarding our outstanding indebtedness see “—Long-Term Debt” below.

67

Cash Flows from Investing Activities

Historically, Legacy Vivint Smart Home’s investing activities have primarily consisted of capital
expenditures, business combinations and technology acquisitions. Capital expenditures primarily consist of
periodic additions to property and equipment to support the growth in our business.

Cash Flows from Financing Activities

Historically, Legacy Vivint Smart Home’s cash flows provided by financing activities primarily related to

the issuance of debt, all to fund the portion of upfront costs associated with generating new subscribers that were
not covered through its operating cash flows or through its Vivint Flex Pay program. Uses of cash for financing
activities are generally associated with the return of capital to our stockholders, the repayment of debt and the
payment of financing costs associated with the issuance of debt.

Long-Term Debt

We are a highly leveraged company with significant debt service requirements. As of December 31, 2019,

Legacy Vivint Smart Home had $3,294.2 million of aggregate principal total debt outstanding, consisting of
$454.3 million of outstanding 2020 notes, $270 million of outstanding 2022 private placement notes,
$900.0 million of outstanding 2022 notes, $400.0 million of outstanding 2023 notes, $225.0 million of
outstanding 2024 notes and $799.9 million of outstanding 2024 Term Loan B with $32.1 million of availability
under Legacy Vivint Smart Home’s revolving credit facility (after giving effect to $11.1 million of outstanding
letters of credit and $245.0 million of borrowings).

Revolving Credit Facility

On November 16, 2012, Legacy Vivint Smart Home entered into a $200.0 million senior secured revolving
credit facility, with a five year maturity. In addition, we may request one or more term loan facilities, increased
commitments under the revolving credit facility or new revolving credit commitments, in an aggregate amount
not to exceed $225.0 million.

On June 28, 2013, Legacy Vivint Smart Home amended and restated the credit agreement to provide for a

new repriced tranche of revolving credit commitments with a lower interest rate. Nearly all of the existing
tranches of revolving credit commitments were terminated and converted into the repriced tranche, with the
unterminated portion of the existing tranche continuing to accrue interest at the original higher rate.

On March 6, 2015, Legacy Vivint Smart Home amended and restated the credit agreement to provide for,

among other things, (1) an increase in the aggregate commitments previously available to it from $200.0 million
to $289.4 million and (2) the extension of the maturity date with respect to certain of the previously available
commitments.

On August 10, 2017, Legacy Vivint Smart Home amended and restated the credit agreement to provide for,
among other things, (1) an increase in the aggregate commitments previously available to it from $289.4 million
to $324.3 million and (2) the extension of the maturity date with respect to certain of the previously available
commitments.

On February 14, 2020, we amended and restated the credit agreement (the “Fourth Amended and Restated

Credit Agreement”) to provide for, among other things, (1) an increase in the aggregate commitments previously
available to us from $288.2 million to $350.0 million and (2) the extension of the maturity date with respect to
certain of the previously available commitments.

As of December 31, 2019, the aggregate commitments available under the credit agreement, as amended

and restated on August 10, 2017, prior to APX entering into the Fourth Amended and Restated Credit

68

Agreement, was $288.2 million. As of December 31, 2019 there was $245.0 million outstanding borrowings
under the revolving credit facility. Borrowings under the Fourth Amended and Restated Credit Agreement bear
interest at a rate per annum equal to an applicable margin plus, at our option, either (1) the base rate determined
by reference to the highest of (a) the Federal Funds rate plus 0.50%, (b) the prime rate of Bank of America, N.A.
and (c) the LIBOR rate determined by reference to the costs of funds for U.S. dollar deposits for an interest
period of one month, plus 1.00% or (2) the LIBOR rate determined by reference to the London interbank offered
rate for dollars for the interest period relevant to such borrowing. The applicable margin for base rate-based
borrowings (1)(a) under the Series A Revolving Commitments of approximately $10.9 million and the Series C
Revolving Commitments of approximately $330.8 million is currently 2.0% and (b) under the Series B
Revolving Commitments of approximately $8.3 million is currently 3.0% and (2) the applicable margin for
LIBOR rate-based borrowings (a) under the Series A Revolving Commitments and the Series C Revolving
Commitments is currently 3.0% per annum and (b) under the Series B Revolving Commitments is currently
4.0%. The applicable margin for borrowings under the revolving credit facility is subject to one step-down of 25
basis points based on our meeting a consolidated first lien net leverage ratio test at the end of each fiscal quarter.

In addition to paying interest on outstanding principal under the revolving credit facility, APX is required to
pay a quarterly commitment fee (which will be subject to one interest rate step-down of 12.5 basis points, based
on APX meeting a consolidated first lien net leverage ratio test) to the lenders under the revolving credit facility
in respect of the unutilized commitments thereunder. APX also pays a customary letter of credit and agency fees.

APX is not required to make any scheduled amortization payments under the revolving credit facility. The

Series D Revolving Commitments expired on March 31, 2019 and the principal amount outstanding under the
revolving credit facility will be due and payable in full on March 31, 2021 with respect to the commitments
under the Series A Revolving Credit Facility and Series B Revolving Credit Facility and on February 14, 2025
(or the applicable springing maturity date if the Revolving Springing Maturity Condition applies) with respect to
the $330.8 million of Series C Revolving Credit Commitments. The “Revolver Springing Maturity Condition”
applies if (i) on the 2022 Springing Maturity Date, an aggregate principal amount of the Borrower’s 7.875%
Senior Secured Notes Due 2022 (the “2022 Notes”) in excess of $350.0 million are either outstanding or have not
been repaid or redeemed with certain qualifying proceeds specified in the Revolving Credit Agreement, (ii) on
the 2023 Springing Maturity Date, an aggregate principal amount of the 2023 Notes in excess of $125.0 million
are either outstanding or have not been repaid or redeemed with certain qualifying proceeds specified in the
Revolving Credit Agreement or (iii) on the 2024 Springing Maturity Date, an aggregate principal amount of the
Borrower’s 8.500% Senior Secured Notes Due 2024 (the “2024 Notes”) in excess of $125.0 million are either
outstanding or have not been repaid or redeemed with certain qualifying proceeds specified in the Revolving
Credit Agreement. The “2022 Springing Maturity Date” means the date that is 91 days before the maturity date
with respect to the 2022 Notes, the “2023 Springing Maturity Date” means the date that is 91 days before the
maturity date with respect to the 2023 Notes and the “2024 Springing Maturity Date” means the date that is 91
days before the maturity date with respect to the 2024 Notes.

2020 Notes

As of December 31, 2019, APX had $454.3 million outstanding aggregate principal amount of its 2020

notes. Subsequent to the year ended December 31, 2019, APX used the net proceeds from the 2027 Notes
offering and Concurrent Refinancing Transactions, together with the proceeds from the Merger, to redeem all of
the outstanding principal amount of the 2020 notes. Interest on the 2020 notes was payable semi-annually in
arrears on each June 1 and December 1. The 2020 notes were to mature on December 1, 2020.

We were permitted to redeem at any time and from time to time some or all of the 2020 notes at par plus

any accrued and unpaid interest to the date of redemption.

69

2022 Private Placement Notes

As of December 31, 2019, APX had $270 million outstanding aggregate principal amount of its 2022
private placement notes. Subsequent to the year ended December 31, 2019, APX used the net proceeds from the
2027 Notes offering and Concurrent Refinancing Transactions, together with the proceeds from the Merger, to
redeem all of the outstanding principal amount of the 2022 private placement notes. Interest on the 2022 private
placement notes was payable semi-annually in arrears on June 1 and December 1 of each year.

We were permitted to, at our option, redeem at any time and from time to time some or all of the 2022
private placement notes at 104.5%, declining to par from and after December 1, 2019, in each case, plus any
accrued and unpaid interest to the date of redemption.

The 2022 private placement notes were to mature on December 1, 2022 unless on September 1, 2020 (i.e.

the 91st day prior to the maturity of the 2020 notes) more than an aggregate principal amount of $190 million of
the 2020 notes remained outstanding or had not been refinanced as permitted under the terms of the 2022 private
placement notes, in which case the private placement notes were to mature on September 1, 2020.

2022 Notes

As of December 31, 2019, APX had $900.0 million outstanding aggregate principal amount of its 2022

notes. Subsequent to the year ended December 31, 2019, APX used the net proceeds from the 2027 Notes
offering and Concurrent Refinancing Transactions, together with the proceeds from the Merger, to redeem
$223.0 million of the outstanding principal amount of the 2022 notes. Interest on the 2022 notes is payable semi-
annually in arrears on June 1 and December 1 of each year.

We may, at our option, redeem at any time and from time to time some or all of the 2022 notes at

103.938%, declining to par from and after December 1, 2020, in each case, plus any accrued and unpaid interest
to the date of redemption.

The 2022 notes mature on December 1, 2022, or on such earlier date when any outstanding pari passu lien

indebtedness matures as a result of the operation of any springing maturity provisions set forth in the agreements
governing such pari passu lien indebtedness.

2023 Notes

As of December 31, 2019, APX had $400.0 million outstanding aggregate principal amount of its 2023
notes. Interest on the 2023 notes is payable semi-annually in arrears on September 1 and March 1 of each year.
The 2023 notes mature on September 1, 2023.

We may, at our option, redeem at any time and from time to time some or all of the 2023 notes at 105.719%,

declining to par from and after September 1, 2022, in each case, plus any accrued and unpaid interest to the date
of redemption.

2024 Notes

As of December 31, 2019, APX had $225.0 million outstanding aggregate principal amount of its 2024
notes. Interest on the 2024 notes is payable semi-annually in arrears on May 1 and November 1 of each year.

We may, at our option, redeem at any time and from time to time prior to May 1, 2021, some or all of the

2024 notes at 100% of the principal amount thereof plus accrued and unpaid interest to the redemption date plus
the applicable “make-whole premium.” From and after May 1, 2021, we may, at our option, redeem at any time
and from time to time some or all of the 2024 notes at 104.25%, declining to par from and after May 1, 2023, in
each case, plus any accrued and unpaid interest to the date of redemption. In addition, on or prior to May 1, 2021,
we may, at our option, redeem up to 40% of the aggregate principal amount of the 2024 notes with the proceeds
from certain equity offerings at 108.50%, plus accrued and unpaid interest to the date of redemption. In addition,

70

on or prior to May 1, 2021, during any 12 month period, we also may, at our option, redeem at any time and from
time to time up to 10% of the aggregate principal amount of the 2024 notes at a price equal to 103% of the
principal amount thereof, plus accrued and unpaid interest, to but excluding the redemption date.

The 2024 notes mature on November 1, 2024, unless, under “Springing Maturity” provisions, (1) on

September 1, 2020 (the 91st day prior to the maturity of the 2020 notes) more than an aggregate principal amount
of $275.0 million of such 2020 notes remain outstanding or have not been refinanced as permitted under the note
purchase agreement for the 2020 notes, in which case the 2024 notes will mature on September 1, 2020 or (2) on
June 1, 2023 (the 91st day prior to the maturity of the 2023 notes) more than an aggregate principal amount of
$125.0 million of such 2023 notes remain outstanding or have not been refinanced as permitted under the note
purchase agreement for the 2023 notes, in which case the 2024 Notes will mature on June 1, 2023.

2025 Term Loan B

On September 6, 2018, a subsidiary of Legacy Vivint Smart Home, APX Group incurred $810 million of

2024 Term Loan B. As of December 31, 2019, APX had $799.9 million outstanding aggregate principal amount
of its 2024 Term Loan B. On February 14, 2020 APX Group incurred $950 million of term loans (the “2025
Term Loan B”), the proceeds of which were used, in part, to refinance the 2024 Term Loan B.

Pursuant to the terms of the 2025 Term Loan B, quarterly amortization payments are due in an amount equal

to 0.25% of the aggregate principal amount of the 2025 Term Loan B outstanding on the closing date. The
remaining principal amount outstanding under the 2025 Term Loan B will be due and payable in full on (x) if the
Term Springing Maturity Condition (as defined below) does not apply, December 31, 2025 and (y) if the Term
Springing Maturity Condition does apply, the 2023 Springing Maturity Date (which date is the date that is 91
days before the maturity date with respect to the 2023 Notes).

The “Term Springing Maturity Condition” applies if on the 2023 Springing Maturity Date (which date is the
date that is 91 days before the maturity date with respect to the 2023 Notes), an aggregate principal amount of the
2023 Notes in excess of $125.0 million are either outstanding or have not been repaid or redeemed.

Guarantees and Security (Revolving Credit Facility, 2025 Term Loan B and Notes)

All of the obligations under the credit agreement governing the revolving credit facility, the credit
agreement governing the 2025 Term Loan B and the debt agreements governing the Notes are guaranteed by
APX Group Holdings, Inc. and each of APX Group, Inc.’s existing and future material wholly-owned U.S.
restricted subsidiaries (subject to customary exclusions and qualifications). However, such subsidiaries shall only
be required to guarantee the obligations under the debt agreements governing the Notes for so long as such
entities guarantee the obligations under the revolving credit facility, the credit agreement governing the 2025
Term Loan B or our other indebtedness. See Note 18 of our accompanying consolidated financial statements
included elsewhere in this report for additional financial information regarding guarantors and non-guarantors.

The obligations under the revolving credit facility, 2025 Term Loan B and the 2022 private placement notes,

2022 notes and 2024 notes (collectively with the 2022 private placement notes and the 2022 notes, the “existing
senior secured notes”) are secured by a security interest in (1) substantially all of the present and future tangible
and intangible assets of APX Group, Inc., and the guarantors, including without limitation equipment, subscriber
contracts and communication paths, intellectual property, fee-owned real property, general intangibles,
investment property, material intercompany notes and proceeds of the foregoing, subject to permitted liens and
other customary exceptions, (2) substantially all personal property of APX Group, Inc. and the guarantors
consisting of accounts receivable arising from the sale of inventory and other goods and services (including
related contracts and contract rights, inventory, cash, deposit accounts, other bank accounts and securities
accounts), inventory and intangible assets to the extent attached to the foregoing books and records of APX
Group, Inc. and the guarantors, and the proceeds thereof, subject to permitted liens and other customary
exceptions, in each case held by APX Group, Inc. and the guarantors and (3) a pledge of all of the capital stock of

71

APX Group, Inc., each of its subsidiary guarantors and each restricted subsidiary of APX Group, Inc. and its
subsidiary guarantors, in each case other than excluded assets and subject to the limitations and exclusions
provided in the applicable collateral documents.

Under the terms of the applicable security documents and intercreditor agreement, the proceeds of any
collection or other realization of collateral received in connection with the exercise of remedies will be applied
first to repay amounts due under the revolving credit facility, and up to an additional $60.0 million of
“superpriority” obligations that APX Group, Inc. may incur in the future, before the holders of the existing senior
secured notes or 2025 Term Loan B receive any such proceeds.

Debt Covenants

The credit agreement governing the revolving credit facility, the credit agreement governing the 2025 Term

Loan B and the debt agreements governing the Notes contain a number of covenants that, among other things,
restrict, subject to certain exceptions, APX Group, Inc. and its restricted subsidiaries’ ability to:

•

•

incur or guarantee additional debt or issue disqualified stock or preferred stock;

pay dividends and make other distributions on, or redeem or repurchase, capital stock;

• make certain investments;

•

•

incur certain liens;

enter into transactions with affiliates;

• merge or consolidate;

• materially change the nature of their business;

•

•

•

•

enter into agreements that restrict the ability of restricted subsidiaries to make dividends or other
payments to APX Group, Inc.;

designate restricted subsidiaries as unrestricted subsidiaries

amend, prepay, redeem or purchase certain subordinated debt; and

transfer or sell certain assets.

The credit agreement governing the revolving credit facility, the credit agreement governing the 2025 Term
Loan B and the debt agreements governing the Notes contain change of control provisions and certain customary
affirmative covenants and events of default. As of December 31, 2019, APX Group, Inc. was in compliance with
all covenants related to its long-term obligations.

Subject to certain exceptions, the credit agreement governing the revolving credit facility, the credit
agreement governing the 2025 Term Loan B and the debt agreements governing the Notes permit APX Group,
Inc. and its restricted subsidiaries to incur additional indebtedness, including secured indebtedness.

Our future liquidity requirements will be significant, primarily due to debt service requirements. The actual

amounts of borrowings under the revolving credit facility will fluctuate from time to time.

Our liquidity and our ability to fund our capital requirements is dependent on our future financial

performance, which is subject to general economic, financial and other factors that are beyond our control and
many of which are described under “Item 1A—Risk Factors” in this report. If those factors significantly change
or other unexpected factors adversely affect us, our business may not generate sufficient cash flow from
operations or we may not be able to obtain future financings to meet our liquidity needs. We anticipate that to the
extent additional liquidity is necessary to fund our operations, it would be funded through borrowings under the
revolving credit facility, incurring other indebtedness, additional equity or other financings or a combination of
these potential sources of liquidity. We may not be able to obtain this additional liquidity on terms acceptable to
us or at all.

72

Other Factors Affecting Liquidity and Capital Resources

Vivint Flex Pay. Vivint Flex Pay became Legacy Vivint Smart Home’s primary sales model beginning
in March 2017. Under the Consumer Financing Program, qualified customers are eligible for loans provided by
third-party financing providers up to $4,000. The annual percentage rates on these loans range between 0% and
9.99%, based on the customer’s credit quality, and are either installment loans or revolving loans with a 42 or 60
month term.

For certain third-party provider loans, we pay a monthly fee based on either the average daily

outstanding balance of the loans or the number of outstanding loans, depending on the third-party financing
provider. Additionally, we share in the liability for credit losses depending on the credit quality of the customer,
with our Company being responsible for between 5% to 100% of lost principal balances, depending on factors
specified in the agreement with such provider. Because of the nature of these provisions, we record a derivative
liability at its fair value when the third-party financing provider originates loans to customers, which reduces the
amount of estimated revenue recognized on the provision of the services. The derivative liability represents the
estimated remaining amounts to be paid to the third-party provider by us related to outstanding loans, including
the monthly fees based on either the outstanding loan balances or the number of outstanding loans, shared
liabilities for credit losses and customer payment processing fees. The derivative liability is reduced as payments
are made by us to the third-party financing provider. Subsequent changes to the fair value of the derivative
liability are realized through other expenses (income), net in the Condensed Consolidated Statement of
Operations. As we continue to use Vivint Flex Pay as our primary sales model, we expect our liability to third-
party providers to continue to increase substantially and the rate of such increases may accelerate.

For other third-party provider loans, we receive net proceeds (net of fees and expected losses) for

which we have no further obligation to the third-party. We record these net proceeds to deferred revenue.

Vehicle Leases. Since 2010, Legacy Vivint Smart Home has leased, and expects to continue leasing,

vehicles primarily for use by our Smart Home Pros. For the most part, these leases have 36 to 48 month durations
and we account for them as finance leases. At the end of the lease term for each vehicle we have the option to
either (i) purchase it for the estimated end-of-lease fair market value established at the beginning of the lease
term; or (ii) return the vehicle to the lessor to be sold by them and in the event the sale price is less than the
estimated end-of-lease fair market value we are responsible for such deficiency.

Aircraft Lease. In December 2012, Legacy Vivint Smart Home entered into an aircraft lease agreement for
the use of a corporate aircraft, which is accounted for as an operating lease. Upon execution of the lease, Legacy
Vivint Smart Home paid a $5.9 million security deposit which is refundable at the end of the lease term.
Beginning January 2013, Legacy Vivint Smart Home is required to make 156 monthly rental payments of
approximately $83,000 each. In January 2015, an amendment to the agreement was made which, among other
changes, increased the required monthly rental payments to approximately $87,000 each. We also have the
option to extend the lease for an additional 36 months upon expiration of the initial term. The lease agreement
also provides us the option to purchase the aircraft on certain specified dates for a stated dollar amount, which
represents the current estimated fair value as of the purchase date.

Contractual Obligations

As of December 31, 2019 and 2018, Mosaic Acquisition Corp. did not have any commitments or contractual

obligations.

Critical Accounting Policies and Estimates

In preparing our consolidated financial statements, we make assumptions, judgments and estimates that can

have a significant impact on our revenue, loss from operations and net loss, as well as on the value of certain
assets and liabilities on our consolidated balance sheets. We base our assumptions, judgments and estimates on

73

historical experience and various other factors that we believe to be reasonable under the circumstances. Actual
results could differ materially from these estimates under different assumptions or conditions. At least quarterly,
we evaluate our assumptions, judgments and estimates and make changes accordingly. Historically, our
assumptions, judgments and estimates relative to our critical accounting estimates have not differed materially
from actual results. Prior to the Merger we believed that the assumptions, judgements and estimates involved in
the accounting for Class A common stock subject to possible redemption to be our critical accounting estimate.
After the Merger date, we believe that the assumptions, judgments and estimates involved in the accounting for
revenue recognition, deferred revenue, capitalized contract costs, derivatives, retail installment contract
receivables, allowance for doubtful accounts, loss contingencies, valuation of intangible assets, impairment of
long-lived assets, fair value and income taxes have the greatest potential impact on our consolidated financial
statements; therefore, we consider these to be our critical accounting estimates.

Critical accounting policies and estimates prior to the Merger date

Class A common stock subject to possible redemption

As of December 31, 2019, we accounted for our Common Stock subject to possible redemption in

accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing
Liabilities from Equity,” under which Common Stock subject to mandatory redemption (if any) are classified as
liability instruments and are measured at fair value. Conditionally redeemable Common Stock (including
Common Stock that feature redemption rights that are either within the control of the holder or subject to
redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary
equity. At all other times, Common Stock is classified as stockholders’ equity. Because our Common Stock
featured certain redemption rights that are considered to be outside of our control and subject to the occurrence of
uncertain future events, at December 31, 2019 and 2018, 34,447,737 and 33,427,182 shares of Common Stock
subject to possible redemption at the redemption amount are presented as temporary equity, outside of the
stockholders’ equity section of our balance sheets.

Critical accounting policies and estimates after the Merger date

Revenue Recognition

We offer our customers smart home services combining Products, including a proprietary control panel,

door and window sensors, door locks, security cameras and smoke alarms; installation; and a proprietary
back-end cloud platform software and Services. These together create an integrated system that allows our
customers to monitor, control and protect their home. Our customers are buying this integrated system that
provides them with these Smart Home Services. The number and type of Products purchased by a customer
depends on their desired functionality. Because the Products and Services included in the customer’s contract are
integrated and highly interdependent, and because they must work together to deliver the Smart Home Services,
we have concluded that installed Products, related installation and Services contracted for by the customer are
generally not distinct within the context of the contract and, therefore, constitute a single, combined performance
obligation. Revenues for this single, combined performance obligation are recognized on a straight-line basis
over the customer’s contract term, which is the period in which the parties to the contract have enforceable rights
and obligations. We have determined that certain contracts that do not require a long-term commitment for
monitoring services by the customer contain a material right to renew the contract, because the customer does not
have to purchase Products upon renewal. Proceeds allocated to the material right are recognized over the period
of benefit, which is generally three years.

The majority of our subscription contracts are between three and five years in length and are non-cancelable.

These contracts with customers generally convert into month-to-month agreements at the end of the initial term,
and some customer contracts are month-to-month from inception. Payment for recurring monitoring and other
Smart Home Services is generally due in advance on a monthly basis.

74

Sales of Products and other one-time fees such as service fees or installation fees are invoiced to the
customer at the time of sale. Revenues for wireless internet service that were provided by Vivint Wireless Inc.
and any Products or Services that are considered separate performance obligations are recognized when those
Products or Services are delivered. Taxes collected from customers and remitted to governmental authorities are
not included in revenue. Payments received or amounts billed in advance of revenue recognition are reported as
deferred revenue.

We consider Products, related installation, and our proprietary back-end cloud platform software and
services an integrated system that allows our customers to monitor, control and protect their homes. These Smart
Home Services are accounted for as a single performance obligation that is recognized over the customer’s
contract term, which is generally three to five years.

Deferred Revenue

Our deferred revenues primarily consist of amounts for sales (including upfront proceeds) of Smart Home

Services. Deferred revenues are recognized over the term of the related performance obligation, which is
generally three to five years.

Capitalized Contract Costs

Capitalized contract costs represent the costs directly related and incremental to the origination of new

contracts, modification of existing contracts or to the fulfillment of the related subscriber contracts. These
include commissions, other compensation and related costs incurred directly for the origination and installation
of new or upgraded customer contracts, as well as the cost of Products installed in the subscriber’s home at the
commencement or modification of the contract. We calculate amortization by accumulating all deferred contract
costs into separate portfolios based on the initial month of service and amortize those deferred contract costs on a
straight-line basis over the expected period of benefit that we have determined to be five years, consistent with
the pattern in which we provide services to our customers. We believe this pattern of amortization appropriately
reduces the carrying value of the capitalized contract costs over time to reflect the decline in the value of the
assets as the remaining period of benefit for each monthly portfolio of contracts decreases. The period of benefit
of five years is longer than a typical contract term because of anticipated contract renewals. We apply this period
of benefit to our entire portfolio of contracts. We update our estimate of the period of benefit periodically and
whenever events or circumstances indicate that the period of benefit could change significantly. Such changes, if
any, are accounted for prospectively as a change in estimate. Amortization of capitalized contract costs is
included in “Depreciation and Amortization” on the consolidated statements of operations.

The carrying amount of the capitalized contract costs is periodically reviewed for impairment. In performing

this review, we consider whether the carrying amount of the capitalized contract costs will be recovered. In
estimating the amount of consideration we expect to receive in the future related to capitalized contract costs, we
consider factors such as attrition rates, economic factors, and industry developments, among other factors. If we
determine that capitalized contract costs are impaired, we recognize an impairment loss for the amount by which
the carrying amount of the capitalized contract costs and the anticipated costs that relate directly to providing the
future services exceed the consideration that we have received and that we expect to receive in the future.

Contract costs not directly related and incremental to the origination of new contracts, modification of
existing contracts or to the fulfillment of the related subscriber contracts are expensed as incurred. These costs
include those associated with housing, marketing and recruiting, non-direct lead generation costs, certain portions
of sales commissions and residuals, overhead and other costs considered not directly and specifically tied to the
origination of a particular subscriber.

Consumer Financing Program

Vivint Flex Pay became Legacy Vivint Smart Home’s primary sales model beginning in March 2017. Under
Vivint Flex Pay, customers pay separately for Products and Services. The customer has the following three ways

75

to pay for the Products: (1) qualified customers in the United States may finance the purchase of Products
through a third-party financing provider (“Consumer Financing Program”), (2) we offer to some customers not
eligible for the Consumer Financing Program, but who qualify under our underwriting criteria, the option to enter
into a retail installment contract (“RIC”) directly with us, or (3) customers may purchase the Products at the
outset of the service contract by check, automatic clearing house payments (“ACH”), credit or debit card.

Under the Consumer Financing Program, qualified customers are eligible for loans provided by third-party

financing providers up to $4,000. The annual percentage rates on these loans range between 0% and 9.99%,
based on the customer’s credit quality, and are either installment loans or revolving loans with a 42 or 60 month
term.

For certain third-party provider loans, we pay a monthly fee based on either the average daily outstanding

balance of the loans or the number of outstanding loans, depending on the third-party financing provider and we
share liability for credit losses, with the Company being responsible for between 5% and 100% of lost principal
balances. Additionally, we are responsible for reimbursing certain third-party financing providers for the credit
card transaction fees associated with the loans. Because of the nature of these provisions, we record a derivative
liability at its fair value when the third-party financing provider originates loans to customers, which reduces the
amount of estimated revenue recognized on the provision of the services. The derivative liability represents the
estimated remaining amounts to be paid to the third-party provider by us related to outstanding loans, including
the monthly fees based on either the outstanding loan balances or the number of outstanding loans, shared
liabilities for credit losses and customer payment processing fees. The derivative liability is reduced as payments
are made by us to the third-party financing provider. Subsequent changes to the fair value of the derivative
liability are realized through other expenses (income), net in the Consolidated Statement of Operations.

For other third-party loans, we receive net proceeds (net of fees and expected losses) for which we have no

further obligation to the third-party. We record these net proceeds to deferred revenue.

Retail Installment Contract Receivables

For subscribers that enter into a RIC to finance the purchase of Products and related installation, we record a
receivable for the amount financed. Gross RIC receivables are reduced for (i) expected write-offs of uncollectible
balances over the term of the RIC and (ii) a present value discount of the expected cash flows using a risk
adjusted market interest rate (together, the “RIC Discount”). Therefore, the RIC receivables equal the present
value of the expected cash flows to be received by us over the term of the RIC. At the time of installation, we
record a long-term note receivable within long-term notes receivables and other assets, net on the consolidated
balance sheets for the present value of the receivables that are expected to be collected beyond 12 months of the
reporting date. The unbilled receivable amounts that are expected to be collected within 12 months of the
reporting date are included as a short-term notes receivable within accounts and notes receivable, net on the
consolidated balance sheets. The billed amounts of notes receivable are included in accounts receivable within
accounts and notes receivable, net on the consolidated balance sheets.

We impute the interest on the RIC receivable using a risk adjusted market interest rate and record it as an

adjustment to deferred revenue and as an adjustment to the face amount of the related receivable. The risk
adjusted interest rate considers a number of factors, including credit quality of the subscriber base and other
qualitative considerations such as macro-economic factors. The imputed interest income is recognized over the
term of the RIC contract as recurring and other revenue on the consolidated statements of operations.

When we determine that there are RIC receivables that have become uncollectible, we record an adjustment
to the RIC Discount and reduce the related note receivable balance. On a regular basis, we also assess the level of
the RIC Discount balance based on historical RIC write-off trends and adjust the balance, if necessary. Account
balances are written-off if collection efforts are unsuccessful and future collection is unlikely based on the length
of time from the day accounts become past due.

76

Accounts Receivable

Accounts receivable consists primarily of amounts due from subscribers for recurring monthly monitoring

Services and the billed portion of RIC receivables. The accounts receivable are recorded at invoiced amounts and
are non-interest bearing and are included within accounts and notes receivable, net on the consolidated balance
sheets. We estimate this allowance based on historical collection experience and subscriber attrition rates. When
we determine that there are accounts receivable that are uncollectible, they are charged off against the allowance
for doubtful accounts. The provision for doubtful accounts is included in general and administrative expenses in
the accompanying consolidated statements of operations.

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 legal counsel. We record an accrual when a loss is deemed probable to occur and
is reasonably estimable. Factors that we consider in the determination of the likelihood of a loss and the estimate
of the range of that loss in respect of legal matters include the merits of a particular matter, the nature of the
litigation, the length of time the matter has been pending, the procedural posture of the matter, whether we intend
to defend the matter, the likelihood of settling for an insignificant amount and the likelihood of the plaintiff
accepting an amount in this range. However, the outcome of such legal matters is inherently unpredictable and
subject to significant uncertainties.

Goodwill and Intangible Assets

Purchase accounting requires that all assets and liabilities acquired in a transaction be recorded at fair value

on the acquisition date, including identifiable intangible assets separate from goodwill. For significant
acquisitions, we obtain independent appraisals and valuations of the intangible (and certain tangible) assets
acquired and certain assumed obligations as well as equity. Identifiable intangible assets include customer
relationships and other purchased and internally developed technology. Goodwill represents the excess of cost
over the fair value of net assets acquired.

The estimated fair values and useful lives of identified intangible assets are based on many factors,
including estimates and assumptions of future operating performance and cash flows of the acquired business,
estimates of cost avoidance, the nature of the business acquired, the specific characteristics of the identified
intangible assets and our historical experience and that of the acquired business. The estimates and assumptions
used to determine the fair values and useful lives of identified intangible assets could change due to numerous
factors, including product demand, market conditions, regulations affecting the business model of our operations,
technological developments, economic conditions and competition.

We conduct a goodwill impairment analysis annually in the fourth fiscal quarter, as of October 1, and as
necessary if changes in facts and circumstances indicate that the fair value of our reporting units may be less than
their carrying amounts. When indicators of impairment do not exist and certain accounting criteria are met, we
are able to evaluate goodwill impairment using a qualitative approach. When necessary, our quantitative
goodwill impairment test consists of two steps. The first step requires that we compare the estimated fair value of
our reporting units to the carrying value of the reporting unit’s net assets, including goodwill. If the fair value of
the reporting unit is greater than the carrying value of its net assets, goodwill is not considered to be impaired and
no further testing is required. If the fair value of the reporting unit is less than the carrying value of its net assets,
we would be required to complete the second step of the test by analyzing the fair value of its goodwill. If the
carrying value of the goodwill exceeds its fair value, an impairment charge is recorded.

Property, Plant and Equipment and Long-lived Assets

Property, plant and equipment are stated at cost and depreciated on the straight-line method over the
estimated useful lives of the assets or the lease term for assets under finance leases, whichever is shorter.

77

Intangible assets with definite lives are amortized over the remaining estimated economic life of the underlying
technology or relationships, which ranges from two to ten years. Definite-lived intangible assets are amortized on
the straight-line method over the estimated useful life of the asset or in a pattern in which the economic benefits
of the intangible asset are consumed. Amortization expense associated with leased assets is included with
depreciation expense. Routine repairs and maintenance are charged to expense as incurred.

We review long-lived assets, including property, plant and equipment, capitalized contract costs, and

definite-lived intangibles for impairment when events or changes in circumstances indicate that the carrying
amount may not be recoverable. We consider whether or not indicators of impairment exist on a regular basis and
as part of each quarterly and annual financial statement close process. Factors we consider in determining
whether or not indicators of impairment exist include market factors and patterns of customer attrition. If
indicators of impairment are identified, we estimate the fair value of the assets. An impairment loss is recognized
if the carrying amount of a long-lived asset is not recoverable and exceeds its fair value.

We conduct an indefinite-lived intangible impairment analysis annually as of October 1, and as necessary if
changes in facts and circumstances indicate that the fair value of our indefinite-lived intangibles may be less than
the carrying amount. When indicators of impairment do not exist and certain accounting criteria are met, we are
able to evaluate indefinite-lived intangible impairment using a qualitative approach. When necessary, our
quantitative impairment test consists of two steps. The first step requires that we compare the estimated fair value
of our indefinite-lived intangibles to the carrying value. If the fair value is greater than the carrying value, the
intangibles are not considered to be impaired and no further testing is required. If the fair value is less than the
carrying value, an impairment loss in an amount equal to the difference is recorded.

Income Taxes

We account for income taxes based on the asset and liability method. Under the asset and liability method,

deferred tax assets and deferred tax liabilities are recognized 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 operating loss and tax credit carryforwards. Valuation allowances are established when necessary
to reduce deferred tax assets when it is determined that it is more likely than not that some portion, or all, of the
deferred tax asset will not be realized.

We recognize the effect of an uncertain income tax position on the income tax return at the largest amount
that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax
position will not be recognized if it has less than a 50% likelihood of being sustained. Our policy for recording
interest and penalties is to record such items as a component of the provision for income taxes.

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.

Recent Accounting Pronouncements

See Note 2 to our accompanying audited Financial Statements.

Off-Balance Sheet Arrangements

As of December 31, 2019 and 2018, Mosaic Acquisition Corp. did not have any off-balance sheet

arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

JOBS Act

On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other

things, relax certain reporting requirements for qualifying public companies. As of December 31, 2019, we
qualified as an “emerging growth company” and under the JOBS Act were allowed to comply with new or
revised accounting pronouncements based on the effective date for private (not publicly traded) companies. As
such, our financial statements may not be comparable to companies that comply with public company effective
dates.

78

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

All activity through December 31, 2019 related to our formation and the Initial Public Offering and
identifying and evaluating prospective acquisition targets for an initial business combination, which we
completed on January 17, 2020. On January 2, 2018, the net proceeds of the Initial Public Offering and the sale
of the private placement warrants held in the trust account were invested in U.S. government treasury bills with a
maturity of 180 days or less. Due to the short-term nature of these investments, we believe there will be no
associated material exposure to interest rate risk. Prior to 2018, such proceeds were not invested and were held in
a non-interest-bearing trust account.

We have not engaged in any hedging activities since our inception. We do not expect to engage in any

hedging activities with respect to the market risk to which we are exposed.

Item 8. Financial Statements and Supplementary Data.

Reference is made to Pages F-1 through F-26 comprising a portion of this Annual Report on Form 10-K.

VIVINT SMART HOME, INC. (F/K/A MOSAIC ACQUISITION CORP.)

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Financial Statements:

Balance Sheets as of December 31, 2019 and 2018

Statements of Operations for the year ended December 31, 2019 and 2018

Statements of Changes in Stockholders’ Equity for the year ended December 31, 2019 and 2018

Statements of Cash Flows for the year ended December 31, 2019 and 2018

Notes to Financial Statements

Page No.

F-2

F-3

F-4

F-5

F-6

F-7

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that
information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls
and procedures designed to ensure that information required to be disclosed in company reports filed or
submitted under the Exchange Act is accumulated and communicated to management, including our Chief
Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our principal executive
officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls
and procedures as of the end of the fiscal quarter ended December 31, 2019, as such term is defined in Rules

79

13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and
principal financial officer have concluded that during the period covered by this report, our disclosure controls
and procedures were effective at a reasonable assurance level and, accordingly, provided reasonable assurance
that the information required to be disclosed by us in reports filed under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules and forms.

Internal Control Over Financial Reporting

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over our financial
reporting. Our internal control over financial reporting is designed to provide reasonable assurances regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with U.S. generally accepted accounting principles. Our internal control over financial reporting includes those
policies and procedures that:

•

•

•

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of our assets;

provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with U.S. generally accepted accounting principles, and that receipts
and expenditures are being made only in accordance with authorizations of our management and
directors; and

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use
or disposition of our assets that could have a material effect on the financial statements.

Our internal control systems include the controls themselves, actions taken to correct deficiencies as
identified, an organizational structure providing for division of responsibilities, careful selection and training of
qualified financial personnel and a program of internal audits.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

Our management has assessed the effectiveness of our internal control over financial reporting as of
December 31, 2019. In making this assessment, management used the criteria established in Internal Control-
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) (2013 framework).

Based on this assessment, our management concluded that our internal control over financial reporting was

effective as of December 31, 2019.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f)

and 15d-15(f) under the Exchange Act) during the fiscal quarter ended December 31, 2019 that have materially
affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

80

Item 9B. Other Information.

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The following table sets forth, as of March 11, 2020, certain information regarding our directors and

executive officers who are responsible for overseeing the management of our business.

On March 3, 2020, we announced that Alex J. Dunn stepped down from his position as President, effective
March 2, 2020. We also announced Matthew J. Eyring, Executive Vice President and General Manager of Inside
Sales, and Jeremy B. Warren, Chief Technology Officer, are leaving to pursue other opportunities, effective
March 13, 2020. On March 3, 2020, Vivint Smart Home, Inc. further announced the promotion of Dale R. Gerard
to Chief Financial Officer and the appointments of Todd M. Santiago as Chief Revenue Officer and JT Hwang as
Chief Technology Officer. Mr. Hwang’s background and experience is more fully detailed in the executive
officer biographical summaries following the table below.

Name

Executive Officers:

Todd R. Pedersen . . . . . . . . . . . . . . . . . . . . . . . . . .
Dale R. Gerard . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Matthew J. Eyring . . . . . . . . . . . . . . . . . . . . . . . . . .

Scott R. Hardy . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Patrick E. Kelliher . . . . . . . . . . . . . . . . . . . . . . . . . .
Shawn J. Lindquist
. . . . . . . . . . . . . . . . . . . . . . . . .
Todd M. Santiago . . . . . . . . . . . . . . . . . . . . . . . . . .

Age

50
49
50

42
56
49
47

Jeremy B. Warren . . . . . . . . . . . . . . . . . . . . . . . . . .

45

Non-employee directors:

Title

Chief Executive Officer and Director
Chief Financial Officer
Executive Vice President, General Manager of
Inside Sales
Chief Operating Officer
Chief Accounting Officer
Chief Legal Officer and Secretary
Executive Vice President, General Manager of
Retail
Chief Technology Officer

David F. D’Alessandro . . . . . . . . . . . . . . . . . . . . . .
Paul S. Galant . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
David M. Maura . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruce McEvoy . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Jay D. Pauley . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Joseph S. Tibbetts, Jr. . . . . . . . . . . . . . . . . . . . . . . .
Peter F. Wallace . . . . . . . . . . . . . . . . . . . . . . . . . . .

68 Director
51 Director
46 Director
42 Director
42 Director
67 Director
44 Director

Executive Officers

Todd R. Pedersen. Mr. Pedersen founded Legacy Vivint Smart Home in 1999 and served as its President,

Chief Executive Officer and Director. In February 2013, Mr. Pedersen relinquished his title as Legacy Vivint
Smart Home’s President and remained its Chief Executive Officer and Director. He has served as our Chief
Executive Officer and a Director of Vivint Smart Home since January 2020. In 2011, Mr. Pedersen founded
Legacy Vivint Smart Home’s sister Company, Vivint Solar, and served as its Chief Executive Officer from August
2011 through January 2013. Mr. Pedersen currently serves as a member of Vivint Solar’s board of directors, a
position he has held since November 2012. Mr. Pedersen was named the Ernst & Young Entrepreneur of the Year
in 2010 in the services category for the Utah Region. Mr. Pedersen attended Brigham Young University.

Dale R. Gerard. Mr. Gerard was named our Chief Financial Officer in March 2020. Prior to this, he served
as Legacy Vivint Smart Home’s interim Chief Financial Officer in October 2019 and our interim Chief Financial
Officer in January 2020. Prior to this, he served Legacy Vivint Smart Home’s Senior Vice President of Finance

81

and Treasurer from September 2014 to October 2019 and Vice President of Finance and Treasurer from January
2013 to September 2014. Previously, he served as the Legacy Vivint Smart Home’s Treasurer from March 2010
to January 2013. Mr. Gerard holds a B.S. in Accounting and an MBA from Purdue University.

Matthew J. Eyring. Mr. Eyring has served as Legacy Vivint Smart Home’s Executive Vice President,
General Manager of Inside Sales, which includes managing the Company’s call center operations, new business
development, and strategy functions, since November 2018 and our Executive Vice President, General Manager
of Inside Sales since January 2020. Prior to this, he served as Chief Strategy and Innovation Officer of Legacy
Vivint Smart Home from November 2012 to November 2018. Prior to Vivint, Mr. Eyring worked at Innosight, a
global strategy and innovation consulting firm, from 2001 to 2012. He held many senior positions at the firm,
most recently serving as Managing Partner with responsibility for all global strategy and operations. Prior to
Innosight, Mr. Eyring was a Vice President and General Manager at LavaStorm Technologies, an Internet
professional services company, where he ran the company’s Boston office. Prior to that, Mr. Eyring was a
Product Manager at Medtronic, Inc. Mr. Eyring previously served on the board of directors of Virgin Pulse.
Mr. Eyring holds a B.A. in Economics from the University of Utah and an MBA from the Harvard Business
School, and is the co-author of a number of articles published in the Harvard Business Review.

Scott R. Hardy. Mr. Hardy has served as Legacy Vivint Smart Home’s Chief Operating Officer since
December 2016 and as our Chief Operating Officer since January 2020. Prior to this, he served as Legacy Vivint
Smart Home’s Senior Vice President, Inside Sales from February 2014 to December 2016. He joined Legacy
Vivint Smart Home as Vice President, Business Analytics in 2013. Prior to joining Legacy Vivint Smart Home,
Mr. Hardy served as Principal at the Cicero Group, LP, a consulting and market research firm, from 2011 to
2013, where he led the firm’s strategy consulting practice. Mr. Hardy also served in senior consulting roles at
McKinsey and Company from 2006 to 2009 and Monitor Group from 2000 to 2002, where he focused on growth
strategy and sales and marketing projects. From 2009 to 2011, Mr. Hardy held senior roles at Cisco, an
information technology company, including Director of Cisco’s Telepresence Cloud business unit and Director
of Product Management, and starting in 2009 until their acquisition by Cisco in the same year, he led strategy
and business development for TANDBERG, a provider of video conferencing systems. Mr. Hardy holds a B.S. in
Economics from Brigham Young University and an MBA from the Harvard Business School.

JT Hwang. Mr. Hwang, 45, was appointed our Chief Technology Officer on February 29, 2020, effective

March 13, 2020. Prior to this, he served as Legacy Vivint Smart Home’s Chief Engineering Officer from
February 2017 and our Chief Engineering Officer from January 2020, Legacy Vivint Smart Home’s Chief
Information Officer from June 2010 to January 2013 and from August 2014 to February 2017, and Legacy Vivint
Smart Home’s Chief Technology Officer from March 2008 to June 2010 and January 2013 to August 2014. He
has over 19 years of experience in the computer science field. Prior to joining us, Mr. Hwang was Chief
Architect at Netezza Corporation, a global provider of data warehouse appliance solutions. He also served as
Chief Architect of Hewlett-Packard’s Advanced Solutions Lab. Mr. Hwang holds a B.S. of science and a Master
of Engineering, Computer Science from Massachusetts Institute of Technology.

Patrick E. Kelliher. Mr. Kelliher has served as Legacy Vivint Smart Home’s Chief Accounting Officer since

February 2014 and our Chief Accounting Officer since January 2020. Prior to this, he served as Legacy Vivint
Smart Home’s Vice President of Finance and Corporate Controller from March 2012 to February 2014. Prior to
joining Legacy Vivint Smart Home, Mr. Kelliher served as Senior Director of Finance and Business Unit
Controller of Adobe from November 2009 to March 2012. Prior to Adobe, Mr. Kelliher was the Vice President
of Finance and Controller for Omniture, Inc. Before that he has served in various senior finance roles at other
high growth technology companies. Mr. Kelliher holds a B.S. in Accounting and Finance from Northern Illinois
University and an MBA from the University of Chicago Graduate School of Business.

Shawn J. Lindquist, Mr. Lindquist has served as Legacy Vivint Smart Home’s Chief Legal Officer and
Secretary since May 2016 and our Chief Legal Officer and Secretary since January 2020. From February 2014 to
May 2016, Mr. Lindquist served as Chief Legal Officer, Executive Vice President and Secretary of Legacy

82

Vivint Smart Home’s sister Company, Vivint Solar. From February 2010 to February 2014, Mr. Lindquist served
as Chief Legal Officer, Executive Vice President and Secretary of Fusion-io, Inc., a leading provider of flash
memory solutions for application acceleration, which was acquired by Sandisk Corporation in 2014. From 2005
to 2010, Mr. Lindquist served as Chief Legal Officer, Senior Vice President and Secretary of Omniture, Inc.,
through the completion and integration of its merger with Adobe Systems Incorporated. Prior to Omniture,
Mr. Lindquist was a corporate and securities attorney at Wilson Sonsini Goodrich & Rosati, P.C., the leading
legal advisor to technology, life sciences and other growth enterprises worldwide. Mr. Lindquist has also served
as in-house corporate and mergers and acquisitions counsel for Novell, Inc., a software and services company,
and as Vice President and General Counsel of a privately held, venture-backed company. Mr. Lindquist has also
served as an adjunct professor of law at the J. Reuben Clark Law School at Brigham Young University.
Mr. Lindquist holds a B.S. in Business Management and J.D. from Brigham Young University.

Todd M. Santiago. Mr. Santiago has served as Legacy Vivint Smart Home’s Executive Vice President,
General Manager of Retail, which includes managing the Company’s retail relationships, home builder initiatives
and direct sales platforms, since November 2018 and our Executive Vice President, General Manager of Retail
since January 2020. He will serve as our Chief Revenue Officer beginning March 13, 2020. Prior to this, he
served as Chief Revenue Officer of Legacy Vivint Smart Home from February 2013 to November 2018. Prior to
joining Legacy Vivint Smart Home, Mr. Santiago was President of 2GIG from December 2008 to March 2013
where he coordinated the successful launch of Go!Control. Prior to joining 2GIG, Mr. Santiago was Partner and
General Manager of Signature Academies in Boise, ID and VP and General Manager at NCH Corporation in
Irving, TX. Mr. Santiago is the brother-in-law of Mr. Pedersen. Mr. Santiago holds a B.A. in English from
Brigham Young University and an MBA from the Harvard Business School.

Jeremy B. Warren. Mr. Warren has served as Legacy Vivint Smart Home’s Chief Technology Officer since
December 2014 and our Chief Technology Officer since January 2020. Prior to this, he served as Vice President
of Innovation from November 2012 to December 2014. Prior to joining us, Mr. Warren was Chief Technology
Officer at 2GIG Technologies where he was responsible for the engineering and mass production of 2GIG’s
product line. Prior to joining 2GIG, Mr. Warren was Chief Technology Officer of the U.S. Department of Justice
and Chief Architect of Lavastorm Technologies. Mr. Warren attended the Massachusetts Institute of Technology.

Non-Employee Directors

David F. D’Alessandro. Mr. D’Alessandro has served as a Director of Legacy Vivint Smart Home’s board

of directors since July 2013 and as a Director and the Chairman of our board of directors since January 2020. Mr.
D’Alessandro serves on the boards of directors of several private companies as well as Legacy Vivint Smart
Home’s publicly traded sister company, Vivint Solar. From 2010 to September 2017, Mr. D’Alessandro also
served as chairman of the board of directors of SeaWorld Entertainment, Inc. He served as chairman, president
and chief executive officer of John Hancock Financial Services, Inc. from 2000 to 2004, having served as
president and chief operating officer of the same entity from 1996 to 2000, and guided it through a merger with
ManuLife Financial Corporation in 2004. Mr. D’Alessandro served as president and chief operating officer of
ManuLife in 2004. He is a former partner of the Boston Red Sox. A graduate of Syracuse University, he holds
honorary doctorates from three colleges and served as vice chairman and a trustee of Boston University.

Paul S. Galant. Mr. Galant has served as a Director of Legacy Vivint Smart Home since October 2015 and

as a Director of Vivint Smart Home since January 2020. Mr. Galant served as Chief Executive Officer of
Brightstar Corp., a leading mobile services company for managing devices and accessories and subsidiary of
SoftBank Group Corp., and he has served as an Operating Partner of SoftBank. Prior to joining Brightstar,
Mr. Galant was the Chief Executive Officer of VeriFone Systems, Inc., and a member of VeriFone’s board of
directors, since October 2013. Prior to joining Verifone, Mr. Galant served as the CEO of Citigroup Inc.’s
Enterprise Payments business since 2010. In this role, Mr. Galant oversaw the design, marketing and
implementation of global business-to-consumer and consumer-to-business digital payments solutions. From 2009
to 2010, Mr. Galant served as CEO of Citi Cards, heading Citigroup’s North American and International Credit

83

Cards business. From 2007 to 2009, Mr. Galant served as CEO of Citi Transaction Services, a division of Citi’s
Institutional Clients Group. From 2002 to 2007, Mr. Galant was the Global Head of the Cash Management
business, one of the largest processors of payments globally. Mr. Galant joined Citigroup, a multinational
financial services corporation, in 2000. Prior to joining Citigroup, Mr. Galant held positions at Donaldson,
Lufkin & Jenrette, Smith Barney, and Credit Suisse. Mr. Galant also brings broad financial industry experience
from his time as chairman of the NY Federal Reserve Bank Payments Risk Committee and chairman of The
Clearing House Secure Digital Payments LLC. Mr. Galant was on the board of directors of Conduent
Incorporated, a leading provider of diversified business services with leading capabilities in transaction
processing, automation and analytics. Mr. Galant holds a B.S. in Economics from Cornell University where he
graduated a Phillip Merrill Scholar.

David M. Maura. Mr. Maura has served as a Director since October 2017 and previously served as

Chairman, Chief Executive Officer and President of Mosaic Acquisition Corp. from October 2017 until January
2020. Mr. Maura has served as the Executive Chairman and Chief Executive Officer of Spectrum Brands since
July 2018. Prior to that Mr. Maura served as the Executive Chairman, effective as of January 2016, and as Chief
Executive Officer, effective as of April 2018, of Spectrum Brands Legacy. Prior to such appointment, Mr. Maura
served as non-executive Chairman of the board of Spectrum Brands Legacy since July 2011 and served as the
interim Chairman of the board and as a director of Spectrum Brands Legacy since June 2010. Mr. Maura was a
Managing Director and the Executive Vice President of Investments at HRG Group from October 2011 until
November 2016, and was a member of HRG’s Group’s board of directors from May 2011 until December 2017.
Mr. Maura previously served as a Vice President and Director of Investments of Harbinger Capital from 2006
until 2012. Prior to joining Harbinger Capital in 2006, Mr. Maura was a Managing Director and Senior Research
Analyst at First Albany Capital, where he focused on distressed debt and special situations, primarily in the
consumer products and retail sectors. Prior to First Albany, Mr. Maura was a Director and Senior High Yield
Research Analyst in Global High Yield Research at Merrill Lynch & Co. Mr. Maura was a Vice President and
Senior Analyst in the High Yield Group at Wachovia Securities, where he covered various consumer product,
service, and retail companies. Mr. Maura began his career at ZPR Investment Management as a Financial
Analyst. Mr. Maura previously served on the board of directors of Ferrous Resources, Ltd., Russell Hobbs
(formerly Salton, Inc.) and Applica, Inc. Mr. Maura received a B.S. in Business Administration from Stetson
University and is a CFA charterholder.

Bruce McEvoy. Mr. McEvoy has served as a Director of Legacy Vivint Smart Home since November 2012
and of Vivint Smart Home since January 2020. Mr. McEvoy is a Senior Managing Director at Blackstone in the
Private Equity Group. Before joining Blackstone in 2006, Mr. McEvoy worked at General Atlantic from 2002 to
2004, and was a consultant at McKinsey & Company from 1999 to 2002. Mr. McEvoy currently serves on the
board of directors of Center for Autism and Related Disorders, MB Aerospace, RGIS Inventory Specialists,
TeamHealth and our publicly traded sister company, Vivint Solar. Mr. McEvoy was formerly a director of
Performance Food Group Company, Catalent, Inc., GCA Services Group, Inc., SeaWorld Entertainment, Inc. and
Vistar Corporation. Mr. McEvoy holds an A.B. in History from Princeton University and an MBA from the
Harvard Business School.

Jay D. Pauley. Mr. Pauley has served as a Director of Legacy Vivint Smart Home since October 2015 and

of Vivint Smart Home since January 2020. Mr. Pauley is a Managing Director at Summit Partners, which he
joined in 2010. Prior to joining Summit Partners, Mr. Pauley was Vice President at GTCR, a private equity firm,
and an associate at Apax Partners, a private equity and venture capital firm. Before that, he worked for GE
Capital. Mr. Pauley currently serves on the boards of directors of numerous private companies, including our
publicly traded sister company, Vivint Solar. Mr. Pauley holds a B.S. from the Ohio State University and an
MBA from the Wharton School at the University of Pennsylvania.

Joseph S. Tibbetts, Jr. Mr. Tibbetts has served as a Director of Legacy Vivint Smart Home since October
2015 and of Vivint Smart Home since January 2020. From March 2017 to March 2018, Mr. Tibbetts served as
the interim chief financial officer of Acquia Corporation, a private company that is a leading provider of cloud-
based, digital experience management solutions. Prior to that Mr. Tibbetts served as the senior vice president and

84

chief financial officer of Publicis Sapient, part of Publicis Group SA, from February 2015, when Publicis
acquired Sapient Corporation, to September 2015. Prior to that Mr. Tibbetts served as senior vice president and
global chief financial officer of Sapient Corporation from October 2006 to February 2015. He began serving as
Sapient Corporation’s treasurer in December 2012 and was reappointed as Sapient Corporation’s chief
accounting officer in June 2013, a role he previously held from 2009 to 2012. In addition to being Sapient
Corporation’s chief financial officer, Mr. Tibbetts also served as Sapient Corporation’s managing director-
SapientNitro Asia Pacific. Prior to joining Sapient Corporation, Mr. Tibbetts was the chief financial officer of
Novell, Inc. from February 2003 to June 2006 and, prior to that, he held a variety of senior financial management
positions at Charles River Ventures, Lightbridge, Inc., and SeaChange International, Inc. Mr. Tibbetts was also
formerly a partner with Price Waterhouse LLP. Mr. Tibbetts currently serves on the board of directors of our
publicly traded sister company, Vivint Solar. Mr. Tibbetts holds a B.S. in business administration from the
University of New Hampshire.

Peter F. Wallace. Mr. Wallace has served as a Director of Legacy Vivint Smart Home since November
2012 and of Vivint Smart Home since January 2020. Mr. Wallace is a Senior Managing Director at Blackstone in
the Private Equity Group, which he joined in 1997. Mr. Wallace has served on the board of directors of our
publicly traded sister company, Vivint Solar, Inc., since November 2012 and as Chairman of the Board since
March 2014. Mr. Wallace also serves on the board of directors of Alight Solutions, Inc., Michaels Stores, Inc.,
Outerstuff, Service King, Tradesmen International and The Weather Channel Companies. Mr. Wallace was
formerly a director of AlliedBarton Security Services, GCA Services, New Skies Satellites Holdings Ltd. and
SeaWorld Entertainment. Mr. Wallace holds a B.A. in Government from Harvard College.

Committees of the Board of Directors

Our board of directors has three standing committees: an audit committee, a compensation committee and a

nominating and corporate governance committee. Each committee operates under a charter that has been
approved by our board and has the composition and responsibilities described below. The charter of each
committee is available on our website, www.vivint.com under Investor Relations: Corporate Governance:
Governance Documents. Our board of directors may from time to time establish other committees.

Audit Committee

Our board has established an audit committee of the board of directors. The members of our audit

committee are Joseph S. Tibbetts, Jr., Jay D. Pauley and Paul S. Galant. Joseph S. Tibbetts serves as the chair of
the audit committee.

Each member of the audit committee qualifies as an independent director under the NYSE corporate
governance standards and the independence requirements of Rule 10A-3 of the Exchange Act. Each member of
the audit committee meets the financial literacy requirements of the NYSE and our board of directors has
determined that each member of the audit committee qualifies as an “audit committee financial expert” as
defined in applicable SEC rules and has accounting or related financial management expertise.

The purpose of the audit committee, as set forth in its charter, is to prepare the audit committee report
required by the SEC to be included in our proxy statement and to assist our board of directors in with respect to
its oversight of (1) the Company’s accounting and financial reporting processes and internal control over
financial reporting, as well as the audit and integrity of the Company’s financial statements;, (2) the independent
registered public accounting firm’s qualifications, performance and independence, (3) the performance of our
internal audit function (4) the Company’s compliance with applicable law (including U.S. federal securities laws
and other legal and regulatory requirements) and (5) risk assessment and risk management, including, but not
limited to, the Company’s IT security program..

Compensation Committee

Our board has established a compensation committee of the board of directors. The members of our

compensation committee are David F. D’Alessandro, Bruce McEvoy and Peter F. Wallace. David F.
D’Alessandro serves as the chair of the compensation committee.

85

The purpose of the compensation committee, as set forth in its charter, is to assist our board of directors in

discharging its responsibilities relating to (1) oversight of the Company’s compensation policies, plans and
benefit programs, and overall compensation philosophy, (2) oversight of the compensation of the Company’s
Chief Executive Officer and other executive officers, (3) approving and evaluating the executive officer
compensation plans, policies and programs of the Company, (4) administering the Company’s equity
compensation plans and (5) preparing the compensation committee report required to be included in our proxy
statement under the rules and regulations of the SEC.

Nominating and Corporate Governance Committee

Our board has established a nominating and corporate governance committee. The members of our

nominating and corporate governance are Peter F. Wallace, David F. D’Alessandro and Paul S. Galant. Peter F.
Wallace serves as chair of the nominating and corporate governance committee.

The purpose of our nominating and corporate governance committee, as set forth in its charter, is to assist
our board of directors in discharging its responsibilities relating to (1) identifying individuals qualified to become
new board of directors members, consistent with criteria approved by the board of directors, (2) reviewing the
qualifications of incumbent directors to determine whether to recommend them for reelection and selecting, or
recommending that the board of directors select, the director nominees for the next annual meeting of
stockholders, (3) identifying board of directors members qualified to fill vacancies on any board of directors
committee and recommending that the board of directors appoint the identified member or members to the
applicable committee, (4) reviewing and recommending to the board of directors corporate governance principles
applicable to us, (5) overseeing the evaluation of the board of directors and management, (6) recommending
members of the Board of Directors to serve on committees of the board of directors and evaluating the functions
and performance of such committees, (7) overseeing and approving the management continuity planning process
and (7) shaping the corporate governance of the Company.

Controlled Company Exception

Affiliates of Blackstone beneficially own a majority of the voting power of all outstanding shares of our
common stock. As a result, we are a “controlled company” within the meaning of the NYSE’s corporate governance
standards. Under these corporate governance standards, a company of which more than 50% of the voting power is
held by an individual, group or another company is a “controlled company” and may elect not to comply with
certain corporate governance standards, including the requirements (1) that a majority of our board of directors
consist of independent directors, (2) that our board of directors have a compensation committee that is composed
entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities and
(3) that our board of directors have a nominating and corporate governance committee that is composed entirely of
independent directors with a written charter addressing the committee’s purpose and responsibilities. We may
choose to utilize certain of these exemptions. If 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 standards and, depending on the board’s
independence determination with respect to our then-current directors, we may be required to add additional
directors to our board in order to achieve such compliance within the applicable transition periods.

Independence of Directors

Under our corporate governance guidelines and NYSE rules, a director is not independent unless our board
affirmatively determines that he or she does not have a direct or indirect material relationship with us or any of
our subsidiaries.

Our corporate governance guidelines define independence in accordance with the independence definition in

the current NYSE corporate governance rules for listed companies. Our corporate governance guidelines require
our board to review the independence of all directors at least annually.

86

In the event a director has a relationship with the Company that is relevant to his or her independence and is

not addressed by the objective tests set forth in the NYSE independence definition, our board will determine,
considering all relevant facts and circumstances, whether such relationship is material.

Our board has affirmatively determined that each of Messrs. D’Alessandro, Wallace, Galant, Pauley,
McEvoy and Tibbetts is independent under the guidelines for director independence set forth in the Corporate
Governance Guidelines and under all applicable NYSE guidelines, including with respect to committee
membership. Our board also has determined that each of Messrs. Galant, Pauley and Tibbetts is “independent”
for purposes of Section 10A(m)(3) of the Exchange Act, and that each of Messrs. D’Alessandro, McEvoy and
Wallace is “independent” for purposes of Section 10C(a)(3) of the Exchange Act. In making its independence
determinations, our board considered and reviewed all information known to it.

Director Nominations

Our nominating and corporate governance committee will recommend to the board of directors candidates
for nomination for election at the annual meeting of the stockholders. Our bylaws also establish advance notice
procedures with respect to the nomination of candidates for election as directors, other than nominations made by
or at the direction of the board of directors or a committee of the board of directors. In order for a shareholder
nomination to be “properly brought” before a meeting, a stockholder will have to comply with advance notice
requirements and provide us with certain information. Generally, to be timely, a stockholder’s notice must be
received at our principal executive offices not less than 90 days nor more than 120 days prior to the first
anniversary date of the immediately preceding annual meeting of stockholders. Our bylaws also specify
requirements as to the form and content of a stockholder’s notice.

We have not formally established any specific, minimum qualifications that must be met or skills that are
necessary for directors to possess. In general, in identifying and evaluating nominees for director, the board of
directors considers educational background, diversity of professional experience, knowledge of our business,
integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our
stockholders.

Compensation Committee Interlocks and Insider Participation

During 2019, our compensation committee was comprised of our former directors Eugene I. Davis, Tyler S.

Kolarik and Andrew A. McKnight. No member of the compensation committee was at any time during fiscal
year 2019, or at any other time, one of the our employees. None of our executive officers has served as a director
or member of a compensation committee (or other committee serving an equivalent function) of any entity, one
of whose executive officers served as a director of our board of directors or member of our compensation
committee.

Code of Business Conduct and Ethics

We have adopted Code of Business Conduct and Ethics that applies to all of our directors, officers and
employees, including our principal executive officer, principal financial officer and principal accounting officer,
which is available on our website at www.vivint.com under Investor Relations: Corporate Governance:
Governance Documents. Our Code of Business Conduct and Ethics is a “code of ethics”, as defined in Item
406(b) of Regulation S-K. We will make any legally required disclosures regarding amendments to, or waivers
of, provisions of our code of ethics on our Internet website.

Corporate Governance Guidelines

Our board of directors has adopted corporate governance guidelines in accordance with the corporate

governance rules of the NYSE that serve as a flexible framework within which our board of directors and its
committees operate. These guidelines cover a number of areas including board membership criteria and director

87

qualifications, director responsibilities, board agenda, roles of the chairman of the board, chief executive officer
and lead director, meetings of non-management and independent directors, committee responsibilities and
assignments, board member access to management and independent advisors, director communications with third
parties, director compensation, director orientation and continuing education, evaluation of senior management
and management succession planning. A copy of our corporate governance guidelines is posted on our website at
www.vivint.com under Investor Relations: Corporate Governance: Governance Documents.

Item 11. Executive Compensation.

As of December 31, 2019, the Company had three officers, David M. Maura (Chairman, President and
CEO), William H. Mitchell (CFO) and Edward Albert III (COO), two of whom (Mr. Maura and Mr. Albert)
received no compensation for their service as officers of the Company. The Company had no other officers or
employees. Concurrently with the completion of the Merger, the Company’s officers resigned from their
respective positions.

We entered into an agreement with an affiliate of Mosaic Sponsor, LLC, pursuant to which we pay such

affiliate a total of $16,875 per month for office space and related support services. Upon completion of the
Merger, we ceased paying these monthly fees.

The Company entered into a services agreement (the “Services Agreement”) with CFO Bullpen LLC, a New

Hampshire limited liability company wholly owned by Mr. Mitchell. Under the Services Agreement,
Mr. Mitchell provided services to us as our Chief Financial Officer until the completion of the Merger. Per the
Services Agreement, we paid a monthly retainer of $5,000 which commenced on the closing of our Initial Public
Offering. The Services Agreement also provided that we would make a deferred cash payment to him upon
completion of our initial business combination, liquidation or Mr. Mitchell’s termination of engagement,
whichever occurred first, equal to $330.00 multiplied by the number of hours Mr. Mitchell had worked to such
date, less the total amount of the $5,000 monthly retainer already paid to CFO Bullpen LLC. Additionally, we
agreed to issue Common Stock to CFO Bullpen LLC upon completion of our initial business combination equal
to 17.895 shares per hour Mr. Mitchell had worked for us up to the date of such combination with such shares
delivered on the six-month anniversary of such date. CFO Bullpen LLC had to have been engaged by the
Company on the date of our initial business combination or liquidation (as applicable) to receive the foregoing
equity awards; however, the agreement provided that CFO Bullpen LLC would remain eligible to receive such
awards if the consulting relationship was terminated by the Company without Cause or by CFO Bullpen LLC for
Good Reason (as such terms are defined in the Services Agreement and described below).

Per the Services Agreement, “Cause” is generally defined as (i) the willful and continuing refusal of
Mr. Mitchell to follow the lawful directives of the Company’s CEO or board of directors, provided such
directives are consistent with Mr. Mitchell’s title and position; (ii) conduct that is intentional and known by
Mr. Mitchell to be materially harmful or potentially materially harmful to the Company’s best interest; (iii) gross
negligence in the performance of, or willful disregard of, Mr. Mitchell’s obligations under the agreement;
(iv) Mr. Mitchell’s conviction of any felony; (v) Mr. Mitchell’s commission of any act of dishonesty or moral
turpitude which, in the good-faith opinion of our board of directors, is materially detrimental to the Company; or
(vi) any material breach by CFO Bullpen LLC or Mr. Mitchell of the agreement. Per the Services Agreement,
“Good Reason” is generally defined as (i) any material breach by the Company of its obligations under the
agreement; (ii) a significant diminution of Mitchell’s position as the Chief Financial Officer of the Company
without CFO Bullpen LLC’s consent; or (iii) a failure by the company to obtain a written agreement from any
successor or assign of Mosaic to assume the material obligations under the agreement upon the consummation of
a business combination.

Pursuant to the Services Agreement, upon completion of the Merger we became obligated to issue to CFO

Bullpen LLC 10,069 shares of our Common Stock.

88

Summary Compensation Table

The following table sets forth compensation that the Company’s CEO, CFO and COO earned during the

Fiscal Year ended December 31, 2019 and 2018.

Name and Principal Position

Year

Salary
($)(1)

Bonus
($)

Stock
Awards
($)

Option
Awards
($)

Non-Equity
Incentive Plan
Compensation
($)

All Other
Compensation
($)

David M. Maura . . . . . . . . . . . . . . 2019

— —

Chairman, President & Chief

Executive Officer

— —
William H. Mitchell . . . . . . . . . . . . 2019 $55,000 —
2018 $60,000 —
— —
— —

. . . . . . . . . . . . . 2019
2018

Chief Operating Officer

Chief Financial Officer

Edward Albert III

2018

—

—
—
—
—
—

—

—
—
—
—
—

—

—
—
—
—
—

—

—
—
—
—
—

Total
($)

—

—
$55,000
$60,000
—
—

(1) For Mr. Mitchell, this amount represents the $5,000 monthly retainer fee paid to CFO Bullpen LLC for

Mr. Mitchell’s services, commencing on our public offering.

We did not make any equity awards to any of our executives or officers during the fiscal year ending

December 31, 2019 and 2018, and none of our executives or officers held any outstanding equity as of
December 31, 2019 and 2018.

Until the completion of the Merger, SPAC our sponsors, officers and directors, or any of their respective
affiliates, were reimbursed for any reasonable out-of-pocket expenses incurred in connection with activities on
our behalf such as identifying potential target businesses and performing due diligence on suitable business
combinations. Our audit committee reviewed on a quarterly basis all payments that were made to our SPAC
sponsors, officers, directors or our or any of their affiliates. We are not party to any agreements with our officers
and directors that provide for benefits upon termination of employment. Other than as described above, none of
our directors received compensation for their service on our board of directors for the fiscal year ending
December 31, 2019 and 2018.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.

As of December 31, 2019, we had no compensation plans under which equity securities are authorized for

issuance.

The following table sets forth information known to the Company regarding the beneficial ownership of the

Company’s common stock as of February 25, 2020, after giving effect to the Closing, by:

•

•

•

•

each person who is known by the Company to be the beneficial owner of more than five percent (5%)
of the outstanding shares of any class of the Company’s common stock;

each named executive officer of the Company;

each current executive officer and director of the Company; and

all current executive officers and directors of the Company, as a group.

Beneficial ownership for the purposes of the following table is determined in accordance with the rules and
regulations of the SEC. A person is a “beneficial owner” of a security if that person has or shares “voting power,”
which includes the power to vote or to direct the voting of the security, or “investment power”, which includes the
power to dispose of or to direct the disposition of the security or has the right to acquire such powers within 60 days.

89

The beneficial ownership percentages set forth in the table below are based on 154,730,618 shares of
Common Stock issued and outstanding as of February 25, 2020 and do not take into account the issuance of any
shares of Common Stock upon the exercise of warrants to purchase up to 17,433,324 shares of Common Stock
that remain outstanding.

Unless otherwise noted in the footnotes to the following table, and subject to applicable community property

laws, the persons and entities named in the table have sole voting and investment power with respect to their
beneficially owned common stock and preferred stock.

Number of Shares of
Common Stock
Beneficially Owned

Percentage of
Outstanding Common
Stock

Name of Beneficial Owners

5% Stockholders:
Blackstone(1) . . . . . . . . . . . . . . . . . . . . . . . . . .
Fortress Mosaic Sponsor LLC and

affiliates(2) . . . . . . . . . . . . . . . . . . . . . . . . . .
Fayerweather Fund Eiger, L.P. . . . . . . . . . . . .
Solamere V Investment, LLC . . . . . . . . . . . . .
Executive Officers and Directors:
Todd R. Pedersen . . . . . . . . . . . . . . . . . . . . . .
William H. Mitchell . . . . . . . . . . . . . . . . . . . .
Edward Albert III . . . . . . . . . . . . . . . . . . . . . .
David F. D’Alessandro(3)
. . . . . . . . . . . . . . . .
Paul S. Galant . . . . . . . . . . . . . . . . . . . . . . . . .
David M. Maura . . . . . . . . . . . . . . . . . . . . . . .
Bruce McEvoy(4) . . . . . . . . . . . . . . . . . . . . . . .
Jay D. Pauley . . . . . . . . . . . . . . . . . . . . . . . . .
Joseph S. Tibbetts, Jr. . . . . . . . . . . . . . . . . . . .
Peter F. Wallace(4)
. . . . . . . . . . . . . . . . . . . . .
All directors and executive officers as a

88,651,119

22,574,739
14,187,648
8,585,216

—
—
—
35,366
—
4,313,797

—
—
—
—

group (16 individuals)

. . . . . . . . . . . . . . .

5,409,878

57.3%

14.6%
9.2%
5.5%

—
—
—

*

—
2.8%
—
—
—
—

3.5%

Indicates less than 1 percent.

*
(1) Represents 78,651,119 shares held by 313 Acquisition, 9,995,784 shares held by BCP Voyager Holdings

LP, and 4,216 shares held by Blackstone Family Investment Partnership VI L.P. 313 Acquisition is managed
by a board of managers and Blackstone Capital Partners VI L.P. (“BCP VI”), as managing member. The
members of the board of managers of 313 Acquisition are Peter Wallace, Bruce McEvoy, Alex J. Dunn, Jay
D. Pauley, Todd R. Pedersen, Paul S. Galant, Joseph S. Tibbetts, Jr. and David F. D’Alessandro. Blackstone
Management Associates VI L.L.C. is the general partner of each of BCP VI and BCP Voyager Holdings LP.
BMA VI L.L.C. is the sole member of Blackstone Management Associates VI L.L.C. BCP VI Side-by-Side
GP L.L.C. is the general partner of Blackstone Family Investment Partnership VI L.P. Blackstone Holdings
III L.P. is the managing member of BMA VI L.L.C and the sole member of BCP VI Side-by-Side GP L.L.C.
The general partner of Blackstone Holdings III L.P. is Blackstone Holdings III GP L.P. The general partner
of Blackstone Holdings III GP L.P. is Blackstone Holdings III GP Management L.L.C. The sole member of
Blackstone Holdings III GP Management L.L.C. is The Blackstone Group Inc. The sole holder of the
Class C common stock of The Blackstone Group Inc. is Blackstone Group Management L.L.C. Blackstone
Group Management L.L.C. is wholly owned by Blackstone’s senior managing directors and controlled by its
founder, Stephen A. Schwarzman. Each of the Blackstone entities described in this footnote and Stephen A.
Schwarzman (other than to the extent it or he directly holds securities as described herein) may be deemed
to beneficially own the shares directly or indirectly controlled by such Blackstone entities or him, but each
disclaims beneficial ownership of such shares. The address of each of such Blackstone entities and
Mr. Schwarzman is c/o The Blackstone Group Inc., 345 Park Avenue, New York, New York 10154. In
addition to funds affiliated with Blackstone, principal holders of limited liability company interests in 313

90

Acquisition include entities affiliated with Summit Partners L.P., Todd Pedersen and Alex Dunn. The
address of 313 Acquisition is 4931 North 300 West, Provo, Utah 84604.

(2) Based on a Schedule 13D filed with the Securities and Exchange Commission on January 21, 2020 by

Fortress Investment Group LLC and the other parties named therein, represents 17,357,339 shares held by
Fortress Mosaic Investor LLC, 2,631,579 shares held by Fortress Mosaic Anchor LLC, and 1,585,821 shares
held by Fortress Mosaic Sponsor LLC. Fortress Mosaic Holdings LLC is the sole owner of each of Fortress
Mosaic Sponsor LLC, Fortress Mosaic Anchor LLC and Fortress Mosaic Investor LLC. FIG LLC controls,
indirectly through investment funds managed or advised by controlled affiliates of FIG LLC, 100% of the
equity interests of Fortress Mosaic Holdings LLC. Fortress Operating Entity I LP is the sole owner of FIG
LLC. FIG Corp. is the general partner of Fortress Operating Entity I LP. Fortress Investment Group LLC is
the sole owner of FIG Corp. The address of Fortress Mosaic Sponsor LLC and each of the entities listed
above is 1345 Avenue of the Americas, New York, New York 10105.

(3) Reflects shares, including 27,193 restricted shares, held by a limited liability company controlled by

Mr. D’Alessandro.

(4) Messrs. McEvoy and Wallace are each employees of affiliates of Blackstone and members of the board of

managers of 313 Acquisition LLC, but each disclaims beneficial ownership of shares beneficially owned by
Blackstone and its affiliates. Messrs. McEvoy and Wallace are each employees of affiliates of the Blackstone
entities described above, but each disclaims beneficial ownership of the limited liability company interests in
313 Acquisition beneficially owned by such Blackstone entities. The address for Messrs., McEvoy and
Wallace is c/o The Blackstone Group Inc., 345 Park Avenue, New York, New York 10154.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Founder Shares

In August 2017, our SPAC sponsors purchased an aggregate of 8,625,000 founder shares for an aggregate
purchase price of $25,000, or approximately $0.003 per share. In October 2017, our SPAC sponsors transferred
an aggregate of 30,000 founder shares to one of our independent director nominees at their original per share
purchase price. In addition, in November 2017 and December 2017, two of our directors purchased an aggregate
amount of 30,000 units from the public market. As such, our initial stockholders collectively own approximately
20% of our issued and outstanding shares and have the right to elect all of our directors prior to our initial
business combination and each director will need to receive the vote of two-thirds of the outstanding Class F
shares in order to be elected.

Private Placement Warrants

In addition, our SPAC sponsors purchased an aggregate of 5,933,334 private placement warrants for a

purchase price of $1.50 per warrant in a private placement that closed simultaneously with the closing of this
Initial Public Offering. As such, our SPAC sponsors’ interest in this transaction is valued at approximately
$8,900,001. Each private placement warrant entitles the holder to purchase one Class A ordinary share at a price
of $11.50 per share, subject to adjustment. The private placement warrants (including the Class A common stock
issuable upon exercise of the private placement warrants) may not, subject to certain limited exceptions, be
transferred, assigned or sold by it until 30 days after the completion of the Merger.

Promissory Note

The SPAC sponsors had loaned us an aggregate of $100,000 to cover expenses related to the Initial Public
Offering pursuant to a promissory note. The loan was non-interest bearing, unsecured and due on the earlier of
March 31, 2018 or the closing of the Initial Public Offering. We repaid the promissory note on October 23, 2017.

Office Space and Related Support Services

We entered into an Agreement with an affiliate of Mosaic Sponsor, LLC, pursuant to which we paid a total

of $16,875 per month for office space and related support services to such affiliate. Upon completion of the
Merger, we ceased paying these monthly fees.

91

Forward Purchase Agreements

Prior to our Initial Public Offering, we entered into forward purchase agreements pursuant to which certain
institutional and accredited investors (the “anchor investors”) (including an affiliate of Fortress Mosaic Sponsor
LLC) agreed to purchase the forward purchase shares in a private placement to occur concurrently with the
Merger.

In connection with the forward purchase shares sold to the anchor investors, the SPAC sponsors received

(by way of an adjustment to their existing Class F Shares) an aggregate number of additional Class F Shares
equal to one ninth of the aggregate number of forward purchase shares sold to the anchor investors.

If the last reported sale price of the Class A common stock is less than $11.00 (as adjusted for share splits,

share combinations and the like) for at least 20 trading days (whether or not consecutive) during the period of 30
consecutive trading days ending on the first anniversary of the Merger, each anchor investor may purchase from
the SPAC sponsors, at a price per Class A ordinary share of $0.01, a number of contingent call shares no greater
than (a) the number of forward purchase shares issued and sold to such anchor investor less any forward purchase
shares sold by such anchor investor prior to its exercise of the right to purchase such contingent call shares
divided by (b) 18 (as adjusted for share splits, share combinations and the like).

The forward purchase agreements also provide that the anchor investors are entitled to a right of first offer

with respect to any proposed sale of additional equity or equity-linked securities by us for capital raising
purposes in connection with the closing of the Merger (other than forward purchase shares) and registration
rights with respect to their forward purchase securities. The forward purchase agreements provide that prior to
our initial business combination each anchor investor has the right to designate one individual to be, at its
election, either elected as a member of our board of directors or a non-voting observer of our board of directors.

In addition, in connection with the Closing, we entered into an additional subscription agreement (the

“Additional Forward Purchaser Subscription Agreement”) with one of the forward purchasers (the “Forward
Purchaser”). Pursuant to the Additional Forward Purchaser Subscription Agreement, immediately prior to the
Effective Time, the Forward Purchaser purchased from us 5,000,000 shares of Common Stock at a purchase price
of $10.00 per share. As consideration for the additional investment, 25% of Mosaic Sponsor LLC’s founder
shares and private placement warrants were forfeited to us and we issued to the Forward Purchaser an equal
number of shares of Common Stock and warrants concurrently with the Closing.

Support and Services Agreement

In connection with Blackstone’s acquisition of us (the “Blackstone Acquisition”), Legacy Vivint Smart
Home entered into a support and services agreement with Blackstone Management Partners L.L.C. (“BMP”), an
affiliate of Blackstone. Under the support and services agreement, Legacy Vivint Smart Home agreed to
reimburse BMP for any out-of-pocket expenses incurred by BMP and its affiliates and to indemnify BMP and its
affiliates and related parties, in each case, in connection with transactions involving Blackstone and the provision
of services under the support and services agreement. In connection with the execution of the Merger Agreement,
the parties to the support and services agreement entered into an amended and restated support and services
agreement with BMP as described below.

Monitoring Services and Fees

In addition, under this agreement, Legacy Vivint Smart Home has engaged BMP to provide, directly or
indirectly, monitoring, advisory and consulting services that may be requested by us in the following areas:
(1) advice regarding the structure, distribution and timing of debt and equity offerings and advice regarding
relationships with our lenders and bankers, (2) advice regarding the structuring and implementation of equity
participation plans, employee benefit plans and other incentive arrangements for certain of our key executives,

92

(3) general advice regarding dispositions and/or acquisitions, (4) advice regarding the strategic direction of our
business and such other advice directly related or ancillary to the above advisory services as may be reasonably
requested by us. These services will generally be provided until the first to occur of (a) the tenth anniversary of
the closing date of the Blackstone Acquisition (November 16, 2022), (b) the date of a first underwritten public
offering of shares of our common stock listed on the New York Stock Exchange or Nasdaq’s national market
system for aggregate proceeds of at least $150 million (an “IPO”) and (c) the date upon which Blackstone owns
less than 9.9% of our common stock or that of our direct or indirect controlling parent and such stock has a fair
market value (as determined by Blackstone) of less than $25 million (each of the events specified in clauses
(a) through (c) above, the “Exit Date”).

The monitoring fee payable for monitoring services in any fiscal year of ours will be equal to the greater of

(1) a minimum base fee of $2.7 million (the “Minimum Annual Fee”), subject to adjustment as summarized
below if we engage in a business combination or disposition that is “significant” (as defined in the support and
services agreement) and (2) the amount of the monitoring fee paid in respect of the immediately preceding fiscal
year, without regard to the post-fiscal year “true-up” adjustment described in the paragraph below (which will
not yet have occurred at the time the annual monitoring fee is paid). We refer to the adjusted monitoring fee for
any fiscal year of the Surviving Company as the “Monitoring Fee” for such fiscal year.

In the case of a significant business combination or disposition, if 1.5% of our pro forma consolidated
EBITDA (as defined in the support and services agreement) after giving effect to the business combination or
disposition exceeds (in the case of a business combination) or is less than (in the case of a disposition) the then-
current Monitoring Fee, the Monitoring Fee for the year in which the significant business combination or
disposition occurs will be adjusted upward or downward, respectively, by the amount of such excess or shortfall,
with such adjustment prorated based on the remaining full or partial fiscal quarters remaining in our then-current
fiscal year. We will pay upward adjustments to the Monitoring Fee promptly upon availability of the pro forma
income statement prepared in respect of such business combination. Downward adjustments to the Monitoring
Fee will be effected through a rebate of the fee paid to BMP in that fiscal year. Subsequently, the Minimum
Annual Fee applicable to full fiscal years following any significant business combination or disposition will be
equal to 1.5% of our pro forma consolidated EBITDA after giving effect to the business combination or
disposition (subject to further adjustments for subsequent significant business combinations and dispositions).
However, in all cases (including in the case of a current-year rebate described above), the Monitoring Fee will
always be at least $2.7 million and in no event will a rebate for a downward adjustment result in BMP retaining a
monitoring fee of less than $2.7 million for monitoring services in respect of any particular fiscal year.

In addition to the adjustments to the Minimum Annual Fee and the Monitoring Fee in connection with
significant business combinations or dispositions and the related payments or rebates described above, there may
be other adjustments to the Monitoring Fee based on projected consolidated EBITDA and a post-fiscal year
“true-up.” If 1.5% of our projected consolidated EBITDA, as first presented to our board of directors by senior
management during the last third of such fiscal year, is projected to exceed the amount of the monitoring fee
already paid to BMP in respect of monitoring services due to be rendered during that fiscal year, we will pay
BMP the amount of such excess as an upward adjustment to the Monitoring Fee within two business days of such
presentation. Following the completion of each applicable fiscal year and within deadlines required by our
revolving credit facility, our chief financial officer will certify to BMP the amount of our consolidated EBITDA
for such fiscal year. If 1.5% of such certified consolidated EBITDA is greater than the Monitoring Fee previously
paid to BMP for monitoring services rendered during that fiscal year (including the adjustment in respect of
projected EBITDA described above), we will, jointly and severally, pay BMP the amount of such excess within
two business days of such certification. If 1.5% of such certified consolidated EBITDA is less than the
monitoring fee previously paid to BMP for services rendered during that fiscal year (including the adjustment in
respect of projected consolidated EBITDA described above), the amount of such shortfall will be applied as a
credit against the next payment by us of the Monitoring Fee to BMP. However, BMP will always be entitled to
retain the Minimum Annual Fee as then in effect and BMP will have no obligation to rebate any amount that
would result in BMP having been paid Monitoring Fees for monitoring services in an amount less than the
Minimum Annual Fee applicable to the relevant fiscal year.

93

Amended and Restated Support and Services Agreement.

In connection with the execution of the Merger Agreement, the parties to the support and services agreement

entered into an amended and restated support and services agreement with BMP. The amended and restated
support and services agreement became effective upon the consummation of the Merger and amended and
restated the existing support and services agreement to, upon the consummation of the merger, (a) eliminate the
requirement to pay a milestone payment to BMP upon the occurrence of an IPO, (b) for any fiscal year beginning
after the consummation of the merger, (i) eliminate the Minimum Annual Fee and (ii) decrease the “true-up” of
the annual Monitoring Fee payment to BMP to 1% of consolidated EBITDA and (c) upon the earlier of (1) the
completion of our fiscal year ending December 31, 2021 or (2) the date upon which Blackstone owns less than
5% of the voting power of all of the shares of capital stock entitled to vote generally in the election of directors of
Vivint Smart Home’s or its direct or indirect controlling parent, and such stake has a fair market value (as
determined by Blackstone) of less than $25 million (the “Exit Date”), the annual Monitoring Fee payment to
BMP otherwise payable in connection with the agreement will cease and no other milestone payment or other
similar payment will be owed by us to BMP.

Under the amended and restated support and services agreement, BMP had made available to us its portfolio
operations group to provide support services customarily provided by Blackstone’s portfolio operations group to
Blackstone’s private equity portfolio companies of a type and amount determined by such portfolio services
group it its sole discretion to be warranted and appropriate. BMP may, at any time, choose not to provide any
such services. Such services will be provided without charge, other than for the reimbursement of related
out-of-pocket expenses incurred by BMP and its affiliates.

Portfolio Operations Support and Other Services

Under the support and services agreement, we have, through the Exit Date (or an earlier date determined by

BMP), engaged BMP to arrange for Blackstone’s portfolio operations group to provide support services
customarily provided by Blackstone’s portfolio operations group to Blackstone’s private equity portfolio
companies of a type and amount determined by such portfolio services group to be warranted and appropriate.
BMP will invoice us for such services based on the time spent by the relevant personnel providing such services
during the applicable period and Blackstone’s allocated costs of such personnel, but in no event shall we be
obligated to pay more than $1.5 million during any calendar year.

Investor Securityholders’ Agreement

In connection with the closing of the Blackstone Acquisition, Acquisition LLC and APX Group Holdings,

Inc. entered into a Securityholders’ Agreement (the “Securityholders’ Agreement”) with the Investors. The
Securityholders’ Agreement governs certain matters relating to ownership of Acquisition LLC and APX Group
Holdings, Inc., including with respect to the election of directors of our parent companies, transfer of shares,
including tag-along rights and drag-along rights, other special corporate governance provisions and registration
rights (including customary indemnification provisions).

Other Transactions with Blackstone

Blackstone Advisory Partners L.P., an affiliate of Blackstone, participated as one of the initial purchasers of

the Term Loan in September 2018, the 2024 Notes in May 2019 and the 2027 Notes in February 2020 and
received $1.9 million of total fees associated with these transactions.

In addition, GSO Capital Partners, an affiliate of Blackstone, is a participating lender in the Term Loan and

receives proportional interest payments of the outstanding debt held. As of December 31, 2019, GSO Capital
Partners holds $103.6 million of outstanding aggregate principal of the Term Loan.

During the year ended December 31, 2019 the Company agreed to reimburse Blackstone for $1.8 million of
certain other fees incurred by Blackstone for activities related to the Company and the full amount was included
in accrued expenses and other current liabilities as of December 31, 2019.

94

Agreements with Solar

The Company is a party to a number of agreements with its sister company, Vivint Solar, Inc. (“Solar”).

Historically, some of those agreements related to Solar’s use of certain of Legacy Vivint Smart Home’s
information technology and infrastructure services; however, Solar stopped using such services in July 2017. In
August 2017, Legacy Vivint Smart Home entered into a sales dealer agreement with Solar, pursuant to which
each company agreed to act as a non-exclusive dealer for the other party to market, promote and sell each other’s
products. During the year ended December 31, 2019, 2018 and 2017 Legacy Smart Home charged $9.2 million,
$17.3 million and $2.8 million, respectively of net expenses to Solar in connection with these agreements. The
balance due from Solar in connection with these agreements and other expenses paid on Solar’s behalf was
$2.2 million at December 31, 2019. As of December 31, 2018 the balance due from Solar was immaterial.

On March 3, 2020, the Company and Solar amended and restated the sales dealer agreement to, among other
things, add exclusivity obligations for both companies in certain territories and jurisdictions, expand the types of
services each company is permitted to render thereunder, and to permit use of the services offered by Amigo, a
wholly owned subsidiary of the Company, in connection with the submission and processing of leads generated
pursuant to the agreement. The amended and restated agreement has a one-year term, which automatically
renews for successive one-year terms unless terminated earlier by either party upon 90 days’ prior written notice.

On March 3, 2020, the Company and Solar entered into a recruiting services agreement pursuant to which

each company has agreed to assist the other in recruiting sales representatives to its direct-to-home sales
force. The parties will pay each other certain fees for these services which will be calculated in accordance with
the terms of the agreement. The Company and Solar have also agreed under the terms of the agreement not to
solicit for employment any member of the other’s executive or senior management team, any dealer, or any of
the other’s employees who primarily manage sales, installation or services of the other’s products and
services. Such obligations will continue throughout the term of the agreement.

On March 3, 2020, Amigo entered into Subscriber Generation Agreements with Solar and the Company to
facilitate the use of the Amigo application for the submission and processing of leads generated pursuant to the
amended and restated sales dealer agreement.

In connection with the amendment and restatement of the sales dealer agreement and the execution of the

recruiting services agreement, the Company and Solar terminated the Marketing and Customer Relations
Agreement, dated September 30, 2014 (as amended from time to time) and the Non-Competition Agreement,
dated September 30, 2014 (as amended from time to time), in each case effective as of March 3, 2020.

Transactions with Executive Officers

In each year from 2015 through 2019 Legacy Vivint Smart Home entered into one-year lease agreements

with Axis Aviation LLC (“Axis Aviation”), a company owned by Mr. Pedersen through a trust, for use of an
airplane hangar at the Provo, Utah airport. Such lease agreements are terminable by either party on 90 days’ prior
written notice without penalty. Payments to Axis Aviation in the year ended December 31, 2019 pursuant to such
lease agreements totaled $67,500.

Procedures with Respect to Review and Approval of Related Person Transactions

We have adopted a formal written policy for the review and approval of transactions with related persons.

Such policy requires, among other things, that:

•

any related person transaction, and any material amendment or modification to a related person
transaction, must be reviewed and approved or ratified by an approving body comprised of the
disinterested and independent members of our board of directors or any committee of the board of
directors, provided that a majority of the members of the board of directors or such committee,
respectively, are disinterested; and

95

•

any employment relationship or transaction involving an executive officer and any related
compensation must be approved by the compensation committee of our board of directors or
recommended by the compensation committee to the board of directors for its approval.

In connection with the review and approval or ratification of a related person transaction:

• management must disclose to the approving body the name of the related person and the basis on which
the person is a related person, the related person’s interest in the transaction, the material terms of the
related person transaction, including the business purpose of the transaction, the approximate dollar
value of the amount involved in the transaction, the approximate dollar value of the amount of the
related person’s interest in the transaction and all the material facts as to the related person’s direct or
indirect interest in, or relationship to, the related person transaction;

• management must advise the approving body as to whether the related person transaction complies
with the terms of our agreements, including the agreements governing our material outstanding
indebtedness, that limit or restrict our ability to enter into a related person transaction;

• management must advise the approving body as to whether the related person transaction will be

required to be disclosed in applicable filings under the Securities Act or the Exchange Act, and related
rules, and, to the extent required to be disclosed, management must ensure that the related person
transaction is disclosed in accordance with such statutes and related rules; and

• management must advise the approving body as to whether the related person transaction may

constitute a “personal loan” for purposes of Section 402 of the Sarbanes-Oxley Act.

In addition, the related person transaction policy provides that the approving body, in connection with any
approval of a related person transaction involving a non-employee director or director nominee, should consider
whether such transaction would compromise the director or director nominee’s status as an “independent”
or “non-employee” director, as applicable, under the rules and regulations of the SEC and any exchange on
which our securities are listed.

The related person transaction policy also contains a standing approval for certain transactions with or
related to Blackstone, including, without limitation: (1) transactions in which Blackstone may have a direct or
indirect material interest entered into or in effect at the effective time of the merger; (2) transactions involving
our securities in which Blackstone serves as an underwriter, placement agent, initial purchaser, financial advisor
or in a similar capacity, and the fees and commissions received by Blackstone for such services are no greater (on
a per security basis) than those received by other underwriters, placement agents, initial purchasers, financial
advisors or persons performing in a similar capacity in the transaction or that would be received by an
unaffiliated third party; and (3) the purchase or sale of products or services involving a Blackstone portfolio
company, provided that (a) the appropriate officers reasonably believe the transaction to be on market terms and
the subject products or services are of a type generally made available to other customers of the subject
Blackstone portfolio company or (b) the aggregate value involved in such purchase or sale is expected to be less
than $5 million over five years.

Independence of Directors

The information contained under the heading “Independence of Directors” in Part III, Item 10. Directors,

Executive Officers and Corporate Governance is incorporated by reference herein.

Transaction with Fortress

The Fortress Debt Investor has previously held and/or currently hold positions in: (i) the Term Loan, (ii) the
2022 notes, (iii) the 2023 notes, and (iv) the 2024 notes, as described below. The Fortress Debt Investor acquired
a $72 million face amount position in the Term Loan between September 2018 and January 2019. The Fortress

96

Debt Investor then sold a $5.5 million face amount position in the Term Loan in February and March 2019. The
Fortress Debt Investor continues to hold a $66.5 million face amount position in the Term Loan. The Fortress
Debt Investor acquired a $5 million face amount position in the 2022 notes in July 2018, and exited the
respective position in August 2018. The Fortress Debt Investor acquired a $40.6 million face amount position in
the 2023 note between July 2018 and April 2019. The Fortress Debt Investor acquired a $20 million face amount
position in the 2024 notes in April 2019. Fortress may receive proceeds of debt repayment in connection with the
transactions to the extent it holds any applicable indebtedness.

Stockholders Agreement

In connection with the execution of the Merger Agreement, we entered into a Stockholders Agreement with

the Stockholder Parties, which provides for certain rights, including director appointment and board observer
rights, for certain stockholders. The Stockholders Agreement will become effective upon the consummation of
the merger. See “Other Agreements—Stockholders Agreement”, which disclosure is incorporated herein by
reference.

Under the Stockholders Agreement, we agreed to nominate a number of individuals designated by

Blackstone for election as our directors at any meeting of our stockholders (each a “Blackstone Director”) such
that, following the election of any directors and taking into account any director continuing to serve as such
without the need for re-election, the number of Blackstone Directors serving as our directors will be equal to:
(1) if the 313 Acquisition Entities together continue to beneficially own at least 50% of the shares of our Class A
common stock entitled to vote generally in the election of directors as of the record date for such meeting, the
lowest whole number that is greater than 50% of the total number of directors comprising our board of directors;
(2) if the 313 Acquisition Entities together continue to beneficially own at least 40% (but not more than 50%) of
the shares of our Class A common stock entitled to vote generally in the election of directors as of the record date
for such meeting, the lowest whole number that is at least 40% of the total number of directors comprising our
board of directors; (3) if the 313 Acquisition Entities together continue to beneficially own at least 30% (but less
than 40%) of the shares of our Class A common stock entitled to vote generally in the election of directors as of
the record date for such meeting, the lowest whole number that is at least 30% of the total number of directors
comprising our board of directors; (4) if the 313 Acquisition Entities together continue to beneficially own at
least 20% (but less than 30%) of the shares of our Class A common stock entitled to vote generally in the
election of directors as of the record date for such meeting, the lowest whole number that is at least 20% of the
total number of directors comprising our board of directors; and (5) if the 313 Acquisition Entities together
continue to beneficially own at least 5% (but less than 20%) of the shares of our Class A common stock entitled
to vote generally in the election of directors as of the record date for such meeting, the lowest whole number that
is at least 10% of the total number of directors comprising our board of directors.

Under the Stockholders Agreement, we agreed to nominate one director designated by Fortress (the
“Fortress Director”) to our board of directors so long as Fortress beneficially owns at least 50% of the shares of
our Class A common stock it owns immediately following the consummation of the merger; provided that the
Fortress Director must be an employee or principal of The SoftBank Vision Fund. Additionally, so long as
Fortress beneficially owns at least 50% of the shares of our Class A common stock it owns immediately
following the consummation of the merger, Fortress shall have the right to appoint a representative (the “Fortress
Observer”) who will have the right to attend meetings of our board of directors and receive information given to
our directors, subject to certain customary exceptions, including to preserve confidentiality obligations or
privilege. The Fortress Observer will not have any voting rights.

Under the Stockholders Agreement, we agreed to nominate one director designated by the Summit

Designator (as defined in the Stockholders Agreement) (the “Summit Director” and together with the Blackstone
Directors and the Fortress Director, the “Sponsor Directors”) to our board of directors so long as the Summit
Holders (as defined in the Stockholders Agreement) beneficially own at least 50% of the shares of our Class A
common stock they own immediately following the consummation of the merger.

97

In the case of a vacancy on our board created by the removal or resignation of a Sponsor Director, we
agreed to nominate an individual designated by Blackstone or Fortress, as applicable, for election to fill the
vacancy.

Registration Rights Agreement

In connection with the execution of the merger agreement, we entered into a registration rights agreement

with the Investors and certain of our other stockholders, which provides for customary “demand” and
“piggyback” registration rights for certain stockholders. The registration rights agreement became effective upon
the consummation of the Merger. The registration rights agreement also provides that we will pay certain
expenses relating to such registrations and indemnify the registration rights holders against (or make
contributions in respect of) certain liabilities which may arise under the Securities Act.

Item 14. Principal Accounting Fees and Services.

Fees for professional services provided by our independent registered public accounting firm

WithumSmith+Brown, PC since inception include:

For the Year
Ended December 31,
2019

For the Year
Ended December 31,
2018

Audit Fees (1) . . . . . . . . . . . . . . . . . . . . .
Audit-Related Fees (2) . . . . . . . . . . . . . .
Tax Fees (3) . . . . . . . . . . . . . . . . . . . . . .
All Other Fees (4) . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . .

$87,870
—
3,500
—

$91,370

$61,634
—
—
—

$61,634

(1) Audit fees consist of fees billed for professional services rendered for the audit of our financial statements

and services that are normally provided by Withum in connection with regulatory filings. The aggregate fees
billed by Withum in 2019 and 2018 for professional services rendered for the audit of our annual financial
statement included in our Form 10-K, review of the quarterly financial information included in our
subsequent Exchange Act filings and review of the financial information included in our Form S-4 related to
our pro forma.

(2) Audit-related fees consist of fees billed for assurance and related services that are reasonably related to

performance of the audit or review of our year-end financial statements and are not reported under “Audit
Fees.” These services include attest services that are not required by statute or regulation and consultation
concerning financial accounting and reporting standards. We did not pay Withum for consultations
concerning financial accounting and reporting standards for the year ended December 31, 2019 and 2018.

(3) Tax fees consist of fees billed for professional services relating to tax compliance, tax planning and tax

advice.

(4) All other fees consist of fees billed for all other services. We did not pay Withum for other services for the

year ended December 31, 2019 and 2018.

Policy on Board Pre-Approval of Audit and Permissible Non-Audit Services of the Independent Auditors

The audit committee is responsible for appointing, setting compensation and overseeing the work of the

independent auditors. In recognition of this responsibility, the audit committee shall review and, in its sole
discretion, pre-approve all audit and permitted non-audit services to be provided by the independent auditors as
provided under the audit committee charter.

98

PART IV

Item 15. Exhibits, Financial Statement Schedules.

(a) The following documents are filed as part of this Annual Report on Form 10-K

1.

Financial Statements: See “Index to Financial Statements” at “Item 8. Financial Statements and
Supplementary Data” herein.

(b) Financial Statement Schedules. All schedules are omitted for the reason that the information is included in

the financial statements or the notes thereto or that they are not required or are not applicable.

(c) Exhibits: The exhibits listed in the accompanying index to exhibits are filed or incorporated by reference as

part of this Annual Report on Form 10-K.

Exhibit
Number

Description

2.1

2.2

3.1

3.2

3.3

4.1

4.2

4.3

Agreement and Plan of Merger dated as of September 15, 2019, by and among Mosaic Acquisition
Corp., Maiden Merger Sub, Inc. and Vivint Smart Home, Inc. (incorporated by reference to Exhibit 2.1
filed with the Registrant’s Current Report on Form 8-K filed on September 16, 2019).

Amendment No. 1 to the Agreement and Plan of Merger, dated as of December 18, 2019, by and
among Mosaic Acquisition Corp., Merger Sub and Vivint Smart Home, Inc. (incorporated by reference
to Exhibit 2.2 filed with the Registrant’s Current Report on Form 8-K filed on December 19, 2019).

Amended and Restated Certificate of Incorporation of Vivint Smart Home, Inc., dated as of January 17,
2020 (incorporated by reference to Exhibit 3.1 filed with the Registrant’s Current Report on Form 8-K/
A filed on January 27, 2020).

Certificate of Amendment to Certificate of Incorporation of Vivint Smart Home, Inc., dated as of
January 17, 2020 (incorporated by reference to Exhibit 3.2 filed with the Registrant’s Current Report on
Form 8-K/A filed on January 27, 2020).

Amended and Restated Bylaws of Vivint Smart Home, Inc., dated as of January 17, 2020 (incorporated
by reference to Exhibit 3.3 filed with the Company’s Current Report on Form 8-K/A filed on
January 27, 2020).

Specimen Unit Certificate (incorporated by reference to Exhibit 4.1 filed with the Registrant’s Proxy
Statement/Prospectus on Form S-4/A filed on November 27, 2018).

Specimen Class A Ordinary Share Certificate (incorporated by reference to Exhibit 4.2 filed with the
Company’s Proxy Statement/Prospectus on Form S-4/A filed on November 27, 2018).

Specimen Warrant Certificate (incorporated by reference to Exhibit 4.3 filed with the Company’s Proxy
Statement/Prospectus on Form S-4/A filed on November 27, 2018).

4.4 Warrant Agreement, dated as of September 26, 2017, between the Company and Continental Stock

Transfer & Trust Company (incorporated by reference to Exhibit 4.4 filed with the Registrant’s Current
Report on Form 8-K filed on October 24, 2017).

4.5

4.6

Indenture, dated as of November 16, 2012, among APX Group, Inc., the guarantors named therein and
Wilmington Trust, National Association, as trustee, relating to APX Group, Inc.’s 8.75% Senior Notes
due 2020 (incorporated by reference to Exhibit 4.5 to the Registration Statement on Form S-4 of APX
Group Holdings, Inc. and the other registrants listed therein (File Number: 333-191132-02))

First Supplemental Indenture, dated as of December 20, 2012, among 313 Aviation, LLC and
Wilmington Trust, National Association, as trustee, relating to APX Group, Inc.’s 8.75% Senior Notes
due 2020 (incorporated by reference to Exhibit 4.6 to the Registration Statement on Form S-4 of APX
Group Holdings, Inc. and the other registrants listed therein (File Number: 333-191132-02))

99

Exhibit
Number

4.7

4.8

4.9

4.10

4.11

4.12

4.13

4.14

4.15

4.16

Description

Third Supplemental Indenture, dated as of May 31, 2013, among APX Group, Inc., the guarantors
named therein and Wilmington Trust, National Association, as trustee, relating to APX Group, Inc.’s
8.75% Senior Notes due 2020 (incorporated by reference to Exhibit 4.8 to the Registration Statement on
Form S-4 of APX Group Holdings, Inc. and the other registrants listed therein (File Number:
333-191132-02))

Fourth Supplemental Indenture, dated as of December 13, 2013, among APX Group, Inc., the
guarantors named therein and Wilmington Trust, National Association, as trustee, relating to APX
Group, Inc.’s 8.75% Senior Notes due 2020 (incorporated by reference to Exhibit 4.1 to the Current
Report on Form 8-K of APX Group Holdings, Inc. filed on December 13, 2013 (File Number:
333-191132-02))

Fifth Supplemental Indenture, dated as of July 1, 2014, among APX Group, Inc., the guarantors named
therein and Wilmington Trust, National Association, as trustee, relating to APX Group, Inc.’s 8.75%
Senior Notes due 2020 (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of
APX Group Holdings, Inc. filed on July 1, 2014 (File Number: 333-191132-02))

Sixth Supplemental Indenture, dated as of December 18, 2014, among APX Group, Inc., the guarantors
named therein and Wilmington Trust, National Association, as trustee, relating to APX Group, Inc.’s
8.75% Senior Notes due 2020 (incorporated by reference to Exhibit 4.12 to the Registration Statement
on Form S-4 of APX Group Holdings, Inc. and the other registrants listed therein (File Number: 333-
191132-02))

Form of Note relating to Company’s 8.75% Senior Notes due 2020 (attached as exhibit to Exhibit 4.5)
(incorporated by reference to Exhibit 4.9 to the Registration Statement on Form S-4 of APX Group
Holdings, Inc. and the other registrants listed therein (File Number: 333-191132-02))

Indenture, dated as of May 26, 2016, among APX Group, Inc., the guarantors party thereto and
Wilmington Trust, National Association, as trustee and collateral agent, relating to APX Group, Inc.’s
7.875% Senior Secured Notes due 2022 (incorporated by reference to Exhibit 4.1 to the Current Report
on Form 8-K of APX Group Holdings, Inc. filed on May 26, 2016 (File Number: 333-191132-02))

First Supplemental Indenture, dated as of August 17, 2016, among APX Group, Inc., the guarantors
party thereto and Wilmington Trust, National Association, as trustee and collateral agent, relating to
APX Group, Inc.’s 7.875% Senior Secured Notes due 2022 (incorporated by reference to Exhibit 4.1 to
the Current Report on Form 8-K of APX Group Holdings, Inc. filed on August 17, 2016 (File Number:
333-191132-02))

Second Supplemental Indenture, dated as of February 1, 2017, among APX Group, Inc., the guarantors
party thereto and Wilmington Trust, National Association, as trustee and collateral agent, relating to
APX Group, Inc.’s 7.875% Senior Secured Notes due 2022 (incorporated by reference to Exhibit 4.1 to
the Current Report on Form 8-K of APX Group Holdings, Inc. filed on February 1, 2017 (File Number:
333-191132-01))

Form of Note Purchase Agreement, relating to APX Group, Inc.’s 8.875% Senior Secured Notes due
2022 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of APX Group
Holdings, Inc. filed on October 19, 2015 (File Number: 333-191132-02))

Indenture, dated as of August 10, 2017, among APX Group, Inc., the guarantors party thereto and
Wilmington Trust, National Association, as trustee, relating to APX Group, Inc.’s 7.625% Senior Notes
due 2023 (incorporated by reference to Exhibit 4.1 to the Current Report on From 8-K of APX Group
Holdings, Inc. filed on August 10, 2017 (File Number: 333-191132-02))

100

Exhibit
Number

4.17

4.18

4.19

10.1

10.2

10.3

10.4

10.5

10.6

10.7

10.8

10.9

10.10

10.11

Description

Indenture, dated as of May 10, 2019, among APX Group, Inc., the guarantors party thereto and
Wilmington Trust, National Association, as trustee and collateral agent, relating to APX Group, Inc.’s
8.5% Senior Notes due 2024 (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-
K of APX Group Holdings, Inc. filed on May 10, 2019 (File Number: 333-191132-02)).

Indenture, dated as of February 14, 2020, among APX Group, Inc., the guarantors party thereto and
Wilmington Trust, National Association, as trustee and collateral agent, relating to APX Group, Inc.’s
6.75% Senior Notes due 2027 (incorporated by reference to Exhibit 10.1 to the Current Report on Form
8-K of APX Group Holdings, Inc. filed on February 19, 2020 (File Number 333-191132-02)).

Description of the Securities of Vivint Smart Home, Inc.

Letter Agreement, dated as of October 18, 2017, among Mosaic Cayman, its officers and directors and
Mosaic Sponsor, LLC and Fortress Mosaic Sponsor LLC (incorporated by reference to Exhibit 10.1
filed with the Registrant’s Current Report on Form 8-K filed on October 24, 2017).

Investment Management Trust Agreement, dated as of October 18, 2017, between Mosaic Cayman and
Continental Stock Transfer & Trust Company, as trustee (incorporated by reference to Exhibit 10.2
filed with the Registrant’s Current Report on Form 8-K filed on October 24, 2017).

Registration Rights Agreement, dated as of October 18, 2017, among Mosaic Cayman and certain
security holders named therein (incorporated by reference to Exhibit 10.3 filed with the Registrant’s
Current Report on Form 8-K filed on October 24, 2017).

Private Placement Warrants Purchase Agreement, dated as of September 26, 2017, between Mosaic
Cayman and Mosaic Sponsor, LLC (incorporated by reference to Exhibit 10.4 filed with the
Registrant’s Current Report on Form 8-K filed on October 24, 2017).

Private Placement Warrants Purchase Agreement, dated as of September 26, 2017, between Mosaic
Cayman and Fortress Mosaic Sponsor, LLC (incorporated by reference to Exhibit 10.5 filed with
Mosaic Cayman’s Current Report on Form 8-K filed on October 24, 2017).

Office Space and Related Services Agreement, dated as of October 18, 2017, between Mosaic Cayman
and Mosaic Sponsor, LLC (incorporated by reference to Exhibit 10.6 filed with Mosaic Cayman’s
Current Report on Form 8-K filed on October 24, 2017).

Indemnity Agreement, dated as of October 18, 2017, between Mosaic Cayman and Eugene I. Davis
(incorporated by reference to Exhibit 10.7 filed with Mosaic Cayman’s Current Report on Form 8-K
filed on October 24, 2017).

Indemnity Agreement, dated as of October 18, 2017, between Mosaic Cayman and Tyler S. Kolarik
(incorporated by reference to Exhibit 10.8 filed with Mosaic Cayman’s Current Report on Form 8-K
filed on October 24, 2017).

Indemnity Agreement, dated as of October 18, 2017, between Mosaic Cayman and David M. Maura
(incorporated by reference to Exhibit 10.9 filed with Mosaic Cayman’s Current Report on Form 8-K
filed on October 24, 2017).

Indemnity Agreement, dated as of October 18, 2017, between Mosaic Cayman and Andrew A.
McKnight (incorporated by reference to Exhibit 10.10 filed with Mosaic Cayman’s Current Report on
Form 8-K filed on October 24, 2017).

Indemnity Agreement, dated as of October 18, 2017, between Mosaic Cayman and William H. Mitchell
(incorporated by reference to Exhibit 10.11 filed with Mosaic Cayman’s Current Report on Form 8-K
filed on October 24, 2017).

101

Exhibit
Number

10.12

10.13

10.14

10.15

Description

Indemnity Agreement, dated as of October 18, 2017, between Mosaic Cayman and Joshua A. Pack
(incorporated by reference to Exhibit 10.12 filed with Mosaic Cayman’s Current Report on Form 8-K
filed on October 24, 2017).

Services Agreement, dated as of October 18, 2017, among Mosaic Cayman, CFO Bullpen LLC, and
solely for purposes of Section 1 and 6, William H. Mitchell (incorporated by reference to Exhibit 10.13
filed with Mosaic Cayman’s Current Report on Form 8-K filed on October 24, 2017).

Form of Promissory Note, issued to Mosaic Sponsor, LLC and Fortress Mosaic Sponsor LLC
(incorporated by reference to Exhibit 10.1 filed with Mosaic Cayman’s Registration Statement on Form
S-1/A filed on October 13, 2017).

Form of Securities Subscription Agreement among Mosaic Cayman, Mosaic Sponsor, LLC and
Fortress Mosaic Sponsor LLC (incorporated by reference to Exhibit 10.5 filed with Mosaic Cayman’s
Registration Statement on Form S-1/A filed on October 13, 2017).

10.16 Office Space and Related Services Agreement between Mosaic Cayman and Mosaic Sponsor, LLC

(incorporated by reference to Exhibit 10.8 filed with Mosaic Cayman’s Registration Statement on Form
S-1/A filed on October 13, 2017).

10.17

10.18

10.19

10.20

10.21

10.22

10.23

10.24

Form of Forward Purchase Agreement among Mosaic Cayman, Mosaic Sponsor, LLC, Fortress Mosaic
Sponsor LLC and the investor listed as the purchaser on the signature page thereof (incorporated by
reference to Exhibit 10.9 filed with Mosaic Cayman’s Registration Statement on Form S-1/A filed on
October 13, 2017).

Indemnity Agreement, dated as of May 29, 2018 between Mosaic Cayman and R. Edward Albert III
(incorporated by reference to Exhibit 10.1 filed with Mosaic Cayman’s Current Report on Form 8-K
filed on June 4, 2018).

Services Agreement of William H. Mitchell among CFO Bullpen LLC, William H. Mitchell and the
Registrant (incorporated by reference to Exhibit 10.13 filed on the Registrant’s Current Report on Form
8-K filed on October 23, 2017).

Subscription Agreement, dated as of December 18, 2019, by and among Mosaic Acqusition Corp.,
Fayerweather Fund Eiger, L.P. and Vivint Smart Home (incorporated by reference to Exhibit 10.1 filed
with the Registrant’s Current Report on Form 8-K filed on December 19, 2019).

Lockup Agreement, dated as of December 18, 2019, by and among Mosaic Acquisition Corp. and
Fayerweather Fund Eiger, L.P. (incorporated by reference to Exhibit 10.2 filed with the Registrant’s
Current Report on Form 8-K filed on December 19, 2019).

Subscription and Backstop Agreement, dated as of December 18, 2019, by and among Mosaic
Acquisition Corp., the Fortress Subscriber and Vivint Smart Home (incorporated by reference to
Exhibit 10.3 filed with the Registrant’s Current Report on Form 8-K filed on December 19, 2019).

Form of Amendment to the Forward Purchase Agreements (incorporated by reference to Exhibit 10.4
filed with the Registrant’s Current Report on Form 8-K filed on December 19, 2019).

Form of Indemnification Agreement (incorporated by reference to Exhibit 10.2 filed with the
Registrant’s Current Report on Form 8-K/A filed by the Registrant on January 27, 2020).

10.25 Amended and Restated Credit Agreement, dated as of June 28, 2013, among APX Group, Inc., the other

guarantors party thereto, Bank of America, N.A., as Administrative Agent and the other lenders and
parties thereto (incorporated by reference to Exhibit 10.1 to the Registration Statement on Form S-4 of
APX Group Holdings, Inc. and the other registrants listed therein (File Number: 333-191132-02))

102

Exhibit
Number

10.26

10.27

10.28

10.29

Description

Second Amended and Restated Credit Agreement, dated as of March 6, 2015, among APX Group, Inc.,
the other guarantors party thereto, Bank of America, N.A., as Administrative Agent and the other
lenders and parties thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form
8-K of APX Group Holdings, Inc. filed on March 11, 2015. (File Number: 333-191132-02))

Third Amended and Restated Credit Agreement, dated as of August 10, 2017, by and among APX
Group, Inc., APX Group Holdings, Inc., the other guarantors party thereto, each lender from time to
time party thereto and Bank of America, N.A., as administrative agent, L/C issuer and swing line lender
(incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of APX Group Holdings,
Inc. filed on August 10, 2017 (File Number: 333-191132-02))

Security Agreement, dated as of November 16, 2012, among the grantors named therein and
Wilmington Trust, National Association, as Collateral Agent (incorporated by reference to Exhibit 10.3
to the Registration Statement on Form S-4 of APX Group Holdings, Inc. and the other registrants listed
therein (File Number: 333-191132-02))

Intercreditor Agreement and Collateral Agency Agreement, dated as of November 16, 2012, among 313
Group Inc., the other grantors named therein, Bank of America, N.A., as Credit Agreement Collateral
Agent, Wilmington Trust, National Association, as Notes Collateral Agent, and each Additional
Collateral Agent from time to time party thereto (incorporated by reference to Exhibit 10.4 to the
Registration Statement on Form S-4 of APX Group Holdings, Inc. and the other registrants listed
therein (File Number: 333-191132-02))

10.30 Credit Agreement, dated as of September 6, 2018, among APX Group, Inc., APX Group Holdings, Inc.,

the other guarantors party thereto, each lender from time to time party thereto and Bank of America,
N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to the Current Report on Form
8-K of APX Group Holdings, Inc. filed on September 6, 2018 (File Number 333-191132-02))

10.31

Security Agreement, dated as of September 6, 2018, among the grantors identified therein and Bank of
America, N.A., as administrative agent (incorporated by reference to Exhibit 10.2 to the Quarterly
Report on Form 10-Q of APX Group Holdings, Inc. for the quarterly period ended September 30, 2018
(File Number 333-191132-02))

10.32 Collateral Agent Joinder Agreement No. 1, dated as of September 6, 2018 to the Intercreditor and

Collateral Agency Agreement dated as of November 16, 2012, among APX Group, Inc., the grantors
party thereto, Bank of America, N.A. as the Credit Agreement Collateral Agent, Wilmington Trust,
National Association, as Notes Collateral Agent, and each additional collateral agent from time to time
party thereto (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q of APX
Group Holdings, Inc. for the quarterly period ended September 30, 2018 (File Number
333-191132-02))

10.33 Amended and Restated Credit Agreement, dated as of February 14, 2020, among APX Group, Inc.,

Vivint Smart Home, Inc., each lender from time to time party thereto and Bank of America, N.A., as
administrative agent (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K of
APX Group Holdings, Inc. filed on February 19, 2020 (File Number 333-191132-02)).

10.34

Fourth Amended and Restated Credit Agreement, dated as of February 14, 2020, among APX Group,
Inc., Vivint Smart Home, Inc., the other guarantors party thereto, each lender from time to time party
thereto and Bank of America, N.A., as administrative agent, L/C issuer and swing line lender
(incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K of APX Group Holdings,
Inc. filed on February 19, 2020 (File Number 333-191132-02)).

103

Exhibit
Number

Description

10.35 Amended and Restated Employment Agreement, dated March 4 2019, between APX Group, Inc. and

Alex Dunn (incorporated by reference to Exhibit 10.19 to the Annual Report on Form 10-K of APX
Group Holdings, Inc. for the fiscal year ended December 31, 2018) (File Number 333-191132-02))

10.36 Amended and Restated Employment Agreement, dated March 4, 2019, between APX Group, Inc. and

Todd Pedersen (incorporated by reference to Exhibit 10.20 to the Annual Report on Form 10-K of APX
Group Holdings, Inc. for the fiscal year ended December 31, 2018) (File Number 333-191132-02))

10.37

10.38

10.39

10.40

10.41

10.42

10.43

Employment Agreement, dated March 8, 2016, by and between APX Group, Inc. and Mark Davies
(incorporated by reference to Exhibit 10.17 to the Annual Report on Form 10-K of APX Group
Holdings, Inc. for the fiscal year ended December 31, 2015 (File Number 333-191132-02))

Employment Agreement, dated March 8, 2016, by and between APX Group, Inc. and Todd Santiago
(incorporated by reference to Exhibit 10.18 to the Annual Report on Form 10-K of APX Group
Holdings, Inc. for the fiscal year ended December 31, 2015 (File Number 333-191132-02))

Employment Agreement, dated March 8, 2016, by and between APX Group, Inc. and Todd Santiago
(incorporated by reference to Exhibit 10.18 to the Annual Report on Form 10-K of APX Group
Holdings, Inc. for the fiscal year ended December 31, 2015 (File Number 333-191132-02))

Employment Agreement, dated March 8, 2016, by and between APX Group, Inc. and Matthew Eyring
(incorporated by reference to Exhibit 10.19 to the Annual Report on Form 10-K of APX Group
Holdings, Inc. for the fiscal year ended December 31, 2016 (File Number 333-191132-02))

Form of Letter Amendment, dated March 8, 2016, to Management Subscription Agreement (Incentive
Units) (incorporated by reference to Exhibit 10.20 to the Annual Report on Form 10-K of APX Group
Holdings, Inc. for the fiscal year ended December 31, 2015 (File Number 333-191132-02))

Form of Outside Director Offer Letter (incorporated by reference to Exhibit 10.1 to the Quarterly
Report on Form 10-Q of APX Group Holdings, Inc. for the quarterly period ended September 30, 2015
(File Number: 333-191132-02))

Form of Retention Award Agreement (incorporated by reference to Exhibit 10.4 to the Quarterly Report
on Form 10-Q of APX Group Holdings, Inc. for the quarterly period ended September 30, 2018 (File
Number 333-191132-02))

10.44 Vivint Group, Inc. Amended and Restated 2013 Omnibus Incentive Plan (incorporated by reference to

Exhibit 10.5 to the Quarterly Report on Form 10-Q of APX Group Holdings, Inc. for the quarterly
period ended September 30, 2018 (File Number 333-191132-02))

10.45

10.46

Form of Restricted Stock Unit Award Agreement under the Vivint Group, Inc. Amended and Restated
2013 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.6 to the Quarterly Report on
Form 10-Q of APX Group Holdings, Inc. for the quarterly period ended September 30, 2018 (File
Number 333-191132-02))

Second Amended and Restated Consumer Financing Services Agreement, dated May 31, 2017,
between Citizens Bank, N.A. and APX Group, Inc. (Portions of this exhibit have been omitted pursuant
to a request for confidential treatment) (incorporated by reference to Exhibit 10.24 to the Annual Report
on Form 10-K of APX Group Holdings, Inc. for the fiscal year ended December 31, 2017 (File Number
333-191132-02))

10.47

Incentive Compensation Plan adopted on March 4, 2019 (incorporated by reference to Exhibit 10.31 to
the Annual Report on Form 10-K of APX Group Holdings, Inc. for the fiscal year ended December 31,
2018) (File Number 333-191132-02))

104

Exhibit
Number

10.48

10.49

24

31.1

31.2

32.1

32.2

Description

Vivint Smart Home, Inc. 2020 Omnibus Incentive Plan (incorporated by reference to Annex D to the
Registrant’s Registration Statement on Form S-4/A filed on November 18, 2019).

Registration Rights Agreement, dated as of May 10, 2019, by and among APX Group, Inc., the
guarantors listed on Schedule I thereto and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
representative of the several initial purchasers of the Notes (incorporated by reference to Exhibit 4.2
to the Current Report on Form 8-K of APX Group Holdings, Inc. filed on May 10, 2019).

Power of Attorney (included on signature page of this Annual Report).

Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the
Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.

Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the
Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.

Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.

Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS XBRL Instance Document

101.SCH XBRL Taxonomy Extension Schema Document

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF XBRL Taxonomy Extension Definition Linkbase Document

101.LAB XBRL Taxonomy Extension Label Linkbase Document

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

105

SIGNATURES

Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended,

the Registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly
authorized, in New York City, New York, on the 13th day of March, 2020.

VIVINT SMART HOME, INC.

/s/ Dale R. Gerard

Name: Dale R. Gerard

Title: Chief Financial Officer

POWERS OF ATTORNEY

KNOW ALL BY THESE PRESENTS, that each of the undersigned constitutes and appoints each of Todd
R. Pedersen and Dale R. Gerard, each acting alone, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for such person and in his or her name, place and stead, in any and
all capacities, to sign this Annual Report on Form 10-K (including all pre-effective and post-effective
amendments and registration statements filed pursuant to Rule 462 under the Securities Act of 1933), and to file
the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, each acting alone, full power and
authority to do and perform each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and
confirming that any such attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this Annual Report has been signed

below by the following persons in the capacities and on the dates indicated.

Signature

Capacity in Which Signed

Date

/s/ Todd R. Pedersen

Todd R. Pedersen

/s/ Dale R. Gerard

Dale R. Gerard

/s/ Patrick E. Kelliher

Patrick E. Kelliher

/s/ David F. D’Alessandro

David F. D’Alessandro

/s/ Paul S. Galant

Paul S. Galant

/s/ David M. Maura

David M. Maura

Chief Executive Officer and
Director
(Principal Executive Officer and
Director)

March 13, 2020

Chief Financial Officer
(Principal Financial Officer)

March 13, 2020

Chief Accounting Officer
(Principal Accounting Officer)

March 13, 2020

Director

March 13, 2020

Director

March 13, 2020

Director

March 13, 2020

106

/s/ Bruce McEvoy

Bruce McEvoy

/s/ Jay D. Pauley

Jay D. Pauley

/s/ Joseph S. Tibbetts, Jr.

Joseph S. Tibbetts, Jr.

/s/ Peter F. Wallace

Peter F. Wallace

Director

March 13, 2020

Director

March 13, 2020

Director

March 13, 2020

Director

March 13, 2020

107

[This page intentionally left blank] 

Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-2

Financial Statements:

Balance Sheets as of December 31, 2019 and 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Statements of Operations for the year ended December 31, 2019 and 2018 . . . . . . . . . . . . . . . . . . .
Statements of Changes in Stockholders’ Equity for the year ended December 31, 2019 and

2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Statements of Cash Flows for the year ended December 31, 2019 and 2018 . . . . . . . . . . . . . . . . . . .
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-3
F-4

F-5
F-6
F-7

Page No.

F-1

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Vivint Smart Home, Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Vivint Smart Home, Inc. (f/k/a Mosaic Acquisition Corp.)
(the ‘‘Company’’) as of December 31, 2019 and 2018, and the related statements of operations, changes in
stockholders’ equity and cash flows for the years ended December 31, 2019 and 2018, and the related notes
(collectively referred to as the ‘‘financial statements’’). In our opinion, the financial statements present fairly, in
all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of
its operations and its cash flows for the years ended December 31, 2019 and 2018, in conformity with accounting
principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on the Company’s financial statements based on our audits. We are a public accounting firm
registered with the Public Company Accounting Oversight Board (United States) (‘‘PCAOB’’) and are required
to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an
understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.

/s/ WithumSmith+Brown, PC

We have served as the Company’s auditor since 2017.

New York, New York
March 13, 2020

F-2

VIVINT SMART HOME, INC. (f/k/a Mosaic Acquisition Corp.)
BALANCE SHEETS

December 31,

2019

2018

Assets:
Current assets:

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

682,940 $
217,809

892,518
112,675

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and investments held in Trust Account

900,749
355,032,480

1,005,193
350,437,823

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 355,933,229

$ 351,443,016

Liabilities and Stockholders’ Equity:
Current liabilities:

Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses—related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise tax payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

75,108 $
61,194
48,002
200,000
—

8,735
—
37,530
5,480
44,449

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred underwriting commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

384,304
6,071,544

96,194
12,075,000

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments
Class A common stock, $0.0001 par value; 34,447,737 and 33,427,182 shares

subject to possible redemption at December 31, 2019 and 2018,
respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Stockholders’ Equity:
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued

6,455,848

12,171,194

344,477,370

334,271,820

and outstanding at December 31, 2019 and 2018, respectively . . . . . . . . . . . .

—

—

Class A common stock, $0.0001 par value; 200,000,000 shares authorized;

52,263 and 1,072,818 shares issued and outstanding (excluding 34,447,737
and 33,427,182 shares subject to possible redemption) at December 31, 2019
and 2018, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Class F common stock, $0.0001 par value; 20,000,000 shares authorized;

8,625,000 shares issued and outstanding at December 31, 2019 and 2018,
respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5

107

863
—
4,999,143

5,000,011

863
—
4,999,032

5,000,002

Total Liabilities and Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 355,933,229

$ 351,443,016

The accompanying notes are an integral part of these financial statements.

F-3

VIVINT SMART HOME, INC. (f/k/a Mosaic Acquisition Corp.)
STATEMENTS OF OPERATIONS

For the years ended December 31,

2019

2018

General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,319,573
194,746

$

871,091
5,480

Loss from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1,514,319)
7,184,341

Income before income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,670,022
1,467,919

(876,571)
6,187,823

5,311,252
44,450

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 4,202,103

$ 5,266,802

Weighted average shares outstanding of Class A common stock . . . . . . . . . . . . .

34,500,000

34,500,000

Basic and diluted net income per share, Class A . . . . . . . . . . . . . . . . . . . . . . . . . .

$

0.14

$

0.16

Weighted average shares outstanding of Class F common stock . . . . . . . . . . . . .

8,625,000

8,625,000

Basic and diluted net loss per share, Class F . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

(0.07)

$

(0.01)

The accompanying notes are an integral part of these financial statements.

F-4

VIVINT SMART HOME, INC. (f/k/a Mosaic Acquisition Corp.)
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Common Stock

Class A

Class F

Shares

Amount

Shares Amount

Additional Paid-In
Capital

Retained Earnings
(Accumulated
Deficit)

Total
Stockholders’
Equity

Balance—December 31, 2017

1,599,499

160

8,625,000

863

5,215,674

(216,687)

5,000,010

Common stock subject to

possible redemption . . . . .

(526,681)

(53)

— —

(5,266,757)

—

(5,266,810)

Reclassification of

additional paid-in capital
to retained earnings . . . . .
Net income . . . . . . . . . . . . . .

Balance—December 31,

— —
— —

— —
— —

51,083
—

(51,083)
5,266,802

—

5,266,802

2018

1,072,818

107 8,625,000

863

—

4,999,032

5,000,002

Common stock subject to

possible redemption . . . . . (1,020,555)

(102)

— —

— —
— —

(10,205,448)
6,003,456

— (10,205,550)
6,003,456
—

Underwriter fee reduction . .
Reclassification of

additional paid-in capital
to retained earnings . . . . .
Net income . . . . . . . . . . . . . .

Balance—December 31,

— —
— —

— —
— —

4,201,992
—

(4,201,992)
4,202,103

—
4,202,103

2019

52,263 $

5 8,625,000 $863

$

—

$ 4,999,143 $ 5,000,011

The accompanying notes are an integral part of these financial statements.

F-5

VIVINT SMART HOME, INC. (f/k/a Mosaic Acquisition Corp.)
STATEMENTS OF CASH FLOWS

Cash Flows from Operating Activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash used in operating activities:

For the years ended December 31,

2019

2018

$ 4,202,103 $ 5,266,802

Interest income from investments held in Trust Account

. . . . . . . . . . . . . . . . . .

(7,184,341)

(6,187,823)

Changes in operating assets and liabilities:

Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses—related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise tax payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(105,134)
66,373
61,194
10,472
194,520
(44,449)

180,748
(85,141)
(5,000)
(5,385)
5,480
44,449

Net cash used in operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2,799,262)

(785,870)

Cash Flows from Investing Activities
Interest released from Trust Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,589,684

Net cash provided by investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,589,684

750,000

750,000

(35,870)
928,388

(209,578)
892,518

$

682,940

$

892,518

$10,205,550
$ 6,003,456 $

$ 5,266,810

—

—

Net change in cash
Cash—beginning of the year

Cash—end of the year

Supplemental disclosure of noncash transactions:

Change in value of Class A common stock subject to possible redemption . . . .
Change in deferred underwriting commissions . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplemental cash flow disclosure:

Cash paid for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,708,127 $

The accompanying notes are an integral part of these financial statements.

F-6

VIVINT SMART HOME, INC. (f/k/a Mosaic Acquisition Corp.)
NOTES TO FINANCIAL STATEMENTS

Note 1. Description of Organization and Business Operations

Vivint Smart Home, Inc. (f/k/a Mosaic Acquisition Corp.) (the “Company”) is a blank check company and
was incorporated in the Cayman Islands on July 26, 2017. In connection with the Closing (as defined below), the
Company changed its name from Mosaic Acquisition Corp. to Vivint Smart Home, Inc. Effective December 21,
2018, the Company changed its jurisdiction of incorporation from Cayman Islands to the State of Delaware
(“Domestication”). The Company was formed for the purpose of effecting a merger, share exchange, asset
acquisition, share purchase, reorganization or similar business combination with one or more businesses that the
Company has not yet identified (“business combination”). Although the Company is not limited to a particular
industry or geographic region for purposes of consummating a Business Combination, the Company intends to
capitalize on the ability of its management team to identify, acquire and operate a business that may provide
opportunities for attractive risk-adjusted returns.

All activity from July 26, 2017 (inception) through December 31, 2019 relates to the Company’s formation,

completion of the initial public offering (“Initial Public Offering”), entering into forward purchase agreements,
and, since the closing of the Initial Public Offering, the search for a Business Combination candidate described
below.

The registration statement for the Company’s Initial Public Offering was declared effective on October 18,
2017. On October 23, 2017, the Company consummated its Initial Public Offering of 34,500,000 units (“units”),
including the issuance of 4,500,000 units as a result of the underwriters’ exercise of their over-allotment option
in full, at $10.00 per unit, generating gross proceeds of $345 million and incurring offering costs of
approximately $19.7 million, inclusive of $12.075 million in deferred underwriting commissions (Note 6).

Simultaneously with the closing of the Initial Public Offering, the Company consummated the private
placement (“private placement”) of 5,933,334 warrants (the “private placement warrants”), at a price of $1.50 per
private placement warrant, with the Company’s SPAC sponsors, Mosaic Sponsor, LLC and Fortress Mosaic
Sponsor LLC (each a “SPAC sponsor” and, together, the “SPAC sponsors”), generating gross proceeds of
$8.9 million (Note 4).

Upon the closing of the Initial Public Offering and private placement, $345 million ($10.00 per unit) of the
aggregate net proceeds of the sale of the units in the Initial Public Offering and the Private Placement was placed
in a U.S.-based trust account (“Trust Account”) at J.P. Morgan Chase Bank, N.A., maintained by Continental
Stock Transfer & Trust Company, acting as trustee. Beginning in January 2018, the proceeds held in the Trust
Account are invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the
Investment Company Act, with a maturity of 180 days or less or in any open-ended investment company that
holds itself out as a money market fund selected by the Company meeting the conditions of paragraphs (d)(2),
(d)(3) and (d)(4) of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier
of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described
below.

At December 31, 2019, the Company had approximately $683,000 in cash held outside of the Trust
Account. The Company’s management has broad discretion with respect to the specific application of the net
proceeds of the Initial Public Offering and the sale of private placement warrants, although substantially all of the
net proceeds are intended to be applied generally toward consummating a Business Combination. The
Company’s initial Business Combination must be with one or more target businesses that together have an
aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding the deferred
underwriting commissions and taxes payable on income earned on the trust account) at the time of the agreement
to enter into the initial Business Combination. However, the Company will only complete a Business
Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities
of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register
as an investment company under the Investment Company Act 1940, as amended, or the Investment Company
Act.

F-7

VIVINT SMART HOME, INC. (f/k/a Mosaic Acquisition Corp.)
NOTES TO FINANCIAL STATEMENTS

The Company will provide its holders of Class A common stock (“public stockholders”) with the

opportunity to redeem all or a portion of their Class A common stock upon the completion of a business
combination either (i) in connection with a stockholder meeting called to approve the business combination or
(ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a
business combination or conduct a tender offer will be made by the Company, solely in its discretion. If,
however, stockholder approval of the transaction is required by law or stock exchange listing requirement, or the
Company decides to obtain stockholder approval for business or other legal reasons, it will: (i) conduct the
redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), which regulates the solicitation of proxies, and not pursuant to the
tender offer rules; and (ii) file proxy materials with the Securities and Exchange Commission (“SEC”). The
public stockholders will be entitled to redeem their Class A common stock for a pro rata portion of the amount
then in the Trust Account (initially approximately $10.00 per share) plus any pro rata interest earned on the funds
held in the Trust Account and not previously released to the Company to fund working capital requirements,
subject to an annual limit of $750,000, and/or to pay for the Company’s tax obligations. Since inception, the
Company has withdrawn approximately $1.5 million for working capital and approximately $1.8 million for
taxes obligations. The per-share amount to be distributed to public stockholders who redeem their Class A
common stock will not be reduced by the deferred underwriting commissions the Company will pay to the
underwriters (as discussed in Note 6). These shares of Class A common stock are recorded at a redemption value
and classified as temporary equity upon the completion of the Initial Public Offering, in accordance with
Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In such case,
the Company will proceed with a business combination if the Company has net tangible assets of at least
$5,000,001 upon such consummation of a business combination and a majority of the shares voted are voted in
favor of the business combination. If a stockholder vote is not required by the law and the Company does not
decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its certificate
of incorporation, conduct the redemptions pursuant to the tender offer rules of the SEC, and file tender offer
documents with the SEC prior to completing a business combination. If, however, a stockholder approval of the
transactions is required by law, or the Company decides to obtain stockholder approval for business or legal
reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy
rules and not pursuant to the tender offer rules. Additionally, each public stockholder may elect to redeem their
Class A common stock irrespective of whether they vote for or against the proposed transaction. If the Company
seeks stockholder approval in connection with a business combination, the initial stockholders (as defined below)
have agreed to vote their founder shares (as defined in Note 5) and any Class A common stock purchased during
or after the Initial Public Offering in favor of a business combination. In addition, the initial stockholders have
agreed to waive their redemption rights with respect to their founder shares and Class A common stock in
connection with the completion of a business combination.

In addition, certain institutional and accredited investors (“anchor investors”) have entered into forward
purchase agreements with the Company, pursuant to which the anchor investors agreed to purchase an aggregate
of 15,789,474 shares of Class A common stock, at a purchase price of $9.50 per share of Class A common stock
(for an aggregate amount of approximately $150 million), in a private placement to occur concurrently with the
closing of the initial business combination (“forward purchase agreements”). The obligations under the forward
purchase agreements do not depend on whether any Class A common stock are redeemed by the public
stockholders. In connection with these agreements, if the last reported sale price of the Class A common stock is
less than $11.00 (as adjusted for share splits, share combinations and the like) for at least 20 trading days
(whether or not consecutive) during the period of 30 consecutive trading days ending on the first anniversary of
the initial business combination, each anchor investor may purchase from the SPAC sponsors, at a price per share
of Class A common stock of $0.01, a number of Class A common stock (“contingent call shares”) no greater than
(a) the number of forward purchase shares issued and sold to such anchor investor less any forward purchase
shares sold by such anchor investor prior to its exercise of the right to purchase such contingent call shares
divided by (b) 18 (as adjusted for share splits, share combinations and the like).

F-8

VIVINT SMART HOME, INC. (f/k/a Mosaic Acquisition Corp.)
NOTES TO FINANCIAL STATEMENTS

Notwithstanding the foregoing, the Company’s certificate of incorporation provides that a public

stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is
acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), is restricted from redeeming
its shares with respect to more than an aggregate of 15% or more of the Class A common stock sold in the Initial
Public Offering, without the prior consent of the Company.

The Company’s SPAC sponsors, officers and directors (the “initial stockholders”) agreed not to propose an

amendment to the Company’s Memorandum and Articles of Association that would affect the substance or
timing of the Company’s obligation to redeem 100% of its Class A common stock if the Company does not
complete a business combination, unless the Company provides the public stockholders with the opportunity to
redeem their Class A common stock in conjunction with any such amendment.

The initial stockholders agreed to waive their liquidation rights with respect to the founder shares if the

Company fails to complete a business combination within the combination period. However, if the initial
stockholders should acquire Class A common stock in or after the Initial Public Offering, they will be entitled to
liquidating distributions from the trust account with respect to such Class A common stock if the Company fails
to complete a business combination within the combination period. The underwriters have agreed to waive their
rights to their deferred underwriting commission (see Note 6) held in the Trust Account in the event the
Company does not complete a business combination within the combination period and, in such event, such
amounts will be included with the funds held in the trust account that will be available to fund the redemption of
the Company’s Class A common stock. In the event of such distribution, it is possible that the per share value of
the residual assets remaining available for distribution (including trust account assets) will be only $10.00 per
share initially held in the trust account (or less than that in certain circumstances). In order to protect the amounts
held in the trust account, the SPAC sponsors have agreed to be liable to the Company, jointly and severally, if
and to the extent any claims by a vendor for services rendered or products sold to the Company, or a prospective
target business with which the Company has discussed entering into a transaction agreement, reduce the amount
of funds in the trust account. This liability will not apply with respect to any claims by a third party who executed
a waiver of any right, title, interest or claim of any kind in or to any monies held in the trust account or to any
claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain
liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in
the event that an executed waiver is deemed to be unenforceable against a third party, the SPAC sponsors will
not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the
possibility that the SPAC sponsors will have to indemnify the trust account due to claims of creditors by
endeavoring to have all vendors, service providers (other than the Company’s independent auditors), prospective
target businesses or other entities with which the Company does business, execute agreements with the Company
waiving any right, title, interest or claim of any kind in or to monies held in the trust account.

Pursuant to the Company’s certificate of incorporation, the Company originally had until 24 months from
the closing of the Initial Public Offering (or October 23, 2019) to complete a business combination, or 27 months
from the closing of the Initial Public Offering (or January 23, 2020) if the Company has executed a letter of
intent, agreement in principle or definitive agreement for an initial business combination within 24 months from
the closing of the Initial Public Offering (the “Combination Period”). On September 15, 2019, the Company
entered into an Agreement and Plan of Merger (the “Merger Agreement”), which was later amended on
December 18, 2019 (the “Amendment”), by and among Mosaic, Maiden Merger Sub, Inc., a wholly owned
subsidiary of Mosaic (“Merger Sub”), and Vivint Smart Home, Inc. (“Vivint Smart Home”). On January 17,
2020 (the “Closing Date”), the consummation was completed (see Note 10).

On December 20, 2019, the Company convened and then adjourned, without conducting any business, the

special meeting of stockholders (the “Special Meeting”) to be held in connection with our previously announced

F-9

VIVINT SMART HOME, INC. (f/k/a Mosaic Acquisition Corp.)
NOTES TO FINANCIAL STATEMENTS

Merger, until January 14, 2020. On January 14, 2020, the Company reconvened and then adjourned, without
conducting any business, the Special Meeting to be held in connection with our previously announced Merger,
until January 17, 2020.

Further information regarding the Merger is set forth in the Report on Form 8-K, which was filed with the

SEC on January 24, 2020.

If the Company was unable to complete a business combination by the Combination Period, the Company

would have to (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably
possible but no more than ten business days thereafter, redeem 100% of the outstanding Class A common stock
which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to
receive further liquidation distributions, if any), subject to applicable law and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of the remaining stockholders and the Company’s
board of directors, proceed to commence a voluntary liquidation and thereby a formal dissolution of the
Company, subject in each case to its obligations to provide for claims of creditors and the requirements of
applicable law.

Note 2. Summary of Significant Accounting Policies

Basis of presentation

The accompanying financial statement is presented in U.S. dollars in conformity with accounting principles

generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of
the SEC.

Emerging growth company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as
modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of
certain exemptions from various reporting requirements that are applicable to other public companies that are not
emerging growth companies including, but not limited to, not being required to comply with the auditor
attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding
executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of
holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden
parachute payments not previously approved.

Further, section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to

comply with new or revised financial accounting standards until private companies (that is, those that have not
had a Securities Act registration statement declared effective or do not have a class of securities registered under
the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act
provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has
elected not to opt out of such extended transition period which means that when a standard is issued or revised
and it has different application dates for public or private companies, the Company, as an emerging growth
company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
This may make comparison of the Company’s financial statements with another public company which is neither
an emerging growth company nor an emerging growth company which has opted out of using the extended
transition period difficult or impossible because of the potential differences in accountant standards used.

F-10

VIVINT SMART HOME, INC. (f/k/a Mosaic Acquisition Corp.)
NOTES TO FINANCIAL STATEMENTS

Use of estimates

The preparation of the financial statements in conformity with U.S. GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of expenses during the
reporting periods.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible

that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the
financial statements, which management considered in formulating its estimate, could change in the near term
due to one or more future confirming events. Accordingly, the actual results could differ significantly from those
estimates.

Income taxes

The Company complies with the accounting and reporting requirements of Accounting Standards
Codification (“ASC”) Topic 740, “Income Taxes,” which requires an asset and liability approach to financial
accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for
differences between the financial statement and tax bases of assets and liabilities that will result in future taxable
or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax
assets to the amount expected to be realized.

ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement
recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to
be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing
authorities. The Company’s management determined that the Cayman Islands is the Company’s major tax
jurisdiction from inception, and changed to State of Delaware since the Domestication on December 21, 2018.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax
expense.

The Company’s currently taxable income primarily consists of interest income on the Trust Account. The

Company’s general and administrative expenses are generally considered start-up costs and are not currently
deductible. The Company’s effective tax rate for the year ended December 31, 2019 and 2018 differ from the
expected income tax rate due to the start-up costs (discussed above) which are not currently deductible.

As of December 31, 2019 and 2018, there were no unrecognized tax benefits and no amounts accrued for

interest and penalties. The Company is currently not aware of any issues under review that could result in
significant payments, accruals or material deviation from its position.

Class A common stock subject to possible redemption

The Company accounts for its Class A common stock subject to possible redemption in accordance with the

guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Class A common stock subject to
mandatory redemption (if any) are classified as liability instruments. Conditionally redeemable Class A common
stock (including Class A common stock that feature redemption rights that are either within the control of the
holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control)
are classified as temporary equity. At all other times, Class A common stock is classified as stockholders’ equity.
The Company’s Class A common stock feature certain redemption rights that are considered to be outside of the
Company’s control and subject to the occurrence of uncertain future events. Accordingly, an aggregate of
34,447,737 and 33,427,182 Class A common stock subject to possible redemption at redemption value at
December 31, 2019 and 2018, respectively, are presented as temporary equity, outside of the stockholders’ equity
section of the Company’s accompanying balance sheets.

F-11

VIVINT SMART HOME, INC. (f/k/a Mosaic Acquisition Corp.)
NOTES TO FINANCIAL STATEMENTS

Net Income (Loss) per Share

The Company’s statement of operations includes a presentation of income per share for common stock
subject to redemption in a manner similar to the two-class method of income per share. Net income per common
stock, basic and diluted for Class A common stock for the year ended December 31, 2019 and 2018 are
calculated by dividing the interest income earned on the Trust Account of approximately $7.2 million and
$6.2 million, respectively, net of funds available to be withdrawn from the Trust for working capital and tax
payable purposes (subject to an annual limit of $750,000), resulted in a total of approximately $5.1 million and
$5.4 million, respectively, by the weighted average number of Class A common stock outstanding for the period.
Net loss per common stock, basic and diluted for Class F common stock for the year ended December 31, 2019
and 2018 are calculated by dividing the net income, less income attributable to Class A common stock by the
weighted average number of Class F common stock outstanding for the period.

The Company complies with accounting and disclosure requirements of FASB ASC 260, “Earnings Per
Share”. Net loss per share of common stock is computed by dividing net loss applicable to common stockholders
by the weighted average number of common stock outstanding for the period. The Company has not considered
the effect of the warrants sold in the Initial Public Offering (including the consummation of the over-allotment)
and Private Placement to purchase an aggregate of 17,433,334 shares of Class A common stock in the calculation
of diluted loss per share, since their inclusion would be anti-dilutive under the treasury stock method at
December 31, 2019 and 2018.

Concentration of credit risk

Financial instruments that potentially subject the Company to concentration of credit risk consist of a cash

account in a financial institution which, at times may exceed the Federal Depository Insurance Corporation
coverage of $250,000. At December 31, 2019 and 2018, the Company had not experienced losses on this account
and management believes the Company is not exposed to significant risks on such account.

Fair value of financial instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC

Topic 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the
accompanying balance sheets, primarily due to their short-term nature.

Fair Value Measurements

Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability,
in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair
value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority
to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the
lowest priority to unobservable inputs (Level 3 measurements). These tiers include:

• Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in

active markets;

• Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly
observable such as quoted prices for similar instruments in active markets or quoted prices for identical
or similar instruments in markets that are not active; and

• Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an
entity to develop its own assumptions, such as valuations derived from valuation techniques in which
one or more significant inputs or significant value drivers are unobservable.

F-12

VIVINT SMART HOME, INC. (f/k/a Mosaic Acquisition Corp.)
NOTES TO FINANCIAL STATEMENTS

In some circumstances, the inputs used to measure fair value might be categorized within different levels of

the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair
value hierarchy based on the lowest level input that is significant to the fair value measurement.

Recent Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if

currently adopted, would have a material effect on the Company’s financial statements.

Note 3. Initial Public Offering

On October 23, 2017, the Company sold 34,500,000 units, including the issuance of 4,500,000 units as a
result of the underwriters’ exercise of their over-allotment option in full, at a price of $10.00 per unit in the Initial
Public Offering. Each unit consists of one Class A common stock and one-third of one redeemable warrant. Each
whole warrant will entitle the holder to purchase one Class A common stock at an exercise price of $11.50 per
share, subject to adjustment (see Note 7).

Note 4. Private Placement

Concurrently with the closing of the Initial Public Offering, the Sponsors purchased an aggregate of
5,933,334 Private Placement Warrants, generating gross proceeds of $8.9 million in the aggregate in a Private
Placement. Each Private Placement Warrant is exercisable to purchase one Class A common stock at $11.50 per
share. A portion of the proceeds from the Private Placement Warrants were added to the proceeds from the Initial
Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the
Combination Period, the Private Placement Warrants will expire worthless.

Note 5. Related Party Transactions

Founder Shares

On October 23, 2017, the Company issued an aggregate of 8,625,000 shares of Class F common stock to the

SPAC sponsors (the “founder shares”) in exchange for an aggregate capital contribution of $25,000, with each
SPAC sponsor purchasing an equal number of founder shares. The SPAC sponsors agreed to forfeit an aggregate
of up to 1,125,000 founder shares to the extent that the over-allotment option is not exercised in full by the
underwriters. On October 23, 2017, the underwriters exercised their over-allotment option. As a result, the
1,125,000 founder shares were no longer subject to forfeiture. The founder shares will automatically convert into
Class A common stock upon the consummation of a business combination, or earlier at the option of the holder,
on a one-for-one basis, subject to adjustment (see Note 7).

The initial stockholders agreed not to transfer, assign or sell any of their founder shares until the earliest of

(a) one year after the completion of the initial business combination, (b) subsequent to the initial business
combination, if the last reported sale price of the Class A common stock equals or exceeds $12.00 per share (as
adjusted) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial
business combination, or (C) following the completion of the initial business combination, such future date on
which the Company completes a liquidation, merger, share exchange, reorganization or other similar transaction
that results in all of our public stockholders having the right to exchange their common stock for cash, securities
or other property.

Forward Purchase Agreements

The Company entered into forward purchase agreements with anchor investors (including an affiliate of

Fortress Mosaic Sponsor LLC), pursuant to which the anchor investors agreed to purchase an aggregate of

F-13

VIVINT SMART HOME, INC. (f/k/a Mosaic Acquisition Corp.)
NOTES TO FINANCIAL STATEMENTS

15,789,474 shares of Class A common stock at a purchase price of $9.50 multiplied by the number of shares of
Class A common stock purchased (“forward purchase shares”), or approximately $150,000,000 in the aggregate,
in a private placement to occur concurrently with the closing of the initial business combination.

In connection with the forward purchase shares sold to the anchor investors, the SPAC sponsors will receive

(by way of an adjustment to their existing founder shares) an aggregate number of additional founder shares
equal to one ninth of the aggregate number of forward purchase shares sold to the anchor investors.

If the last reported sale price of the Class A common stock is less than $11.00 (as adjusted for share splits,

share combinations and the like) for at least 20 trading days (whether or not consecutive) during the period of 30
consecutive trading days ending on the first anniversary of the Company’s initial business combination, each
anchor investor may purchase from the SPAC sponsors, at a price per Class A common stock of $0.01, a number
of Class A common stock no greater than (a) the number of forward purchase shares issued and sold to such
anchor investor less any forward purchase shares sold by such anchor investor prior to its exercise of the right to
purchase such contingent call shares divided by (b) 18 (as adjusted for share splits, share combinations and the
like).

In connection with the execution of the Amendment, the Company had also entered into amendments with

each of the anchor investor. These amendments provide, among other things, for waivers by the forward
purchasers of certain rights of first offer with respect to the investments to be made pursuant to the Additional
Forward Purchaser Subscription Agreement and the Fortress Subscription and Backstop Agreement (as defined
below).

The forward purchase agreements provided that prior to the initial business combination each anchor
investor has the right to designate one individual to be, at its election, either elected as a member of our board of
directors or a non-voting observer of our board of directors.

The proceeds from the sale of the forward purchase shares may be used as part of the consideration to the
sellers in the initial business combination, expenses in connection with the initial business combination or for
working capital in the post-transaction company. These purchases will be required to be made regardless of
whether any Class A common stock are redeemed by the public stockholders and are intended to provide the
Company with a minimum funding level for the initial business combination.

The anchor investors will have no right to the funds held in the trust account except with respect to any

public shares owned by them.

Additional Forward Purchaser Subscription

In connection with the execution of the Amendment, we had also entered into an additional subscription

agreement (the “Additional Forward Purchaser Subscription Agreement”) with one of the anchor investors.
Pursuant to the Additional Forward Purchaser Subscription Agreement, immediately prior to the effective time of
the Merger, the Company will sell, and the Forward Purchaser will purchase from us, 5,000,000 shares of Mosaic
Class A common stock at $10.00 per share. As consideration for the additional investment, 25% of Mosaic
Sponsor LLC’s shares of Mosaic Class F common stock and private placement warrants will be forfeited to
Mosaic and Mosaic will issue to the Forward Purchaser an equal number of shares of Mosaic Class A common
stock and warrants concurrently with the consummation of the merger.

In connection with the Additional Forward Purchaser Subscription Agreement, we had entered into a lockup

agreement with the abovementioned anchor investor, pursuant to which the shares purchased by such anchor
investor under the Additional Forward Purchaser Subscription Agreement will be subject to a six-month lockup.

F-14

VIVINT SMART HOME, INC. (f/k/a Mosaic Acquisition Corp.)
NOTES TO FINANCIAL STATEMENTS

Fortress Subscription and Backstop Agreement

In connection with the execution of the Amendment, we had also entered into a Subscription and Backstop

Agreement (the “Fortress Subscription and Backstop Agreement”) with an affiliate of Fortress Investment Group
LLC (the “Fortress Subscriber”), pursuant to which the Fortress Subscriber committed to purchase up to
$50,000,000 in aggregate purchase price of shares of Mosaic Class A common stock as follows: the Fortress
Subscriber (i) intends to purchase up to $50,000,000 in aggregate purchase price of shares of Mosaic Class A
common stock in the open market, subject to applicable law, (ii) agreed to backstop redemptions by subscribing
for a number of shares of newly-issued shares of Mosaic Class A common stock at a purchase price per share
equal to the per-share value of the Mosaic’s Trust Account at the time of any such redemptions (the “Trust
Value”) to be issued at the closing of the merger with an aggregate value equal to the lesser of (x) $50,000,000
(less the aggregate purchase price of the shares purchased by it in the open market) and (y) the aggregate value of
the number of shares of Mosaic Class A common stock that elect to redeem in the redemption offer (based on the
Trust Value), and (iii) agreed to subscribe for up to $50,000,000 (less the aggregate purchase price of the shares
purchased by it in the open market and to backstop redemptions) in aggregate purchase price of newly-issued
shares of Mosaic Class A common stock at $10.00 per share to be issued at the election of Vivint Smart Home at
the closing of the merger. The obligations to consummate the subscriptions contemplated by the Fortress
Subscription and Backstop Agreement are conditioned upon, among other things, customary closing conditions
and the consummation of the transactions contemplated by the merger agreement. All the shares purchased by
the Fortress Subscriber under the Fortress Subscription and Backstop Agreement will also be subject to the
restrictions of the Confidentiality and Lockup Agreement, dated September 15, 2019, to which it is party.

Office Space and Related Support Services

Effective October 18, 2017, the Company entered into an agreement with an affiliate of one of the SPAC

sponsors a monthly fee of $16,875 for office space and related support services.

On October 18, 2017, the Company agreed to pay a monthly fee of $5,000 for its Chief Financial Officer
(“CFO”) commencing on the closing of the Initial Public Offering, plus a deferred cash payment of $330 per
hour, less cumulative monthly fees paid, payable upon completion of its initial business combination or
liquidation, whichever occurs first. In addition, the Company also agreed to pay its CFO according to the
agreement for services performed prior to the closing of the Initial Public Offering. Any deferred cash payment
will not be claimed against the trust account. Additionally, the Company will issue Class A common stock to him
upon completion of the Company’s initial business combination (“Equity Compensation”). The number of
Class A common stock to be issued is determined in accordance with an agreed formula, which is estimated to be
9,652 shares as of December 31, 2019. The Company was not obligated to issue the Equity Compensation if no
Business Combination is consummated. The equity compensation fee is an unrecognized contingent liability, as
closing of a potential business combination had not yet occurred as of December 31, 2019 and 2018. On
January 17, 2020, the Business Combination was consummated, and the Company is obligated to issue 10,069
shares of Class A common stock to the CFO by July 17, 2020.

The Company had incurred $268,000 and $257,000 in expenses during the year ended December 31, 2019

and 2018, respectively, as reflected in the accompanying Statements of Operations for services provided by
related parties in connection with these aforementioned agreements with related parties. An aggregate of
approximately $48,000 and $37,500 in fees for these services was accrued as of December 31, 2019 and 2018,
respectively, as reflected in the accompanying balance sheets.

Related Party Loans

In order to finance transaction costs in connection with a business combination, the SPAC sponsors or an
affiliate of either SPAC sponsor, or certain of our officers and directors may, but are not obligated to, provide

F-15

VIVINT SMART HOME, INC. (f/k/a Mosaic Acquisition Corp.)
NOTES TO FINANCIAL STATEMENTS

Working Capital Loans to the Company as may be required. If the Company completes a business combination,
the Company would repay the Working Capital Loans out of the proceeds of the trust account released to the
Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the trust
account. In the event that a business combination does not close, the Company may use a portion of proceeds
held outside the trust account to repay the Working Capital Loans but no proceeds held in the trust account would
be used to repay the Working Capital Loans, other than the interest on such proceeds that may be released for
working capital purposes. Except for the foregoing, the terms of such Working Capital Loans, if any, have not
been determined and no written agreements exist with respect to such loans. The Working Capital Loans would
either be repaid upon consummation of a business combination, without interest, or, at the lender’s discretion, up
to $1,500,000 of such Working Capital Loans may be convertible into warrants of the post business combination
entity at a price of $1.50 per warrant. The warrants would be identical to the private placement warrants. There
were no Working Capital Loans outstanding as of December 31, 2019 and 2018.

Note 6. Commitments & Contingencies

Registration Rights

The holders of the founder shares and private placement warrants and warrants that may be issued upon
conversion of Working Capital Loans (and any Class A common stock issuable upon the exercise of the private
placement warrants and warrants that may be issued upon conversion of Working Capital Loans) will be entitled
to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of
the Initial Public Offering. The holders of these securities are entitled to make up to three demands, excluding
short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back”
registration rights with respect to registration statements filed subsequent to the consummation of a business
combination. However, the registration rights agreement provides that the Company will not permit any
registration statement filed under the Securities Act to become effective until termination of the applicable
lock-up period. The Company will bear the expenses incurred in connection with the filing of any such
registration statements.

Pursuant to the forward purchase agreements, the Company agreed to file within 30 days after the closing of

the business combination a registration statement for a secondary offering of the forward purchase shares and
contingent call shares and to maintain the effectiveness of such registration statement until the earliest of (A) the
date on which the anchor investors cease to hold the securities covered thereby, (B) the date all of the securities
covered thereby can be sold publicly without restriction or limitation under Rule 144 under the Securities Act,
subject to certain conditions and limitations set forth in the forward purchase agreements.

Underwriting Agreement

The Company granted the underwriters a 45-day option from the date of the Initial Public Offering to
purchase up to 4,500,000 additional units to cover over-allotments, if any, at the price paid by the underwriters in
the Initial Public Offering. The underwriters exercised this over-allotment in full concurrently with the closing of
the Initial Public Offering.

The underwriters were entitled to an underwriting discount of $0.20 per unit, or $6.9 million in the

aggregate, paid upon the closing of the Initial Public Offering. Additionally, a deferred underwriting discount of
$0.35 per unit, or $12.075 million in the aggregate will be payable to the underwriters from the amounts held in
the trust account solely in the event that the Company completes a business combination, subject to the terms of
the underwriting agreement.

In January 2020, the Company negotiated the deferred underwriting discount and paid $6.1 million at

Closing.

F-16

VIVINT SMART HOME, INC. (f/k/a Mosaic Acquisition Corp.)
NOTES TO FINANCIAL STATEMENTS

Note 7. Stockholders’ Equity

Class A Common Stock—The Company is authorized to issue 200,000,000 shares of Class A common stock
with a par value of $0.0001 per share. Holders of the Company’s Class A common stock are entitled to one vote
for each share on each matter on which they are entitled to vote. At December 31, 2019 and 2018, there were
34,500,000 shares of Class A common stock issued and outstanding, including 34,447,737 and 33,427,182 shares
of Class A common stock subject to possible redemption, respectively.

Class F Common Stock—The Company is authorized to issue 20,000,000 founder shares with a par value of

$0.0001 per share. Holders of the Company’s founder shares are entitled to one vote for each share on each
matter on which they are entitled to vote. The founder shares will automatically convert into Class A common
stock on the first business day following the consummation of the initial business combination on a one-for-one
basis. As of December 31, 2019 and 2018, there were 8,625,000 founder shares outstanding.

Holders of the founder shares will have the right to elect all of the Company’s directors prior to the initial

business combination and each director will need to receive the vote of two-thirds of the outstanding founder
shares in order to be elected. Otherwise, holders of Class A common stock and founder shares will vote together
as a single class on all matters submitted to a vote of stockholders except as required by law or the applicable
rules of the New York Stock Exchange then in effect.

Founder shares will automatically convert into Class A common stock on the first business day following
the consummation of the initial business combination, or earlier at the option of the holders, on a one-for-one
basis, subject to adjustment. In the case that additional Class A common stock, or equity-linked securities, are
issued or deemed issued in excess of the amounts sold in the Initial Public Offering and related to the closing of
the initial business combination, the ratio at which the founder shares shall convert into Class A common stock
will be adjusted (unless the holders of two-thirds of the outstanding founder shares agree to waive such anti-
dilution adjustment with respect to any such issuance or deemed issuance) so that the number of Class A
common stock issuable upon conversion of all founder shares will equal, in the aggregate, 20% of the sum of the
total number of all common stock outstanding upon the completion of the Initial Public Offering plus all Class A
common stock and equity-linked securities issued or deemed issued in connection with the initial business
combination, excluding any shares or equity-linked securities issued, or to be issued, to any seller in the initial
business combination and excluding forward purchase shares sold to the anchor investors. The conversion ratio
of the founder shares into Class A common stock will be further adjusted in connection with the forward
purchase shares sold to the anchor investors such that the SPAC sponsors will receive upon the closing of our
initial business combination an aggregate number of additional Class A common stock equal to one ninth of the
aggregate number of forward purchase shares sold to the anchor investors.

Preferred stock—The Company is authorized to issue 1,000,000 preferred stock with a par value of $0.0001

per share. At December 31, 2019 and 2018, there are no preferred stock issued or outstanding.

Warrants—Warrants may only be exercised for a whole number of shares. No fractional warrants will be

issued upon separation of the units and only whole warrants will trade. The warrants will become exercisable on
the later of (a) 30 days after the completion of a business combination or (b) 12 months from the closing of the
Initial Public Offering; provided in each case that the Company has an effective registration statement under the
Securities Act covering the Class A common stock issuable upon exercise of the warrants and a current
prospectus relating to them is available (or the Company permits holders to exercise their warrants on a cashless
basis and such cashless exercise is exempt from registration under the Securities Act). The Company has agreed
that as soon as practicable, but in no event later than 15 business days, after the closing of a business
combination, the Company will use its best efforts to file with the SEC a registration statement for the

F-17

VIVINT SMART HOME, INC. (f/k/a Mosaic Acquisition Corp.)
NOTES TO FINANCIAL STATEMENTS

registration, under the Securities Act, of the Class A common stock issuable upon exercise of the warrants. The
Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such
registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance
with the provisions of the warrant agreement. If a registration statement covering the Class A common stock
issuable upon exercise of the warrants is not effective by the sixtieth (60th) day after the closing of the initial
business combination, warrant holders may, until such time as there is an effective registration statement and
during any period when the Company will have failed to maintain an effective registration statement, exercise
warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. The
warrants will expire five years after the completion of a business combination or earlier upon redemption or
liquidation.

The private placement warrants are identical to the warrants underlying the units sold in the Initial Public
Offering, except that the private placement warrants and the Class A common stock issuable upon exercise of the
private placement warrants will not be transferable, assignable or salable until 30 days after the completion of a
business combination, subject to certain limited exceptions. Additionally, the private placement warrants will be
non-redeemable so long as they are held by the initial purchasers or such purchasers’ permitted transferees. If the
private placement warrants are held by someone other than the initial stockholders or their permitted transferees,
the private placement warrants will be redeemable by the Company and exercisable by such holders on the same
basis as the warrants.

The Company may call the warrants for redemption:

1.

For cash:

•

•

•

•

in whole and not in part;

at a price of $0.01 per warrant;

upon a minimum of 30 days’ prior written notice of redemption; and

if, and only if, the last reported closing price of the common stock equals or exceeds $18.00 per share
(as adjusted for share splits, share dividends, reorganizations, reclassifications, recapitalizations and the
like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the
date on which the Company sends the notice of redemption to the warrant holders.

2.

For Class A common stock:

•

•

•

•

in whole and not in part;

at a price equal to a number of Class A common stock to be determined by reference to a table included
in the warrant agreement, based on the redemption date and the fair market value of the Class A
common stock;

upon a minimum of 30 days’ prior written notice of redemption; and

if, and only if, the last reported closing price of the common stock equals or exceeds $10.00 per share
(as adjusted for share splits, share dividends, reorganizations, reclassifications, recapitalizations and the
like) on the trading day prior to the date on which the Company sends notice of redemption to the
warrant holders.

If the Company calls the warrants for redemption, management will have the option to require all holders

that wish to exercise the warrants to do so on a “cashless basis,” as described in the warrant agreement.

The exercise price and number of Class A common stock issuable upon exercise of the warrants may be

adjusted in certain circumstances including in the event of a share dividend, or recapitalization, reorganization,

F-18

VIVINT SMART HOME, INC. (f/k/a Mosaic Acquisition Corp.)
NOTES TO FINANCIAL STATEMENTS

merger or consolidation. However, the warrants will not be adjusted for issuance of Class A common stock at a
price below its exercise price. Additionally, in no event will the Company be required to net cash settle the
warrants shares. If the Company is unable to complete a business combination within the combination period and
the Company liquidates the funds held in the trust account, holders of warrants will not receive any of such funds
with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of
the trust account with the respect to such warrants. In such a situation, the warrants would expire worthless.

Note 8. Fair Value Measurements

The following table presents information about the Company’s assets that are measured on a recurring basis

as of December 31, 2019 and 2018 and indicates the fair value hierarchy of the valuation techniques that the
Company utilized to determine such fair value.

Description

Investments held in Trust

Account at December 31,
2019 . . . . . . . . . . . . . . . . . . . . .

Description

Investments held in Trust

Account at December 31,
2018 . . . . . . . . . . . . . . . . . . . . .

Quoted Prices
in Active Markets
(Level 1)

Significant Other
Observable Inputs
(Level 2)

Significant Other
Unobservable Inputs
(Level 3)

$355,032,480

$—

$—

Quoted Prices
in Active Markets
(Level 1)

Significant Other
Observable Inputs
(Level 2)

Significant Other
Unobservable Inputs
(Level 3)

$350,437,823

$—

$—

None of the balance in the Trust Account was held in cash as of December 31, 2019 and 2018.

Note 9. Income Taxes

The Company’s net deferred tax assets are as follows:

December 31,

2019

2018

Deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net operating loss carryforward . . . . . . . . . . . . . . . . .
Startup/Organizational Costs . . . . . . . . . . . . . . . . . . .

$

—
286,152

$ —
8,937

Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation Allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

286,152
(286,152)

8,937
(8,937)

Deferred tax asset, net of allowance . . . . . . . . . . . . . . . . . .

$

—

$ —

F-19

VIVINT SMART HOME, INC. (f/k/a Mosaic Acquisition Corp.)
NOTES TO FINANCIAL STATEMENTS

The income tax provision consists of the following:

For the years ended December 31,

2019

2018

Current

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Federal
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,467,919
—

$44,450
—

Deferred

Federal
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—
—

—
—

Income tax provision expense . . . . . . . . . . . . . . . . . . . . .

$1,467,919

$44,450

At December 31, 2019 and 2018, the Company had gross deferred tax assets of approximately $286,000 and

$9,000. In assessing the realization of deferred tax assets, management considers whether it is more likely than
not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income during the period in which those temporary
differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected
future taxable income and taxing strategies in making this assessment. In case the deferred tax assets will not be
realized in future periods, the Company has provided a valuation allowance for the full amount of the deferred
tax assets at December 31, 2019 and 2018.

A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as

follows:

Statutory federal income tax rate . . . . . . . . . . . . . . .
State taxes, net of federal tax benefit . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . .

Income tax provision expense . . . . . . . . . . . . . . . . .

For the years ended December 31,

2019

21.0%
0.0%
4.9%

25.9%

2018

21.0%
0.0%
5.3%

26.3%

The Company’s major tax jurisdiction is the United States. All of the Company’s tax years will remain open

three years for examination by the Federal authorities from the date of utilization of the net operating loss. The
Company does not have any tax audits pending.

Note 10. Merger Agreement

Pursuant to the terms of the amended Merger Agreement, a business combination between Mosaic and
Vivint Smart Home was effected through the merger of Merger Sub with and into Vivint Smart Home, with
Vivint Smart Home surviving as the surviving company (the “Merger”). The Amendment amended the Merger
Agreement to, among other things, (i) reduce the exchange ratio and VGI exchange ratio from 209.6849221312
and 0.2076986176 to 84.5320916792 and 0.0864152412, respectively, to reflect a reduced transaction enterprise
valuation of $4.1 billion, (ii) provide for an additional 12.5 million of Class A common shares to be issued to
Vivint Smart Home’s holders upon achievement of a $17.50 earnout threshold, (iii) provide for the additional
investment by a forward purchaser and the additional investment by an affiliate of Fortress Investment Group
LLC (each as described under “Additional Forward Purchaser Subscription” and “Fortress Subscription and
Backstop Agreement”, respectively), (iv) decrease the termination fee to $32.4 million and (v) agree to adjourn
the special meeting to approve the merger to January 14, 2020. On January 14, 2020, the Company reconvened
and then adjourned, without conducting any business, the Special Meeting to be held in connection with our
previously announced Merger, until January 17, 2020.

F-20

VIVINT SMART HOME, INC. (f/k/a Mosaic Acquisition Corp.)
NOTES TO FINANCIAL STATEMENTS

Pursuant to the terms of the Merger Agreement, Mosaic was required to use reasonable best efforts to cause
the Common Stock to be issued in connection with the transactions contemplated by the Merger Agreement (the
“Transactions”) to be listed on the New York Stock Exchange (“NYSE”) prior to the closing of the Merger (the
“Closing”). Certain investment funds managed by affiliates of Fortress Investment Group LLC (“Fortress”) and
certain investment funds affiliated with The Blackstone Group Inc. (such investment funds, collectively,
“Blackstone”) have agreed to purchase, respectively, 12,500,000 and 10,000,000 newly-issued shares of
Common Stock (such purchases, the “Fortress Subscription” and the “Blackstone Subscription”, respectively,
and together, the “Subscriptions”) concurrently with the completion of the Merger.

Earnout

Following the Closing, holders of Vivint common stock and holders of Rollover Restricted Stock (as

defined in the Merger Agreement) and outstanding Rollover Equity Awards (as defined in the Merger
Agreement) will have the contingent right to receive, in the aggregate, up to 37,500,000 shares of Common Stock
if, from the Closing until the fifth anniversary thereof, the dollar volume-weighted average price of Common
Stock exceeds certain thresholds. The first issuance of 12,500,000 earnout shares will occur if the volume-
weighted average price of Common Stock exceeds $12.50 for any 20 trading days within any 30 trading day
period (the “First Earnout”). The second issuance of 12,500,000 earnout shares will occur if the volume weighted
average price of Common Stock exceeds $15.00 for any 20 trading days within any 30 day trading period (the
“Second Earnout”). The third issuance of 12,500,000 earnout shares will occur if the volume weighted average
price of Common Stock exceeds $17.50 for any 20 trading days within any 30 trading day period (the “Third
Earnout”) (as further described in the Merger Agreement).

Sponsor Agreement

In connection with the execution of the Merger Agreement, the SPAC sponsors and Eugene I. Davis
(together with the SPAC sponsors, the “Sponsor Agreement Parties”) entered into an amendment to the existing
SPAC sponsor agreement (as amended, the “Sponsor Agreement”) with Mosaic and Vivint Smart Home pursuant
to which the Sponsor Agreement Parties have agreed to vote all shares of Common Stock beneficially owned by
such persons in favor of each of the proposals at the Mosaic special stockholder meeting, to use their reasonable
best efforts to take all actions reasonably necessary to consummate the Merger and the other transactions
contemplated by the Merger Agreement and to not take any action that would reasonable be expected to
materially delay or prevent the satisfaction of the conditions to the Merger set forth in the Merger Agreement.

Pursuant to the Sponsor Agreement, prior to the valid termination of the Merger Agreement, each Sponsor

Agreement Party is subject to certain non-solicitation restrictions restricting each Sponsor Agreement Party from,
among other things, soliciting, initiating or knowingly encouraging or knowingly facilitating any inquiry,
proposal or offer which constitutes, or could reasonably be expected to constitute a Business Combination
Proposal (as defined in the Sponsor Agreement) other than with Vivint Smart Home, its stockholders and their
respective affiliates and representatives or entering into any letter of intent, merger agreement or similar
agreement providing such a Business Combination Proposal.

The Sponsor Agreement provides that the Sponsor Agreement Parties will not redeem any shares of Common

Stock owned by such persons in connection with the Merger and will take all actions necessary to opt out of any
class in any class action with respect to any claim, derivative or otherwise, against Mosaic, Vivint Smart Home or
any of their respective successors and assigns relating to the negotiation, execution or delivery of the Sponsor
Agreement, the Merger Agreement or the consummation of the transactions contemplated in such agreements.

F-21

VIVINT SMART HOME, INC. (f/k/a Mosaic Acquisition Corp.)
NOTES TO FINANCIAL STATEMENTS

The Sponsor Agreement Parties have also agreed, subject to the Stockholders Agreement (described below)

and subject to certain exceptions, not to transfer any Founder Shares (as defined in the Sponsor Agreement) (or
any shares of Common Stock issuable upon conversion thereof) or any Private Placement Warrants (as defined in
the Sponsor Agreement) (or any shares of Common Stock issuable upon exercise thereof) until the earlier of
(A) one year after the completion of the Merger, (B) subsequent to the Merger, if the last sale price of Common
Stock equals or exceeds $12.00 per share (as adjusted for share splits, share dividends, reorganizations,
recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150
days after the Merger or (C) such future date following the completion of the Merger on which Mosaic completes
a liquidation, merger, share exchange, reorganization or similar transaction that results in all of Mosaic’s
stockholders having the right to exchange their shares of Common Stock for cash, securities or other property
(the “Lock-up Period”).

The Sponsor Agreement also provides that all the Founder Shares (and any shares of Common Stock
issuable upon conversion thereof) and Private Placement Warrants held by each Sponsor Agreement Party as of
the Closing shall be unvested and shall be subject to certain time and performance-based vesting provisions
described below. The Sponsor Agreement Parties have agreed not to transfer any unvested Founder Shares or
Private Placement Warrants prior to the date such securities become vested.

Pursuant to the Sponsor Agreement, 50% of the unvested Founder Shares shall vest at the closing of the
Merger. 25% of the unvested Founder Shares shall vest at such time as a $12.50 Stock Price Level (as defined
below) is achieved on or before the fifth anniversary of the Closing. The remaining 25% of unvested Founder
Shares shall vest at such time as a $15.00 Stock Price Level is achieved on or before the fifth anniversary of the
Closing. 50% of the unvested Private Placement Warrants shall vest at such time as a $12.50 Stock Price Level is
achieved on or before the fifth anniversary of the Closing. The remaining 50% of the unvested Private Placement
Warrants shall vest at such time as a $15.00 Stock Price Level is achieved on or before the fifth anniversary of
the Closing.

In the event Mosaic enters into a binding agreement on or before the fifth anniversary of the Closing related
to certain sale transactions involving the shares of Common Stock or all or substantially all the assets of Mosaic
(a “Mosaic Sale”), all unvested Founder Shares and unvested Private Placement Warrants shall vest on the day
prior to the closing of such Mosaic Sale if the per share price implied in such Mosaic Sale meets or exceeds the
applicable Stock Price Level.

Any Founder Shares or Private Placement Warrants that remain unvested after the fifth anniversary of the

Closing shall be forfeited. The applicable “Stock Price Level” will be considered achieved only (a) when the
volume weighted average price of Common Stock on the New York Stock Exchange is greater than or equal to
the applicable threshold for any 20 trading days within a 30 trading day period or (b) the per share price implied
in a Mosaic Sale is greater than or equal to the applicable threshold.

The Sponsor Agreement shall terminate on the earlier of (a) the consummation of a Mosaic Sale and (b) the

later of (i) the earlier of (x) the achievement of a $15.00 Stock Price Level on or before the fifth anniversary of
the Closing and (y) the fifth anniversary of the Closing and (ii) the expiration of the Lock-up Period.

Stockholders Agreement

In connection with the execution of the Merger Agreement, Mosaic entered into a stockholders agreement

(the “Stockholders Agreement”) with the SPAC sponsors, Blackstone and certain other parties thereto
(collectively, the “Stockholder Parties”). The Stockholders Agreement will become effective upon the
consummation of the Merger. Pursuant to the terms of the Stockholders Agreement, Blackstone will have the

F-22

VIVINT SMART HOME, INC. (f/k/a Mosaic Acquisition Corp.)
NOTES TO FINANCIAL STATEMENTS

right to designate nominees for election to Mosaic’s board of directors following the Closing at any meeting of
its stockholders (each, a “Blackstone Director”). The number of nominees that Blackstone will be entitled to
nominate pursuant to the Stockholders Agreement is dependent on Blackstone’s beneficial ownership of
Common Stock. For so long as Blackstone and their affiliates own (i) 50% or more of the Common Stock,
Blackstone will be entitled to designate a majority of Mosaic’s directors, (ii) 40% to 50% of the Common Stock,
Blackstone will be entitled to designate 40% of Mosaic’s directors, (iii) 30% (but less than 40%) of the Common
Stock, Blackstone will be entitled to designate 30% of Mosaic’s directors, (iv) 20% (but less than 30%) of the
Common Stock, Blackstone will be entitled to designate 20% of Mosaic’s directors and (v) 5% (but less than
20%) of the Common Stock, Blackstone will be entitled to designate 10% of Mosaic’s directors.

Under the Stockholders Agreement, Mosaic agreed to nominate one director designated by Fortress (the

“Fortress Director”) to Mosaic’s board of directors so long as Fortress beneficially owns at least 50% of the
shares of Mosaic’s Common Stock it owns immediately following the consummation of the Merger; provided
that the Fortress Director must be an employee or principal of the Softbank Vision Fund unless otherwise agreed
by Mosaic and Blackstone. Additionally, so long as Fortress beneficially owns at least 50% of the shares of
Mosaic’s common stock it owns immediately following the consummation of the Merger, Fortress shall have the
right to appoint a representative (the “Fortress Observer”) who will have the right to attend meetings of Mosaic’s
board of directors and receive information given to Mosaic’s directors, subject to certain customary exceptions,
including to preserve confidentiality obligations or privilege. The Fortress Observer will not have any voting
rights.

Under the Stockholders Agreement, Mosaic agreed to nominate one director designated by the Summit
Designator (as defined in the Stockholders Agreement) (the “Summit Director” and together with the Blackstone
Directors and the Fortress Director, the “Stockholder Directors”) to Mosaic’s board of directors so long as the
Summit Holders (as defined in the Stockholders Agreement) beneficially own at least 50% of the shares of
Mosaic’s Common Stock they own immediately following the consummation of the Merger. Additionally, so
long as the Summit Holders beneficially owns at least 50% of the shares of Mosaic’s common stock they own
immediately following the consummation of the Merger, the Summit Holders shall have the right to appoint a
representative (the “Summit Observer”) who will have the right to attend meetings of Mosaic’s board of directors
and receive information given to Summit’s directors, subject to certain customary exceptions, including to
preserve confidentiality obligations or privilege. The Summit Observer will not have any voting rights.

In the case of a vacancy on Mosaic’s board created by the removal or resignation of a Stockholder Director,

Mosaic agreed to nominate an individual designated by Blackstone or Fortress, as applicable, for election to fill
the vacancy.

Confidentiality and Lockup Agreements

In addition, pursuant to certain Confidentiality and Lockup Agreements (the “Confidentiality and Lockup
Agreements”), certain stockholders have agreed that they will not, during the period beginning on the effective
time of the Merger and continuing to and including the date that is (i) in the case of 313 Acquisition, six months
after the date of Closing, (ii) in the case of the Pedersen Holders, Dunn Holders, Summit Holders and Black
Horse Holders (each as defined in the Stockholders Agreement), two years after the date of Closing and (iii) for
all other Stockholder Parties, one year after the date of Closing, directly or indirectly, offer, sell, contract to sell,
pledge, grant any option to purchase, make any short sale or otherwise dispose of any shares of Common Stock,
or any options or warrants to purchase any shares of Common Stock, or any securities convertible into,
exchangeable for or that represent the right to receive shares of Common Stock, or any interest in any of the
foregoing (in each case, subject to certain exceptions set forth in the Confidentiality and Lockup Agreements).
The Confidentiality and Lockup Agreements will become effective upon the consummation of the Merger.

F-23

VIVINT SMART HOME, INC. (f/k/a Mosaic Acquisition Corp.)
NOTES TO FINANCIAL STATEMENTS

Registration Rights Agreement

In connection with the execution of the Merger Agreement, Vivint Smart Home, Mosaic, 313 Acquisition
and certain significant stockholders of Mosaic entered into a registration rights agreement (“Registration Rights
Agreement”). The Registration Rights Agreement will become effective upon the consummation of the Merger.
Under the Registration Rights Agreement, following the consummation of the Merger Mosaic agreed to provide
to 313 Acquisition an unlimited number of “demand” registration rights and to provide to other stockholders
customary “piggyback” registration rights. The Registration Rights Agreement also provides that Mosaic will
pay certain expenses relating to such registrations and indemnify the registration rights holders against (or make
contributions in respect of) certain liabilities which may arise under the Securities Act.

Support and Services Agreement

In connection with the execution of the Merger Agreement, Mosaic, a subsidiary of Vivint Smart Home and

Blackstone Management Partners L.L.C. (“BMP”), an affiliate of Blackstone, entered into an amended and
restated support and services agreement (as amended, the “Support and Services Agreement”), which amends
and restates and existing agreement between Vivint Smart Home and BMP. The Support and Services Agreement
will become effective upon the consummation of the Merger. Pursuant to the Support and Services Agreement,
BMP has been engaged to provide, directly or indirectly, monitoring, advisory and consulting services that may
be requested by Vivint Smart Home in the following areas: (1) advice regarding the structure, distribution and
timing of debt and equity offerings and advice regarding relationships with Vivint Smart Home’s lenders and
bankers, (2) advice regarding the structuring and implementation of equity participation plans, employee benefit
plans and other incentive arrangements for certain of Vivint Smart Home’s key executives, (3) general advice
regarding dispositions and/or acquisitions, (4) advice regarding the strategic direction of Vivint Smart Home’s
business and (5) such other advice directly related or ancillary to the above advisory services as may be
reasonably requested by Vivint Smart Home. In exchange for these services, Vivint Smart Home will pay an
annual monitoring fee to BMP of 1% of consolidated EBITDA until upon the earlier of (1) the completion of
Vivint Smart Home’s fiscal year ended December 31, 2021 or (2) the date upon which Blackstone owns less than
5% of the voting power of all of the shares of capital stock entitled to vote generally in the election of directors of
Vivint Smart Home or its direct or indirect controlling parent, and such stake has a fair market value (as
determined by Blackstone) of less than $25 million.

Additionally, under the Support and Services Agreement, BMP will make available to Vivint Smart Home

its portfolio operations group to provide support services customarily provided by Blackstone’s portfolio
operations group to Blackstone’s private equity portfolio companies of a type and amount determined by such
portfolio services group it its sole discretion to be warranted and appropriate. BMP may, at any time, choose not
to provide any such services. Such services will be provided without charge, other than for the reimbursement of
related out-of-pocket expenses incurred by BMP and its affiliates.

Note 11. Subsequent Events

Transaction between Legacy Vivint Smart Home and Vivint Smart Home

On January 17, 2020 (the “Closing Date”), the Company consummated the previously announced merger

pursuant to that certain Agreement and Plan of Merger, dated September 15, 2019, by and among the Company,
Maiden Merger Sub, Inc., its subsidiary (“Merger Sub”), and Legacy Vivint Smart Home, Inc. (f/k/a Vivint
Smart Home, Inc.) (“Legacy Vivint Smart Home”), as amended by Amendment No. 1 to the Agreement and Plan
of Merger (the “Amendment” and as amended, the “Merger Agreement”), dated as of December 18, 2019, by and
among the Company, Maiden Sub and Legacy Vivint Smart Home.

F-24

VIVINT SMART HOME, INC. (f/k/a Mosaic Acquisition Corp.)
NOTES TO FINANCIAL STATEMENTS

Pursuant to the terms of the Merger Agreement, a business combination between the Company and Legacy

Vivint Smart Home was effected through the merger of Merger Sub with and into Legacy Vivint Smart Home,
with Legacy Vivint Smart Home surviving as the surviving company (the “Merger”). At the effective time of the
Merger (the “Effective Time”), each stockholder of Legacy Vivint Smart Home received 84.5320916792 shares
of the Company’s Class A common stock, par value $0.0001 per share (the “Common Stock”), for each share of
Legacy Vivint Smart Home common stock, par value $0.01 per share, that such stockholder owned.

Pursuant in each case to a Subscription Agreement entered into in connection with the Merger Agreement,

certain investment funds managed by affiliates of Fortress Investment Group LLC (“Fortress”) and certain
investment funds affiliated with The Blackstone Group Inc. (“Blackstone”) purchased, respectively, 12,500,000
and 10,000,000 newly-issued shares of Common Stock (such purchases, the “Fortress PIPE” and the “Blackstone
PIPE,” respectively, and together, the “PIPE”) concurrently with the completion of the Merger (the “Closing”) on
the Closing Date for an aggregate purchase price of $125,000,000 and $100,000,000, respectively. The founder
shares automatically converted into Common Stock at Closing, on a one-for-one basis, subject to adjustment. The
private placement warrants will expire five years after the Closing or earlier upon redemption or liquidation.

In connection with the execution of the Amendment, the Company entered into a Subscription and Backstop

Agreement (the “Fortress Subscription and Backstop Agreement”) with Fortress, pursuant to which Fortress
committed to (i) purchase $50,000,000 in aggregate purchase price of shares of the Company’s Common Stock
in the open market, subject to applicable law, (ii) backstop redemptions by subscribing for a number of shares of
newly-issued shares of the Company’s Common Stock at a purchase price per share equal to the per-share value
of our trust account at the time of any such redemptions and (iii) subscribe for up to $50,000,000 (less the
aggregate purchase price of the shares purchased by it in the open market and to backstop redemptions) in
aggregate purchase price of newly-issued shares of the Company’s Common Stock at a purchase price of $10.00
per share to be issued at the Company’s election at the Closing. On the Closing Date, pursuant to the Fortress
Subscription and Backstop Agreement, Fortress purchased 2,698,753 shares of Common Stock for an aggregate
of $27.8 million. In connection with the Closing, 31,074,592 shares of Common Stock were redeemed at a per
price share of approximately $10.29.

In addition, the Company entered into an additional subscription agreement (the “Additional Forward
Purchaser Subscription Agreement”) with one of the forward purchasers (the “Forward Purchaser”). Pursuant to
the Additional Forward Purchaser Subscription Agreement, immediately prior to the Effective Time, the Forward
Purchaser purchased from us 5,000,000 shares of Common Stock at a purchase price of $10.00 per share. As
consideration for the additional investment, 25% of Mosaic Sponsor LLC’s founder shares and private placement
warrants were forfeited to the Company and the Company issued to the Forward Purchaser an equal number of
shares of Common Stock and warrants concurrently with the Closing.

At the Closing, certain investors (including an affiliate of Fortress) received an aggregate of 15,789,474

shares of Common Stock at a purchase price of $9.50 per share (the “IPO Forward Purchaser Investment”)
pursuant to the terms of the forward purchase agreements the Company entered into in connection with the
Company’s initial public offering.

In addition, in connection with the Closing, all of the 8,625,000 outstanding shares of the Founder Shares
were converted into shares of Common Stock on a one-for-one basis, subject to adjustment. Pursuant to the terms
of a sponsor agreement (the “Sponsor Agreement”) entered into by the Company, Legacy Vivint Smart Home,
the SPAC sponsors and one of the Company’s independent directors, the private placement warrants remain
unvested and are subject to certain time and performance-based vesting provisions described therein.

In connection with the Closing, actual underwriter payments were $6.1 million.

F-25

VIVINT SMART HOME, INC. (f/k/a Mosaic Acquisition Corp.)
NOTES TO FINANCIAL STATEMENTS

In connection with the Closing, the Company changed its name from Mosaic Acquisition Corp. to Vivint

Smart Home, Inc.

Subsequent to the Closing, the issuance of 12,500,000 earnout shares occurred in February 2020 after
attainment of the First Earnout and the issuance of 12,500,000 earnout shares occurred in March 2020 after
attainment of the Second Earnout.

Refinancing Transactions

On February 14, 2020, APX completed its offering of $600.0 million aggregate principal amount of 6.75%

senior secured notes due 2027 (the “2027 Notes”) in a private placement.

Concurrently with the 2027 Notes offering, APX amended and restated the credit agreements governing our

existing revolving credit facility and existing term loan credit facility (the “Concurrent Refinancing
Transactions”). In connection therewith, APX, among other things, (i) extended the maturity date with respect to
certain commitments under the revolving credit facility and increased the aggregate commitments in respect of
the revolving credit facility to $350.0 million and (ii) extended the maturity date with respect to the loans
outstanding under the term loan facility and increased the aggregate principal amount of term loans term loans
outstanding under the term loan credit facility to $950.0 million.

APX used the net proceeds from the 2027 Notes offering and Concurrent Refinancing Transactions, together

with the proceeds from the Merger, to (i) redeem all of APX’s outstanding 8.750% Senior Notes due 2020 (the
“2020 Notes Redemption”), (ii) redeem all of APX’s outstanding 8.875% Senior Secured Notes due 2022 (the
“2022 Private Placement Notes Redemption”), (iii) refinance in full the existing borrowings under APX’s
existing term loan facility and revolving credit facility, (iv) redeem $223.0 million aggregate principal amount of
APX’s outstanding 7.875% Senior Secured Notes due 2022 (the “Existing 7.875% Notes Redemption” and,
together with the 2020 Notes Redemption and the 2022 Private Placement Notes Redemption, the
“Redemptions”) and (v) pay the related accrued interest, fees and expenses related thereto. APX irrevocably
deposited funds with the applicable trustee and/or paying agent to effect the Redemptions and to satisfy and
discharge all of APX’s remaining obligations under the indenture governing APX’s 8.750% Senior Notes due
2020 and the note purchase agreement governing APX’s 8.875% Senior Secured Notes due 2022. Vivint intends
to use any remaining net proceeds for general corporate purposes, which may include repayment of additional
indebtedness.

F-26

Exhibit 31.1

CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Todd R. Pedersen, certify that:

1.

I have reviewed this Annual Report on Form 10-K of Vivint Smart Home, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report,

fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to

be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial

reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that

occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a

significant role in the registrant’s internal control over financial reporting.

Date: March 13, 2020

By: /s/ Todd R. Pedersen
Todd R. Pedersen

Chief Executive Officer and Director
(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Dale R. Gerard, certify that:

1.

I have reviewed this Annual Report on Form 10-K of Vivint Smart Home, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report,

fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to

be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial

reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that

occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a

significant role in the registrant’s internal control over financial reporting.

Date: March 13, 2020

By: /s/ Dale R. Gerard
Dale R. Gerard

Chief Financial Officer
(Principal Financial Officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Vivint Smart Home, Inc. (the “Company”) on Form 10-K for the year
ending December 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the
“Report”), I certify, in the capacity and on the date indicated below, pursuant to 18 U.S.C. § 1350, as adopted
pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange

Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition

and results of operations of the Company.

Date: March 13, 2020

By: /s/ Todd R. Pedersen
Todd R. Pedersen

Chief Executive Officer and Director
(Principal Executive Officer)

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Vivint Smart Home, Inc. (the “Company”) on Form 10-K for the year
ending December 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the
“Report”), I certify, in the capacity and on the date indicated below, pursuant to 18 U.S.C. § 1350, as adopted
pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange

Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition

and results of operations of the Company.

Date: March 13, 2020

By: /s/ Dale R. Gerard
Dale R. Gerard

Chief Financial Officer
(Principal Financial Officer)

BR928542-0420-COMBO