SolarWinds Corp (Form: 10-Q, Received: 11/27/2018 17:39:19)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

(Mark One)



þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2018



¨	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: 001-38711

SolarWinds Corporation

(Exact name of registrant as specified in its charter)



Delaware		81-0753267
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

7171 Southwest Parkway

Building 400

Austin, Texas 78735

(512) 682.9300

(Address and telephone number of principal executive offices)

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 þ 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). þ Yes ¨ 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 definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	þ	Smaller reporting company	¨
Emerging growth company	þ

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes þ No

On November 15, 2018 , 309,943,622 shares of common stock, par value $0.001 per share, were outstanding.

SOLARWINDS CORPORATION

Table of Contents



PART I - FINANCIAL INFORMATION
		Page
Item 1.	Financial Statements	4
	Condensed Consolidated Balance Sheets as of September 30, 2018 and December 31, 2017	4
	Condensed Consolidated Statements of Operations for the three and nine month periods ended September 30, 2018 and 2017	5
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine month periods ended September 30, 2018 and 2017	7
	Condensed Consolidated Statements of Redeemable Convertible Class A Common Stock and Stockholders' Deficit for the nine month period ended September 30, 2018	8
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2018 and 2017	9
	Notes to the Condensed Consolidated Financial Statements	10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures of Market Risk	38
Item 4.	Controls and Procedures	40
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 6.	Exhibits	42
	Signatures	43
	Certifications

Safe Harbor Cautionary Statement

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. Such statements may be signified by terms such as “aim,” “anticipate,” “believe,” “continue,” “expect,” “feel,” “intend,” “estimate,”“seek,” “plan,” “may,” “can,” “could,” “should,” “will,” “would” or similar expressions and the negatives of those terms. In this report, forward-looking statements include statements regarding our financial projections, future financial performance and plans and objectives for future operations including, without limitation, the following:


•	expectations regarding our financial condition and results of operations, including revenue, revenue growth, cost of revenue, operating expenses, operating income, non-GAAP operating income, non-GAAP operating margin, adjusted EBITDA and adjusted EBITDA margin, cash flows and effective income tax rate;


•	expectations regarding investment in product development and our expectations about the results of those efforts;


•	expectations concerning acquisitions and opportunities resulting from our acquisitions;


•	expectations regarding hiring additional personnel globally in the areas of sales and marketing and research and development;


•	expectations regarding our international earnings and investment of those earnings in international operations;


•	expectations regarding our capital expenditures;


•	our beliefs regarding the sufficiency of our cash and cash equivalents, cash flows from operating activities and borrowing capacity; and


•	our intentions for use of net proceeds from our initial public offering.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially and adversely different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the following: (a) the inability to generate significant volumes of high quality sales leads from our digital marketing initiatives and convert such leads into new business at acceptable conversion rates; (b) the inability to sell products to new customers or to sell additional products or upgrades to our existing customers; (c) any decline in our renewal or net retention rates; (d) our inability to successfully identify, complete, and integrate acquisitions and manage our growth effectively; (e) risks associated with our international operations; (f) our status as a controlled company; (g) the possibility that general economic conditions or uncertainty cause information technology spending to be reduced or purchasing decisions to be delayed; (h) the timing and success of new product introductions and product upgrades by SolarWinds or its competitors; (i) the possibility that our operating income could fluctuate and may decline as percentage of revenue as we make further expenditures to expand our operations in order to support additional growth in our business; (j) potential foreign exchange gains and losses related to expenses and sales denominated in currencies other than the functional currency of an associated entity; and (k) such other risks and uncertainties described more fully in documents filed with or furnished to the Securities and Exchange Commission, including the risk factors discussed in our final prospectus dated October 18, 2018 and filed with the SEC on October 22, 2018 pursuant to Rule 424(b) of the Securities Act of 1933, as amended. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this quarterly report on Form 10-Q. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially and adversely from those anticipated in these forward-looking statements, even if new information becomes available in the future.

PART I: FINANCIAL INFORMATION

Item 1. Financial Statements

SolarWinds Corporation

Condensed Consolidated Balance Sheets

(In thousands, except share and per share information)

(Unaudited)



	September 30,			December 31,
	2018			2017
Assets
Current assets:
Cash and cash equivalents	$	278,333		$	277,716
Accounts receivable, net of allowances of $3,027 and $2,065 as of September 30, 2018 and December 31, 2017, respectively	98,035			85,133
Income tax receivable	1,774			1,713
Prepaid and other current assets	16,103			24,331
Total current assets	394,245			388,893
Property and equipment, net	37,870			34,209
Deferred taxes	4,738			4,425
Goodwill	3,699,311			3,695,640
Intangible assets, net	1,020,995			1,194,499
Other assets, net	11,178			9,398
Total assets	$	5,168,337		$	5,327,064
Liabilities, redeemable convertible common stock and stockholders’ deficit
Current liabilities:
Accounts payable	$	5,831		$	9,657
Accrued liabilities and other	50,611			39,593
Accrued interest payable	1,116			11,632
Income taxes payable	2,536			9,049
Current portion of deferred revenue	259,456			241,513
Current debt obligation	19,900			16,950
Total current liabilities	339,450			328,394
Long-term liabilities:
Deferred revenue, net of current portion	24,721			20,278
Non-current deferred taxes	152,397			167,523
Other long-term liabilities	141,531			148,121
Long-term debt, net of current portion	2,216,272			2,245,622
Total liabilities	2,874,371			2,909,938
Commitments and contingencies ( Note 12 )
Redeemable convertible Class A common stock, $0.001 par value: 5,755,000 Class A shares authorized; 2,661,015 and 2,661,030 Class A shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively	3,363,491			3,146,887
Stockholders’ deficit:
Common stock, $0.001 par value: 233,000,000 Class B shares authorized; 102,088,136 and 100,734,056 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively	102			101
Accumulated other comprehensive income (loss)	39,205			75,294
Accumulated deficit	(1,108,832		)	(805,156		)
Total stockholders’ deficit	(1,069,525		)	(729,761		)
Total liabilities, redeemable convertible common stock and stockholders’ deficit	$	5,168,337		$	5,327,064

The accompanying notes are an integral part of these financial statements.

SolarWinds Corporation

Condensed Consolidated Statements of Operations

(In thousands, except per share information)

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Revenue:
Subscription	$	67,713		$	55,361		$	196,004		$	155,402
Maintenance	101,817			93,258			297,584			261,461
Total recurring revenue	169,530			148,619			493,588			416,863
License	43,747			40,493			118,320			112,815
Total revenue	213,277			189,112			611,908			529,678
Cost of revenue:
Cost of recurring revenue ⁽¹⁾	18,022			15,190			52,617			44,879
Amortization of acquired technologies	43,835			43,513			132,121			127,781
Total cost of revenue	61,857			58,703			184,738			172,660
Gross profit	151,420			130,409			427,170			357,018
Operating expenses: ⁽¹⁾
Sales and marketing	56,926			50,942			166,022			152,070
Research and development	23,274			20,521			71,800			63,414
General and administrative	19,597			15,080			59,849			50,865
Amortization of acquired intangibles	16,507			17,035			50,288			49,910
Total operating expenses	116,304			103,578			347,959			316,259
Operating income	35,116			26,831			79,211			40,759
Other income (expense):
Interest expense, net	(35,627		)	(42,534		)	(112,103		)	(127,018		)
Other income (expense), net ⁽²⁾	(13		)	14,285			(74,476		)	29,685
Total other income (expense)	(35,640		)	(28,249		)	(186,579		)	(97,333		)
Loss before income taxes	(524		)	(1,418		)	(107,368		)	(56,574		)
Income tax benefit	(126		)	(3,055		)	(20,045		)	(12,469		)
Net income (loss)	$	(398	)	$	1,637		$	(87,323	)	$	(44,105	)
Net loss available to common stockholders	$	(75,006	)	$	(66,627	)	$	(303,944	)	$	(242,310	)
Net loss per share:
Basic loss per share	$	(0.73	)	$	(0.66	)	$	(2.98	)	$	(2.42	)
Diluted loss per share	$	(0.73	)	$	(0.66	)	$	(2.98	)	$	(2.42	)
Weighted-average shares used to compute net loss per share:
Shares used in computation of basic loss per share	102,078			100,759			101,915			100,330
Shares used in computation of diluted loss per share	102,078			100,759			101,915			100,330

____________


(1)	Includes stock-based compensation expense as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Cost of recurring revenue	$	2	$	1	$	7	$	3
Sales and marketing	115		10		234		26
Research and development	21		6		48		14
General and administrative	22		4		43		6
	$	160	$	21	$	332	$	49


(2)	Other income (expense), net includes the following:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018			2017
Unrealized net transaction gains (losses) related to remeasurement of intercompany loans	$	51	$	14,774	$	(12,660	)	$	49,955

The accompanying notes are an integral part of these consolidated financial statements.

SolarWinds Corporation

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

(Unaudited)



	Three Months Ended September 30,					Nine Months Ended September 30,
	2018			2017		2018			2017
Net income (loss)	$	(398	)	$	1,637	$	(87,323	)	$	(44,105	)
Other comprehensive income (loss):
Foreign currency translation adjustment	(10,520		)	37,414		(36,089		)	125,392
Other comprehensive income (loss)	(10,520		)	37,414		(36,089		)	125,392
Comprehensive income (loss)	$	(10,918	)	$	39,051	$	(123,412	)	$	81,287

The accompanying notes are an integral part of these consolidated financial statements.

SolarWinds Corporation

Condensed Consolidated Statements of Redeemable Convertible Class A Common Stock and

Stockholders' Deficit

(In thousands, except per share information)



	Redeemable Convertible Class A Common Stock				Common Stock				Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Earnings (Deficit)			Total Stockholders’ Deficit
	Shares	Amount			Shares		Amount		Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Earnings (Deficit)			Total Stockholders’ Deficit
Balance at December 31, 2017	2,661	3,146,887			100,734		101		—			75,294			(805,156		)	(729,761		)
Foreign currency translation adjustment	—	—			—		—		—			(36,089		)	—			(36,089		)
Net loss	—	—			—		—		—			—			(87,323		)	(87,323		)
Comprehensive loss																		(123,412		)
Exercise of stock options	—	—			39		—		13			—			—			13
Issuance of stock	—	—			1,372		1		395			—			—			396
Repurchase of stock	—	(17		)	(57	)	—		(472		)	—			—			(472		)
Accumulating dividends	—	216,621			—		—		(268		)	—			(216,353		)	(216,621		)
Stock-based compensation	—	—			—		—		332			—			—			332
Balance at September 30, 2018	2,661	$	3,363,491		102,088		$	102	$	—		$	39,205		$	(1,108,832	)	$	(1,069,525	)

The accompanying notes are an integral part of these consolidated financial statements.

SolarWinds Corporation

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)



	Nine Months Ended September 30,
	2018			2017
Cash flows from operating activities
Net loss	$	(87,323	)	$	(44,105	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	193,903			187,086
Provision for doubtful accounts	1,991			2,140
Stock-based compensation expense	332			49
Amortization of debt issuance costs	9,272			14,226
Loss on extinguishment of debt	60,590			18,559
Deferred taxes	(14,085		)	(19,776		)
(Gain) loss on foreign currency exchange rates	12,747			(49,648		)
Other non-cash expenses (benefits)	1,451			3,452
Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in business combinations:
Accounts receivable	(13,963		)	4,151
Income taxes receivable	(131		)	1,470
Prepaid and other current assets	(1,931		)	4,497
Accounts payable	(3,958		)	(3,130		)
Accrued liabilities and other	9,745			(8,783		)
Accrued interest payable	(10,516		)	255
Income taxes payable	(16,112		)	768
Deferred revenue	22,291			24,249
Other long-term liabilities	1,779			439
Net cash provided by operating activities	166,082			135,899
Cash flows from investing activities
Maturities of investments	—			2,000
Purchases of property and equipment	(12,794		)	(6,340		)
Purchases of intangible assets	(2,082		)	(3,158		)
Acquisitions, net of cash acquired	(60,578		)	(23,999		)
Proceeds from sale of cost method investment	10,715			—
Net cash used in investing activities	(64,739		)	(31,497		)
Cash flows from financing activities
Proceeds from issuance of common stock and incentive restricted stock	1,723			108
Repurchase of common stock and incentive restricted stock	(568		)	(374		)
Exercise of stock options	13			—
Premium paid on debt extinguishment	(22,725		)	—
Proceeds from credit agreement	626,950			3,500
Repayments of borrowings from credit agreement	(694,925		)	(32,714		)
Payment of debt issuance costs	(5,561		)	(1,288		)
Payment for offering costs	(2,194		)	—
Net cash used in financing activities	(97,287		)	(30,768		)
Effect of exchange rate changes on cash and cash equivalents	(3,439		)	8,042
Net increase in cash and cash equivalents	617			81,676
Cash and cash equivalents
Beginning of period	277,716			101,643
End of period	$	278,333		$	183,319

Supplemental disclosure of cash flow information
Cash paid for interest	$	114,148		$	109,203
Cash paid for income taxes	$	8,045		$	3,741

The accompanying notes are an integral part of these consolidated financial statements.

SolarWinds Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Organization and Nature of Operations

SolarWinds Corporation and its subsidiaries (“Company” or “Successor”) is a leading provider of information technology, or IT, infrastructure management software. References to “we,” “us” and “our” refer to the Company. Our products give organizations worldwide, regardless of type, size or IT infrastructure complexity, the power to monitor and manage the performance of their IT environments, whether on-premise, in the cloud, or in hybrid infrastructure models. Our approach, which we refer to as the SolarWinds Model, combines powerful, scalable, affordable, easy to use products with high-velocity, low-touch sales. We’ve built our business to enable the technology professionals who use our products to manage “all things IT.” Our range of customers has expanded over time from network and systems engineers to a broad set of technology professionals, such as database administrators, storage administrators, web operators and DevOps professionals, as well as managed service providers, or MSPs. Our SolarWinds Model enables us to sell our products for use in organizations ranging in size from very small businesses to large enterprises.

Initial Public Offering

In October 2018, we completed our initial public offering, or IPO, in which we sold and issued 25,000,000 shares of our common stock at an issue price of $15.00 per share. Upon the closing of our IPO, all shares of Class A Common Stock that were outstanding immediately prior to the closing of the offering converted into shares of common stock in accordance with the terms of our certificate of incorporation. In addition, we converted the accrued and unpaid dividends on the Class A Common Stock into shares of common stock equal to the result of the accrued and unpaid dividends on each share of Class A Common Stock, divided by the conversion price of $19.00 per share. See Note 13. Subsequent Events for additional details. The condensed consolidated financial statements as of September 30, 2018, including share and per share amounts, do not give effect to the sale of shares in connection with the IPO or conversion of Class A Common Stock as the IPO was completed subsequent to September 30, 2018.

2. Summary of Significant Accounting Policies

We prepared our interim condensed consolidated financial statements in conformity with United States of America generally accepted accounting principles, or GAAP, and the reporting regulations of the Securities and Exchange Commission, or the SEC. They do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying condensed consolidated financial statements include the accounts of SolarWinds Corporation and the accounts of its wholly owned subsidiaries. We have eliminated all intercompany balances and transactions.

The interim financial information is unaudited, but reflects all normal adjustments that are, in our opinion, necessary to provide a fair statement of results for the interim periods presented. This interim information should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2017, contained in our final prospectus dated October 18, 2018 and filed with the SEC on October 22, 2018 pursuant to Rule 424(b) of the Securities Act of 1933, as amended.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires our management to make estimates and assumptions that affect the reported amounts and the disclosure of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. The actual results that we experience may differ materially from our estimates. The accounting estimates that require our most significant, difficult and subjective judgments include:


•	the valuation of goodwill, intangibles, long-lived assets and contingent consideration;


•	revenue recognition;


•	stock-based compensation;


•	income taxes; and


•	loss contingencies.

Foreign Currency Translation

The functional currency of our foreign subsidiaries is determined in accordance with authoritative guidance issued by the Financial Accounting Standards Board, or FASB. We translate assets and liabilities for these subsidiaries at exchange rates in effect at the balance sheet date. We translate income and expense accounts for these subsidiaries at the average monthly exchange rates for the periods. We record resulting translation adjustments as a component of accumulated other comprehensive income (loss) within stockholders’ equity (deficit). We record gains and losses from currency transactions denominated in currencies other than the functional currency as other income (expense) in our consolidated statements of operations. There were no equity transactions

SolarWinds Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

denominated in foreign currencies for the three and nine months ended September 30, 2018 and 2017 . Local currency transactions of international subsidiaries that have the U.S. dollar as the functional currency are remeasured into U.S. dollars using current rates of exchange for monetary assets and liabilities and historical rates of exchange for non-monetary assets and liabilities.

We recorded an immaterial net transaction loss related to the remeasurement of monetary assets and liabilities for the three months ended September 30, 2018 and a net transaction gain of $14.3 million for the three months ended September 30, 2017 within our consolidated statements of operations. We recorded a net transaction loss related to the remeasurement of monetary assets and liabilities of $14.0 million and a net transaction gain of $48.2 million within our consolidated statements of operations for the nine months ended September 30, 2018 and 2017 , respectively.

As of July 1, 2018, we changed our assertion regarding the planned settlement of a certain intercompany loan. We have evaluated our investment strategy in light of our global treasury plans and the new Tax Act (as defined below) and have determined there is no need to settle the principal related to the loan. The intercompany loan has been designated as long-term based on the assertion that settlement is not planned or anticipated in the foreseeable future. Therefore, beginning on July 1, 2018, the foreign currency transaction gains and losses resulting from the remeasurement of this long-term intercompany loan denominated in a currency other than the subsidiary's functional currency are recognized as a component of accumulated other comprehensive income (loss). In the three months ended September 30, 2018 , a foreign currency translation adjustment of $3.3 million was recognized as a component of accumulated other comprehensive income related to this long-term intercompany loan.

Recent Accounting Pronouncements Not Yet Adopted

Under the Jumpstart our Business Startups Act, or the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to non-public companies. We intend to take advantage of the longer phase-in periods for the adoption of new or revised financial accounting standards permitted under the JOBS Act until we are no longer an emerging growth company.

In May 2014, FASB issued “Revenue from Contracts with Customers,” which replaced all existing revenue guidance, including prescriptive industry-specific guidance. This standard’s core principle is that an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Entities will need to apply more judgment and make more estimates than under the previous guidance. In July 2015, FASB deferred the effective date for all entities by one year, making the guidance for non-public companies effective for annual reporting periods beginning after December 15, 2018. Early adoption is permitted to the original effective date of December 15, 2016. The standard permits the use of either a full-retrospective or a modified-retrospective transition method. We will adopt the new standard effective first quarter 2019. Management anticipates using the modified-retrospective method for adoption.

In preparation for this planned adoption, we have been evaluating the impact of the new standard to our financial statements and accompanying disclosures in the notes to our consolidated financial statements. Our assessment of the impact includes an evaluation of the five-step process set forth in the new standard along with the enhancement of disclosures that will be required. We are in the process of executing our plan for implementing the standard, which includes identifying customer contracts within the scope of the new standard, identifying performance obligations within those customer contracts, and evaluating the impact of incremental variable consideration paid to obtain those customer contracts. We have also undertaken a comprehensive review of all contracts that fall under the scope of the new standard. We are continuing our review of in-scope contracts and reviewing all potential impacts of the standard, including the tax related impact.

SolarWinds Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

Based on analysis performed to date, we expect that adoption of the new standard will result in changes to the classification and timing of our revenue recognition. The most significantly impacted areas are the following:

•

License and Recurring Revenue. Under the new guidance, the requirement to establish VSOE to recognize license revenue separately from the other elements is eliminated. This change is expected to impact the allocation of the transaction price and timing of our revenue recognition between deliverables, or performance obligations, within an arrangement. In addition, we will recognize time-based license revenues upon the transfer of the license and the associated maintenance revenue over the contract period under the new standard instead of recognizing both the license and maintenance revenue ratably over the contract period. We expect the overall adoption impact to total revenue to be immaterial, though we do expect some changes to the timing and classification between license and recurring revenues. Additionally, some deferred revenue, primarily from arrangements involving time-based licenses, will never be recognized as revenue and instead will be a cumulative effect adjustment within accumulated deficit. We expect an immaterial reduction to the deferred revenue balance as a cumulative effect adjustment upon adoption.

•

Contract Acquisition Costs. We expense all sales commissions as incurred under current guidance. The new guidance requires the deferral and amortization of certain incremental costs incurred to obtain a contract. This guidance will require us to capitalize and amortize certain sales commission costs over the remaining contractual term or over an expected period of benefit, which we have determined to be approximately three to six years . As part of the transition to the new guidance, we will recognize a contract asset as a cumulative effect adjustment upon adoption.

We do not expect the changes described above to have a material impact on our quarterly or annual consolidated financial statements, however the exact impact of the new standard will be dependent on facts and circumstances that could vary from quarter to quarter.

In February 2016, FASB issued an accounting standard to provide updated guidance requiring the recognition of all lease assets and liabilities on the balance sheet. The accounting standard required the use of a modified retrospective transition method. In July 2018, FASB issued additional guidance that provides entities with an optional transition method in which an entity can apply the new standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance retained earnings in the period of adoption. The updated accounting guidance is effective for non-public companies for fiscal years beginning after December 15, 2019 and interim periods beginning the following year. Early adoption is permitted and the standard provides for certain practical expedients. We expect to adopt the updated guidance in fiscal year 2020. Our evaluation of the new standard will extend into future periods and we will update our disclosures, including the expected impacts of the new standard, as we progress towards the required adoption date.

In January 2017, FASB issued an accounting standard to simplify the accounting for goodwill impairment. The new guidance removes step two of the two-step quantitative goodwill impairment test, which requires a hypothetical purchase price allocation. The updated guidance is effective for non-public companies for fiscal years beginning after December 15, 2021 and may be adopted early for any interim or annual goodwill impairment tests performed after January 1, 2017. We expect to adopt the updated guidance in fiscal year 2022. We do not believe that this standard will have a material impact on our consolidated financial statements.

Fair Value Measurements

We apply the authoritative guidance on fair value measurements for financial assets and liabilities that are measured at fair value on a recurring basis and non-financial assets and liabilities, such as goodwill, intangible assets and property, plant and equipment that are measured at fair value on a non-recurring basis.

The guidance establishes a three-tiered fair value hierarchy that prioritizes inputs to valuation techniques used in fair value calculations. The three levels of inputs are defined as follows:

Level 1: Unadjusted quoted prices for identical assets or liabilities in active markets accessible by us.

Level 2: Inputs that are observable in the marketplace other than those inputs classified as Level 1.

Level 3: Inputs that are unobservable in the marketplace and significant to the valuation.

See Note 5. Fair Value Measurements for a summary of our financial instruments accounted for at fair value on a recurring basis. The carrying amounts reported in our consolidated balance sheets for cash, accounts receivable, accounts payable and other accrued expenses approximate fair value due to relatively short periods to maturity.

SolarWinds Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

Deferred Offering Costs

Deferred offering costs, primarily consisting of legal, accounting, printer, and other direct fees and costs, related to our proposed initial public offering are capitalized. The deferred offering costs were offset against proceeds from our initial public offering upon the closing of the offering in October 2018. As of September 30, 2018 , we have capitalized $2.2 million of offering costs in the consolidated balance sheet. As of December 31, 2017 , we had no t yet capitalized any offering costs in the consolidated balance sheet.

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) by component are summarized below:



	Foreign Currency Translation Adjustments			Accumulated Other Comprehensive Income (Loss)

	(in thousands)
Balance at December 31, 2017	$	75,294		$	75,294
Other comprehensive gain (loss) before reclassification	(36,089		)	(36,089		)
Amount reclassified from accumulated other comprehensive income (loss)	—			—
Net current period other comprehensive income (loss)	(36,089		)	(36,089		)
Balance at September 30, 2018	$	39,205		$	39,205

Cost of Revenue

Amortization of acquired technologies. Amortization of acquired technologies included in cost of revenue relate to our licensed products and subscription products as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017

	(in thousands)
Amortization of acquired license technologies	$	36,061	$	36,232	$	108,974	$	106,487
Amortization of acquired subscription technologies	7,774		7,281		23,147		21,294
Total amortization of acquired technologies	$	43,835	$	43,513	$	132,121	$	127,781

3. Acquisitions

In the nine months ended September 30, 2018, we completed acquisitions for a combined purchase price of approximately $62.9 million in cash, including $2.4 million of cash acquired. The acquisitions were funded with available cash on hand. We incurred $0.9 million in acquisition related costs, which are included in general and administrative expense for the nine months ended September 30, 2018. Goodwill for these acquisitions is no t deductible for tax purposes.

The initial determination of the fair value of the assets acquired and liabilities assumed is based on a preliminary valuation and the estimates and assumptions for these items are subject to change as we obtain additional information during the measurement period. Subsequent changes to the purchase price or other fair value adjustments determined during the measurement period will be recorded as an adjustment to goodwill.

The amounts of revenue and net loss related to these acquisitions included in our condensed consolidated financial statements from the effective date of the respective acquisitions are insignificant for the nine months ended September 30, 2018. Pro forma information for these acquisitions have not been provided because the impact of the historical financials on our revenue, net loss and loss per share is not material.

SolarWinds Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table summarizes the consideration paid and the amounts recognized for the assets acquired and liabilities assumed for our acquisitions completed in the nine months ended September 30, 2018:



	Total Fair Value
	(in thousands)
Current assets, including cash acquired	$	4,577
Deferred tax asset	1,462
Fixed assets	1,272
Identifiable intangible assets	18,412
Goodwill	41,789
Current liabilities	(1,628		)
Deferred revenue	(2,944		)
Total consideration	$	62,940

The following table summarizes the fair value of the acquired identifiable intangible assets and weighted-average useful life:



	Fair Value		Weighted-average useful life
	(in thousands)		(in years)
Developed product technologies	$	13,317	5
Customer relationships	4,805		4
Tradenames	290		3
Total identifiable intangible assets	$	18,412

4. Goodwill and Intangible Assets

Goodwill

The following table reflects the changes in goodwill for the nine months ended September 30, 2018 :



	(in thousands)
Balance at December 31, 2017	$	3,695,640
Acquisitions	41,789
Foreign currency translation and other adjustments	(38,118		)
Balance at September 30, 2018	$	3,699,311

The goodwill from acquisitions resulted primarily from our expectations that we will now be able to offer our customers additional products in new markets. Additionally, we expect the acquisitions will attract new customers for our entire line of products.

SolarWinds Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

Intangible Assets

Intangible assets consisted of the following at September 30, 2018 and December 31, 2017:



	September 30, 2018							December 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net

	(in thousands)
Developed product technologies	$	1,010,952	$	(452,420	)	$	558,532	$	1,006,454	$	(324,196	)	$	682,258
Customer relationships	544,823		(166,597		)	378,226		546,207		(118,930		)	427,277
Intellectual property	764		(109		)	655		547		(59		)	488
Trademarks	84,800		(1,218		)	83,582		85,257		(1,075		)	84,182
Customer backlog	—		—			—		6,200		(5,906		)	294
Total intangible assets	$	1,641,339	$	(620,344	)	$	1,020,995	$	1,644,665	$	(450,166	)	$	1,194,499

Intangible asset amortization expense was as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017

	(in thousands)
Intangible asset amortization expense	$	60,360	$	60,559	$	182,459	$	177,721

5. Fair Value Measurements

The following table summarizes the fair value of our financial assets that were measured on a recurring basis as of September 30, 2018 and December 31, 2017 . There have been no transfers between fair value measurement levels during the nine months ended September 30, 2018 .



	Fair Value Measurements at September 30, 2018 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total

	(in thousands)
Money market funds	$	67,100	$	—	$	—	$	67,100



	Fair Value Measurements at December 31, 2017 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total

	(in thousands)
Money market funds	$	67,100	$	—	$	—	$	67,100

As of September 30, 2018 and December 31, 2017 , the carrying value of our long-term debt approximates its estimated fair value as the interest rate on the debt agreements is adjusted for changes in the market rates. See Note 6. Debt for additional information regarding our debt.

SolarWinds Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

6. Debt

Debt Agreements

The following table summarizes information relating to our debt:



	September 30,					December 31,
	2018					2017
	Amount			Effective Rate		Amount			Effective Rate

	(in thousands, except interest rates)
Revolving credit facility	$	—		—	%	$	—		—	%
First Lien Term Loan (as amended) due Feb 2024	1,975,075			5.24	%	1,678,050			5.07	%
Second Lien Floating Rate Notes (as amended) due Feb 2024	—			—	%	680,000			10.14	%
Second Lien Term Loan due Feb 2025	315,000			9.49	%	—			—	%
Total principal amount	2,290,075					2,358,050
Unamortized discount and debt issuance costs	(53,903		)			(95,478		)
Total debt	2,236,172					2,262,572
Less: Current portion of long-term debt	(19,900		)			(16,950		)
Total long-term debt	$	2,216,272				$	2,245,622

Senior Secured Debt

Senior Secured First Lien Credit Facilities

On February 5, 2016, we were acquired by the Sponsors in a take private transaction, or the Take Private. In connection with the Take Private, we entered into a first lien credit agreement with Credit Suisse AG, Cayman Islands Branch, or Credit Suisse, as administrative agent and collateral agent, and a syndicate of institutional lenders and financial institutions, or Initial First Lien Credit Agreement.

In March 2018, we entered into Amendment No. 4 to the Initial First Lien Credit Agreement, or Amendment No. 4, which replaced the outstanding borrowings with a new $1.99 billion U.S. dollar term loan, or First Lien Term Loan. The Initial First Lien Credit Agreement, as amended, is referred to here as the First Lien Credit Agreement. The proceeds of the First Lien Term Loan were used to repay all outstanding borrowings including accrued interest under the existing First Lien Term Loan and a portion of the Second Lien Notes, including accrued interest and related transaction costs. In connection with Amendment No. 4, a loss on debt extinguishment of $21.4 million was recorded to other income (expense) in the consolidated statement of operations for the nine months ended September 30, 2018 .

The First Lien Credit Agreement provides for senior secured first lien credit facilities, consisting as of September 30, 2018 of:


•	a $1.99 billion First Lien Term Loan with a final maturity date of February 5, 2024; and

•

a $125.0 million revolving credit facility (with a letter of credit sub-facility in the amount of $35.0 million ), or the Revolving Credit Facility, consisting of (i) a $100.0 million multicurrency tranche and (ii) a $25.0 million tranche available only in U.S. dollars, of which $7.5 million has a final maturity date of February 5, 2021 and $17.5 million has a final maturity date of February 5, 2022.

Borrowings under our Revolving Credit Facility bear interest at a floating rate which can be, at our option, either (1) a Eurodollar rate for a specified interest period plus an applicable margin of 3.00% or (2) a base rate plus an applicable margin of 2.00% . The applicable margins for Eurodollar rate and base rate borrowings are subject to reductions to 2.75% and 2.50% , and to 1.75% and 1.50% , respectively, based on our first lien net leverage ratio or based upon the completion of an initial public offering. The Eurodollar rate applicable to the Revolving Credit Facility is subject to a “floor” of 0.0% .

Borrowings under our First Lien Term Loan bear interest at a floating rate which can be, at our option, either (1) a Eurodollar rate for a specified interest period plus an applicable margin of 3.00% or (2) a base rate plus an applicable margin of 2.00% . The applicable margins for Eurodollar and base rate borrowings are each subject to a reduction to 2.75% and 1.75% , respectively, based

SolarWinds Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

on our first lien net leverage ratio or based upon the completion of an initial public offering. The Eurodollar rate applicable to the First Lien Term Loan is subject to a “floor” of 0.0% .

The Eurodollar rate is equal to an adjusted London Interbank Offered Rate, or LIBOR, for a one -, two -, three - or six -month interest period with a LIBOR floor of 0% . The base rate for any day is a fluctuating rate per annum equal to the highest of (a) the rate of interest in effect for such day as publicly announced by Credit Suisse as its “prime rate” and (b) the federal funds effective rate in effect on such day plus 0.50% and (c) the one-month adjusted LIBOR plus 1.0% per annum.

The First Lien Term Loan requires equal quarterly repayments equal to 0.25% of the original principal amount.

In addition to paying interest on loans outstanding under the Revolving Credit Facility and the First Lien Term Loan, we are required to pay a commitment fee of 0.50% per annum of unused commitments under the Revolving Credit Facility. The commitment fee is subject to a reduction to 0.375% per annum based on our first lien net leverage ratio.

The First Lien Credit Agreement contains a number of covenants that, among other things, restrict, subject to certain exceptions, our ability to: incur additional indebtedness; incur liens; engage in mergers, consolidations, liquidations or dissolutions; pay dividends and distributions on, or redeem, repurchase or retire our capital stock; and make certain investments, acquisitions, loans, or advances. In addition, the terms of the First Lien Credit Agreement include a financial covenant which requires that, at the end of each fiscal quarter, if the aggregate amount of borrowings under the Revolving Credit Facility exceeds 35% of the aggregate commitments under the Revolving Credit Facility, our first lien net leverage ratio cannot exceed 7.40 to 1.00 . The First Lien Credit Agreement also contains certain customary representations and warranties, affirmative covenants and events of default. As of September 30, 2018 , we were in compliance with all covenants of the First Lien Credit Agreement.

The following table summarizes the future minimum principal payments under the First Lien Term Loan outstanding as of September 30, 2018 :



	As of September 30, 2018

	(in thousands)
2018	$	4,975
2019	19,900
2020	19,900
2021	19,900
2022	19,900
Thereafter	1,890,500
Total minimum principal payments	$	1,975,075

Senior Secured Second Lien Credit Facility

In March 2018, we terminated the agreements governing our senior secured second lien floating rate notes, or the Second Lien Notes, and repaid or exchanged the then-outstanding principal on our Second Lien Notes of $680.0 million and replaced the Second Lien Notes with a new second lien credit agreement, or the Second Lien Credit Agreement, with Wilmington Trust, National Association or Wilmington Trust, as administrative agent and collateral agent, and certain other financial institutions. The Second Lien Credit Agreement provides for a $315.0 million U.S. dollar term loan, or the Second Lien Term Loan, with a final maturity of February 5, 2025 and does not require periodic principal payments. In connection with the redemption and exchange of our Second Lien Notes, a loss on debt extinguishment of $39.2 million , which includes a $22.7 million redemption premium, was recorded to other income (expense) in the consolidated statement of operations for the nine months ended September 30, 2018 .

The borrowings under the Second Lien Term Loan bear interest at a floating rate which can be, at our option, either (1) a Eurodollar rate for a specified interest period plus an applicable margin of 7.25% or (2) a base rate plus an applicable margin of 6.25% . The Eurodollar rate is equal to the adjusted LIBOR Rate for a one-, two-, three or six-month interest period. The base rate for any day is a fluctuating rate per annum equal to the rate last quoted by the Wall Street Journal as the “Prime Rate” in the United States, or if the Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board as “bank prime loan” rate or, if such rate is no longer quoted therein (as determined by Wilmington Trust) or any similar release by the Federal Reserve Board (as determined by Wilmington Trust).

SolarWinds Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

The Second Lien Credit Agreement contains a number of covenants that, among other things, restrict, subject to certain exceptions, our ability to: incur additional indebtedness; incur liens; engage in mergers, consolidations, liquidations or dissolutions; pay dividends and distributions on, or redeem, repurchase or retire our capital stock; or make investments, acquisitions, loans, or advances. The Second Lien Credit Agreement also contains certain customary representations and warranties, affirmative covenants and events of default. As of September 30, 2018 , we were in compliance with all covenants of the Second Lien Credit Agreement.

In October 2018, we completed our IPO and used a portion of the net proceeds from the offering to repay the $315.0 million in borrowings outstanding under our Second Lien Term Loan. See Note 13. Subsequent Events for additional information.

7. Redeemable Convertible Class A Common Stock

Class A Common Stock accrued dividends at a rate of 9% per annum and had a liquidation preference equal to $1,000 per share plus any accrued and unpaid dividends. Prior to the conversion of the Class A Common Stock into common stock, in a future liquidation event, such as a sale, the holders of the Class A Common Stock would have been entitled to payment up to the amount of the liquidation preference and holders of the Class B Common Stock would have been entitled to the residual value of the Company.

Cumulative undeclared and unpaid dividends on Class A Common Stock totaled $702.5 million and $485.9 million at September 30, 2018 and December 31, 2017 , respectively. Redeemable convertible Class A Common Stock was recorded at liquidation value plus accrued, unpaid dividends in our consolidated balance sheets.

Immediately prior to the completion of our IPO in October 2018, we converted each outstanding share of our Class A Common Stock into a number of shares of common stock equal to the result of the liquidation value of such share of Class A Common Stock, divided by $19.00 per share. The liquidation value for each share of Class A Common Stock was equal to $1,000 . At the time of the conversion of the Class A Common Stock, we converted $717.4 million of accrued and unpaid dividends on the Class A Common Stock into 37,758,109 shares of common stock equal to the result of the accrued and unpaid dividends on each share of Class A Common Stock, divided by $19.00 per share. See Note 13. Subsequent Events for additional information regarding the conversion of our Class A Common Stock.

8. Stockholders’ Deficit and Stock-Based Compensation

Common Stock

As of September 30, 2018, the Company had authorized capital stock of 238,755,000 shares consisting of 5,755,000 shares of Class A Common Stock, par value $0.001 per share, or Class A Common Stock, and 233,000,000 shares of Class B Common Stock, par value of $0.001 per share, or Class B Common Stock. See Note 13. Subsequent Events for additional information regarding the conversion of our Class A Common Stock and Class B Common Stock into common stock immediately prior to the completion of our IPO.

2016 Equity Plan

Equity awards to the Company’s employees, consultants, directors, managers and advisors are issued by the Company. The board of directors adopted, and the stockholders approved, the SolarWinds Corporation Equity Plan, or 2016 Plan, in June 2016. Under the 2016 Plan, the Company is able to sell or grant shares of Class A Common Stock and Class B Common Stock and common stock-based awards, including nonqualified stock options, to the Company’s employees, consultants, directors, managers and advisors.

The Company has issued common stock-based incentive awards, consisting of nonqualified stock options exercisable for shares of Class B Common Stock and restricted shares of Class B Common Stock, under the 2016 Plan to employees and certain members of the Company’s board of directors. As of September 30, 2018 , common stock-based incentive awards of 8,241,934 were outstanding under the 2016 Plan consisting of 3,199,400 stock options and 5,042,534 shares of restricted Class B Common Stock and 502,833 shares of Class B Common Stock were reserved for future equity incentive awards under the 2016 Plan. For the nine months ended September 30, 2018 , the Company repurchased 250,333 shares of vested and unvested restricted Class B Common Stock upon employee terminations.

SolarWinds Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

Stock Option Awards

Option grant activity under the 2016 Plan was as follows:



	Number of Shares Outstanding		Weighted- Average Exercise Price		Aggregate Intrinsic Value (in thousands)		Weighted- Average Remaining Contractual Term (in years)
Outstanding balances at December 31, 2017	2,156,550		$	0.45
Options granted	1,327,475		3.40
Options exercised	(38,600	)	0.35
Options forfeited	(231,075	)	0.94
Options expired	(30,050	)	0.30
Outstanding balances at September 30, 2018	3,184,300		$	1.65
Options exercisable at September 30, 2018	618,250		$	0.41	$	5,980	8.17
Options vested and expected to vest at September 30, 2018	3,184,300		$	1.65	$	26,856	8.84

Additional information regarding options follows (in thousands except for per share amounts):



	Nine Months Ended September 30,
	2018
Weighted-average grant date fair value per share of options granted during the period	$	1.98
Aggregate intrinsic value of options exercised during the period	302
Aggregate fair value of options vested during the period	102

Stock-based compensation expense related to stock option awards recorded for the three and nine months ended September 30, 2018 and 2017 was immaterial. The unrecognized stock-based compensation expense related to unvested stock options and subject to recognition in future periods was approximately $2.5 million and $0.3 million as of September 30, 2018 and December 31, 2017 , respectively. We expect to recognize this expense over weighted average periods of approximately 3.5 years and 3.8 years at September 30, 2018 and December 31, 2017 , respectively.

Restricted Stock

The following table summarizes information about employee restricted stock activity subject to vesting under the 2016 Plan:



	Number of Shares Outstanding
Unvested balances at December 31, 2017	5,789,401
Restricted stock granted and issued	820,500
Restricted stock vested	(1,371,334	)
Restricted stock repurchased - unvested shares	(196,033	)
Unvested balances at September 30, 2018	5,042,534

Restricted stock is purchased at fair market value by the employee and Class B Common Stock is issued at the date of grant. The weighted-average grant date fair market value of restricted Class B Common Stock purchased was $2.10 per share for the nine months ended September 30, 2018 . Restricted stock is subject to certain restrictions, such as vesting and a repurchase right. The Class B Common Stock acquired by the employee is restricted stock because vesting is conditioned upon (i) continued employment through the applicable vesting date and (ii) for employees at the level of group vice president and above, the achievement of certain financial performance targets determined by the board of directors. The restricted stock is subject to repurchase in the event the stockholder ceases to be employed or engaged (as applicable) by the Company for any reason or in the event of a change of control or due to certain regulatory burdens. As the restricted stock is purchased at fair market value at the time of grant, there is no stock-based compensation expense recognized related to these awards. The related liability for unvested

SolarWinds Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

shares is included in other long-term liabilities on the consolidated balance sheet and was $2.9 million and $1.7 million as of September 30, 2018 and December 31, 2017 . See Note 13. Subsequent Events for additional information regarding the adoption of our 2018 Equity Incentive Plan.

9. Net Loss Per Share

A reconciliation of the number of shares in the calculation of basic and diluted loss per share follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017

	(in thousands)
Basic net loss per share
Numerator:
Net income (loss)	$	(398	)	$	1,637		$	(87,323	)	$	(44,105	)
Accretion of dividends on Class A common stock	(74,608		)	(68,264		)	(216,621		)	(198,205		)
Net loss available to common stockholders	$	(75,006	)	$	(66,627	)	$	(303,944	)	$	(242,310	)
Denominator:
Weighted-average Class B common shares outstanding used in computing basic net loss per share	102,078			100,759			101,915			100,330
Diluted net loss per share
Numerator:
Net loss available to common stockholders	$	(75,006	)	$	(66,627	)	$	(303,944	)	$	(242,310	)
Denominator:
Weighted-average shares used in computing basic net loss per share	102,078			100,759			101,915			100,330
Add options and restricted stock units to purchase common stock	—			—			—			—
Weighted-average shares used in computing diluted net loss per share	102,078			100,759			101,915			100,330

The following weighted average outstanding shares of common stock equivalents were excluded from the computation of the diluted net loss per share attributable to common stockholders for the periods presented because their effect would have been anti-dilutive or for which the performance condition had not been met at the end of the period:



	Three Months Ended September 30,		Nine Months Ended September 30,
	2018	2017	2018	2017

	(in thousands)
Stock options to purchase common stock	2,782	1,816	2,525	1,509
Performance-based stock options to purchase common stock	316	116	267	96
Non-vested restricted stock incentive awards	3,512	3,410	3,435	3,605
Performance-based non-vested restricted stock incentive awards	1,537	2,260	1,566	2,601
Total anti-dilutive shares	8,147	7,602	7,793	7,811

Class A Common Stock was not included in the basic or diluted earnings (loss) per share calculations as it was contingently convertible upon a future event. The calculation of diluted earnings per share requires us to make certain assumptions related to the use of proceeds that would be received upon the assumed exercise of stock options.

10. Related Party Transactions

Management Fee Agreement with Silver Lake Management, Thoma Bravo and TB Partners

On February 5, 2016, we entered into a Management Fee Agreement with Silver Lake Management Company IV, L.L.C. (Silver Lake Management), Thoma Bravo, LLC (Thoma Bravo) and Thoma Bravo Partners XI, L.P. (TB Partners and, collectively with Silver Lake Management and Thoma Bravo, the Managers), pursuant to which the Managers provided business and organizational strategy and financial and advisory services. Under the Management Fee Agreement, we paid to the Managers quarterly payments of $2.5 million in the aggregate, plus fees for certain corporate transactions in the Managers’ discretion. Each

SolarWinds Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

payment of fees under the Management Fee Agreement was allocated among the Managers as follows: 50% to Silver Lake Management, 40.73% to Thoma Bravo and 9.27% to TB Partners. We also reimbursed each of the Managers for all out-of-pocket costs incurred in connection with activities under the Management Fee Agreement, and we indemnified the Managers and their respective related parties from and against all losses, claims, damages and liabilities related to the performance of the Managers obligations under the Management Fee Agreement. The Management Fee Agreement terminated upon the consummation of the IPO in October 2018 and no future payments are required.

The following table details the management fees for the respective periods:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017

	(in thousands)
Silver Lake Management	$	1,250	$	1,250	$	3,750	$	3,750
Thoma Bravo	1,018		1,018		3,054		3,054
TB Partners	232		232		696		696
	$	2,500	$	2,500	$	7,500	$	7,500

11. Income Taxes

For the three months ended September 30, 2018 and 2017 , we recorded income tax benefit of $0.1 million and $3.1 million , respectively, resulting in an effective tax rate of 24.0% and 215.4% , respectively. For the nine months ended September 30, 2018 and 2017 , we recorded income tax benefit of $20.0 million and $12.5 million , respectively, resulting in an effective tax rate of 18.7% and 22.0% , respectively. The decrease in the effective tax rate for the three and nine months ended September 30, 2018 compared to the same periods in 2017 were generally a result of the lower U.S. corporate tax rate attributable to the Tax Cuts and Jobs Act, or the Tax Act, as well as discrete items related to expired statutes in various jurisdictions.

The Tax Act reduces the U.S. federal corporate tax rate from 35% to 21% , requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that have not been taxed previously in the U.S., and creates new taxes on certain foreign sourced earnings. We are required to recognize the effect of the tax law changes in the period of enactment, such as determining the transition tax, re-measuring our U.S. deferred tax assets and liabilities as well as reassessing the net realizability of our deferred tax assets and liabilities. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118) , which allows us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, the Company made reasonable estimates of the effects and recorded provisional amounts in our consolidated financial statements for the year ended December 31, 2017 .

As the Company collects and prepares the necessary data, interprets the Tax Act and reviews any additional guidance issued by the U.S. Treasury Department, state taxation authorities and other standard-setting bodies, the Company may make adjustments to the provisional amounts noted above which may materially impact its provision for income taxes from continuing operations in the period in which the adjustments are made. The accounting for the tax effects of the Tax Act will be completed in 2018.

Our policy is to include interest and penalties related to unrecognized tax benefits as a component of income tax expense. At September 30, 2018 , we had accrued interest and penalties related to unrecognized tax benefits of approximately $3.8 million .

We file U.S., state and foreign income tax returns in jurisdictions with varying statutes of limitations. The 2011 through 2017 tax years generally remain open and subject to examination by federal tax authorities. The 2010 through 2017 tax years generally remain open and subject to examination by the state tax authorities and foreign tax authorities. We are currently under examination by the IRS for the tax years 2011 through the period ending February 2016. We are under audit by the Indian Tax Authority for the 2014 and 2017 tax years. We are currently under audit by the California Franchise Tax Board for the 2012 through 2014 tax years. We were notified in December 2017 that the Swiss Tax Authorities would audit the 2014 through 2016 tax years. This audit concluded in April 2018 with no adjustments. We are not currently under audit in any other taxing jurisdictions.

On July 24, 2018, U.S. Court of Appeals for the Ninth Circuit reversed the decision of the U.S. Tax Court in Altera Corp. v. Commissioner related to the treatment of stock-based compensation in an intercompany cost sharing arrangement. On August 7, 2018, the Ninth Circuit withdrew the opinion to allow time for a reconstituted panel to confer on this appeal. Until the reconstituted

SolarWinds Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

panel issues a decision, the Tax Court's decision in Altera controls. As of September 30, 2018, we have not recorded any tax benefit of excluding stock-based compensation from our cost sharing agreement.

12. Commitments and Contingencies

Take Private Deferred Stock Payments

As a result of the Take Private, RSUs granted to certain of our employees under the existing stock plans not subject to accelerated vesting were cancelled and converted into the right to receive the per share price of $60.10 less applicable withholding taxes shortly after those RSUs would have vested based on the underlying original RSU vesting schedule and subject to continued employment of the holders of those RSUs. As of September 30, 2018 , we had a liability for Take Private deferred stock payments recorded of $1.8 million included in accrued liabilities and other, related to the future payment for service provided. For the nine months ended September 30, 2018 , we recognized $2.4 million of compensation expense and made cash payments of approximately $3.5 million to employees related to the deferred compensation. We expect to pay approximately $4.2 million through the year 2020. The expected future payment may differ from actual payment amounts due to future employee terminations.

Legal Proceedings

From time to time, we have been and may be involved in various legal proceedings arising in our ordinary course of business. In the opinion of management, resolution of any pending claims (either individually or in the aggregate) is not expected to have a material adverse impact on our consolidated financial statements, cash flows or financial position and it is not possible to provide an estimated amount of any such loss. However, the outcome of disputes is inherently uncertain. Therefore, although management considers the likelihood of such an outcome to be remote, an unfavorable resolution of one or more matters could materially affect our future results of operations or cash flows, or both, in a particular period.

13. Subsequent Events

Initial Public Offering

In October 2018, we completed our IPO, in which we sold and issued 25,000,000 shares of our common stock at an issue price of $15.00 per share. We raised a total of $375.0 million in gross proceeds from the offering, or approximately $353.0 million in net proceeds after deducting underwriting discounts and commissions of $17.8 million and estimated offering-related expenses of approximately $4.2 million . A portion of the net proceeds from the offering were used to repay the $315.0 million in borrowings outstanding under our Second Lien Term Loan. In connection with the voluntary prepayment of the Second Lien Term Loan, we paid a $14.2 million prepayment fee.

Upon the closing of our IPO, all 2,661,015 shares of Class A Common Stock that were outstanding immediately prior to the closing of such offering converted into 140,053,370 shares of common stock in accordance with the terms of our certificate of incorporation. In addition, we converted $717.4 million of accrued and unpaid dividends on the Class A Common Stock into 37,758,109 shares of common stock equal to the result of the accrued and unpaid dividends on each share of Class A Common Stock, divided by $19.00 per share. All outstanding shares of Class B Common Stock converted into common stock on a one -for-one basis.

Following consummation of our IPO, we amended our certificate of incorporation to, among other things, set the authorized capital stock of the company at 1,000,000,000 shares of common stock, par value of $0.001 per share, and 50,000,000 shares of preferred stock, par value of $0.001 per share. Each share of common stock entitles the holder thereof to one vote on each matter submitted to a vote at any meeting of stockholders.

2018 Equity Incentive Plan

In October 2018, the board of directors adopted, and the stockholders approved, the SolarWinds Corporation 2018 Equity Incentive Plan, or 2018 Plan. We reserved 30,000,000 shares of our common stock for issuance under the 2018 Plan. On October 27, 2018, we granted 7,342,878 equity awards to our employees and directors consisting of 6,371,956 restricted stock units, or RSUs, and 970,922 performance stock units, or PSUs. RSUs generally vest over a four -year service period. PSUs generally vest over a three -year period based on the achievement of specified performance targets for the fiscal year ended December 31, 2019 and subject to continued service through the applicable vesting dates. Based on the extent to which the performance targets are achieved, vested shares may range from 0% to 150% of the target award amount. We will not grant any additional awards under our 2016 Plan; however, the 2016 Plan will continue to govern the terms and conditions of all outstanding equity awards granted under the 2016 Plan.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and related notes thereto included elsewhere in this quarterly report on Form 10-Q. In addition to historical condensed consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially and adversely from those anticipated in the forward-looking statements. Please see the section entitled “Safe Harbor Cautionary Statement” above and the risk factors discussed in our final prospectus dated October 18, 2018 and filed with the SEC on October 22, 2018 pursuant to Rule 424(b) of the Securities Act of 1933, as amended for a discussion of the uncertainties, risks and assumptions associated with these statements.

Overview

SolarWinds is a leading provider of information technology, or IT, infrastructure management software. Our products give organizations worldwide, regardless of type, size or IT infrastructure complexity, the power to monitor and manage the performance of their IT environments, whether on-premise, in the cloud, or in hybrid models. We combine powerful, scalable, affordable, easy to use products with a high-velocity, low-touch sales model to grow our business while also generating significant cash flow.

We offer over 50 products to monitor and manage network, systems, desktop, application, storage, database and website infrastructures, whether on-premise, in the public or private cloud or in a hybrid IT infrastructure. We intend to continue to innovate and invest in areas of product development that bring new products to market and enhance the functionality, ease of use and integration of our current products. We believe this will strengthen the overall value proposition of our products in any IT environment.

Financial Highlights

Key financial highlights for the period include the following:



	Three Months Ended September 30,							Nine Months Ended September 30,
	2018			2017		Change		2018			2017			Change

	(in thousands, except per share data and percentages)
GAAP Results
Total revenue	$	213,277		$	189,112	12.8	%	$	611,908		$	529,678		15.5	%
Net income (loss)	(398		)	1,637		(124.3	)%	(87,323		)	(44,105		)	98.0	%
Net cash flow provided by operations	58,957			40,226		46.6	%	166,082			135,899			22.2	%
Non-GAAP Results ⁽¹⁾
Non-GAAP total revenue	$	214,005		$	191,035	12.0	%	$	615,197		$	541,229		13.7	%
Non-GAAP total recurring revenue	170,258			150,542		13.1	%	496,877			428,411			16.0	%
Adjusted EBITDA	106,482			99,302		7.2	%	295,656			261,804			12.9	%

______________


(1)	See "Non-GAAP Financial Measures" for a reconciliation of our GAAP to non-GAAP results.

Business Highlights

During the third quarter, SolarWinds made a number of updates and enhancements to its network and systems management, MSP and public cloud IT management product lines. We also released new products that add depth and breadth to our IT infrastructure management products while also introducing new security capabilities to quickly position us in the infrastructure security market:


•	We released Log Manager, making enterprise class machine data analysis accessible to companies of all sizes with an easy to use product at a disruptive price point. We also broadened our systems management capabilities with the release of SolarWinds Server Configuration Monitor (SCM) and added user access rights management with the release of Access Rights Manager (ARM).


•	We launched the latest version of SolarWinds N-Central with a wide range of features, including deeper PSA application integration, enhanced patch management, and NetPath. NetPath is a strong example of how SolarWinds is designing products and features that can be utilized across a wider set of product lines.


•	We added threat monitoring and management and entered the infrastructure security market. The new product , SolarWinds Threat Monitor, is an automated tool that is designed to reduce the complexity of threat detection for IT operations teams as well as for MSPs and MSSPs (Managed Security Service Providers).

Initial Public Offering

See Note 13. Subsequent Events in the Notes to Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional information regarding our IPO.

Components of Our Results of Operations

Revenue

Our revenue consists of recurring revenue and perpetual license revenue.


•	Recurring Revenue. The significant majority of our revenue is recurring and consists of subscription and maintenance revenue.

▪

Subscription Revenue. We derive subscription revenue from fees received for subscriptions to our cloud management and MSP products. Subscription revenue is recognized ratably over the subscription term after all revenue recognition criteria have been met. We generally invoice subscription agreements monthly in arrears based on usage or monthly in advance over the subscription period. Our subscription revenue grows as customers add new subscription products, upgrade the capacity level of their existing subscription products or increase the usage of their subscription products. Our revenue from MSP products increases with the addition of end customers served by our MSP customers, the proliferation of devices managed by those MSPs and the expansion of products used by those MSPs to manage end customers’ IT infrastructures.

•

Maintenance Revenue. We derive maintenance revenue from the sale of maintenance services associated with our perpetual license products. Perpetual license customers pay for maintenance services based on the products they have purchased. Our maintenance revenue grows when we renew existing maintenance contracts and add new perpetual license customers, and as existing customers add new products. Customers typically renew their maintenance contracts at our standard list maintenance renewal pricing for their applicable products. We generally invoice maintenance contracts annually in advance.

•

License Revenue. We derive license revenue from sales of perpetual licenses of our products to new and existing customers. We include one year of maintenance services as part of our customers’ initial license purchase. We calculate the amount of revenue allocated to the license by subtracting the fair value, which is determined by our standard maintenance renewal price list, of the applicable maintenance services from the total invoice or contract amount. If we increase list prices for maintenance services without increasing prices by a similar percentage for perpetual licenses, the amount of license revenue we recognize at the time of the sale of the perpetual license could be adversely affected.

Cost of Revenue


•	Cost of Recurring Revenue. Cost of recurring revenue consists of technical support personnel costs, royalty fees, hosting fees and an allocation of overhead costs for our subscription revenue and maintenance services. Allocated costs consist of certain facilities, depreciation, benefits, recruiting and IT costs allocated based on headcount.


•	Amortization of Acquired Technologies. We amortize to cost of revenue the capitalized costs of technologies acquired in connection with the Take Private and our other acquisitions.

Operating Expenses

Operating expenses consists of sales and marketing, research and development and general and administrative expenses as well as amortization of acquired intangibles. Personnel costs are the most significant component of operating expenses and consist of salaries, benefits, bonuses, sales commissions, stock-based compensation and contractor fees.

•

Sales and Marketing. Sales and marketing expenses primarily consist of related personnel costs, including our sales, marketing and maintenance renewal and subscription retention teams. Sales and marketing expenses also includes the cost of digital marketing programs such as paid search, search engine optimization and management, website maintenance and design. We expect to continue to hire personnel globally to drive new sales and maintenance renewals.


•	Research and Development . Research and development expenses primarily consist of related personnel costs. We expect to continue to grow our research and development organization, particularly internationally.

•

General and Administrative . General and administrative expenses primarily consist of personnel costs for our executive, finance, legal, human resources and other administrative personnel, general restructuring charges and other acquisition-related costs, professional fees and other general corporate expenses. Since the Take Private, these expenses have also included management fees payable to our Sponsors that were eliminated upon the completion of our initial public offering.


•	Amortization of Acquired Intangibles. We amortize to operating expenses the capitalized costs of intangible assets acquired in connection with the Take Private and our other acquisitions.

Other Income (Expense)

Other income (expense) primarily consists of interest expense, gains (losses) resulting from changes in exchange rates on foreign currency denominated intercompany loans, and losses on extinguishment of debt. We expect interest expense to decrease following the completion of our initial public offering as we repay indebtedness.

We established a foreign currency denominated intercompany loan as part of the Take Private to provide a conduit to utilize foreign earnings effectively. Until any cash payments are made with respect to this loan, the gains (losses) associated with the changes in exchange rates on amounts borrowed are unrealized non-cash events. Substantially all of these unrealized amounts are related to this one foreign currency denominated loan. As of July 1, 2018, this foreign currency denominated intercompany loan was designated as long-term due to a change in our investment strategy and the new Tax Act. Therefore, beginning on July 1, 2018, the foreign currency transaction gains and losses resulting from remeasurement are recognized as a component of accumulated other comprehensive income (loss).

Foreign Currency

As a global company, we face exposure to adverse movements in foreign currency exchange rates. Fluctuations in foreign currencies impact the amount of total assets, liabilities, revenue, operating expenses and cash flows that we report for our foreign subsidiaries upon the translation of these amounts into U.S. dollars. See “Item 3: Quantitative and Qualitative Disclosures About Market Risk ” for additional information on how foreign currency impacts our financial results.

Income Tax Expense

Income tax expense consists of domestic and foreign corporate income taxes related to the sale of products. The tax rate on income earned by our North American entities is higher than the tax rate on income earned by our international entities. We expect the income earned by our international entities to grow over time as a percentage of total income, which may result in a decline in our effective income tax rate. However, our effective tax rate will be affected by many other factors including changes in tax laws, regulations or rates, new interpretations of existing laws or regulations, shifts in the allocation of income earned throughout the world and changes in overall levels of income before tax.

The Tax Act was enacted on December 22, 2017. The Tax Act reduces the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that have not been taxed previously in the U.S. and creates new taxes on certain foreign sourced earnings. For additional discussion about our income taxes, see Note 11. Income Taxes in the Notes to Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q.

Comparison of the Three Months Ended September 30, 2018 and 2017

Revenue



	Three Months Ended September 30,
	2018				2017
	Amount		Percentage of Revenue		Amount		Percentage of Revenue		Change

			(in thousands, except percentages)
Subscription	$	67,713	31.7	%	$	55,361	29.3	%	$	12,352
Maintenance	101,817		47.7		93,258		49.3		8,559
Total recurring revenue	169,530		79.5		148,619		78.6		20,911
License	43,747		20.5		40,493		21.4		3,254
Total revenue	$	213,277	100.0	%	$	189,112	100.0	%	$	24,165

Our revenue recognized is impacted by our accounting for acquisitions, including the Take Private. We account for acquired businesses using the acquisition method of accounting, which requires the assets acquired and liabilities assumed, including deferred revenue, be recorded at the date of acquisition at their respective fair values which could differ from the historical book values. In most cases, adjusting the acquired deferred revenue balances to fair value on the date of acquisition had the effect of reducing the historical deferred revenue balance and therefore reducing the revenue recognized in subsequent periods. The impact to revenue as a result of purchase accounting adjustments during the relevant periods were as follows:



	Three Months Ended September 30,
	2018		2017
	Amount		Amount		Change

			(in thousands)
Subscription	$	154	$	353	$	(199	)
Maintenance	574		1,570		(996		)
Total recurring revenue	728		1,923		(1,195		)
License	—		—		—
Total revenue	$	728	$	1,923	$	(1,195	)

Total revenue increased $24.2 million , or 12.8% , for the three months ended September 30, 2018 compared to the three months ended September 30, 2017 . Revenue from North America was approximately 64% and 67% of total revenue for the three months ended September 30, 2018 and 2017 , respectively. Other than the United States, no single country accounted for 10% or more of our total revenue during these periods.

Recurring Revenue

Subscription Revenue. Subscription revenue increased $12.4 million , or 22.3% , for the three months ended September 30, 2018 compared to the three months ended September 30, 2017 , primarily due to sales of additional cloud management and MSP products. Our subscription revenue increased as a percentage of our total revenue for the three months ended September 30, 2018 compared to the three months ended September 30, 2017 .

Maintenance Revenue. Maintenance revenue increased $8.6 million , or 9.2% , for the three months ended September 30, 2018 compared to the three months ended September 30, 2017 . Of this change, $7.6 million was attributable to a growing maintenance renewal customer base from sales of our perpetual license products and maintenance renewal rates in the low- to mid-90 percent range. The remaining $1.0 million increase was attributable to a smaller purchase accounting adjustment to deferred revenue in the three months ended September 30, 2018 as compared to the three months ended September 30, 2017 .

We define our maintenance renewal rate as the sales of maintenance services for all existing maintenance contracts expiring in a period, divided by the sum previous sales of maintenance services corresponding to those services expiring in the current period. Sales of maintenance services includes sales of maintenance renewals for a previously purchased product and the amount allocated to maintenance revenue from a license purchase.

License Revenue

License revenue increased $3.3 million , or 8.0% , due to increased sales of our licensed products in each of our North American and international locations. We believe our more tenured sales and marketing leadership teams, particularly in our international regions, during 2018 was primarily the reason for the increased growth in sales of our licensed products globally.

Cost of Revenue



	Three Months Ended September 30,
	2018				2017
	Amount		Percentage of Revenue		Amount		Percentage of Revenue		Change

			(in thousands, except percentages)
Cost of recurring revenue	$	18,022	8.5	%	$	15,190	8.0	%	$	2,832
Amortization of acquired technologies	43,835		20.6		43,513		23.0		322
Total cost of revenue	$	61,857	29.0	%	$	58,703	31.0	%	$	3,154

Total cost of revenue increased in the three months ended September 30, 2018 compared to the three months ended September 30, 2017 primarily due to increases in personnel costs of $1.1 million to support new customers and additional product offerings, royalty and hosting fees related to our subscription products of $1.0 million and depreciation and other amortization of $0.8 million . In addition, amortization of acquired technologies increased $0.3 million . Amortization of acquired technologies includes $41.3 million and $41.4 million of amortization related to the Take Private for the three months ended September 30, 2018 and three months ended September 30, 2017 , respectively, with the remaining balance related primarily to the LOGICnow acquisition in May 2016.

Operating Expenses



	Three Months Ended September 30,
	2018				2017
	Amount		Percentage of Revenue		Amount		Percentage of Revenue		Change

			(in thousands, except percentages)
Sales and marketing	$	56,926	26.7	%	$	50,942	26.9	%	$	5,984
Research and development	23,274		10.9		20,521		10.9		2,753
General and administrative	19,597		9.2		15,080		8.0		4,517
Amortization of acquired intangibles	16,507		7.7		17,035		9.0		(528		)
Total operating expenses	$	116,304	54.5	%	$	103,578	54.8	%	$	12,726

Sales and Marketing. Sales and marketing expenses increased $6.0 million , or 11.7% , primarily due to increases in personnel costs of $5.8 million and marketing program costs of $0.5 million . We increased our sales and marketing employee headcount to support the sales of additional products and growth in the business.

Research and Development. Research and development expenses increased $2.8 million , or 13.4% , primarily due to an increase in personnel costs of $3.7 million . We increased our worldwide research and development employee headcount to expedite delivery of product enhancements and new product offerings to our customers. This increase was offset by reductions in acquisition and Take Private related costs of $0.6 million and contract services of $0.3 million .

General and Administrative . General and administrative expenses increased $4.5 million , or 30.0% , primarily due to a $3.1 million increase in personnel costs to support the growth of the business, a $1.1 million increase in professional fees and other offering costs related to our IPO.

Amortization of Acquired Intangibles. Amortization of acquired intangibles decreased $0.5 million , or 3.1% , for the three months ended September 30, 2018 compared to the three months ended September 30, 2017 . Amortization of intangible assets includes $11.9 million and $12.7 million of amortization related to the Take Private for the three months ended September 30, 2018 and 2017 , respectively, with the remaining balance related primarily to the LOGICnow acquisition in May 2016.

Interest Expense, Net



	Three Months Ended September 30,
	2018					2017
	Amount			Percentage of Revenue		Amount			Percentage of Revenue		Change

				(in thousands, except percentages)
Interest expense, net	$	(35,627	)	(16.7	)%	$	(42,534	)	(22.5	)%	$	6,907

Interest expense, net decreased by $6.9 million , or 16.2% , in the three months ended September 30, 2018 compared to the three months ended September 30, 2017 . The decrease in interest expense is due to the reduction in the interest rate spread under our credit facilities resulting from the refinancing transaction we completed in March 2018. See Note 6. Debt in the Notes to Consolidated Financial Statements included in Item 1 of Part I of this Form 10-Q for additional information regarding our debt.

Other Income (Expense), Net



	Three Months Ended September 30,
	2018					2017
	Amount			Percentage of Revenue		Amount			Percentage of Revenue		Change

				(in thousands, except percentages)
Unrealized net transaction gains (losses) related to remeasurement of intercompany loans	$	51		—	%	$	14,774		7.8	%	$	(14,723	)
Other income (expense)	(64		)	—		(489		)	(0.3	)	425
Total other income (expense), net	$	(13	)	—	%	$	14,285		7.6	%	$	(14,298	)

Other income (expense), net decreased by $14.3 million in the three months ended September 30, 2018 compared to the three months ended September 30, 2017 primarily due to the impact of changes in foreign currency exchange rates related to various intercompany loans and accounts for the period. As of July 1, 2018, we changed our assertion regarding the planned settlement of a certain intercompany loan. We have evaluated our investment strategy in light of our global treasury plans and the new Tax Act and have determined there is no need to settle the principal related to the loan. Therefore, beginning on July 1, 2018, the foreign currency transaction gains and losses resulting from the remeasurement of this long-term intercompany loan denominated in a currency other than the subsidiary's functional currency are recognized as a component of accumulated other comprehensive income (loss) and not included in other income (expense), net.

Income Tax Expense (Benefit)



	Three Months Ended September 30,
	2018					2017
	Amount			Percentage of Revenue		Amount			Percentage of Revenue		Change

				(in thousands, except percentages)
Income tax expense (benefit)	$	(126	)	(0.1	)%	$	(3,055	)	(1.6	)%	$	2,929
Effective tax rate	24.0		%			215.4		%			(191.4		)%

Our income tax benefit for the three months ended September 30, 2018 decreased by $2.9 million as compared to the three months ended September 30, 2017 primarily as a result of a decrease in the loss before income taxes for the period and a lower U.S. corporate tax rate attributable to the Tax Act. The effective tax rate decreased for the period as a result of the lower U.S. corporate tax rate attributable to the Tax Act as well as discrete items related to expired statutes in various jurisdictions recorded in the three months ended September 30, 2017. For additional discussion about our income taxes, see Note 11. Income Taxes in the Notes to Consolidated Financial Statements included in Item 1 of Part I of this Form 10-Q.

Comparison of the Nine Months Ended September 30, 2018 and 2017

Revenue



	Nine Months Ended September 30,
	2018				2017
	Amount		Percentage of Revenue		Amount		Percentage of Revenue		Change

			(in thousands, except percentages)
Subscription	$	196,004	32.0	%	$	155,402	29.3	%	$	40,602
Maintenance	297,584		48.6		261,461		49.4		36,123
Total recurring revenue	493,588		80.7		416,863		78.7		76,725
License	118,320		19.3		112,815		21.3		5,505
Total revenue	$	611,908	100.0	%	$	529,678	100.0	%	$	82,230



	Nine Months Ended September 30,
	2018		2017
	Amount		Amount		Change

			(in thousands)
Subscription	$	1,116	$	1,168	$	(52	)
Maintenance	2,173		10,380		(8,207		)
Total recurring revenue	3,289		11,548		(8,259		)
License	—		3		(3		)
Total revenue	$	3,289	$	11,551	$	(8,262	)

Total revenue increased $82.2 million , or 15.5% , for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017 . Revenue from North America was approximately 65% and 67% of total revenue for the nine months ended September 30, 2018 and 2017 , respectively. Other than the United States, no single country accounted for 10% or more of our total revenue during these periods.

Recurring Revenue

Subscription Revenue. Subscription revenue increased $40.6 million , or 26.1% , for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017 , primarily due to sales of additional cloud management and MSP products. Our subscription revenue increased as a percentage of our total revenue for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017 .

Maintenance Revenue. Maintenance revenue increased $36.1 million , or 13.8% , for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017 . Of this change, $27.9 million was attributable to a growing maintenance renewal customer base from sales of our perpetual license products and maintenance renewal rates in the low- to mid-90 percent range. The remaining $8.2 million increase was attributable to a smaller purchase accounting adjustment to deferred revenue in the nine months ended September 30, 2018 as compared to the nine months ended September 30, 2017 .

License Revenue

License revenue increased $5.5 million , or 4.9% , due to increased sales of our licensed products, particularly in our international locations. We believe our more tenured sales and marketing leadership teams in international regions during 2018 was primarily the reason for the increased growth in these regions.

Cost of Revenue



	Nine Months Ended September 30,
	2018				2017
	Amount		Percentage of Revenue		Amount		Percentage of Revenue		Change

			(in thousands, except percentages)
Cost of recurring revenue	$	52,617	8.6	%	$	44,879	8.5	%	$	7,738
Amortization of acquired technologies	132,121		21.6		127,781		24.1		4,340
Total cost of revenue	$	184,738	30.2	%	$	172,660	32.6	%	$	12,078

Total cost of revenue increased in the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017 primarily due to increases in amortization of acquired technologies of $4.3 million , royalty and hosting fees related to our subscription products of $2.8 million , personnel costs to support new customers and additional product offerings of $2.6 million and depreciation and other amortization of $2.3 million . Amortization of acquired technologies includes $124.6 million and $122.0 million of amortization related to the Take Private for the nine months ended September 30, 2018 and September 30, 2017 , respectively, with the remaining balance related primarily to the LOGICnow acquisition in May 2016.

Operating Expenses



	Nine Months Ended September 30,
	2018				2017
	Amount		Percentage of Revenue		Amount		Percentage of Revenue		Change

			(in thousands, except percentages)
Sales and marketing	$	166,022	27.1	%	$	152,070	28.7	%	$	13,952
Research and development	71,800		11.7		63,414		12.0		8,386
General and administrative	59,849		9.8		50,865		9.6		8,984
Amortization of acquired intangibles	50,288		8.2		49,910		9.4		378
Total operating expenses	$	347,959	56.9	%	$	316,259	59.7	%	$	31,700

Sales and Marketing. Sales and marketing expenses increased $14.0 million , or 9.2% , primarily due to increases in personnel costs of $13.3 million and marketing program costs of $0.9 million . We increased our sales and marketing employee headcount to support the sales of additional products and growth in the business.

Research and Development. Research and development expenses increased $8.4 million , or 13.2% , primarily due to an increase in personnel costs of $10.7 million . We increased our worldwide research and development employee headcount to expedite delivery of product enhancements and new product offerings to our customers. This increase was offset by reductions in contract services of $1.2 million and acquisition and Take Private related costs of $1.1 million .

General and Administrative . General and administrative expenses increased $9.0 million , or 17.7% , primarily due to a $9.1 million increase in personnel costs to support the growth of the business, a $2.3 million increase in offering costs related to our IPO and other professional fees. These increases were partially offset by a lease abandonment charge of $1.7 million in the nine months ended September 30, 2017 that did not reoccur in the nine months ended September 30, 2018 and a decrease of acquisition and Take Private related costs of $1.5 million .

Amortization of Acquired Intangibles. Amortization of acquired intangibles increased $0.4 million , or 0.8% , for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017 due to the addition of intangible assets related to acquisitions. Amortization of intangible assets includes $36.3 million and $37.7 million of amortization related to the Take Private for the nine months ended September 30, 2018 and September 30, 2017 , respectively, with the remaining balance related primarily to the LOGICnow acquisition in May 2016.

Interest Expense, Net



	Nine Months Ended September 30,
	2018					2017
	Amount			Percentage of Revenue		Amount			Percentage of Revenue		Change

				(in thousands, except percentages)
Interest expense, net	$	(112,103	)	(18.3	)%	$	(127,018	)	(24.0	)%	$	14,915

Interest expense, net decreased by $14.9 million , or 11.7% , in the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017 . The decrease in interest expense is due to the reduction in the interest rate spread under our credit facilities resulting from the refinancing transaction we completed in March 2018. See Note 6. Debt in the Notes to Consolidated Financial Statements included in Item 1 of Part I of this Form 10-Q for additional information regarding our debt.

Other Income (Expense), Net



	Nine Months Ended September 30,
	2018					2017
	Amount			Percentage of Revenue		Amount			Percentage of Revenue		Change

				(in thousands, except percentages)
Unrealized net transaction gains (losses) related to remeasurement of intercompany loans	$	(12,660	)	(2.1	)%	$	49,955		9.4	%	$	(62,615	)
Loss on extinguishment of debt	(60,590		)	(9.9	)	(18,559		)	(3.5	)	(42,031		)
Other income (expense)	(1,226		)	(0.2	)	(1,711		)	(0.3	)	485
Total other income (expense), net	$	(74,476	)	(12.2	)%	$	29,685		5.6	%	$	(104,161	)

Other income (expense), net decreased by $104.2 million in the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017 primarily due to the impact of changes in foreign currency exchange rates related to various intercompany loans for the period and a loss of $60.6 million on extinguishment of debt related to the refinancing of our credit facilities in March 2018. See Note 6. Debt in the Notes to Consolidated Financial Statements included in Item 1 of Part I of this Form 10-Q for additional information regarding our debt.

Income Tax Expense (Benefit)



	Nine Months Ended September 30,
	2018					2017
	Amount			Percentage of Revenue		Amount			Percentage of Revenue		Change

				(in thousands, except percentages)
Income tax expense (benefit)	$	(20,045	)	(3.3	)%	$	(12,469	)	(2.4	)%	$	(7,576	)
Effective tax rate	18.7		%			22.0		%			(3.3		)%

Our income tax benefit for the nine months ended September 30, 2018 increased by $7.6 million as compared to the nine months ended September 30, 2017 primarily as a result of an increase in the loss before income taxes for the period offset by a lower U.S. corporate tax rate attributable to the Tax Act. For additional discussion about our income taxes, see Note 11. Income Taxes in the Notes to Consolidated Financial Statements included in Item 1 of Part I of this Form 10-Q.

Non-GAAP Financial Measures

In addition to financial measures prepared in accordance with GAAP, we use certain non-GAAP financial measures to clarify and enhance our understanding, and aid in the period-to-period comparison, of our performance. We believe that these non-GAAP financial measures provide supplemental information that is meaningful when assessing our operating performance because they exclude the impact of certain amounts that our management and board of directors do not consider part of core operating results when assessing our operational performance, allocating resources, preparing annual budgets and determining compensation. Accordingly, these non-GAAP financial measures may provide insight to investors into the motivation and decision-making of management in operating the business. Set forth in the first table below are the corresponding GAAP financial measures for each non-GAAP financial measure. Investors are encouraged to review the reconciliation of each of these non-GAAP financial measures to its most comparable GAAP financial measure included below.

While we believe that these non-GAAP financial measures provide useful supplemental information, non-GAAP financial measures have limitations and should not be considered in isolation from, or as a substitute for, their most comparable GAAP measures. These non-GAAP financial measures are not prepared in accordance with GAAP, do not reflect a comprehensive system of accounting and may not be comparable to similarly titled measures of other companies due to potential differences in their financing and accounting methods, the book value of their assets, their capital structures, the method by which their assets were acquired and the manner in which they define non-GAAP measures. Items such as the amortization of intangible assets, stock-based compensation expense, acquisition related adjustments and restructuring charges, as well as the related tax impacts of these items can have a material impact on our GAAP financial results.

Non-GAAP Revenue

We define non-GAAP subscription revenue, non-GAAP maintenance revenue, non-GAAP license revenue and non-GAAP total revenue, as subscription revenue, maintenance revenue, license revenue and total revenue, respectively, excluding the impact of purchase accounting. We monitor these measures to assess our performance because we believe our revenue growth rates would be overstated without these adjustments. We believe presenting non-GAAP subscription revenue, non-GAAP maintenance revenue, non-GAAP license revenue and non-GAAP total revenue aids in the comparability between periods and in assessing our overall operating performance.



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017

	(in thousands)
Revenue:
GAAP subscription revenue	$	67,713	$	55,361	$	196,004	$	155,402
Impact of purchase accounting	154		353		1,116		1,168
Non-GAAP subscription revenue	67,867		55,714		197,120		156,570
GAAP maintenance revenue	101,817		93,258		297,584		261,461
Impact of purchase accounting	574		1,570		2,173		10,380
Non-GAAP maintenance revenue	102,391		94,828		299,757		271,841
GAAP total recurring revenue	169,530		148,619		493,588		416,863
Impact of purchase accounting	728		1,923		3,289		11,548
Non-GAAP total recurring revenue	170,258		150,542		496,877		428,411
GAAP license revenue	43,747		40,493		118,320		112,815
Impact of purchase accounting	—		—		—		3
Non-GAAP license revenue	43,747		40,493		118,320		112,818
Total GAAP revenue	$	213,277	$	189,112	$	611,908	$	529,678
Impact of purchase accounting	$	728	$	1,923	$	3,289	$	11,551
Total non-GAAP revenue	$	214,005	$	191,035	$	615,197	$	541,229

Non-GAAP Operating Income and Non-GAAP Operating Margin

We provide non-GAAP operating income and related non-GAAP margin using non-GAAP revenue as discussed above and excluding such items as the write-down of deferred revenue related to purchase accounting, amortization of acquired intangible assets, stock-based compensation expense, acquisition and Sponsor related costs and restructuring charges and other. Management believes these measures are useful for the following reasons:

•

Amortization of Acquired Intangible Assets. We provide non-GAAP information that excludes expenses related to purchased intangible assets associated with our acquisitions. We believe that eliminating this expense from our non-GAAP measures is useful to investors, because the amortization of acquired intangible assets can be inconsistent in amount and frequency and is significantly impacted by the timing and magnitude of our acquisition transactions, which also vary in frequency from period to period. Accordingly, we analyze the performance of our operations in each period without regard to such expenses.

•

Stock-Based Compensation Expense. We provide non-GAAP information that excludes expenses related to stock-based compensation. We believe that the exclusion of stock-based compensation expense provides for a better comparison of our operating results to prior periods and to our peer companies as the calculations of stock-based compensation vary from period to period and company to company due to different valuation methodologies, subjective assumptions and the variety of award types. Because of these unique characteristics of stock-based compensation, management excludes these expenses when analyzing the organization’s business performance.

•

Acquisition and Sponsor Related Costs. We exclude certain expense items resulting from the Take Private and other acquisitions, such as legal, accounting and advisory fees, changes in fair value of contingent consideration, costs related to integrating the acquired businesses, deferred compensation, severance and retention expense. We consider these adjustments, to some extent, to be unpredictable and dependent on a significant number of factors that are outside of our control. Furthermore, acquisitions result in operating expenses that would not otherwise have been incurred by us in the normal course of our organic business operations. We believe that providing these non-GAAP measures that exclude acquisition and Sponsor related costs, allows users of our financial statements to better review and understand the historical and current results of our continuing operations, and also facilitates comparisons to our historical results and results of less acquisitive peer companies, both with and without such adjustments.

•

Restructuring Charges and Other. We provide non-GAAP information that excludes restructuring charges such as severance and the estimated costs of exiting and terminating facility lease commitments, as they relate to our corporate restructuring and exit activities. These restructuring charges are inconsistent in amount and are significantly impacted by the timing and nature of these events. Therefore, although we may incur these types of expenses in the future, we believe that eliminating these charges for purposes of calculating the non-GAAP financial measures facilitates a more meaningful evaluation of our operating performance and comparisons to our past operating performance.



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017

	(in thousands, except margin data)
GAAP operating income	$	35,116		$	26,831		$	79,211		$	40,759
Impact of purchase accounting	728			1,923			3,289			11,551
Stock-based compensation expense	160			21			332			49
Amortization of acquired technologies	43,835			43,513			132,121			127,781
Amortization of acquired intangibles	16,507			17,035			50,288			49,910
Acquisition and Sponsor related costs	5,614			6,097			16,361			18,163
Restructuring costs and other	281			556			1,494			2,644
Non-GAAP operating income	$	102,241		$	95,976		$	283,096		$	250,857
GAAP operating margin	16.5		%	14.2		%	12.9		%	7.7		%
Non-GAAP operating margin	47.8		%	50.2		%	46.0		%	46.3		%

Adjusted EBITDA and Adjusted EBITDA Margin

We regularly monitor adjusted EBITDA, as it is a measure we use to assess our operating performance. We define adjusted EBITDA as net income or loss, excluding the impact of purchase accounting on total revenue, amortization of acquired intangible assets and developed technology, depreciation expense, stock-based compensation expense, restructuring and other charges,

acquisition and Sponsor related costs, interest expense, net, debt extinguishment and refinancing costs, unrealized foreign currency (gains) losses, and income tax expense (benefit). We define adjusted EBITDA margin as adjusted EBITDA divided by non-GAAP revenue. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are: although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; adjusted EBITDA excludes the impact of the write-down of deferred revenue due to purchase accounting in connection with our acquisition, and therefore includes revenue that will never be recognized under GAAP; adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; adjusted EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debt; adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; and other companies, including companies in our industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

Because of these limitations, you should consider adjusted EBITDA alongside other financial performance measures, including net income (loss) and our other GAAP results. In evaluating adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of adjusted EBITDA should not be construed as an inference that our future results will be unaffected by the types of items excluded from the calculation of adjusted EBITDA. Adjusted EBITDA is not a presentation made in accordance with GAAP and the use of the term varies from others in our industry.



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017

	(in thousands)
Net income (loss)	$	(398	)	$	1,637		$	(87,323	)	$	(44,105	)
Amortization and depreciation	64,289			63,825			193,903			187,086
Income tax expense (benefit)	(126		)	(3,055		)	(20,045		)	(12,469		)
Interest expense, net	35,627			42,534			112,103			127,018
Impact of purchase accounting on total revenue	728			1,923			3,289			11,551
Unrealized foreign currency (gains) losses ⁽¹⁾	202			(14,428		)	13,704			(47,551		)
Acquisition and Sponsor related costs	5,614			6,097			16,361			18,163
Debt related costs ⁽²⁾	105			192			61,838			19,418
Stock-based compensation expense	160			21			332			49
Restructuring costs and other	281			556			1,494			2,644
Adjusted EBITDA	$	106,482		$	99,302		$	295,656		$	261,804
Adjusted EBITDA margin	49.8		%	52.0		%	48.1		%	48.4		%

________________


(1)	Unrealized foreign currency (gains) losses primarily relate to the remeasurement of our intercompany loans and to a lesser extent, unrealized foreign currency (gains) losses on selected assets and liabilities.

(2)

Debt related costs include fees related to our credit agreements, debt refinancing costs and the related write-off of debt issuance costs. The fees related to our credit agreements were $0.1 million and $0.2 million for the three months ended September 30, 2018 and 2017 , respectively and $1.2 million and $0.9 million for the nine months ended September 30, 2018 and 2017 , respectively. See Note 6. Debt in the Notes to Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional information regarding our debt and the write-off of debt issuance costs.

Liquidity and Capital Resources

Cash and cash equivalents were $278.3 million as of September 30, 2018 . Our international subsidiaries held approximately $129.9 million of cash and cash equivalents, of which 73.7% were held in Euros. The Tax Act imposes a mandatory transition tax on accumulated foreign earnings and eliminates U.S. federal income taxes on foreign subsidiary distribution. Effective January 1, 2018, we began recognizing the tax impact of including certain foreign earnings in U.S. taxable income as a period cost. We intend either to invest our foreign earnings permanently in foreign operations or to remit these earnings to our U.S. entities in a tax-free manner. For this reason, we have not recognized deferred income taxes for local country income and withholding taxes that could be incurred on distributions of certain foreign earnings or for outside basis differences in our subsidiaries.

Our primary source of cash for funding operations and growth has been through cash provided by operating activities. We believe that our existing cash and cash equivalents, our cash flows from operating activities and our borrowing capacity under our credit facilities will be sufficient to fund our operations, fund required debt repayments and meet our commitments for capital expenditures for at least the next 12 months.

Although we are not currently a party to any material definitive agreement regarding potential investments in, or acquisitions of, complementary businesses, applications or technologies, we may enter into these types of arrangements, which could reduce our cash and cash equivalents, require us to seek additional equity or debt financing or repatriate cash generated by our international operations that could cause us to incur withholding taxes on any distributions. Additional funds from financing arrangements may not be available on terms favorable to us or at all.

Indebtedness

As of September 30, 2018 , our total indebtedness was $2.3 billion , with up to $125.0 million of available borrowings under our revolving credit facility. See Note 6. Debt in the Notes to Condensed Consolidated Financial Statements included in Item 1 of Part I of this Form 10-Q for additional information regarding our debt.

First Lien Credit Agreement

On March 15, 2018, or the Refinancing Date, we entered into Amendment No. 4 to First Lien Credit Agreement, originally dated as of February 5, 2016.

The First Lien Credit Agreement, as amended, provides for a senior secured revolving credit facility in an aggregate principal amount of $125.0 million, or the Revolving Credit Facility, consisting of a $25.0 million U.S. dollar revolving credit facility, or the U.S. Dollar Revolver, and a $100.0 million multicurrency revolving credit facility, or the Multicurrency Revolver. The Revolving Credit Facility includes a $35.0 million sublimit for the issuance of letters of credit. The First Lien Credit Agreement also contains a term loan facility (which we refer to as the First Lien Term Loan, and together with the Revolving Credit Facility, as the First Lien Credit Facilities) in an original aggregate principal amount of $1,990.0 million.

The First Lien Credit Agreement provides us the right to request additional commitments for new incremental term loans and revolving loans, in an aggregate principal amount not to exceed (a) the greater of (i) $400.0 million and (ii) 100% of our consolidated EBITDA, as defined in the First Lien Credit Agreement (calculated on a pro forma basis), for the most recent four fiscal quarter period, or the First Lien Fixed Basket, minus (b) the amount of any incremental loans incurred under the Second Lien Fixed Basket (as defined below), plus (c) the amount of certain voluntary prepayments of the First Lien Credit Facilities, plus (d) an unlimited amount subject to pro forma compliance with a first lien net leverage ratio not to exceed 4.75 to 1.00.

Under the U.S. Dollar Revolver, $7.5 million of commitments will mature on February 5, 2021, and $17.5 million along with all commitments under the Multicurrency Revolver will mature on February 5, 2022. The First Lien Term Loan will mature on February 5, 2024.

The First Lien Term Loan requires equal quarterly repayments equal to 0.25% of the original principal amount.

Second Lien Credit Facility

On the Refinancing Date, we entered into the Second Lien Credit Agreement with Wilmington Trust, National Association, or Wilmington Trust, as administrative agent and collateral agent, and the other parties thereto. The Second Lien Credit Agreement provides for a term loan facility, or the Second Lien Credit Facility, in an original aggregate principal amount of $315.0 million.

In October 2018, we completed our IPO and used a portion of our net proceeds from the offering to repay the borrowings under our Second Lien Credit Facility.

Summary of Cash Flows

Summarized cash flow information is as follows:



	Nine Months Ended September 30,
	2018			2017

	(in thousands)
Net cash provided by operating activities	$	166,082		$	135,899
Net cash used in investing activities	(64,739		)	(31,497		)
Net cash used in financing activities	(97,287		)	(30,768		)
Effect of exchange rate changes on cash and cash equivalents	(3,439		)	8,042
Net increase in cash and cash equivalents	617			81,676

Operating Activities

For the nine months ended September 30, 2018 , net cash provided by operating activities was $166.1 million which consisted of a net loss of $87.3 million , adjusted for $266.2 million of non-cash expenses and other adjustments and a $12.8 million net change in operating assets and liabilities. Non-cash expenses include depreciation and amortization of $193.9 million primarily related to the intangible assets recorded in connection with the Take Private and other acquisitions. The other adjustments include the loss on extinguishment of debt related to amendments to our credit facilities of $60.6 million . Significant changes in operating assets and liabilities include:


•	Deferred revenue increased as compared to the balance at December 31, 2017 resulting in an increase in operating liabilities and reflecting a cash inflow of $22.3 million for the nine months ended September 30, 2018 .

•

Changes in our income tax receivable and payable balances are significant components of our cash flows from operating activities. The cash outflows related to our income tax payable balance includes $10.4 million related to the impacts of the Tax Act enacted during 2017 and $8.0 million of income tax payments for the nine months ended September 30, 2018 . See Note 11. Income Taxes in the Notes to Condensed Consolidated Financial Statements included in Item 1 of Part I of this Form 10-Q for additional information.

For the nine months ended September 30, 2017 , net cash provided by operating activities was $135.9 million , which consisted of a net loss of $44.1 million , adjusted for $156.1 million of non-cash expenses and other adjustments and a $23.9 million net change in operating assets and liabilities. Non-cash expenses include depreciation and amortization of $187.1 million primarily related to the intangible assets recorded in connection with the Take Private and other acquisitions. The significant changes in operating assets and liabilities during the period include the following:


•	Deferred revenue increased as compared to the balance in prior period at September 30, 2017 resulting in an increase in operating liabilities and reflecting a cash inflow of $24.2 million for the nine months ended September 30, 2017 . The deferred revenue balances were impacted by the purchase accounting adjustments made at the Take Private.

Investing Activities

Net cash used in investing activities for the nine months ended September 30, 2018 was primarily related to $60.6 million of cash used for acquisitions and $12.8 million of cash used to purchase property and equipment, offset by $10.7 million of cash proceeds from the sale of a cost-method investment.

Net cash used in investing activities for the nine months ended September 30, 2017 was primarily related to $24.0 million of cash used for acquisitions and $6.3 million of cash used to purchase property and equipment.

Financing Activities

Net cash used in financing activities for the nine months ended September 30, 2018 was primarily due to debt principal repayments of $694.9 million , offset by $627.0 million of additional proceeds from the refinancing of our debt agreements. These cash flows primarily relate to deemed gross repayments and borrowings made in connection with the refinancing of debt agreements and $14.9 million of total quarterly principal payments under our First Lien Credit Agreement. In addition, we paid a redemption premium of $22.7 million in connection with the redemption and exchange of our Second Lien Notes.

Net cash used in financing activities for the nine months ended September 30, 2017 was primarily due to debt repayments of $32.7 million related to the repayment of outstanding borrowings under our revolving credit facility and quarterly principal payments

under our First Lien Credit Agreement. These repayments were offset by $3.5 million of additional proceeds from refinancing related to Amendment 3 of our First Lien Credit Agreement.

Contractual Obligations and Commitments

As of September 30, 2018 , with the exception of long-term debt obligations and cash interest expense, there have been no material changes in our contractual obligations and commitments as of December 31, 2017 that were disclosed in our final prospectus dated October 18, 2018 and filed with the SEC on October 22, 2018 pursuant to Rule 424(b) of the Securities Act of 1933, as amended, and included below.

The following table summarizes our outstanding contractual obligations as of December 31, 2017 that require us to make future cash payments:



	Payments Due by Period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years

	(in thousands)
Long-term debt obligations ⁽¹⁾	$	2,358,050	$	16,950	$	33,900	$	33,900	$	2,273,300
Cash interest expense ⁽¹⁾	854,933		155,832		309,474		305,567		84,060
Operating leases	144,049		16,607		32,549		28,762		66,131
Purchase obligations ⁽²⁾	65,986		47,810		18,176		—		—
Related party consulting agreement ⁽³⁾	50,986		10,000		20,000		20,000		986
Take Private deferred stock payments ⁽⁴⁾	8,071		4,553		3,518		—		—
Acquisition related retention and deferred compensation	5,549		2,699		2,850		—		—
Transition tax payable ⁽⁵⁾	120,793		6,545		19,327		19,327		75,594
Total ⁽⁶⁾	$	3,608,417	$	260,996	$	439,794	$	407,556	$	2,500,071

________________


(1)	Represents principal maturities of our Senior Secured First Lien Credit Facility and our Senior Secured Second Lien Floating Rate Note Agreement in effect at December 31, 2017. The estimated cash interest expense is based upon (i) an interest rate of 5.07% on our First Lien and (ii) an interest rate of 10.14% on the Second Lien Notes.

In March 2018, we entered into Amendment No. 4 to First Lien Credit Agreement. In addition, we terminated our Second Lien Notes Agreement and entered into a new Senior Secured Second Lien Credit Agreement. The amounts below reflect the obligations due under these new and amended agreements as of September 30, 2018 . The estimated cash interest expense is based upon (i) an interest rate of 5.24% on our First Lien and (ii) an interest rate of 9.49% on our Second Lien.

In October 2018, we completed our IPO and used a portion of our net proceeds from the offering to repay the $315.0 million of borrowings under our Second Lien Credit Facility.

The following table summarizes principal maturities and estimated cash interest expense as of September 30, 2018 :



	Payments Due by Period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years

	(in thousands)
Long-term debt obligations, as amended	$	2,290,075	$	4,975	$	39,800	$	39,800	$	2,205,500
Cash interest expense	739,511		34,101		268,564		263,966		172,880
Total	$	3,029,586	$	39,076	$	308,364	$	303,766	$	2,378,380


(2)	Purchase obligations primarily represent outstanding purchase orders for purchases of software license and support fees, marketing activities, hosting, corporate health insurance costs, accounting, legal and contractor fees and computer hardware and software costs.


(3)	Our consulting agreement with our Sponsors terminated in October 2018 upon the consummation of the IPO. For more information, see Note 10. Related Party Transactions in the Notes to Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q.

(4)

As a result of the Take Private, certain restricted stock units, or RSUs, not subject to accelerated vesting were cancelled and converted into the right to receive the per share price of $60.10 less applicable withholding taxes shortly after those RSUs would have vested based on the underlying original RSU vesting schedule and subject to the continued employment of the holders of those RSUs. See Note 12. Commitments and Contingencies in the Notes to Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional details.


(5)	Represents the provisional one–time transition tax as a result of the Tax Act which we have elected to pay over eight years. See Note 11. Income Taxes in the Notes to Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional details of the impact of the Tax Act.


(6)	Other long-term obligations on our balance sheet at December 31, 2017 included non-current income tax liabilities of $22.5 million, which related primarily to unrecognized tax benefits. We have not included this amount in the table above because we cannot reasonably estimate the period during which this obligation may be incurred, if at all.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements are prepared in conformity with GAAP and require our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates, and such estimates may change if the underlying conditions or assumptions change. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected, perhaps materially.

In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application, while in other cases, management’s judgment is required in selecting among available alternative accounting standards that allow different accounting treatment for similar transactions. We believe that these accounting policies requiring significant management judgment and estimates are critical to understanding our historical and future performance, as these policies relate to the more significant areas of our financial results. These critical accounting policies are:


•	the valuation of goodwill, intangibles, long-lived assets and contingent consideration;


•	revenue recognition;


•	stock-based compensation;


•	income taxes; and


•	loss contingencies.

A full description of our critical accounting policies that involve significant management judgment appears in our final prospectus dated October 18, 2018 and filed with the SEC on October 22, 2018 pursuant to Rule 424(b) of the Securities Act of 1933, as amended. There have been no material changes to our critical accounting policies and estimates since that time.

Recent Accounting Pronouncements

See Note 2. Summary of Significant Accounting Policies in the Notes to Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q, for a full description of recent accounting pronouncements, which is incorporated herein by reference.

Off-Balance Sheet Arrangements

During the nine months ended September 30, 2018 , we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

We had cash and cash equivalents of $278.3 million and $277.7 million at September 30, 2018 and December 31, 2017 , respectively. Our cash and cash equivalents consist primarily of bank demand deposits and money market funds. We hold cash, cash equivalents and short-term investments for working capital purposes. Our investments are made for capital preservation purposes, and we do not enter into investments for trading or speculative purposes.

We do not have material exposure to market risk with respect to our cash and cash equivalents, as these consist primarily of highly liquid investments purchased with original maturities of three months or less at September 30, 2018 .

We had total indebtedness with an outstanding principal balance of $2.3 billion and $2.4 billion at September 30, 2018 and December 31, 2017 , respectively. Borrowings outstanding under our various credit agreements bear interest at variable rates equal to applicable margins plus specified base rates or LIBOR-based rates with a 1% floor. As of September 30, 2018 and December 31, 2017 , the annual weighted-average rate on borrowings was 5.8% and 6.5% , respectively. If there was a hypothetical 100 basis point increase in interest rates, the annual impact to interest expense would be approximately $22.9 million. This hypothetical change in interest expense has been calculated based on the borrowings outstanding at December 31, 2017 and a 100 basis point per annum change in interest rate applied over a one-year period.

We do not have material exposure to fair value market risk with respect to our total long-term outstanding indebtedness which consists of $2.3 billion U.S. dollar term loans as of September 30, 2018 , not subject to market pricing.

See Note 6. Debt in the Notes to Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional information regarding our debt.

Foreign Currency Exchange Risk

As a global company, we face exposure to adverse movements in foreign currency exchange rates. We primarily conduct business in the following locations: the United States, Europe, Canada, South America and Australia. This exposure is the result of selling in multiple currencies, growth in our international investments, additional headcount in foreign countries and operating in countries where the functional currency is the local currency. Specifically, our results of operations and cash flows are subject to fluctuations in the following currencies: the Euro, British Pound Sterling and Australian Dollar against the United States Dollar, or USD. These exposures may change over time as business practices evolve and economic conditions change. Changes in foreign currency exchange rates could have an adverse impact on our financial results and cash flows.

Our condensed consolidated statements of operations are translated into USD at the average exchange rates in each applicable period. Our international revenue, operating expenses and significant balance sheet accounts denominated in currencies other than the USD primarily flow through our United Kingdom and European subsidiaries, which have British Pound Sterling and Euro functional currencies, respectively. This results in a two-step currency exchange process wherein the currencies other than the British Pound Sterling and Euro are first converted into those functional currencies and then translated into USD for our consolidated financial statements. As an example, revenue for sales in Australia is translated from the Australian Dollar to the Euro and then into the USD.

Our statement of operations and balance sheet accounts are also impacted by the re-measurement of non-functional currency transactions such as intercompany loans, cash accounts held by our overseas subsidiaries, accounts receivable denominated in foreign currencies, deferred revenue and accounts payable denominated in foreign currencies. Our foreign currency denominated intercompany loan was established as part of the Take Private to provide a conduit to utilize foreign earnings effectively. The gains (losses) associated with the changes in exchange rates on amounts borrowed are unrealized non-cash events. As of July 1, 2018, the foreign currency denominated intercompany loan is designated as long-term due to a change in our investment strategy and the new Tax Act. Therefore, beginning on July 1, 2018, the foreign currency transaction gains and losses resulting from remeasurement are recognized as a component of accumulated other comprehensive income (loss).

Foreign Currency Transaction Risk

Our foreign currency exposures typically arise from selling annual and multi-year maintenance contracts and subscriptions in multiple currencies, accounts receivable, intercompany transfer pricing arrangements and other intercompany transactions. Our foreign currency management objective is to minimize the effect of fluctuations in foreign exchange rates on selected assets or liabilities without exposing us to additional risk associated with transactions that could be regarded as speculative.

We utilize purchased foreign currency forward contracts to minimize our foreign exchange exposure on certain foreign balance sheet positions denominated in currencies other than the Euro. We do not enter into any derivative financial instruments for trading or speculative purposes. Our objective in managing our exposure to foreign currency exchange rate fluctuations is to reduce the impact of adverse fluctuations in such exchange rates on our earnings and cash flow. The notional amounts and currencies underlying our foreign currency forward contracts will fluctuate period to period as they are principally dependent on the balances of the balance sheet positions that are denominated in currencies other than the Euro held by our global entities. There can be no assurance that our foreign currency hedging activities will substantially offset the impact of fluctuation in currency exchange rates on our results of operations and functional positions. As of September 30, 2018 and December 31, 2017 , we did not have any forward contracts outstanding and while we do not have a formal policy to settle all derivatives prior to the end of each quarter, our current practice is to do so. The effect of derivative instruments on our condensed consolidated statements of operations was insignificant for the nine months ended September 30, 2018 and 2017.

We are exposed to credit-related losses in the event of non-performance by counterparties to derivative financial instruments, but we do not expect any counterparties to fail to meet their obligations given their high credit ratings. In addition, we diversify this risk across several counterparties and actively monitor their ratings.

Foreign Currency Translation Risk

Fluctuations in foreign currencies impact the amount of total assets, liabilities, revenue, operating expenses and cash flows that we report for our foreign subsidiaries upon the translation of these amounts into U.S. dollars. If there is a change in foreign currency exchange rates, the amounts of assets, liabilities, revenue, operating expenses and cash flows that we report in U.S. dollars for foreign subsidiaries that transact in international currencies may be higher or lower to what we would have reported using a constant currency rate. To the extent the U.S. dollar strengthens against foreign currencies, the translation of these foreign currency denominated transactions results in reduced assets, liabilities, revenue, operating expenses and cash flows for our international operations. Similarly, our assets, liabilities, revenue, operating expenses and cash flows will increase for our international operations if the U.S. dollar weakens against foreign currencies. The conversion of the foreign subsidiaries’ financial statements into U.S. dollars will also lead to remeasurement gains and losses recorded in income, or translation gains or losses that are recorded as a component of accumulated other comprehensive income (loss).

Item 4: Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2018 . The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under 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 by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, 2018 , our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at a reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II: OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we have been and may be involved in various legal proceedings and claims arising in our ordinary course of business. At this time, neither we nor any of our subsidiaries is a party to, and none of our respective property is the subject of, any material legal proceeding. However, the outcome of legal proceedings and claims brought against us are subject to significant uncertainty. Therefore, if one or more of these legal matters were resolved against us in the same reporting period for amounts in excess of management’s expectations, our consolidated financial statements for a particular period could be materially adversely affected.

Item 1A. Risk Factors

For a discussion of our potential risks and uncertainties, see the information under the heading "Risk Factors" in our final prospectus dated October 18, 2018 and filed with the SEC on October 22, 2018 pursuant to Rule 424(b) of the Securities Act of 1933, as amended. There have been no material changes from the risk factors disclosed in our final prospectus.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On October 18, 2018, the Registration Statement on Form S-1 (File No. 333-227479) (the “Registration Statement”) relating to our initial public offering was declared effective by the SEC. Pursuant to the Registration Statement, we registered an aggregate of 25,000,000 shares of our common stock, all of which were sold by us at a price to the public of $15.00 per share. Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC acted as the representatives of the underwriters in our initial public offering. We received approximately $353.0 million in net proceeds after deducting underwriting discounts and commissions of $17.8 million and estimated offering-related expenses of approximately $4.2 million . No payments of the net proceeds were made to our directors or officers or their associates, holders of 10% or more of any class of our equity securities or any affiliates.

We used a portion of the net proceeds from the offering to repay $315.0 million in borrowings outstanding under our Second Lien Term Loan and a related voluntary prepayment fee of approximately $14.2 million concurrently with the closing of our initial public offering in October 2018. All of the remaining net proceeds are held in cash and have not been deployed. We intend to apply the remaining net proceeds to monthly interest payments under our First Lien Credit Agreement.

Issuer Purchases of Equity Securities



	Class A Common Stock			Class B Common Stock
Period	Number of Shares Purchased (1)	Average Price Paid Per Share (2)		Number of Shares Purchased (1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of a Publicly Announced Plan or Program	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plan or Program (in thousands)
July 1-31, 2018	—	$	—	16,000	$	0.27	—	$	—
August 1-31, 2018	14.85	1,179.85		126,054	3.58		—	—
September 1-30, 2018	—	—		12,000	3.54		—	—
Total	14.85			154,054			—

________________


(1)	All repurchases relate to employee held common stock and common stock-based incentive awards that are subject to repurchase in the event the stockholder ceases to be employed or engaged (as applicable) by the Company for any reason or in the event of a change of control or due to certain regulatory burdens.


(2)	Class A common stock price paid includes the $1,000 per share liquidation value plus accrued dividends.

Item 6. Exhibits

EXHIBIT INDEX



Exhibit Number		Exhibit Title
3.1		Third Amended and Restated Certificate of Incorporation as currently in effect
3.2		Amended and Restated Bylaws as currently in effect
4.1		Amended and Restated Stockholders' Agreement, dated October 18, 2018, by and among the Company and the stockholders' named therein
10.1		SolarWinds Corporation 2018 Equity Incentive Plan and forms of agreements thereunder
10.2		SolarWinds Corporation 2018 Employee Stock Purchase Plan
31.1		Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certifications of Chief Executive Officer and Chief Financial 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 Calculation Linkbase Document
101.DEF		XBRL Taxonomy Definition Linkbase Document
101.LAB		XBRL Taxonomy Label Linkbase Document
101.PRE		XBRL Taxonomy Presentation Linkbase Document

SOLARWINDS CORPORATION

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		SOLARWINDS CORPORATION

Dated:	November 27, 2018	By:	/s/ J. Barton Kalsu

			J. Barton Kalsu
			Chief Financial Officer
			(Principal Financial and Accounting Officer)

Exhibit 3.1

CERTIFICATE OF

THIRD AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

SOLARWINDS CORPORATION



*	*	*	*

Adopted in accordance with the provisions of Section 242 and 245 of the

General Corporation law of the State of Delaware



*	*	*	*

The undersigned, being an authorized officer of SolarWinds Corporation, a corporation duly organized and existing under and by virtue of the laws of the State of Delaware (the “ Corporation ”), does hereby certify as follows:

FIRST: The Corporation filed its original Certificate of Incorporation with the Delaware Secretary of State on October 14, 2015 under the name of Project Aurora Parent, Inc.

SECOND: The Board of Directors of the Corporation, pursuant to a unanimous written consent, adopted resolutions authorizing the Corporation to amend, integrate and restate the Second Amended and Restated Certificate of Incorporation, as amended, in its entirety to read as set forth in Exhibit A attached hereto and made a part hereof (the " Restated Certificate ").

THIRD: In accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware, the Restated Certificate was duly approved and adopted by the Board of Directors of the Corporation.

*************************

IN WITNESS WHEREOF , the undersigned does hereby certify under penalties of perjury that this Certificate of Third Amended and Restated Certificate of Incorporation is the act and deed of the Corporation and the facts stated herein are true and accordingly has hereunto set his hand this 23rd day of October, 2018.



SolarWinds Corporation
a Delaware corporation

By:	/s/ KEVIN THOMPSON
Name:	Kevin Thompson
Title:	President and Chief Executive Officer

THIRD AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

SOLARWINDS CORPORATION

(Pursuant to Sections 242 and 245 of the
General Corporation Law of the State of Delaware)

ARTICLE I

The name of the corporation is SolarWinds Corporation (hereinafter referred to as the “ Corporation ”).

ARTICLE II

The address of the Corporation’s registered office in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle, 19801. The name of the Corporation’s registered agent at such address is The Corporation Trust Company.

ARTICLE III

The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the Delaware General Corporation Law (the “ DGCL ”) and to possess and employ all powers and privileges now or hereafter granted or available under the laws of the State of Delaware to such corporations.

ARTICLE IV

A. The total number of shares of capital stock of all classes which the Corporation shall have authority to issue is 1,050,000,000 shares, consisting of: 1,000,000,000 shares of common stock, par value $0.001 per share (“ Common Stock ”) and 50,000,000 shares of preferred stock, par value $0.001 per share (“ Preferred Stock ”).

B. Except as otherwise restricted by this Third Amended and Restated Certificate of Incorporation (this “ Certificate ”), the Corporation is authorized to issue, from time to time, all or any portion of the capital stock of the Corporation which may have been authorized but not issued, to such person or persons and for such lawful consideration as it may deem appropriate, and generally in its absolute discretion to determine the terms and manner of any disposition of such authorized but unissued capital stock.

Any and all such shares issued for which the full consideration has been paid or delivered shall be deemed fully paid shares of capital stock, and the holder of such shares shall not be liable for any further call or assessment or any other payment thereon.

C. The designations and the powers, preferences and rights and qualifications, limitations or restrictions of the shares of each class of stock are as follows:

1. Common Stock

(a) Each holder of record of shares of Common Stock shall be entitled to one vote for each

share of Common Stock held on all matters submitted to a vote of stockholders of the Corporation on which holders of Common Stock are entitled to vote.

(b) The holders of shares of Common Stock shall not have cumulative voting rights (as defined in Section 214 of the DGCL).

(c) Subject to the rights of the holders of Preferred Stock, and subject to any other provisions of this Certificate, as it may be amended from time to time, holders of shares of Common Stock shall be entitled to receive such dividends and other distributions in cash, stock or property of the Corporation if, as and when declared thereon by the Board of Directors of the Corporation (the “ Board of Directors ”) from time to time out of assets or funds of the Corporation legally available therefor.

(d) In the event of any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, after payment or provision for the payment of the debt and liabilities of the Corporation and subject to the prior payment in full of the preferential amounts, if any, to which any series of Preferred Stock may be entitled, the holders of shares of Common Stock shall be entitled to receive the assets and funds of the Corporation remaining for distribution in proportion to the number of shares held by them, respectively.

(e) No holder of shares of Common Stock shall be entitled to preemptive or subscription rights.

2. Preferred Stock . The shares of Preferred Stock shall initially be undesignated and may be issued from time to time in one or more additional series by the Board of Directors. The Board of Directors is hereby authorized, subject to any limitations prescribed by law, to determine or alter the rights, preferences, privileges and restrictions granted to or imposed upon a wholly-unissued series of Preferred Stock, and the number of shares constituting any such series and the designation thereof, or any of them; and to increase or decrease the number of shares constituting any such series and the designation thereof, or any of them; and to increase or decrease the number of shares of any series subsequent to the issue of shares of that series, but, in respect of decreases, not below the number of shares of such series then outstanding. In case the number of shares of any series should be so decreased, the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolutions originally fixing the number of shares of such series. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the outstanding shares of Common Stock without a vote of the holders of the Preferred Stock, or of any series thereof, unless a vote of any such holders is required pursuant to the certificate or certificates establishing any series of Preferred Stock.

ARTICLE V

The Corporation is to have perpetual existence.

ARTICLE VI

The following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:

A. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. In addition to the powers and authority expressly conferred upon them by law or by this Certificate or the bylaws of the Corporation, as the same may be amended from time to time (the

“ Bylaws ”), the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation.

B. Subject to any rights of the holders of any series of Preferred Stock then outstanding or the rights granted pursuant to the Stockholders Agreement (as defined below) to elect additional directors under specified circumstances, the number of directors which shall constitute the Board of Directors shall be fixed exclusively from time to time by, (i) for so long as the Silver Lake Investors (defined herein) and Thoma Bravo Investors (defined herein) (collectively, the “ Investors ”) collectively hold, in the aggregate, at least 40% of the outstanding Common Stock of the Corporation, the Investors, or (ii) thereafter, resolution adopted by the affirmative vote of a majority of the directors then in office. “ Silver Lake Investors ” means Silver Lake Partners IV, L.P., Silver Lake Technology Investors IV, L.P., SLP Aurora Co-Invest, L.P. and their respective Affiliates (as defined in Article X ). “ Thoma Bravo Investors ” means Thoma Bravo Fund XI, L.P., Thoma Bravo Fund XI-A, L.P., Thoma Bravo Executive Fund XI, L.P., Thoma Bravo Special Opportunities Fund II, L.P., Thoma Bravo Special Opportunities Fund II-A, L.P., Thoma Bravo Fund XII, L.P., Thoma Bravo Fund XII-A, L.P., Thoma Bravo Executive Fund XII, L.P. and Thoma Bravo Executive Fund XII-A, L.P. and their respective Affiliates.

C. Beginning immediately following the consummation of the Corporation’s initial public offering of its Common Stock pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “ Initial Public Offering ”), the directors of the Corporation, other than those who may be elected by the holders of any series of Preferred Stock under specified circumstances, shall be divided into three classes, hereby designated Class I, Class II and Class III.

D. The term of office of the initial Class I directors shall expire at the first annual meeting of stockholders after the Initial Public Offering, the term of office of the initial Class II directors shall expire at the second succeeding annual meeting of stockholders after the Initial Public Offering and the term of office of the initial Class III directors shall expire at the third succeeding annual meeting of the stockholders after the Initial Public Offering. For the purposes hereof, the Board of Directors may assign directors already in office to the initial Class I, Class II and Class III at the time that the division of directors into classes becomes effective. At each annual meeting of stockholders after the Initial Public Offering, directors elected to replace those of a Class whose terms expire at such annual meeting shall be elected for a term expiring at the third succeeding annual meeting after their election and shall remain in office until their respective successors shall have been duly elected and qualified. Nothing in this Certificate shall preclude a director from serving consecutive terms. Elections of directors need not be by written ballot.

E. Subject to the rights of the holders of any series of Preferred Stock then outstanding or the rights granted pursuant to the Stockholders Agreement, dated on or about the date hereof, by and among the Corporation, the Silver Lake Investors, the Thoma Bravo Investors and certain other parties named therein (as amended, supplement, restated or otherwise modified from time to time, the “ Stockholders Agreement ”), (i) newly created directorships resulting from any increase in the authorized number of directors and (ii) any vacancies in the Board of Directors resulting from death, resignation, disqualification, removal from office or any other cause may be filled only by the Board of Directors (and not by stockholders), provided that a quorum is then in office and present, or by a majority of the directors then in office, if less than a quorum is then in office, or by the sole remaining director. A director elected to fill a vacancy shall be elected for the unexpired term of his or her predecessor in office and until his or her successor is elected and qualified, or until his or her earlier death, resignation or removal. After the Initial Public Offering, a director chosen to fill a position resulting from an increase in the number of directors shall hold office until the next election of the class for which such director shall have been chosen and until his or her successor is elected and qualified, or until his or her earlier death, resignation or removal. No decrease in the authorized number of

directors shall shorten the term of any incumbent director.

F. Subject to the rights of the holders of any series of Preferred Stock then outstanding or the rights granted pursuant to the Stockholders Agreement and notwithstanding any other provision of this Certificate, (i) prior to the first date on which the Investors and their Affiliates cease to beneficially own (directly or indirectly) in the aggregate at least 30% of the voting power of the then outstanding shares of capital stock of the Corporation then entitled to vote generally in the election of directors, directors may be removed with or without cause upon the affirmative vote of the Investors and their respective Affiliates which beneficially own shares of capital stock of the Corporation entitled to vote generally in the election of directors and (ii) on and after such date, directors may only be removed for cause (as defined below) and only upon the affirmative vote of stockholders representing at least sixty-six and two-thirds percent (66-2/3%) of the voting power of all of the then outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class. Unless the Board has made a determination that removal is in the best interests of the Corporation (in which case the following definition shall not apply), “cause” for removal of a director shall be deemed to exist only if (a) the director whose removal is proposed has been convicted of a felony by a court of competent jurisdiction and such conviction is no longer subject to direct appeal; (b) such director has been found by the affirmative vote of a majority of the directors then in office at any regular or special meeting of the Board called for that purpose, or by a court of competent jurisdiction, to have been guilty of willful misconduct in the performance of such director’s duties to the Corporation in a matter of substantial importance to the Corporation; or (c) such director has been adjudicated by a court of competent jurisdiction to be mentally incompetent, which mental incompetency directly affects such director’s ability to perform his or her obligations as a director of the Corporation. Any director may resign at any time upon written notice to the Corporation.

G. Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the Bylaws of the Corporation.

ARTICLE VII

No director shall be personally liable to the Corporation or its stockholders for monetary damages for breach of his or her fiduciary duty as a director of the Corporation, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for any acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL or (iv) for any transaction from which the director derived an improper personal benefit. If the DGCL hereafter is amended to authorize further elimination or limitation of the liability of directors, then the liability of a director of the Corporation, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the amended DGCL. Any repeal or modification of this paragraph by the stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of the Corporation existing at the time of such repeal or modification.

The Corporation shall indemnify any director or officer to the fullest extent permitted by Delaware law.

ARTICLE VIII

A. From and after the first date (the “ Trigger Date ”) on which the Investors, including through their Affiliates, cease to beneficially own (directly or indirectly), in the aggregate, at least 40% of the voting power of the then outstanding shares of capital stock of the Corporation then entitled to vote generally in

the election of directors, any action required or permitted to be taken by the Corporation’s stockholders may be effected only at a duly called annual or special meeting of the Corporation’s stockholders and the power of stockholders to consent in writing without a meeting is specifically denied. Prior to the Trigger Date, any action which is required or permitted to be taken by the Corporation’s stockholders may be taken without a meeting, without prior notice and without a vote if a consent or consents in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of the Corporation’s stock entitled to vote thereon were present and voted.

B. Subject to the rights of the holders of any series of Preferred Stock then outstanding and to the requirements of applicable law, special meetings of stockholders of the Corporation may be called only (i) by or at the direction of the Board of Directors pursuant to a written resolution adopted by the affirmative vote of the majority of the total number of directors that the Corporation would have if there were no vacancies or (ii) prior to the Trigger Date, by the Secretary of the Corporation at the request of the Investors and their Affiliates that hold shares of capital stock of the Corporation then entitled to vote generally in the election of directors in the manner provided for in the Bylaws. Any business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of the meeting.

ARTICLE IX

A. In recognition and anticipation that: (i) the principals, officers, members, managers, partners, directors, employees and/or independent contractors of the Investors may serve as directors or officers of the Corporation, (ii) members of the Investors engage and may continue to engage in the same or similar activities or related lines of business as those in which the Corporation, directly or indirectly, may engage and/or other business activities that overlay with or compete with those in which the Corporation, directly or indirectly, may engage, and (iii) that the Corporation and its Affiliate Companies (as defined below) may engage in material business transactions with the Investors, and that the Corporation is expected to benefit therefrom, the provisions of this Article IX are set forth to regulate and define the conduct of certain affairs of the Corporation as they may involve the Investors and/or their respective principals, officers, members, managers, partners, directors, employees and/or independent contractors, including any of the foregoing who serve as officers or directors of the Corporation (collectively, the “ Exempted Persons ”), and the powers, rights, duties and liabilities of the Corporation and its officers, directors, stockholders and employees in connection therewith.

B. To the fullest extent permitted by applicable law, neither the Investors nor any of their respective Exempted Persons shall have any fiduciary duty to refrain from engaging, directly or indirectly, in the same or similar business activities or lines of business as the Corporation or any of its Affiliated Companies, and no Exempted Person shall be liable to the Corporation or its stockholders for breach of any fiduciary or other duty (whether contractual or otherwise) solely by reason of any such activities of the Investors or such Exempted Person. To the fullest extent permitted by applicable law, the Corporation, on behalf of itself and its Affiliated Companies, renounces any interest or expectancy of the Corporation and its Affiliated Companies in, or in being offered an opportunity to participate in, business opportunities that are from time to time presented to any Investor or any of its Exempted Persons, even if the opportunity is one that the Corporation or its Affiliated Companies might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so, and each Exempted Person shall have no duty to communicate or offer such business opportunity to the Corporation or its Affiliated Companies and, to the fullest extent permitted by applicable law, shall not be liable to the Corporation or any of its Affiliated Companies for breach of any fiduciary or other duty (whether contractual or otherwise), as a director, officer or stockholder of the Corporation solely, by reason of the fact that any Investor or any Exempted Person

pursues or acquires such business opportunity, sells, assigns, transfers or directs such business opportunity, or information regarding such business opportunity, to the Corporation or any of its Affiliated Companies. For the avoidance of doubt, any member of the Investors and its Exempted Persons shall have the right to, and shall have no duty (whether contractual or otherwise) not to, directly or indirectly: (A) engage in the same, similar or competing business activities or lines of business as the Corporation or its Affiliated Companies, (B) do business with any client or customer of the Corporation or its Affiliated Companies, or (C) make investments in competing businesses of the Corporation or its Affiliated Companies, and such acts shall not be deemed wrongful or improper.

C. In addition to and notwithstanding the foregoing provisions of this Article IX , the Corporation renounces any interest or expectancy of the Corporation of any of its Affiliated Companies in, or in being offered an opportunity to participate in, any business opportunity that the Corporation is not financially able or contractually permitted or legally able to undertake. Moreover, nothing in this Article IX shall amend or modify in any respect any written contractual agreement between any Investor on one hand and the Corporation or any of its Affiliated Companies on the other hand.

D. For purposes of this Article IX , “ Affiliated Company ” means any company controlled by the Corporation.

E. Notwithstanding anything to the contrary elsewhere contained in this Certificate and in addition to any vote required by law: (i) the affirmative vote of the holders of at least 80% of the voting power of all shares of Common Stock then outstanding, voting together as a single class, shall be required to alter, amend or repeal, or to adopt any provision inconsistent with, this Article IX ; provided however , that neither the alteration, amendment or repeal of this Article IX nor the adoption of any provision of this Certificate inconsistent with this Article IX shall apply to or have any effect on the liability or alleged liability of any Exempted Person for or with respect to any activities or opportunities which such Exempted Person becomes aware prior to such alteration, amendment, repeal or adoption.

F. Any person or entity purchasing or otherwise acquiring or obtaining any interest in any capital stock of the Corporation shall be deemed to have notice and to have consented to the provisions of this Article IX.

G. To the extent that any provision or part of any provision of this Article IX is found to be invalid or unenforceable, such invalidity or unenforceability shall not affect the validity or enforceability of any other provision or part of any other provision of this Article IX , and this Article IX shall be construed in all respects as if such invalid or enforceable provisions or parts were omitted.

ARTICLE X

A. The Corporation hereby expressly elects not to be governed by Section 203 of the DGCL.

B. Notwithstanding any other provision in this Certificate to the contrary, the Corporation shall not engage in any Business Combination (as defined hereinafter) with any Interested Stockholder (as defined hereinafter) for a period of three years following the time that such stockholder became an Interested Stockholder, unless:


(i)	(iprior to such time the Board of Directors approved either the Business Combination or the transaction which resulted in such stockholder becoming an Interested Stockholder;

(ii)

upon consummation of the transaction which resulted in such stockholder becoming an Interested Stockholder, such stockholder owned at least 85% of the Voting Stock (as defined hereafter) of the Corporation outstanding at the time the transaction commenced, excluding for purposes of determining the Voting Stock outstanding (but not the outstanding Voting Stock owned by such Interested Stockholder) those shares owned (a) by Persons (as defined hereinafter) who are directors and also officers of the Corporation and (b) employee stock plans of the Corporation in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or


(iii)	at or subsequent to such time the Business Combination is approved by the Board of Directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least sixty-six and two-thirds percent (66-2/3%) of the outstanding Voting Stock which is not owned by such Interested Stockholder.

C. The restrictions contained in this Article X shall not apply if:

(i)

a stockholder becomes an Interested Stockholder inadvertently and (i) as soon as practicable divests itself of ownership of sufficient shares so that the stockholder ceases to be an Interested Stockholder; and (ii) would not, at any time within the three‑year period immediately prior to a Business Combination between the Corporation and such stockholder, have been an Interested Stockholder but for the inadvertent acquisition of ownership; or

(ii)

the Business Combination is proposed prior to the consummation or abandonment of and subsequent to the earlier of the public announcement or the notice required hereunder of a proposed transaction which (a) constitutes one of the transactions described in the second sentence of this Section C(ii) of this Article X ; (b) is with or by a Person who either was not an Interested Stockholder during the previous three years or who became an Interested Stockholder with the approval of the Board of Directors; and (c) is approved or not opposed by a majority of the directors then in office (but not less than one) who were directors prior to any Person becoming an Interested Stockholder during the previous three years or were recommended for election or elected to succeed such directors by a majority of such directors. The proposed transactions referred to in the preceding sentence are limited to (x) a merger or consolidation of the Corporation (except for a merger in respect of which, pursuant to Section 251(f) of the DGCL, no vote of the stockholders of the Corporation is required); (y) a sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority‑owned subsidiary of the Corporation (other than to any direct or indirect wholly‑owned subsidiary or to the Corporation) having an aggregate market value equal to 50% or more of either that aggregate market value of all of the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding Stock (as defined hereinafter) of the Corporation; or (z) a proposed tender or exchange offer for 50% or more of the outstanding Voting Stock of the Corporation. The Corporation shall give not less than 20 days’ notice to all Interested Stockholders prior to the consummation of any of the transactions described in

clause (x) or (y) of the second sentence of this Section C(ii) of this Article X .

D. As used in this Article X only, and unless otherwise provided by the express terms of this Article X , the following terms shall have the meanings ascribed to them as set forth in this Section D of this Article X :


(i)	“ Affiliate ” means a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another Person.

(ii)

“ Associate ,” when used to indicate a relationship with any Person, means (a) any corporation, partnership, unincorporated association or other entity of which such Person is a director, officer or partner, or is, directly or indirectly, the owner of 20% or more of any class of Voting Stock; (b) any trust or other estate in which such Person has at least a 20% beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity; and (c) any relative or spouse of such Person, or any relative of such spouse, who has the same residence as such Person.


(iii)	“ Business Combination ” means:

(a)

any merger or consolidation of the Corporation (other than pursuant to Section 251(g), Section 253 or Section 267 of the DGCL) or any direct or indirect majority‑owned subsidiary of the Corporation with (A) the Interested Stockholder, or (B) with any Person if the merger or consolidation is caused by the Interested Stockholder and as a result of such merger or consolidation Section B of this Article X is not applicable to the surviving entity.

(b)

any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except proportionately as a stockholder of the Corporation, to or with the Interested Stockholder, whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority‑owned subsidiary of the Corporation which assets have an aggregate market value equal to 10% or more of either the aggregate market value of all the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding Stock of the Corporation.

(c)

any transaction or series of transactions which results in the issuance or transfer by the Corporation or by any direct or indirect majority‑owned subsidiary of the Corporation of 10% or more of any class or series of Stock of the Corporation or of such subsidiary to the Interested Stockholder, except: (A) pursuant to the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into Stock of the Corporation or any such subsidiary which securities were outstanding prior to the time that the Interested Stockholder became such; (B) pursuant to a merger under Section 251(g) or Section 253 or Section 267 of the DGCL; (C) pursuant to a dividend or distribution paid or made, or the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into Stock of the Corporation or any such subsidiary which

security is distributed, pro rata to all holders of a class or series of Stock of the Corporation subsequent to the time the Interested Stockholder became such; or (D) pursuant to an exchange offer by the Corporation to purchase Stock made on the same terms to all holders of such Stock.

(iv)

“ Control ,” including the terms “controlling,” “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of stock or other equity interests, by contract or otherwise. A Person who is the owner of 20% or more of the outstanding Voting Stock of any corporation, partnership, unincorporated association or other entity shall be presumed to have control of such entity, in the absence of proof by a preponderance of the evidence to the contrary; notwithstanding the foregoing, a presumption of control shall not apply where such Person holds Voting Stock, in good faith and not for the purpose of circumventing this Article X , as an agent, bank, broker, nominee, custodian or trustee for one or more owners who do not individually or as a group have control of such entity;

(v)

“ Interested Stockholder ” means any Person (other than the Corporation and any direct or indirect majority‑owned subsidiary of the Corporation) that (i) is the owner of 15% or more of the outstanding Voting Stock of the Corporation, or (ii) is an Affiliate or Associate of the Corporation and was the owner of 15% or more of the outstanding Voting Stock of the Corporation at any time within the three‑year period immediately prior to the date on which it is sought to be determined whether such Person is an Interested Stockholder, and the Affiliates and Associates of such Person. Notwithstanding anything in this Article X to the contrary, the term “ Interested Stockholder ” shall not include: (x) the Investors or any of their Affiliates or Associates, including any investment funds managed by the Investors, or any other Person with whom any of the foregoing are acting as a group or in concert for the purpose of acquiring, holding, voting or disposing of shares of Stock of the Corporation; (y) any Person who would otherwise be an Interested Stockholder because of a transfer, sale, assignment, conveyance, hypothecation, encumbrance, or other disposition of 5% or more of the outstanding Voting Stock of the Corporation (in one transaction or a series of transactions) by any party specified in the immediately preceding clause (x) to such Person; provided, however , that such Person was not an Interested Stockholder prior to such transfer, sale, assignment, conveyance, hypothecation, encumbrance, or other disposition; or (z) any Person whose ownership of shares in excess of the 15% limitation set forth herein is the result of action taken solely by the Corporation, provided that , for purposes of this clause (z), such Person shall be an Interested Stockholder if thereafter such Person acquires additional shares of Voting Stock of the Corporation, except as a result of further action by the Corporation not caused, directly or indirectly, by such Person;

(vi)

“ Owner ,” including the terms “ own ” and “ owned ,” when used with respect to any Stock, means a Person that individually or with or through any of its affiliates or associates beneficially owns such Stock, directly or indirectly; or has (A) the right to acquire such Stock (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options, or

otherwise; provided, however, that a Person shall not be deemed the owner of Stock tendered pursuant to a tender or exchange offer made by such Person or any of such Person’s Affiliates or Associates until such tendered Stock is accepted for purchase or exchange; or (B) the right to vote such Stock pursuant to any agreement, arrangement or understanding; provided, however, that a Person shall not be deemed the owner of any Stock because of such Person’s right to vote such Stock if the agreement, arrangement or understanding to vote such Stock arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to 10 or more Persons; or has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in (B) of this Section D(v) of Article X ), or disposing of such Stock with any other Person that beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, such Stock; provided, that, for the purpose of determining whether a Person is an Interested Stockholder, the Voting Stock of the Corporation deemed to be outstanding shall include Stock deemed to be owned by the Person through application of this definition of “owned” but shall not include any other unissued Stock of the Corporation which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise;


(vii)	“ Person ” means any individual, corporation, partnership, unincorporated association or other entity;


(viii)	“ Stock ” means, with respect to any corporation, capital stock and, with respect to any other entity, any equity interest;

(ix)

“ Voting Stock ” means, with respect to any corporation, Stock of any class or series entitled to vote generally in the election of directors and, with respect to any entity that is not a corporation, any equity interest entitled to vote generally in the election of the governing body of such entity. Every reference to a percentage of Voting Stock shall refer to such percentage of the votes of such Voting Stock.

ARTICLE XI

The Board of Directors is expressly empowered to adopt, amend or repeal the Bylaws after the Trigger Date. Any adoption, amendment or repeal of the Bylaws by the Board of Directors shall require the approval of a majority of the total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any resolution providing for adoption, amendment or repeal is presented to the Board of Directors). The stockholders shall also have power to adopt, amend or repeal the Bylaws. Subject to the rights of the holders of any series of Preferred Stock then outstanding, (i) prior to the Trigger Date, any adoption, amendment or repeal of Bylaws shall be made solely by the affirmative vote of the holders of at least a majority in voting power of all the then outstanding shares of stock of the Corporation entitled to vote thereon, voting together as a single class, and (ii) after the Trigger Date, any adoption, amendment or repeal of Bylaws by the stockholders shall require, in addition to any vote of the holders of any class or series of stock of the Corporation required by law or by this Certificate, the affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of all of the then outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class.

ARTICLE XII

Notwithstanding anything contained in this Certificate or the Bylaws to the contrary, and notwithstanding the fact that a lesser percentage or separate class vote may be specified by law or otherwise, but in addition to any affirmative vote of the holders of any particular class or series of the capital stock required by law or otherwise, (i) prior to the Trigger Date this Certificate may be amended, altered, repealed or rescinded, in whole or in part, or any provision inconsistent therewith or herewith may be adopted, only by the affirmative vote of the holders of at least a majority in voting power of all the then outstanding shares of stock of the Corporation entitled to vote thereon, voting together as a single class, and (ii) after the Trigger Date the following provisions in this Certificate may be amended, altered, repealed or rescinded, in whole or in part, or any provision inconsistent therewith or herewith may be adopted, only by the affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of all the then outstanding shares of stock of the Corporation entitled to vote thereon, voting together as a single class, at a meeting of the Corporation’s stockholders called for that purpose: Article VI, Article VII, Article VIII, Article IX and Article X, Article XI and this Article XII.

ARTICLE XIII

If any provision of this Certificate becomes or is declared on any ground by a court of competent jurisdiction to be illegal, unenforceable or void, portions of such provision, or such provision in its entirety, to the extent necessary, shall be severed from this Certificate, and the court will replace such illegal, void or unenforceable provision of this Certificate with a valid and enforceable provision that most accurately reflects the Corporation’s intent, in order to achieve, to the maximum extent possible, the same economic, business and other purposes of the illegal, void or unenforceable provision. The balance of this Certificate shall be enforceable in accordance with its terms.

ARTICLE XIV

Unless the Corporation consents in writing otherwise, to the fullest extent permitted by law, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, employee or stockholder (including a beneficial owner) of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation, its directors, officers, employees or stockholders (including beneficial owners) arising pursuant to any provision of the DGCL, this Certificate or the Bylaws, or (iv) any action asserting a claim against the Corporation, its directors, officers, employees or stockholders (including beneficial owners) governed by the internal affairs doctrine.

Exhibit 3.2

AMENDED AND RESTATED BYLAWS

SOLARWINDS CORPORATION

Adopted effective as of October 23, 2018

ARTICLE I

1.1 Registered Office . The corporation may have an office or offices other than its registered office at such place or places, either within or outside the State of Delaware, as the Board of Directors of the corporation (the “ Board ”) may from time to time determine or the business of the corporation may require.

ARTICLE II

STOCKHOLDERS

2.1 Place of Meetings . All meetings of stockholders shall be held at such place (if any) within or without the State of Delaware as may be determined from time to time by the Board of Directors or, if not determined by the Board of Directors, by the Chairman of the Board, the President or the Chief Executive Officer; provided that the Board of Directors may, in its sole discretion, determine that any meeting of stockholders shall not be held at any place but shall be held solely by means of remote communication in accordance with Section 2.13.

2.2 Annual Meeting . The annual meeting of stockholders for the election of directors and for the transaction of such other business as may properly be brought before the meeting shall be held on a date to be fixed by the Board at a time to be fixed by the Board and stated in the notice of the meeting.

2.3 Special Meetings . Subject to the corporation’s certificate of incorporation as then in effect (as the same may be amended, supplemented, restated or otherwise modified from time to time, the “ Certificate of Incorporation ”), the Stockholders Agreement (as defined in the Certificate of Incorporation), the rights of the holders of any series of preferred stock then outstanding and to the requirements of applicable law, special meetings of stockholders of the corporation may be called only (i) by or at the direction of the Board pursuant to a written resolution adopted by the affirmative vote of the majority of the total number of directors that the corporation would have if there were no vacancies or (ii) prior to the Trigger Date (as defined in the Certificate of Incorporation), by the Secretary of the corporation at the request of the Investors (as defined in the Certificate of Incorporation) holding shares of capital stock of the corporation then entitled to vote generally in the election of directors. Any business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of the meeting.

2.4 Notice of Meetings .

(a) Written notice of each meeting of stockholders, whether annual or special, shall be given not less than 10 nor more than 60 days before the date on which the meeting is to be held, to each stockholder entitled to vote at such meeting as of the record date fixed by the Board for determining the stockholders entitled to notice of the meeting, except as otherwise provided herein or as required by law (meaning here and hereafter, as required from time to time by the Delaware General Corporation Law (the “ DGCL ”) or the Certificate of Incorporation. The notice of any meeting shall state the place, if any, date

and hour of the meeting, and the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting. The notice of a special meeting shall state, in addition, the purpose or purposes for which the meeting is called.

(b) Notice to stockholders shall be delivered in writing or in any other manner permitted by the DGCL. If mailed, such notice shall be delivered by postage prepaid envelope directed to each stockholder at such stockholder’s address as it appears in the records of the corporation and shall be deemed given when deposited in the United States mail. Notice given by electronic transmission pursuant to this subsection shall be deemed given: (1) if by facsimile telecommunication, when directed to a facsimile telecommunication number at which the stockholder has consented to receive notice; (2) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice; (3) if by posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and (4) if by any other form of electronic transmission, when directed to the stockholder. An affidavit of the secretary or an assistant secretary or of the transfer agent or other agent of the corporation that the notice has been given by personal delivery, by mail, or by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

(c) Notice of any meeting of stockholders need not be given to any stockholder if waived by such stockholder either in a writing signed by such stockholder or by electronic transmission, whether such waiver is given before or after such meeting is held. If such a waiver is given by electronic transmission, the electronic transmission must either set forth or be submitted with information from which it can be determined that the electronic transmission was authorized by the stockholder.

2.5 Voting List . The officer who has charge of the stock ledger of the corporation shall prepare, at least 10 days before each meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting; the list shall reflect the stockholders entitled to vote as of the tenth day before the meeting date, arranged in alphabetical order for each class of stock and showing the mailing address of each stockholder and the number of shares registered in the name of each stockholder. The corporation shall not be required to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, for a period of at least 10 days prior to the meeting: (a) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, (b) during ordinary business hours at the principal place of business of the corporation or (c) in any other manner provided by law. If the meeting is to be held at a place, the list shall be produced and kept at the time and place of the meeting during the whole time of the meeting, and may be examined by any stockholder who is present. If the meeting is to be held solely by means of remote communication, such list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. The stock ledger shall be the only evidence as to the stockholders who are entitled to examine the list required by this Section 2.5 or to vote in person or by proxy at any meeting of stockholders.

2.6 Quorum . Except as otherwise provided by law or these Bylaws, the holders of a majority of the shares of the capital stock of the corporation entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum for the transaction of business. Where a separate class vote by a class or classes or series is required, a majority of the shares of such class or classes or series present in person or represented by proxy shall constitute a quorum entitled to take action with respect to that vote on that matter.

2.7 Adjournments . Any meeting of stockholders may be adjourned to any other time and to any other place at which a meeting of stockholders may be held under these Bylaws by the chairman of the meeting or, in the absence of such person, by any officer entitled to preside at or to act as secretary of such meeting, or by the holders of a majority of the shares of stock present or represented at the meeting and entitled to vote, although less than a quorum. When a meeting is adjourned to another place, date or time, written notice need not be given of the adjourned meeting if the date, time and place, if any, thereof, and the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting, are announced at the meeting at which the adjournment is taken; provided, however, that if the date of any adjourned meeting is more than 30 days after the date for which the meeting was originally noticed, or if the Board fixes a new record date for determining the stockholders entitled to vote at the adjourned meeting in accordance with Section 5.5, written notice of the place, if any, date and time of the adjourned meeting and the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting, shall be given in conformity herewith. At the adjourned meeting, the corporation may transact any business which might have been transacted at the original meeting.

2.8 Voting and Proxies . Each stockholder shall have one vote for each share of stock entitled to vote held of record by such stockholder and a proportionate vote for each fractional share so held, unless otherwise provided by law or in the Certificate of Incorporation. Each stockholder of record entitled to vote at a meeting of stockholders may vote in person or may authorize any other person or persons to vote or act for such stockholder by a written proxy executed by the stockholder or the stockholder’s authorized agent or by an electronic transmission permitted by law and delivered to the Secretary of the corporation. Any copy, facsimile transmission or other reliable reproduction of the writing or electronic transmission created pursuant to this section may be substituted or used in lieu of the original writing or electronic transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile transmission or other reproduction shall be a complete reproduction of the entire original writing or electronic transmission.

2.9 Action at Meeting .

(a) At any meeting of stockholders for the election of one or more directors at which a quorum is present, the election shall be determined by a plurality of the votes cast by the stockholders entitled to vote at the election.

(b) All other matters shall be determined by a majority in voting power of the shares present in person or represented by proxy and entitled to vote on the matter (or if there are two or more classes of stock entitled to vote as separate classes, then in the case of each such class, a majority of the shares of each such class present in person or represented by proxy and entitled to vote on the matter shall decide such matter), provided that a quorum is present, except when a different vote is required by express provision of law, the Certificate of Incorporation or these Bylaws.

(c) All voting, including on the election of directors, but excepting where otherwise required by law, may be by a voice vote; provided, that upon demand therefor by a stockholder entitled to vote or the stockholder’s proxy, a vote by ballot shall be taken. Each ballot shall state the name of the stockholder or proxy voting and such other information as may be required under the procedure established for the meeting. The corporation may, and to the extent required by law, shall, in advance of any meeting of stockholders, appoint one or more inspectors to act at the meeting and make a written report thereof. The corporation may designate one or more persons as an alternate inspector to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the person presiding

at the meeting may, and to the extent required by law, shall, appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath to faithfully execute the duties of inspector with strict impartiality and according to the best of his ability.

2.10 Stockholder Business (Other Than the Election of Directors) .

(a) Only such business (other than nominations for election of directors, which is governed by Section 3.16 of these Bylaws) shall be conducted as shall have been properly brought before an annual meeting. To be properly brought before an annual meeting, business must be either (i) brought in accordance with the Stockholders Agreement, (ii) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board, (iii) otherwise properly brought before the meeting by or at the direction of the Board, or (iv) otherwise properly brought before the meeting by a stockholder who (A) is a stockholder of record (and, with respect to any beneficial owner, if different, on whose behalf such business is proposed, only if such beneficial owner is the beneficial owner of shares of the corporation) both at the time of giving the notice provided for in this Section 2.10 and at the time of the meeting, (B) is entitled to vote at the meeting and (C) has complied with the notice procedures set forth in this Section 2.10 as to such business. For any business to be properly brought before an annual meeting by a stockholder (other than nominations for election of directors, which is governed by Section 3.16 of these Bylaws), it must be a proper matter for stockholder action under the DGCL, and the stockholder must have given timely notice thereof in writing to the Secretary of the corporation. To be timely, a stockholder’s notice shall be in writing and must be received at the corporation’s principal executive offices not later than 90 days nor earlier than 120 days prior to the first anniversary of the date of the preceding year’s annual meeting as first specified in the corporation’s notice of meeting (without regard to any postponements or adjournments of such meeting after such notice was first sent), provided, however, that if no annual meeting was held in the previous year or the date of the annual meeting is advanced by more than thirty (30) days, or delayed (other than as a result of adjournment) by more than thirty (30) days from the anniversary of the previous year’s annual meeting, notice by the stockholder to be timely must be received not later than the close of business on the later of the ninetieth (90 ^th ) day prior to such annual meeting or the tenth (10 ^th ) day following the date on which public announcement of the date of such meeting is first made. “ Public announcement ” for purposes hereof shall have the meaning set forth in Section 3.16(c) of these Bylaws. In no event shall the public announcement of an adjournment or postponement of an annual meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. For business to be properly brought before a special meeting by a stockholder, the business must be limited to the purpose or purposes set forth in a request under Section 2.3.

(b) A stockholder’s notice to the Secretary of the corporation shall set forth (i) as to each matter the stockholder proposes to bring before the annual meeting, a brief description of the business desired to be brought before the annual meeting and the text of the proposal or business, including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the Bylaws of the corporation, the language of the proposed amendment, and (ii) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the proposal is being made, and any of their respective affiliates or associates (each within the meaning of Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”)) or others acting in concert therewith (each, a “ Proposing Person ”), (A) the name and address, as they appear on the corporation’s books, of the stockholder proposing such business and of any other Proposing Person, (B) the class or series and number of shares of the corporation which are owned beneficially and of record by the stockholder and any other Proposing Person as of the date of the notice, and a representation that the stockholder will notify the corporation in writing within five (5) business days after the record date for voting at the meeting of the class or series and number of shares of the corporation owned beneficially and of record by the stockholder and any other

Proposing Person as of the record date for voting at the meeting, (C) a representation that the stockholder intends to appear in person or by proxy at the meeting to propose the business specified in the notice, (D) any material interest of the stockholder and any other Proposing Person in such business, (E) the following information regarding the ownership interests of the stockholder and any other Proposing Person which shall be supplemented in writing by the stockholder not later than ten (10) days after the record date for voting at the meeting to disclose such interests as of such record date: (1) a description of any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the corporation or with a value derived in whole or in part from the value of any class or series of shares of the corporation, any derivative or synthetic arrangement having the characteristics of a long position in any class or series of shares of the corporation, or any contract, derivative, swap or other transaction or series of transactions designed to produce economic benefits and risks that correspond substantially to the ownership of any class or series of shares of the corporation, including due to the fact that the value of such contract, derivative, swap or other transaction or series of transactions is determined by reference to the price, value or volatility of any class or series of shares of the corporation, whether or not such instrument, contract or right shall be subject to settlement in the underlying class or series of shares of the corporation, through the delivery of cash or other property, or otherwise, and without regard to whether the stockholder of record or any other Proposing Person may have entered into transactions that hedge or mitigate the economic effect of such instrument, contract or right (a “ Derivative Instrument ”) directly or indirectly owned beneficially by such stockholder or other Proposing Person, and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the corporation; (2) a description of any proxy, contract, arrangement, understanding, or relationship pursuant to which such stockholder or other Proposing Person has a right to vote any shares of any security of the corporation; (3) a description of any agreement, arrangement, understanding, relationship or otherwise, including any repurchase or similar so-called “stock borrowing” agreement or arrangement, engaged in, directly or indirectly, by such stockholder or other Proposing Person, the purpose or effect of which is to mitigate loss to, reduce the economic risk (of ownership or otherwise) of any class or series of the shares of the corporation by, manage the risk of share price changes for, or increase or decrease the voting power of, such stockholder or other Proposing Person with respect to any class or series of the shares of the corporation, or which provides, directly or indirectly, the opportunity to profit or share in any profit derived from any decrease in the price or value of any class or series of the shares of the corporation (“ Short Interests ”); (4) a description of any rights to dividends on the shares of the corporation owned beneficially by such stockholder or other Proposing Person that are separated or separable from the underlying shares of the corporation; (5) a description of any proportionate interest in shares of the corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such stockholder or other Proposing Person is a general partner or, directly or indirectly, beneficially owns an interest in a general partner; (6) a description of any performance-related fees (other than an asset-based fee) to which such stockholder or other Proposing Person is entitled based on any increase or decrease in the value of shares of the corporation or Derivative Instruments, if any, as of the date of such notice, including, without limitation, any such interests held by members of such stockholder’s or other Proposing Person’s immediate family sharing the same household; (7) a description of any significant equity interests or any Derivative Instruments or Short Interests in any principal competitor of the corporation held by such stockholder or other Proposing Person; and (8) a description of any direct or indirect interest of such stockholder or other Proposing Person in any contract with the corporation, any affiliate of the corporation or any principal competitor of the corporation (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement), and (F) any other information relating to such stockholder or other Proposing Person, if any, that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder.

(c) Unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual meeting of stockholders to present the proposed business, such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the corporation. For purposes of this section, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or authorized by a writing executed by such stockholder (or a reliable reproduction or electronic transmission of the writing) delivered to the corporation prior to the making of such proposal at such meeting by such stockholder stating that such person is authorized to act for such stockholder as proxy at the meeting of stockholders.

(d) Notwithstanding the foregoing provisions of this Section 2.10, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 2.10; provided however , that any references in this Section 2.10 to the Exchange Act or the rules and regulations promulgated thereunder are not intended to and shall not limit any requirements applicable to proposals as to any business to be considered pursuant to this Section 2.10. Nothing in this Section 2.10 shall be deemed to affect any rights (i) of stockholders to request inclusion of proposals in the corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders of any series of preferred stock if and to the extent provided for under law, the Certificate of Incorporation or these Bylaws.

(e) Notwithstanding any provisions to the contrary, the notice requirements set forth in subsections (a) and (b) above shall be deemed satisfied by a stockholder if the stockholder has notified the corporation of the stockholder’s intention to present a proposal at an annual meeting in compliance with applicable rules and regulations promulgated under the Exchange Act and such stockholder’s proposal has been included in a proxy statement that has been prepared by the corporation to solicit proxies for such annual meeting.

2.11 Conduct of Business . At every meeting of the stockholders, the Chairman of the Board, or, in his absence, the Chief Executive Officer, or, in his absence, such other person as may be appointed by the Board, shall act as chairman. The Secretary of the corporation or a person designated by the chairman of the meeting shall act as secretary of the meeting. Unless otherwise approved by the chairman of the meeting, attendance at the stockholders’ meeting is restricted to stockholders of record, persons authorized in accordance with Section 2.8 of these Bylaws to act by proxy, and officers of the corporation.

The chairman of the meeting shall call the meeting to order, establish the agenda, and conduct the business of the meeting in accordance therewith or, at the chairman’s discretion, the business of the meeting may be conducted otherwise in accordance with the wishes of the stockholders in attendance. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at the meeting shall be announced at the meeting.

The chairman shall also conduct the meeting in an orderly manner, rule on the precedence of, and procedure on, motions and other procedural matters, and exercise discretion with respect to such procedural matters with fairness and good faith toward all those entitled to take part. Without limiting the foregoing, the chairman may (a) restrict attendance at any time to bona fide stockholders of record and their proxies and other persons in attendance at the invitation of the presiding officer or Board, (b) restrict use of audio or video recording devices at the meeting, and (c) impose reasonable limits on the amount of time taken up at the meeting on discussion in general or on remarks by any one stockholder. Should any person in attendance become unruly or obstruct the meeting proceedings, the chairman shall have the power to have such person removed from the meeting. Notwithstanding anything in the Bylaws to the contrary, no business shall be

conducted at a meeting except in accordance with the procedures set forth in Section 2.10, this Section 2.11 and Section 3.12. The chairman of the meeting, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the provisions of Section 2.10, this Section 2.11 and Section 3.12, and if he should so determine that any proposed nomination or business is not in compliance with such sections, he shall so declare to the meeting that such defective nomination or proposal shall be disregarded.

2.12 Stockholder Action Without Meeting . Any action required or permitted to be taken at any annual or special meeting of stockholders of the Corporation may be taken without a meeting, without prior notice and without a vote only to the extent permitted by and in the manner provided in the Certificate of Incorporation and in accordance with applicable law.

2.13 Meetings by Remote Communication . If authorized by the Board, and subject to such guidelines and procedures as the Board may adopt, stockholders and proxy holders not physically present at a meeting of stockholders may, by means of remote communication, participate in the meeting and be deemed present in person and vote at the meeting, whether such meeting is to be held at a designated place or solely by means of remote communication, provided that (a) the corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxy holder, (b) the corporation shall implement reasonable measures to provide such stockholders and proxy holders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings, and (c) if any stockholder or proxy holder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the corporation.

ARTICLE III

BOARD OF DIRECTORS

3.1 General Powers . The business and affairs of the corporation shall be managed by or under the direction of a Board, who may exercise all of the powers of the corporation except as otherwise provided by law or the Certificate of Incorporation. In the event of a vacancy on the Board, the remaining directors, except as otherwise provided by law, may exercise the powers of the full Board until the vacancy is filled.

3.2 Election . Subject to the rights of the holders of any series of preferred stock to elect directors under specified circumstances, the Certificate of Incorporation and the Stockholders Agreement, members of the Board shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote in the election of directors; provided that , whenever the holders of any class or series of capital stock of the corporation are entitled to elect one or more directors pursuant to the provisions of the Certificate of Incorporation (including, but not limited to, any duly authorized certificate of designation), such directors shall be elected by a plurality of the votes of such class or series present in person or represented by proxy at the meeting and entitled to vote in the election of such directors. Elections of directors need not be by written ballot.

3.3 Number and Term . Subject to the rights of the holders of any series of preferred stock to elect directors under specified circumstances, the Certificate of Incorporation and the Stockholders Agreement , the number of directors shall initially be ten (10) and, thereafter, shall be fixed from time to time exclusively by the Board pursuant to a resolution adopted by a majority of the total number of authorized directors

(whether or not there exist any vacancies in previously authorized directorships at the time any such resolution is presented to the Board for adoption).

3.4 Resignations . Any director may resign at any time upon notice given in writing or by electronic transmission to the Board, the Chairman of the Board, the Chief Executive Officer of the corporation or the Secretary. The resignation shall take effect at the time specified therein, and if no time is specified, at the time of its receipt. The acceptance of a resignation shall not be necessary to make it effective unless otherwise expressly provided in the resignation.

3.5 Removal . Subject to the rights of the holders of any series of preferred stock to elect directors under specified circumstances, the Certificate of Incorporation and the Stockholders Agreement, directors, or the entire Board, may only be removed for cause and only upon the affirmative vote of stockholders representing at least sixty-six and two-thirds percent (66-2/3%) of the voting power of all of the then outstanding shares of the capital stock of the corporation entitled to vote generally in the election of directors, voting together as a single class. Any director may resign at any time upon written notice to the corporation.

3.6 Vacancies and Newly Created Directorships . Except as otherwise provided by applicable law, vacancies occurring in any directorship (whether by death, resignation, retirement, disqualification, removal or other cause) and newly created directorships resulting from any increase in the number of directors shall be filled in accordance with the Certificate of Incorporation and the Stockholders Agreement. Any director elected to fill a vacancy or newly created directorship shall hold office until the next election of the class for which such director shall have been chosen and until his or her successor shall be elected and qualified, or until his or her earlier death, resignation, retirement, disqualification or removal.

3.7 Regular Meetings . Regular meetings of the Board may be held without notice at such time and place, either within or without the State of Delaware, as shall be determined from time to time by the Board; provided that any director who is absent when such a determination is made shall be given notice of the determination. A regular meeting of the Board may be held without notice immediately after and at the same place as the annual meeting of stockholders.

3.8 Special Meetings . Special meetings of the Board may be called by the Chairman of the Board, the Chief Executive Officer, the President or two or more directors and may be held at any time and place, within or without the State of Delaware.

3.9 Notice of Special Meetings . Notice of any special meeting of directors shall be given to each director by whom it is not waived by the Secretary or by the officer or one of the directors calling the meeting. Notice shall be duly given to each director by (a) giving notice to such director in person or by telephone, electronic transmission or voice message system at least 24 hours in advance of the meeting, (b) sending a facsimile to his last known facsimile number, or delivering written notice by hand to his last known business or home address, at least 24 hours in advance of the meeting, or (c) mailing written notice to his last known business or home address at least three days in advance of the meeting. A notice or waiver of notice of a meeting of the Board need not specify the purposes of the meeting. Unless otherwise indicated in the notice thereof, any and all business may be transacted at a special meeting.

3.10 Participation in Meetings by Telephone Conference Calls or Other Methods of Communication . Directors or any members of any committee designated by the directors may participate in a meeting of the Board or such committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation by such means shall constitute presence in person at such meeting.

3.11 Quorum; Adjournment . A majority of the total number of authorized directors shall constitute a quorum at any meeting of the Board. In the absence of a quorum at any such meeting, a majority of the directors present may adjourn the meeting from time to time without further notice other than announcement at the meeting, until a quorum shall be present. Interested directors may be counted in determining the presence of a quorum at a meeting of the Board or at a meeting of a committee which authorizes a particular contract or transaction.

3.12 Action at Meeting . At any meeting of the Board at which a quorum is present, the vote of a majority of those present shall be sufficient to take any action, unless a different vote is specified by law, the Certificate of Incorporation or these Bylaws.

3.13 Action by Written Consent . Any action required or permitted to be taken at any meeting of the Board or of any committee of the Board may be taken without a meeting if all members of the Board or committee, as the case may be, consent to the action in writing or by electronic transmission, and the writings or electronic transmissions are filed with the minutes of proceedings of the Board or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

3.14 Committees . The Board may designate one or more committees, each committee to consist of one or more of the directors of the corporation in accordance with the Stockholder Agreement, with such lawfully delegated powers and duties as it therefor confers; provided that, the committee membership of each committee designated by the Board will comply with the applicable rules of the exchange on which any securities of the corporation are listed. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members of the committee present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board and subject to the provisions of the DGCL, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the corporation and may authorize the seal of the corporation to be affixed to all papers which may require it. Each such committee shall keep minutes and make such reports as the Board may from time to time request. Except as the Board may otherwise determine, any committee may make rules for the conduct of its business, but unless otherwise provided by such rules, its business shall be conducted as nearly as possible in the same manner as is provided in these Bylaws for the Board. Unless otherwise provided in the Certificate of Incorporation, these Bylaws or the resolutions of the Board designating the committee, a committee may create one or more subcommittees, each subcommittee consists of one or more members of the committee, and delegate to a subcommittee any or all of the powers and authority of the committee.

3.15 Compensation of Directors . Directors may be paid such compensation for their services and such reimbursement for expenses of attendance at meetings as the Board may from time to time determine. No such payment shall preclude any director from serving the corporation or any of its parent or subsidiary corporations in any other capacity and receiving compensation for such service.

3.16 Nomination of Director Candidates . Subject to the rights of holders of any class or series of preferred stock then outstanding, nominations for the election of directors at an annual meeting may be made (i) as provided in the Stockholders Agreement, (ii) by the Board or a duly authorized committee thereof or (iii) by any stockholder of the corporation who is a stockholder of record at the time of giving the notice

provided for in paragraphs (b) and (c) of this Section 3.16, who is entitled to vote at the meeting and who complies with the procedures set forth in this Section 3.16.

(a) All nominations by stockholders must be made pursuant to timely notice given in writing to the Secretary of the corporation. To be timely, a stockholder’s nomination for a director to be elected at an annual meeting must be received at the corporation’s principal executive offices not later than 90 days nor earlier than 120 days prior to the first anniversary of the date of the preceding year’s annual meeting as first specified in the corporation’s notice of meeting (without regard to any postponements or adjournments of such meeting after such notice was first sent), provided, however, that if no annual meeting was held in the previous year or the date of the annual meeting is advanced by more than thirty (30) days or delayed (other than as a result of adjournment) by more than thirty (30) days from the first anniversary of the previous year’s annual meeting, notice by the stockholder to be timely must be received not later than the close of business on the later of the ninetieth (90 ^th ) day prior to such annual meeting or the tenth (10 ^th ) day following the date on which public announcement of the date of such meeting is first made. Each such notice shall set forth (i) as to the stockholder and the beneficial owner, if any, on whose behalf the nomination is being made, and any of their respective affiliates or associates or others acting in concert therewith (each, a “ Nominating Person ”), the name and address, as they appear on the corporation’s books, of the stockholder who intends to make the nomination and of any other Nominating Person, (ii) the class or series and number of shares of the corporation which are owned beneficially and of record by the stockholder and any other Nominating Person as of the date of the notice, and a representation that the stockholder will notify the corporation in writing within five (5) business days after the record date for voting at the meeting of the class or series and number of shares of the corporation owned beneficially and of record by the stockholder and any other Nominating Person as of the record date for voting at the meeting, (iii) a representation that the stockholder intends to appear in person or by proxy at the meeting to nominate the nominee specified in the notice, (iv) the following information regarding the ownership interests of the stockholder and any other Nominating Person, which shall be supplemented in writing by the stockholder not later than ten (10) days after the record date for notice of the meeting to disclose such interests as of such record date: (A) a description of any Derivative Instrument directly or indirectly owned beneficially by such stockholder or other Nominating Person, and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the corporation; (B) a description of any proxy, contract, arrangement, understanding, or relationship pursuant to which such stockholder or other Nominating Person has a right to vote any shares of any security of the corporation; (C) a description of any Short Interests in any securities of the corporation directly or indirectly owned beneficially by such stockholder or other Nominating Person; (D) a description of any rights to dividends on the shares of the corporation owned beneficially by such stockholder or other Nominating Person that are separated or separable from the underlying shares of the corporation; (E) a description of any proportionate interest in shares of the corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such stockholder or other Nominating Person is a general partner or, directly or indirectly, beneficially owns an interest in a general partner; (F) a description of any performance-related fees (other than an asset-based fee) to which such stockholder or other Nominating Person is entitled based on any increase or decrease in the value of shares of the corporation or Derivative Instruments, if any, as of the date of such notice, including, without limitation, any such interests held by members of such stockholder’s or other Nominating Person’s immediate family sharing the same household; (G) a description of any significant equity interests or any Derivative Instruments or Short Interests in any principal competitor of the corporation held by such stockholder or other Nominating Person; and (H) a description of any direct or indirect interest of such stockholder or other Nominating Person in any contract with the corporation, any affiliate of the corporation or any principal competitor of the corporation (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement), (v) a description of all arrangements or understandings between the stockholder or other Nominating Person and each nominee and any other person

or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder, (vi) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such stockholder and any other Nominating Person, on the one hand, and each nominee, and his respective affiliates and associates, or others acting in concert therewith, on the other hand, including, without limitation all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the stockholder and any Nominating Person, if any, or any affiliate or associate thereof or person acting in concert therewith, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant, (vii) such other information regarding each nominee as would be required to be included in a proxy statement filed pursuant to the proxy rules of the SEC, had the nominee been nominated, or intended to be nominated, by the Board, and (viii) the signed consent of each nominee to serve as a director of the corporation if so elected. In no event shall the public announcement of an adjournment or postponement of an annual meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. Notwithstanding the second sentence of this Section 3.16(b), in the event that the number of directors to be elected at an annual meeting is increased and there is no public announcement by the corporation naming the nominees for the additional directorships at least 100 days prior to the one-year anniversary of the date of the preceding year’s annual meeting as first specified in the corporation’s notice of meeting (without regard to any postponements or adjournments of such meeting after such notice was first sent), a stockholder’s notice required by this Section 3.16(b) shall also be considered timely, but only with respect to nominees for the additional directorships, if it shall be delivered to the Secretary at the principal executive offices of the corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the corporation.

(b) Subject to the rights of holders of any class or series of preferred stock then outstanding, the Certificate of Incorporation, and the terms of the Stockholders Agreement, nominations of persons for election to the Board may be made at a special meeting of stockholders at which directors are to be elected pursuant to the corporation’s notice of meeting (i) by or at the direction of the Board or a committee thereof or (ii) by any stockholder who complies with the notice procedures set forth in this Section 3.16 and who is a stockholder of record at the time such notice is delivered to the Secretary of the corporation. In the event the corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board, any such stockholder may nominate a person or persons (as the case may be), for election to such position(s) as are specified in the corporation’s notice of meeting, if the stockholder’s notice as required by Section 3.12(a) is delivered to the Secretary at the principal executive offices of the corporation not earlier than ninety (90) days prior to such special meeting and not later than the close of business on the later of the sixtieth (60 ^th ) day prior to such special meeting or the tenth (10 ^th ) day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board to be elected at such meeting. In no event shall the public announcement of an adjournment or postponement of a special meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.

(c) For purposes of these Bylaws, “ public announcement ” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed or furnished by the corporation with the SEC pursuant to Section 13, 14 or 15(d) of the Exchange Act.

(d) Only those persons who are nominated in accordance with the procedures set forth in this section or the Stockholders Agreement shall be eligible for election as directors at any meeting of stockholders. The Chairman of the Board or Secretary may, if the facts warrant, determine that a notice

received by the corporation relating to a nomination proposed to be made does not satisfy the requirements of this Section 3.16 (including if the stockholder does not provide the updated information required under Section 3.12(b) to the corporation within five (5) business days following the record date for the meeting), and if it be so determined, shall so declare and any such nomination shall not be introduced at such meeting of stockholders, notwithstanding that proxies in respect of such vote may have been received. The chairman of the meeting shall have the power and duty to determine whether a nomination brought before the meeting was made in accordance with the procedures set forth in this section, and, if any nomination is not in compliance with this section (including if the stockholder does not provide the updated information required under Section 3.12(b) to the corporation within five (5) business days following the record date for the meeting), to declare that such defective nomination shall be disregarded, notwithstanding that proxies in respect of such vote may have been received. Unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual meeting or a special meeting of stockholders of the corporation to present a nomination, such nomination shall be disregarded, notwithstanding that proxies in respect of such vote may have been received by the corporation. For purposes of this Section 3.16, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or authorized by a writing executed by such stockholder (or a reliable reproduction or electronic transmission of the writing) delivered to the corporation prior to the making of such nomination at such meeting by such stockholder stating that such person is authorized to act for such stockholder as proxy at the meeting of stockholders.

(e) Notwithstanding the foregoing provisions of this Section 3.16, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 3.16; provided however, that any references in this Section 3.16 to the Exchange Act or the rules promulgated thereunder are not intended to and shall not limit any requirements applicable to nominations to be considered pursuant to this Section 3.16. Nothing in this Section 3.16 shall be deemed to affect any rights of the holders of any series of preferred stock if and to the extent provided for under law, the Certificate of Incorporation or these Bylaws.

3.17 Reliance on Books and Records . A member of the Board, or a member of any committee designated by the Board shall, in the performance of such members’ duties, be fully protected in relying in good faith upon records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of the Corporation’s officers or employees, or committees of the Board, or by any other person as to matters the member reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.

ARTICLE IV

OFFICERS

4.1 Enumeration . The officers of the corporation shall consist of a Chief Executive Officer, a President, a Secretary, a Treasurer, a Chief Financial Officer and such other officers with such other titles as the Board shall determine, including, at the discretion of the Board, a Chairman of the Board and one or more Vice Presidents and Assistant Secretaries. The Board may appoint such other officers as it may deem appropriate.

4.2 Election . Officers shall be elected annually by the Board at its first meeting following the annual meeting of stockholders. Officers may be appointed by the Board at any other meeting.

4.3 Qualification . No officer need be a stockholder. Any two or more offices may be held by the same person.

4.4 Tenure . Except as otherwise provided by law, by the Certificate of Incorporation or by these Bylaws, each officer shall hold office until his successor is elected and qualified, unless a different term is specified in the vote appointing the officer, or until his earlier death, resignation or removal.

4.5 Resignation and Removal . Any officer may resign by delivering his written resignation to the corporation at its principal office or to the President or Secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event. Any officer elected by the Board may be removed at any time, with or without cause, by the Board.

4.6 Chairman of the Board . The Board may appoint a Chairman of the Board. If the Board appoints a Chairman of the Board, he shall perform such duties and possess such powers as are assigned to the Chairman by the Board and these Bylaws. Unless otherwise provided by the Board, he shall preside at all meetings of the Board.

4.7 Chief Executive Officer . The Chief Executive Officer of the corporation shall, subject to the direction of the Board, have general supervision, direction and control of the business and the officers of the corporation. He shall preside at all meetings of the stockholders and, in the absence or nonexistence of a Chairman of the Board, at all meetings of the Board. He shall have the general powers and duties of management usually vested in the chief executive officer of a corporation, including general supervision, direction and control of the business and supervision of other officers of the corporation, and shall have such other powers and duties as may be prescribed by the Board or these Bylaws.

4.8 President . Subject to the direction of the Board and such supervisory powers as may be given by these Bylaws or the Board to the Chairman of the Board or the Chief Executive Officer, if such titles be held by other officers, the President shall have general supervision, direction and control of the business and supervision of other officers of the corporation. Unless otherwise designated by the Board, the President shall be the Chief Executive Officer of the corporation. The President shall have such other powers and duties as may be prescribed by the Board or these Bylaws. He shall have power to sign stock certificates, contracts and other instruments of the corporation which are authorized and shall have general supervision and direction of all of the other officers, employees and agents of the corporation, other than the Chairman of the Board and the Chief Executive Officer.

4.9 Vice Presidents . Any Vice President shall perform such duties and possess such powers as the Board, the Chief Executive Officer or the President may from time to time prescribe. In the event of the absence, inability or refusal to act of the President, the Vice President (or if there shall be more than one, the Vice Presidents in the order determined by the Board) shall perform the duties of the President and when so performing shall have all the powers of and be subject to all the restrictions upon the President. The Board may assign to any Vice President the title of Executive Vice President, Senior Vice President or any other title selected by the Board.

4.10 Secretary and Assistant Secretaries . The Secretary shall perform such duties and shall have such powers as the Board or the President may from time to time prescribe. In addition, the Secretary shall perform such duties and have such powers as are set forth in these Bylaws and as are incident to the office of the Secretary, including, without limitation, the duty and power to give notices of all meetings of stockholders and special meetings of the Board, to keep a record of the proceedings of all meetings of stockholders and the Board, to maintain a stock ledger and prepare lists of stockholders and their addresses

as required, to be custodian of corporate records and the corporate seal and to affix and attest to the same on documents.

Any Assistant Secretary shall perform such duties and possess such powers as the Board, the Chief Executive Officer, the President or the Secretary may from time to time prescribe. In the event of the absence, inability or refusal to act of the Secretary, the Assistant Secretary (or if there shall be more than one, the Assistant Secretaries in the order determined by the Board) shall perform the duties and exercise the powers of the Secretary.

In the absence of the Secretary or any Assistant Secretary at any meeting of stockholders or directors, the person presiding at the meeting shall designate a temporary secretary to keep a record of the meeting.

4.11 Treasurer . The Treasurer shall perform such duties and have such powers as are incident to the office of treasurer, including without limitation, the duty and power to keep and be responsible for all funds and securities of the corporation, to maintain the financial records of the corporation, to deposit funds of the corporation in depositories as authorized, to disburse such funds as authorized, to make proper accounts of such funds, and to render as required by the Board accounts of all such transactions and of the financial condition of the corporation.

4.12 Chief Financial Officer . The Chief Financial Officer shall perform such duties and shall have such powers as may from time to time be assigned to the Chief Financial Officer by the Board, the Chief Executive Officer or the President. Unless otherwise designated by the Board, the Chief Financial Officer shall be the Treasurer of the corporation.

4.13 Salaries . Officers of the corporation shall be entitled to such salaries, compensation or reimbursement as shall be fixed or allowed from time to time by the Board.

4.14 Delegation of Authority . The Board may from time to time delegate the powers or duties of any officer to any other officers or agents, notwithstanding any provision hereof.

ARTICLE V

CAPITAL STOCK

5.1 Issuance of Stock . Subject to the provisions of the Certificate of Incorporation, the whole or any part of any unissued balance of the authorized capital stock of the corporation or the whole or any part of any unissued balance of the authorized capital stock of the corporation held in its treasury may be issued, sold, transferred or otherwise disposed of by vote of the Board in such manner, for such consideration and on such terms as the Board may determine.

5.2 Stock Certificates . The shares of stock of the corporation shall be represented by certificates, provided that the Board may provide by resolution or resolutions that some or all of any class or series of stock of the corporation shall be uncertificated shares; provided, however, that no such resolution shall apply to shares represented by a certificate until such certificate is surrendered to the corporation. Every holder of stock of the corporation represented by certificates, and, upon written request to the corporation’s transfer agent or registrar, any holder of uncertificated shares, shall be entitled to have a certificate, in such form as may be prescribed by law and by the Board, certifying the number and class of shares of stock owned by such stockholder in the corporation. Each such certificate shall be signed by, or in the name of the corporation by, the Chairman or Vice Chairman, if any, of the Board, or the President or a Vice President, and the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the corporation. Any or all of the signatures on the certificate may be a facsimile.

Each certificate for shares of stock which are subject to any restriction on transfer pursuant to the Certificate of Incorporation, the Bylaws, applicable securities laws or any agreement among any number of stockholders or among such holders and the corporation shall have conspicuously noted on the face or back of the certificate either the full text of the restriction or a statement of the existence of such restriction.

5.3 Transfers . Except as otherwise established by rules and regulations adopted by the Board, and subject to applicable law, shares of stock may be transferred on the books of the corporation: (i) in the case of shares represented by a certificate, by the surrender to the corporation or its transfer agent of the certificate representing such shares properly endorsed or accompanied by a written assignment or power of attorney properly executed, and with such proof of authority or authenticity of signature as the corporation or its transfer agent may reasonably require; and (ii) in the case of uncertificated shares, upon the receipt of proper transfer instructions from the registered owner thereof. Except as may be otherwise required by law, the Certificate of Incorporation or the Bylaws, the corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect to such stock, regardless of any transfer, pledge or other disposition of such stock until the shares have been transferred on the books of the corporation in accordance with the requirements of these Bylaws.

5.4 Lost, Stolen or Destroyed Certificates . The corporation may issue a new certificate in place of any previously issued certificate alleged to have been lost, stolen, or destroyed, or it may issue uncertificated shares if the shares represented by such certificate have been designated as uncertificated shares in accordance with Section 5.2, upon such terms and conditions as the Board may prescribe, including the presentation of reasonable evidence of such loss, theft or destruction and the giving of such indemnity as the Board may require for the protection of the corporation or any transfer agent or registrar.

5.5 Record Dates . The Board may fix in advance a record date for the determination of the stockholders entitled to vote at any meeting of stockholders. Such record date shall not precede the date on which the resolution fixing the record date is adopted and shall not be more than 60 nor less than 10 days before the date of such meeting.

If no record date is fixed by the Board, the record date for determining the stockholders entitled to notice of or to vote at a meeting of stockholders shall be the close of business on the day before the date on which notice is given, or, if notice is waived, the close of business on the day before the date on which the meeting is held.

A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the determination of stockholders entitled to vote at the adjourned meeting, and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for the determination of stockholders entitled to vote in accordance with the foregoing provisions.

The Board may fix in advance a record date (a) for the determination of stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights in respect of any change, concession or exchange of stock, or (b) for the purpose of any other lawful action. Any such record date shall not precede the date on which the resolution fixing the record date is adopted and shall not be more than 60 days prior to the action to which such record date relates. If no record date is fixed by the Board, the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting when no prior action by the Board is necessary shall be the date on which the first written consent

is expressed. The record date for determining stockholders for any other purpose shall be the close of business on the day on which the Board adopts the resolution relating to such purpose.

ARTICLE VI

GENERAL PROVISIONS

6.1 Fiscal Year . The fiscal year of the corporation shall be as fixed by the Board.

6.2 Waiver of Notice . Whenever any notice whatsoever is required to be given by law, by the Certificate of Incorporation or by these Bylaws, a waiver of such notice either in writing signed by the person entitled to such notice or such person’s duly authorized attorney, or by electronic transmission or any other method permitted under the DGCL, whether before, at or after the time stated in such waiver, or the appearance of such person or persons at such meeting in person or by proxy, shall be deemed equivalent to such notice. Neither the business nor the purpose of any meeting need be specified in such a waiver. Attendance at any meeting shall constitute waiver of notice except attendance for the sole purpose of objecting to the timeliness or manner of notice.

6.3 Actions with Respect to Securities of Other Corporations . Except as the Board may otherwise designate, the Chief Executive Officer or President or any officer of the corporation authorized by the Chief Executive Officer or President shall have the power to vote and otherwise act on behalf of the corporation, in person or by proxy, and may waive notice of, and act as, or appoint any person or persons to act as, proxy or attorney-in-fact to this corporation (with or without power of substitution) at any meeting of stockholders or shareholders (or with respect to any action of stockholders) of any other corporation or organization, the securities of which may be held by this corporation and otherwise to exercise any and all rights and powers that this corporation may possess by reason of this corporation’s ownership of securities in such other corporation or other organization.

6.4 Evidence of Authority . A certificate by the Secretary, or an Assistant Secretary, or a temporary Secretary, as to any action taken by the stockholders, directors, a committee or any officer or representative of the corporation shall as to all persons who rely on the certificate in good faith be conclusive evidence of such action.

6.5 Certificate of Incorporation . All references in these Bylaws to the Certificate of Incorporation shall be deemed to refer to the Certificate of Incorporation of the corporation, as amended and in effect from time to time.

6.6 Severability . Any determination that any provision of these Bylaws is for any reason inapplicable, illegal or ineffective shall not affect or invalidate any other provision of these Bylaws.

6.7 Pronouns . All pronouns used in these Bylaws shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person or persons may require.

6.8 Notices . Except as otherwise specifically provided herein or required by law, all notices required to be given to any stockholder, director, officer, employee or agent of the corporation shall be in writing and may in every instance be effectively given by hand delivery to the recipient thereof, by depositing such notice in the mails, postage paid, or by sending such notice by commercial courier service, or by facsimile or other electronic transmission, provided that notice to stockholders by electronic transmission shall be given in the manner provided in Section 232 of the DGCL. Any such notice shall be addressed to such stockholder, director, officer, employee or agent at his last known address as the same appears on the books of the corporation. The time when such notice shall be deemed to be given shall be the time such notice is received

by such stockholder, director, officer, employee or agent, or by any person accepting such notice on behalf of such person, if delivered by hand, facsimile, other electronic transmission or commercial courier service, or the time such notice is dispatched, if delivered through the mails. Without limiting the manner by which notice otherwise may be given effectively, notice to any stockholder shall be deemed given: (a) if by facsimile, when directed to a number at which the stockholder has consented to receive notice; (b) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice; (c) if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (i) such posting and (ii) the giving of such separate notice; (d) if by any other form of electronic transmission, when directed to the stockholder; and (e) if by mail, when deposited in the mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the corporation.

6.9 Reliance Upon Books, Reports and Records . Each director, each member of any committee designated by the Board, and each officer of the corporation shall, in the performance of his duties, be fully protected in relying in good faith upon the books of account or other records of the corporation as provided by law, including reports made to the corporation by any of its officers, by an independent certified public accountant, or by an appraiser selected with reasonable care.

6.10 Time Periods . In applying any provision of these Bylaws which require that an act be done or not done a specified number of days prior to an event or that an act be done during a period of a specified number of days prior to an event, calendar days shall be used, the day of the doing of the act shall be excluded, and the day of the event shall be included.

6.11 Facsimile Signatures . In addition to the provisions for use of facsimile signatures elsewhere specifically authorized in these Bylaws, facsimile signatures of any officer or officers of the corporation may be used whenever and as authorized by the Board or a committee thereof.

6.12 Voting of Securities Owned by the Corporation . All stock and other securities of other corporations owned or held by the Corporation for itself, or for other parties in any capacity, shall be voted, and all proxies with respect thereto shall be executed, by the person authorized so to do by resolution of the Board, or, in the absence of such authorization, the Chief Executive Officer, the President, or any Vice President.

ARTICLE VII

AMENDMENTS

7.1 By the Board . Except as otherwise set forth in these Bylaws, these Bylaws may be altered, amended or repealed or new Bylaws may be adopted only in accordance with Article XI of the Certificate of Incorporation.

7.2 By the Stockholders . Except as otherwise set forth in these Bylaws, and subject to the Certificate of Incorporation and the Stockholders Agreement, these Bylaws may be altered, amended or repealed or new Bylaws may be adopted by the affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of all of the shares of capital stock of the corporation issued and outstanding and entitled to vote generally in any election of directors, voting together as a single class. Such vote may be held at any annual meeting of stockholders, or at any special meeting of stockholders provided that notice of such alteration, amendment, repeal or adoption of new Bylaws shall have been stated in the notice of such special meeting .

ARTICLE VIII

INDEMNIFICATION OF DIRECTORS AND OFFICERS

8.1 Right to Indemnification . Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (“ proceeding ”), by reason of the fact that he or a person of whom he is the legal representative, is or was a director or officer of the corporation or is or was serving at the request of the corporation as a director or officer of another corporation, or as a controlling person of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a director or officer, or in any other capacity while serving as a director or officer, shall be indemnified and held harmless by the corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than such law permitted the corporation to provide prior to such amendment) against all expenses, liability and loss reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of his heirs, executors and administrators; provided, that except as provided in Section 8.2 of this Article VIII, the corporation shall indemnify any such person seeking indemnity in connection with a proceeding (or part thereof) initiated by such person only if (a) such indemnification is expressly required to be made by law, (b) the proceeding (or part thereof) was authorized by the Board, (c) such indemnification is provided by the corporation, in its sole discretion, pursuant to the powers vested in the corporation under the DGCL, or (d) the proceeding (or part thereof) is brought to establish or enforce a right to indemnification or advancement under an indemnity agreement or any other statute or law or otherwise as required under Section 145 of the DGCL. The rights hereunder shall be contract rights and shall include the right to be paid reasonable expenses and attorneys’ fees incurred in defending any such proceeding in advance of its final disposition; provided, that the payment of such expenses incurred by a director or officer of the corporation in his capacity as a director or officer (and not in any other capacity in which service was or is tendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of such proceeding, shall be made only upon delivery to the corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it should be determined ultimately by final judicial decision from which there is no further right to appeal that such director or officer is not entitled to be indemnified under this section or otherwise.

8.2 Right of Claimant to Bring Suit . If a claim under Section 8.1 is not paid in full by the corporation within 60 days after a written claim has been received by the corporation, or 20 days in the case of a claim for advancement of expenses, the claimant may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim and, if such suit is not frivolous or brought in bad faith, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any, has been tendered to this corporation) that the claimant has not met the standards of conduct which make it permissible under the DGCL for the corporation to indemnify the claimant for the amount claimed. Neither the failure of the corporation (including its Board, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in the DGCL, nor an actual determination by the corporation (including its Board, independent legal counsel or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that claimant has not met the applicable standard of conduct. In any suit brought by the corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the corporation shall be entitled to recover

such expenses upon a final judicial decision from which there is no further right to appeal that the indemnitee has not met any applicable standard for indemnification set forth in the DGCL. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or brought by the corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, shall be on the corporation.

8.3 Indemnification of Employees and Agents . The corporation may, to the extent authorized from time to time by the Board, grant rights to indemnification, and to the advancement of related expenses, to any employee or agent of the corporation to the fullest extent of the provisions of this Article VIII with respect to the indemnification of and advancement of expenses to directors and officers of the corporation.

8.4 Non-Exclusivity of Rights . The rights conferred on any person in this Article VIII shall not be exclusive of any other right which such persons may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, Bylaw, agreement, vote of stockholders or disinterested directors or otherwise.

8.5 Indemnification Contracts . The Board is authorized to enter into a contract with any director, officer, employee or agent of the corporation, or any person serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including employee benefit plans, providing for indemnification rights equivalent to or, if the Board so determines, greater than, those provided for in this Article VIII.

8.6 Insurance . The corporation shall maintain insurance to the extent reasonably available, at its expense, to protect itself and any such director, officer, employee or agent of the corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the corporation would have the power to indemnify such person against such expense, liability or loss under the DGCL.

8.7 Effect of Amendment . Any amendment, repeal or modification of any provision of this Article VIII shall not adversely affect any right or protection of an indemnitee or his successor in respect of any act or omission occurring prior to such amendment, repeal or modification.

8.8 Reliance . Persons who after the date of the adoption of this provision become or remain directors or officers of the corporation or who, while a director or officer of the corporation, become or remain a director, officer, employee or agent of a subsidiary, shall be conclusively presumed to have relied on the rights to indemnity, advance of expenses and other rights contained in this Article VIII in entering into or continuing such service. The rights to indemnification and to the advance of expenses conferred in this Article VIII shall apply to claims made against an indemnitee arising out of acts or omissions which occurred or occur both prior and subsequent to the adoption hereof.

Exhibit 4.1

AMENDED & RESTATED

STOCKHOLDERS’ AGREEMENT

by and among

SOLARWINDS CORPORATION

and

THE STOCKHOLDERS NAMED HEREIN

Dated as of October 18, 2018

TABLE OF CONTENTS



			Page
1.	EFFECTIVENESS; DEFINITIONS		2
	1.1	Effective Time	2
	1.2	Definitions	2
2.	CORPORATE GOVERNANCE		2
	2.1	Board of Directors	2
	2.2	Voting Agreement	6
	2.3	Controlled Company	6
	2.4	Special Meetings.	7
3.	POST-IPO TRANSFERS		7
	3.1	Restrictions on Transfer	7
	3.2	Post-IPO Sell-Downs	7
	3.3	Permitted Transferees.	8
	3.4	Other Restrictions on Transfer.	9
4.	PUBLIC OFFERING COOPERATION		10
	4.1	Public Offering	10
5.	COVENANTS		10
	5.1	Directors’ and Officers’ Insurance	10
	5.2	Indemnification Agreements.	10
	5.3	Indemnification.	11
	5.4	Actions Requiring Approval of the Lead Investors	12
	5.5	Other Business Opportunities; Company Charter; Company Bylaws	13
	5.6	Information Rights	14
	5.7	Affiliate Transactions	15
	5.8	Acquisition of Shares.	15
	5.9	Notice of Lock-Up Release or Waiver.	15
	5.10	Confidentiality.	16
6.	AMENDMENT, TERMINATION, ETC.		17
	6.1	Oral Modifications	17
	6.2	Written Modifications	17
	6.3	Effect of Termination	17
7.	DEFINITIONS		17
	7.1	Certain Matters of Construction	17
	7.2	Definitions	17
8.	MISCELLANEOUS		22
	8.1	Authority; Effect	22
	8.2	Notices	22
	8.3	Binding Effect, Etc.	24
	8.4	Descriptive Headings	24
	8.5	Counterparts	24



	8.6	Severability	24
	8.7	No Recourse	25
9.	GOVERNING LAW		25
	9.1	Governing Law	25
	9.2	Consent to Jurisdiction; Venue; Service	25
	9.3	WAIVER OF JURY TRIAL	26
	9.4	Exercise of Rights and Remedies	26
	9.5	Waiver of Sovereign Immunity	26

iii

AMENDED & RESTATED
STOCKHOLDERS’ AGREEMENT

This Amended & Restated Stockholders’ Agreement (the “ Agreement ”) is made as of October 18, 2018 by and among:


(i)	SolarWinds Corporation, a Delaware corporation (the “ Company ”);


(ii)	Silver Lake Partners IV, L.P., a Delaware limited partnership (together with its Permitted Transferees, “ SLP IV ”), and Silver Lake Technology Investors IV, L.P., a Delaware limited partnership (collectively with SLP IV, and together with its Permitted Transferees, “ Silver Lake ”);

(iii)

Thoma Bravo Fund XI, L.P., a Delaware limited partnership (“ TB Fund XI ”), Thoma Bravo Fund XI-A, L.P., a Delaware limited partnership (“ TB Fund XI-A ”), Thoma Bravo Executive Fund XI, L.P., a Delaware limited partnership (“ TB Exec Fund ”), Thoma Bravo Special Opportunities Fund II, L.P., a Delaware limited partnership (“ TB SOF II ”), Thoma Bravo Special Opportunities Fund II-A, L.P., a Delaware limited partnership (“ TB SOF II-A ”), Thoma Bravo Fund XII, L.P., a Delaware limited partnership (“ TB Fund XII ”), Thoma Bravo Fund XII-A, L.P., a Delaware limited partnership (“ TB Fund XII-A ”), Thoma Bravo Executive Fund XII, L.P., a Delaware limited partnership (“ TB Exec Fund XII ”), and Thoma Bravo Executive Fund XII-A, L.P., a Delaware limited partnership (“ TB Exec Fund XII-A ” and, collectively with TB Fund XI, TB Fund XI-A, TB Exec Fund, TB SOF II, TB SOF II-A, TB Fund XII, TB Fund XII-A, TB Exec Fund XII-a, and together with their Permitted Transferees, “ Thoma Bravo ”);


(iv)	SLP Aurora Co-Invest L.P. (together with its Permitted Transferees, the “ SL Co-Investor ”);

(v)

Howard Hughes Medical Institute, AlpInvest Partners Co-Investments 2014 I C.V., AlpInvest Partners Co-Investments 2014 II C.V., AM 2014 CO C.V., AlpInvest GA CO C.V., SMRS-TOPE LLC, Meranti Fund L.P., HarbourVest Global Annual Private Equity Fund L.P., HarbourVest 2015 Global Fund L.P., HarbourVest Partners X Buyout Fund LP., HarbourVest Partners X AIF Buyout L.P., HarbourVest Partners IX-Buyout Fund L.P., NPS Co-Investment (A) Fund L.P., Lexington Co-Investment Holdings III, L.P., The Prudential Insurance Company of America, Prudential Legacy Insurance Company of New Jersey, Hermes USA Investors Venture II, LP, NB Crossroads XX - MC Holdings LP, NB Crossroads XXI - MC Holdings LP, NB Wildcats Fund LP, NB RP Co-Investment & Secondary Fund LLC, NB Sonoran Fund Limited Partnership, TFL Trustee Company Limited as Trustee of the TFL Pension Fund, NB - Iowa’s Public Universities LP, NB PEP Holdings Limited, Neuberger Berman Insurance Fund Series of the SALI Multi-Series Fund, L.P., and NB Strategic Co-Investment Partners II Holdings LP (each a “ TB Co-Investor ” and collectively, together with their Permitted Transferees, the “ TB Co-Investors ”); and


(vi)	the Persons who from time to time became party to the Original Agreement by executing a counterpart signature page thereto as a “Manager” (such Persons, together with their Permitted Transferees, the “ Managers ” and, collectively with Silver Lake, Thoma Bravo, the SL Co-Investor, the TB Co-Investors and the Managers, the “ Stockholders ”).

RECITALS

WHEREAS, the Company and the Stockholders entered into a Stockholders Agreement, dated as of February 5, 2016 (the “ Original Agreement ”); and

WHEREAS, the parties hereto believe that it is in the best interests of the Company and the Stockholders to enter into this Agreement to (i) set forth herein their agreements on certain matters relating to the governance of the Company and the rights and obligations of the Stockholders following the Initial Public Offering (as defined below) and (ii) amend, replace and supersede in its entirety the Original Agreement.

NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

AGREEMENT


1.	EFFECTIVENESS; DEFINITIONS.

1.1 Effective Time . This Agreement will become effective as of immediately prior to the Form 8-A Effective Time (the “ Effective Time ”). This Agreement shall automatically terminate and be deemed null and avoid (and the Original Agreement shall remain in full force and effect) if the Initial Public Offering of the Company is not consummated on or before the tenth business day following the date of this Agreement.

1.2 Definitions . Certain terms are used in this Agreement as specifically defined herein. These definitions are set forth or referred to in Section 7 hereof.


2.	CORPORATE GOVERNANCE.

2.1 Board of Directors .

2.1.1 Size . On and after the Effective Time, the Board shall consist of ten (10) Directors; provided, that the Board shall further increase the number of Independent Directors to the extent necessary to comply with applicable law and the Stock Exchange rules, or as otherwise agreed by the Board, subject to the rights of the Lead Investors under Section 5.4.7.

2.1.2 Composition; Company Recommendation . Subject to Section 2.1.1, the rights of the Lead Investors to nominate Directors shall be as follows:

(a) So long as the Aggregate Silver Lake Ownership continues to be (i) at least 20% of the aggregate number of outstanding shares of Common Stock immediately following the consummation of the Initial Public Offering, Silver Lake shall be entitled to nominate three Directors, (ii) less than 20% but at least 10% of the aggregate number of outstanding shares of Common Stock immediately following the consummation of the Initial Public Offering, Silver Lake shall be entitled to nominate two Directors and (iii) less than 10% but at least 5% of the aggregate number of outstanding shares of Common Stock immediately following the consummation of the Initial Public Offering, Silver Lake shall be entitled to nominate one Director. Each Director so nominated may be referred to as a “ Silver Lake Director ”.

(b) So long as the Aggregate Thoma Bravo Ownership continues to be (i) at least 20% of the aggregate number of outstanding shares of Common Stock immediately following the consummation of the Initial Public Offering, Thoma Bravo shall be entitled to nominate three Directors, (ii) less than 20% but at least 10% of the aggregate number of outstanding shares of Common Stock immediately following the consummation of the Initial Public Offering, Thoma Bravo shall be entitled to nominate two Directors and (iii) less than 10% but at least 5% of the aggregate number of outstanding shares of Common Stock immediately following the consummation of the Initial Public Offering, Thoma Bravo shall be entitled to nominate one Director. Each Director so nominated may be referred to as a “ Thoma Bravo Director ”.

(c) The Company hereby agrees (i) to include the nominees of the Lead Investors nominated pursuant to this Section 2.1.2 as the nominees to the Board on each slate of nominees for election of the Board included in the Company’s annual meeting proxy statement (or consent solicitation or similar document), (ii) to recommend the election of such nominees to the stockholders of the Company and (iii) without limiting the foregoing, to otherwise use its reasonable best efforts to cause such nominees to be elected to the Board, including providing at least as high a level of support for the election of such nominees as it provides to any other individual standing for election as a director.

2.1.3 Nominations . With respect to any Director to be nominated by the applicable Lead Investor other than the initial Directors appointed in accordance with Section 2.1.2 or the then-serving Silver Lake Director(s) or Thoma Bravo Director(s), a Lead Investor shall nominate its Director(s) by delivering to the Company a written statement at least sixty (60) days prior to the one-year anniversary of the preceding annual meeting (or, in the case of the first annual meeting following the Initial Public Offering, at least sixty (60) days prior to the date of the annual meeting) which sets forth the names, business address, telephone number, facsimile number and e-mail address of such nominee(s); provided, that if a Lead Investor fails to deliver such written notice, such Lead Investor shall be deemed to have nominated the Director(s) previously nominated (or designated pursuant to this Section 2.1.3) by such Lead Investor who is/are currently serving on the Board.

2.1.4 Right to Delegate; Committees . The Company shall establish and maintain an audit committee of the Board (the “ Audit Committee ”), a compensation committee of the Board (the “ Compensation Committee ”), a nominating and corporate governance committee of the Board (the “ Nominating Committee ”), and such other Board committees as the Board deems appropriate from time to time or as may be required by applicable law or the Stock Exchange rules. The committees shall have such duties and responsibilities as are customary for such committees, subject to the provisions of this Agreement.

(a) No later than 90 days after the date of effectiveness of the IPO Registration Statement, the Audit Committee shall include one additional Independent Director. No later than the first anniversary of the effectiveness of the IPO Registration Statement, the Audit Committee shall consist of at least three Independent Directors (at least one of whom shall satisfy the “audit committee financial expert” requirements as such term is defined by Item 407(d)(5) of Regulation S-K). Subject to Section 2.1.4(d), for so long as the Company maintains the Audit Committee, it shall consist of at least one Silver Lake Director (but only if Silver Lake is then entitled to nominate at least one Silver Lake Director) and at least one Thoma Bravo Director (but only if Thoma Bravo is then entitled to nominate at least one Thoma Bravo Director).

(b) Subject to Section 2.1.4(d), for so long as the Company maintains the Compensation Committee and Nominating Committee, such committees shall each consist of at least one Silver Lake Director (but only if Silver Lake is then entitled to nominate at least one Silver Lake Director) and at least one Thoma Bravo Director (but only if Thoma Bravo is then entitled to nominate at least one Thoma Bravo Director).

(c) Subject to Section 2.1.4(d), any committee of the Board not specified in Section 2.1.4(a) or 2.1.4(b) shall consist of at least one Silver Lake Director (but only if Silver Lake is then entitled to nominate at least one Silver Lake Director) and at least one Thoma Bravo Director (but only if Thoma Bravo is then entitled to nominate at least one Thoma Bravo Director) and such additional members as may be determined by the Board; provided, that a special committee may exclude Directors nominated by the Lead Investors if (i) no such Director is eligible to serve on such special committee due to the rules and requirements of any national stock exchange on which the Company’s stock is listed or (ii) the primary purpose of such special committee is to review, assess and/or approve a transaction in which the applicable Lead Investor has a material direct or indirect interest and having such Lead Investor’s Director appointed on such special committee would constitute a clear conflict of interest, in each case as determined by a majority of the Independent Directors in their reasonable good faith discretion.

(d) Notwithstanding the foregoing, the Board (upon the recommendation of the Nominating Committee) shall, only to the extent necessary to comply with applicable law or the Stock Exchange rules, modify the composition of any such committee to the extent required to comply with such applicable law or the Stock Exchange rules. If any vacant Director position on any committee of the Board results from a Lead Investor no longer being entitled to nominate at least one Director or declining to have one of its Director

nominees serve on such committee, then such vacant position shall be filled by the Board upon the recommendation of the Nominating Committee, in accordance with Section 2.1.6.

2.1.5 Removal . If the number of Directors that a Lead Investor is entitled to nominate is reduced pursuant to the terms of Section 2.1.2, then such Lead Investor shall, if requested by either (i) the other Lead Investor or (ii) a majority of the Independent Directors, promptly cause a number of Directors equal to such reduction to resign from service on the Board and any board or other similar governing body of any Subsidiary of the Company, including all committees thereof. Each Lead Investor shall cause any Director nominated by it to resign from service on any committee of the Board if, as a result of such Director’s service on such committee, such committee does not satisfy the requirements of applicable law or the Stock Exchange rules for service on such committee.

2.1.6 Vacancies .

(a) If any Director previously nominated by a Lead Investor dies or is unwilling or unable to serve as such or is otherwise removed or resigns from office (other than pursuant to Section 2.1.5), then the Lead Investor whose previously nominated Director shall have been removed or shall have resigned shall promptly nominate a successor to such Director; but if neither of the Lead Investors is entitled to fill such vacant Director position(s), such vacant Director position(s) shall be filled by the Board, upon the recommendation of the Nominating Committee.

(b) If, subject to the rights of the Lead Investors under Section 5.4.7, the Board votes to increase the size of the Board, the vacant Director position(s) created as a result of such newly created directorship(s) shall be filled by the Board, upon the recommendation of the Nominating Committee.

(c) Any other vacant Director position(s) shall be filled by the Board, or the Board shall nominate a replacement Director, in each case, upon the recommendation of the Nominating Committee, in accordance with the Company Charter.

(d) Any recommendation of the Nominating Committee shall require the approval of the Silver Lake Director (if any) serving on the Nominating Committee, for so long as the Aggregate Silver Lake Ownership continues to be at least 10% of the aggregate number of outstanding shares of Common Stock immediately following the consummation of the IPO, and the Thoma Bravo Director (if any) serving on the Nominating Committee, for so long as the Aggregate Thoma Bravo Ownership continues to be at least 10% of the aggregate number of outstanding shares of Common Stock immediately following the consummation of the IPO.

2.1.7 Subsidiaries . At the request of any Lead Investor, the Company shall cause the members of the Board or other similar governing body, and committees thereof, of any “significant subsidiary” (as defined in Rule 1-02 of Regulation S-X under the Exchange Act) to comply with this Section 2.1 as if such Subsidiary were the Company.

2.1.8 Expense Reimbursement . The Company shall pay or reimburse the reasonable, documented, out-of-pocket expenses incurred by the members of the Board in connection with their service on the Board (and any committee thereof) or in connection with their service on the Board or other similar governing body of any Subsidiary of the Company (and any committee thereof).

2.2 Voting Agreement .

2.2.1 Each Equity Investor agrees, at any time it is then entitled to vote for the election of Directors to the Board, to take all necessary action, including casting all votes to which such Equity Investor is entitled in respect of its Shares, whether at any annual or special meeting, by written consent, proxy or otherwise, so as to ensure that the composition of the Board complies with (and includes all of the requisite nominees in accordance with) Section 2.1 and to otherwise effect the intent of this Section 2. Each Equity Investor then entitled to vote for the election of any successor as a Director agrees to take all necessary action, including casting all votes to which such Stockholder is entitled in respect of its Shares, whether at any annual or special meeting, by written consent, proxy or otherwise, so as to ensure that any such successor determined in accordance with Section 2.1.6 is elected to the Board as promptly as practicable. Each Equity Investor agrees that if, at any time, it is then entitled to vote for the removal of Directors, it will not vote any of its Shares in favor of the removal of any Director who shall have been nominated in accordance with Section 2.1, unless (a) the Lead Investor entitled to nominate such Director shall have consented to such removal in writing, (b) removal is compelled pursuant to Section 2.1.5 or (c) the Person or Persons entitled to nominate any Director pursuant to Section 2.1 shall request in writing the removal, with or without cause, of such Director (in which case, each such Equity Investor shall vote its Shares in favor of such removal). Each Equity Investor agrees not to grant, or enter into a binding agreement with respect to, any proxy to any Person in respect of its Shares that would prohibit such Equity Investor from casting votes in respect of such Shares in accordance with this Section 2.2.1.

2.3 Controlled Company .

2.3.1 The Company and the Equity Investors acknowledge and agree that, by virtue of the combined voting power of Common Stock held by the Equity Investors representing more than 50% of the total voting power of the Common Stock outstanding as of the closing date of the Initial Public Offering, the Company qualifies as of the date of the closing of the IPO as a “controlled company” within the meaning of Stock Exchange rules.

2.3.2 So long as the Company qualifies as a “controlled company” for purposes of Stock Exchange rules, the Company shall elect to be a “controlled company” for purposes of Stock Exchange rules. If the Company ceases to qualify as a “controlled company” for purposes of Stock Exchange rules, the Equity Investors and the Company shall take whatever action may be reasonably necessary in relation to such party, if any, to cause the Company to comply with Stock Exchange rules as then in effect within the timeframe for compliance available under such rules, including any applicable transition periods. Notwithstanding the foregoing, upon the mutual election of the Lead Investors at any time, the Company shall

elect not to be a “controlled” company for purposes of Stock Exchange rules and, if so elected by the Lead Investors, the Equity Investors and the Company will take all actions reasonably necessary in relation to such party, if any, to cause the Company to comply with Stock Exchange rules as then in effect within the timeframe for compliance available under such rules, including any applicable transition periods.

2.4 Special Meetings . If any two Thoma Bravo Directors (or, in the event Thoma Bravo is entitled to nominate only one Director, one Thoma Bravo Director) or any two Silver Lake Directors (or, in the event Silver Lake is entitled to nominate only one Director, one Silver Lake Director) wishes to call a special meeting of the Board, the Company shall take all such action as is necessary to cause the calling of a special meeting.


3.	POST-IPO TRANSFERS.

3.1 Restrictions on Transfer . No Stockholder will Transfer (or solicit any offers in respect of any Transfer of such Shares) any of such Stockholder’s Shares to any other Person except as provided in this Section 3 and in compliance with the Securities Act and any applicable state securities laws. No Stockholder shall avoid the restrictions or obligations set forth in this Section 3 by undergoing an ownership change itself or Transferring any Shares to any other Person and then Transferring or permitting the Transfer of such other Person in whole or in part. Notwithstanding anything herein to the contrary, no Stockholder will Transfer any Unvested Shares except as expressly permitted by the Board in writing. Any attempted Transfer of Shares not permitted under the terms of this Section 3 will be null and void, and the Company shall not in any way give effect to any such impermissible Transfer.

3.2 Post-IPO Sell-Downs . Upon and following the Effective Time, (a) no Lead Investor shall Transfer its Shares without the consent of the other Lead Investor and (b)(i) the SL Co-Investor hereby agrees that it will, and each of the other Stockholders agrees that the SL Co-Investor shall be entitled to, Transfer its Shares at the same time, on the same terms and conditions and in the same proportions as Silver Lake, and not in any other instance, unless all of the Lead Investors agree to permit such Transfer; provided that the Lead Investors may not agree to reduce the amounts the SL Co-Investor is entitled to Transfer pursuant to this clause (b)(i) without the consent of the SL Co-Investor, and (ii) each TB Co-Investor hereby agrees that it will, and each of the other Stockholders agrees that each TB Co-Investor shall be entitled to, Transfer its Shares at the same time, on the same terms and conditions and in the same proportions as Thoma Bravo, and not in any other instance, unless all of the Lead Investors agree to permit such Transfer; provided that the Lead Investors may not agree to reduce the amounts any TB Co-Investor is entitled to Transfer pursuant to this clause (b)(ii) without the consent of such TB Co-Investor. The SL Co-Investor and each TB Co-Investor constitute and appoint SLP IV or Thoma Bravo, respectively, with full power of substitution, as such SL Co-Investor’s or TB Co-Investor’s, as applicable, true and lawful representative and attorney-in-fact, in such SL Co-Investor’s or TB Co-Investor’s, as applicable, name, place and stead, to execute and deliver any and all agreements, including stock powers, that SLP IV or Thoma Bravo, as applicable, reasonably believes are consistent with this Section 3.2. The foregoing power of attorney is coupled with an interest and, to the maximum extent permitted by applicable law, will continue in full force and effect notwithstanding the subsequent death,

incapacity, bankruptcy or dissolution of the SL Co-Investor or any TB Co-Investor, as applicable. Each of the Stockholders will hold all Shares owned by him, her or it following the Effective Time in book-entry form at the Company’s transfer agent. Each of the SL Co-Investor and each TB Co-Investor will take or cause to be taken all such actions as may be necessary or reasonably desirable in order to consummate expeditiously each Transfer pursuant to this Section 3.2 and any related transactions, including executing, acknowledging and delivering consents, assignments, waivers and other documents or instruments, including any necessary opinions and otherwise cooperating with Silver Lake and Thoma Bravo, as the case may be. Upon and following the Effective Time, each Manager agrees that, unless otherwise approved by the Board, such Manager will not Transfer any Shares except that (x) during the first year following the Effective Time, such Manager may Transfer up to such number of Shares that would result in such Manager having sold a percentage of the Shares held by the Manager at the Effective Time which is equal to the percentage of Shares that have been sold by the Equity Investors, collectively, in connection with or following the Initial Public Offering relative to the number of Shares held collectively by the Equity Investors at the Effective Time and (y) from and after the first year anniversary of the Effective Time, such Manager may Transfer the greater of (1) in any calendar year, up to one-third of the Shares held by the Manager as of the beginning of such calendar year and (2) up to such number of Shares that would result in such Manager having sold a percentage of the Shares held by the Manager at the Effective Time which is equal to the percentage of Shares that have been sold by the Equity Investors, collectively, in connection with or following the Initial Public Offering relative to the number of Shares held collectively by the Equity Investors at the Effective Time. The restrictions set forth in this Section 3.2 with respect to any Stockholder shall be of no further effect with respect to the Shares as of the earlier of (A) the third anniversary of the Effective Time and (B) the time at which the Equity Investors own less than 25% of the Shares held by the Equity Investors at the Effective Time; provided that (I) the rights of the SL Co-Investor pursuant to clause (b)(i) of the first sentence of this Section 3.2 above may be extended with the consent of SLP IV and (II) the rights of the TB Co-Investors pursuant to clause (b)(ii) of the first sentence of this Section 3.2 above may be extended with the consent of Thoma Bravo. The restrictions on Transfer set forth in this Section 3.2, with respect to the Managers, shall apply only to those Managers who have the title of “Group Vice President” or any more senior title with the Company or its Subsidiaries.

3.3 Permitted Transferees .

3.3.1 Affiliates . Any holder of Equity Investor Shares may Transfer any or all of such Equity Investor Shares to an Affiliate of such holder; provided that, in no event shall any portfolio company or other investment of any Lead Investor or Co-Investor be considered an Affiliate for purposes of any Transfer of Equity Investor Shares (i.e., Transfers of Equity Investor Shares by a holder of Equity Investor Shares to any of its portfolio companies or other investments are not permitted hereunder).

3.3.2 Estate Planning . Subject to the provisions of any other agreement between the Company and the Stockholder (if applicable), any Stockholder who is a natural person may Transfer any or all of such Stockholder’s Shares (a) by gift to, or for the benefit of, any Members of the Immediate Family of such Stockholder or (b) to a trust (or limited liability company, partnership or other estate planning vehicle) for the benefit of such Stockholder

and/or any Members of the Immediate Family of such Stockholder; provided , that the trust instrument governing such trust (or limited liability company agreement or partnership agreement, as applicable) must provide that such Stockholder, as trustee (or managing member, manager, general partner or otherwise, as applicable), must retain sole and exclusive control over the voting and disposition of such Shares until the termination of the provisions of this Section 3.2.

3.3.3 Upon Death . Subject to the provisions of any other agreement among the Company and the Stockholder (if applicable), if applicable, upon the death of any Stockholder who is a natural person, such Stockholder’s Shares may be distributed by the will or other instrument taking effect at death of such Stockholder or by applicable laws of descent and distribution to such Stockholder’s estate, executors, administrators and personal representatives, and then to such Stockholder’s heirs, legatees or distributees, whether or not such recipients are Members of the Immediate Family of such Stockholder.

3.3.4 Any Shares Transferred in accordance with this Section 3.3.4 will remain Lead Investor Shares, Co-Investor Shares or Management Shares, as the case may be, and will be subject to all of the provisions of this Agreement applicable to such Shares; provided that Shares that are Transferred to any director, officer or employee of, or consultant or adviser to, the Company or any of its Subsidiaries by a holder of Lead Investor Shares will thereafter become Management Shares hereunder. No Transfer shall be permitted under the terms of this Section 3.3.4, and any Transfer permitted under the terms of this Section 3.3.4 shall not be effective, unless the transferee of such Shares (each, a “ Permitted Transferee ”) has delivered to the Company a written acknowledgment and agreement in form and substance reasonably satisfactory to the Company that such Permitted Transferee will be bound by, and be a party to, this Agreement as the holder of Lead Investor Shares, Co-Investor Shares or Management Shares hereunder, as the case may be and in accordance with the prior sentence; provided , that no Transfer by any Stockholder to a Permitted Transferee will relieve such Stockholder of any of his, her or its obligations under this Agreement; and provided further that, as a condition to such Transfer, the Permitted Transferee and Stockholder will agree that, if at any time the Permitted Transferee ceases to be a Permitted Transferee of such Stockholder following such Transfer, the Permitted Transferee will immediately Transfer the Shares back to such Stockholder. In connection with any Transfer by a Stockholder pursuant to Sections 3.3.1 or 3.3.2, such Stockholder shall provide written notice to the Company of such Transfer not less than ten (10) business days prior to effecting such Transfer, which notice shall state the name and address of each Permitted Transferee to whom such Transfer is proposed to be made, the relationship of such Permitted Transferee to the Transferring Stockholder, and the number of Shares proposed to be Transferred to such Permitted Transferee.

3.4 Other Restrictions on Transfer . The restrictions on Transfer contained in this Agreement are in addition to any other restrictions on Transfer to which a Stockholder may be subject, including any restrictions on transfer contained in any equity incentive plan, restricted stock agreement, stock option agreement, stock subscription agreement or other agreement to which such Stockholder is a party or instrument by which such Stockholder is bound.


4.	PUBLIC OFFERING COOPERATION.

4.1 Public Offering . If the Board approves a Public Offering, each holder of Shares will take all actions reasonably requested by the Company in connection with the consummation of the Public Offering including executing and delivering a lock-up agreement with the underwriter(s) of the Public Offering substantially similar to any lock-up agreement entered into by the Lead Investors and regardless of whether such holder is selling any Shares in the Public Offering, including, solely to the extent the underwriters and Lead Investors agree to include in the lock-up agreement, a provision providing for the release of a pro rata portion of each holder’s Shares subject to the lock up, prior to the expiration thereof, if the underwriters agree to permit any other holder to sell a portion of the Shares held by such holder prior to the expiration of the lock up.


5.	COVENANTS.

5.1 Directors’ and Officers’ Insurance . The Company will purchase and maintain at its expense, insurance in an amount determined in good faith by the Board to be appropriate, on behalf of any person who prior to or after the Effective Time is or was a director or officer of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including any direct or indirect Subsidiary of the Company, against any expense, liability or loss asserted against such Person and incurred by such Person in any such capacity, or arising out of such Person’s status as such, subject to customary exclusions. The Company hereby acknowledges that any director, officer or other indemnified person covered by any such indemnity insurance policy (any such Person, a “ Covered Indemnitee ”) may have certain rights to indemnification, advancement of expenses and/or insurance provided by any of the Lead Investors and certain of their respective Affiliates (collectively, the “ Fund Indemnitors ”). The Company hereby agrees that (a) the Company shall be the indemnitor of first resort ( i.e. , its obligations to a Covered Indemnitee shall be primary and any obligation of any Fund Indemnitor to advance expenses or to provide indemnification for the same expenses or liabilities incurred by Covered Indemnitee shall be secondary) and (b) the Company irrevocably waives, relinquishes and releases the Fund Indemnitors from any and all claims against the Fund Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. The Company further agrees that no advancement or payment by the Fund Indemnitors on behalf of a Covered Indemnitee with respect to any claim for which such Covered Indemnitee has sought indemnification from the Company shall affect the foregoing and the Fund Indemnitors shall have a right of contribution and/or shall be subrogated to the extent of such advancement or payment to all of the rights of recovery of such Covered Indemnitee against the Company. The provisions of this Section 5.1 will survive any termination of this Agreement. Any Fund Indemnitor or insurer thereof not a party to this Agreement is an express third party beneficiary of this Section 5.1, and is entitled to enforce this Section 5.1 according to its terms to the same extent as if such Fund Indemnitor or insurer thereof were a party hereto.

5.2 Indemnification Agreements . The Company has entered into and shall at all times maintain in effect an indemnification agreement with each Director nominated by or affiliated with Silver Lake or Thoma Bravo, as applicable, in such form as has been previously agreed to by each of the Company and Silver Lake or Thoma Bravo, as applicable.

5.3 Indemnification .

5.3.1 To the fullest extent permitted by law, the Company shall indemnify, hold harmless and defend each Covered Person from and against any Losses (other than for taxes based on fees or other compensation received by such Covered Person from the Company or its Subsidiaries), expenses (including reasonable legal fees and expenses), judgments, fines and other amounts which may be imposed on, asserted against, paid in settlement, incurred or suffered by such Covered Person or any of them, as a party or otherwise, before or after the date of this Agreement (collectively, the “ Indemnified Liabilities ”), in connection with any threatened, pending or completed Third-Party Claim arising directly or indirectly out of or in connection with such Covered Person’s investment in, or actual, alleged or deemed control or ability to influence, the Company or any of its Subsidiaries if (a) the Covered Person’s conduct was in good faith and to the extent such Losses did not arise out of a breach by such Covered Person or its Affiliates of this Agreement, and (b) if the Covered Person is a director, officer or employee of the Company (or (x) an Affiliate of a director, officer or employee of the Company that is controlled by a director, officer or employee of the Company, or (y) a successor, heir, estate or legal representative of a director, officer or employee of the Company), the Covered Person reasonably believed (or, if the Covered Person is a successor, heir, or estate of, a director, officer or employee of the Company, then such director, officer or employee of the Company, as applicable, reasonably believed) that his, her or its conduct was in, or not opposed to, the best interest of the Company and, with respect to any criminal action or proceeding, did not have reasonable cause to believe that his, her or its conduct was unlawful, and did not include any transaction from which such Covered Person derived an improper personal benefit. If and to the extent that the foregoing indemnification is unavailable or unenforceable for any reason, the Company hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. The rights of any Covered Person to indemnification and contribution hereunder will be in addition to any other rights any such Person may have under any other agreement or instrument to which such Covered Person is or becomes a party (including for the avoidance of doubt, any rights under Section 5.1) or is otherwise becomes the beneficiary or under law or regulation or under the organizational documents of the Company or, any of its Subsidiaries and shall extend to such Covered Person’s successors and assigns. The Company shall not be liable for amounts paid in settlement of any action effected without its written consent, but if any action is settled with written consent of the Company, or if there is a final judgment against a Covered Person in any such action, the Company agrees to indemnify and hold harmless the Covered Person to the extent provided above from and against any Losses by reason of such settlement or judgment. In addition, the Company shall not be required to indemnify a Covered Person for any disgorgement of profits made from the purchase or sale by such Covered Person of securities of the Company pursuant to the provisions of Section 16(b) of the Exchange Act, or to indemnify or advance expenses to a Covered Person in any circumstance where such indemnification has been determined to be prohibited by law by a final (not interlocutory) judgment or other adjudication of a court or arbitration or administrative body of competent jurisdiction as to which there is no further right or option of appeal or the time within which an appeal must be filed has expired without such filing. Notwithstanding anything herein

to the contrary, each of the Covered Persons shall be a third party beneficiary of the rights conferred to such Covered Persons in this Section 5.3. This Section 5.3 shall survive any termination of this Agreement.

5.3.2 To the extent provided in this Section 5.3, the Company hereby agrees that it is the indemnitor of first resort (i.e., its obligations to any Covered Person under this Agreement are primary and any obligation of any Stockholder (or any Affiliate thereof) to provide advancement or indemnification for the same Losses (including all interest, assessment and other charges paid or payable in connection with or in respect of such Losses) incurred by a Covered Person are secondary), and if any Stockholder (or any Affiliate thereof) pays or causes to be paid, for any reason, any amounts otherwise indemnifiable hereunder or under any other indemnification agreement (whether pursuant to contract, bylaws or charter) with any Covered Person, then (i) such Stockholder (or such Affiliate, as the case may be) shall be fully subrogated to all rights of the Covered Person with respect to the payments actually made and (ii) the Company shall reimburse such Stockholder (or such other Affiliate) for the payments actually made. The Company hereby unconditionally and irrevocably waives, relinquishes and releases (and covenants and agrees not to exercise, and to cause each Affiliate of the Company not to exercise), any claims or rights that the Company may now have or hereafter acquire against any Covered Person (in any capacity) that arise from or relate to the existence, payment, performance or enforcement of the Company’s obligations under this Agreement or under any indemnification obligation (whether pursuant to any other contract, any organizational document or otherwise), including any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of any Covered Person against any Covered Person, whether such claim, remedy or right arises in equity or under contract, law or otherwise, including any right to claim, take or receive from any Covered Person, directly or indirectly, in cash or other property or by set-off or in any other manner, any payment or security or other credit support on account of such claim, remedy or right.

5.4 Actions Requiring Approval of the Lead Investors . So long as the Lead Investors collectively continue to hold at least 30% of the aggregate number of outstanding shares of Common Stock immediately following the consummation of the Initial Public Offering, the following actions by the Company or any of its Subsidiaries shall require the prior written consent of each Lead Investor that is then entitled to nominate at least two Directors to the Board:

5.4.1 Entering into or effecting a Change of Control.

5.4.2 Directly or indirectly, entering into or effecting any transaction or series of related transactions involving, or entering into any agreement providing for, (a) the purchase, lease, license, exchange or other acquisition by the Company or its Subsidiaries of any assets and/or equity securities for consideration having a fair market value (as reasonably determined by the Board) in excess of $300.0 million and/or (b) the sale, lease, license, exchange or other disposal by the Company or its Subsidiaries of any assets and/or equity securities having a fair market value or for consideration having a fair market value (in each case as reasonably determined by the Board) in excess of $300.0 million; in each case, other

than transactions solely between or among the Company and one or more of its direct or indirect wholly-owned Subsidiaries.

5.4.3 Directly or indirectly, entering into any joint venture or similar business alliance involving, or entering into any agreement providing for, the investment, contribution or disposition by the Company or its Subsidiaries of assets (including stock of Subsidiaries) having a fair market value (as reasonably determined by the Board) in excess of $300.0 million, other than transactions solely between or among the Company and one or more of its direct or indirect wholly-owned Subsidiaries.

5.4.4 Incurring (or extending, supplementing or otherwise modifying any of the material terms of) any indebtedness for borrowed money (including any refinancing of existing indebtedness), assuming, guaranteeing, endorsing or otherwise as an accommodation becoming responsible for the obligations of any other Person (other than the Company or any of its Subsidiaries), or entering into (or extending, supplementing or otherwise modifying any of the material terms of) any agreement under which the Company or any Subsidiary may incur indebtedness for borrowed money in the future, in each case in an aggregate principal amount in excess of $300.0 million in any transaction or series of related transactions and other than a drawdown of amounts committed (including under a revolving facility) under a debt agreement that previously received the prior written consent of the Lead Investors or that was entered into on or prior to the date hereof.

5.4.5 Initiating a voluntary liquidation, dissolution, receivership, bankruptcy or other insolvency proceeding involving the Company or any Subsidiary of the Company that is a “significant subsidiary” as defined in Rule 1-02 of Regulation S-X under the Exchange Act.

5.4.6 Terminating the employment of the Chief Executive Officer of the Company or hiring a new Chief Executive Officer of the Company.

5.4.7 Increasing or decreasing the size of the Board.

5.5 Other Business Opportunities; Company Charter; Company Bylaws . Except with the prior written consent of the Lead Investors, for so long as any Director nominated by any of the Lead Investors is a member of the Board, the Company Charter, as may be amended, restated, supplemented and/or otherwise modified from time to time, shall provide for a renunciation of corporate opportunities presented to the Equity Investors (and their respective Affiliates and Director nominees) to the maximum extent permitted by Section 122(17) of the Delaware General Corporation Law. Each Stockholder (for so long as any Lead Investor is entitled to nominate at least one Director to the Board pursuant to Section 2.1) shall take all necessary or advisable actions, including, to the extent necessary, voting all of its Shares and executing proxies or written consents, as the case may be, to ensure that the provisions in respect of corporate opportunities and director and officer indemnification, exculpation and advancement of expenses set forth in the Company Charter and the Company Bylaws in the forms in existence at the Effective Time are not amended, modified or supplemented in any manner, without the prior written consent of the Lead Investors. The Stockholders shall vote all of their Shares and execute proxies or written consents, as the case

may be, and shall take all necessary or advisable actions, to ensure that the Company Charter and Company Bylaws (a) do not at any time conflict with any provision of this Agreement and (b) permit the Equity Investors to receive the benefits to which they are entitled under this Agreement. In the event of any ambiguity or conflict arising between the terms of this Agreement and those of the Company Charter or Company Bylaws, the terms of this Agreement shall prevail.

5.6 Information Rights . Solely in the event that none of the Company or any of its Subsidiaries is a reporting company under the Exchange Act (and none of the Company or any of its Subsidiaries otherwise files reports required to be filed by Exchange Act reporting companies), the Company will provide to each Equity Investor and each Manager (for so long as such Manager (x) holds Shares valued, based on the value of one share of Common Stock as of the Effective Time, at $500,000 or more and (y) is not employed by or affiliated with a competitor of the Company or its Subsidiaries) (each such Equity Investor and Manager, an “ Information Recipient ”); provided , that with respect to Section 5.6.3 below, the Company reserves the right to withhold any access, information and/or materials set forth below if the Board determines in good faith that such access, information and/or materials would (i) adversely affect the attorney-client privilege between the Company and its counsel, (ii) adversely affect the Company or its Affiliates under governmental regulations or other applicable laws, (iii) be in contravention of any agreement or arrangement with any governmental authority or requiring such information to be kept confidential or (iv) result in a conflict of interest (which clauses (i) through (iv) shall be applied consistently to the Equity Investors and Managers that are similarly situated with respect to the circumstances giving rise to such limitations):

5.6.1 As soon as available after the end of each of the first three quarterly accounting periods in each fiscal year but in any event within sixty (60) days after the end of each such quarterly accounting period in each fiscal year, unaudited consolidated and consolidating statements of income or operations, stockholders’ equity (or the equivalent) and cash flows of the Company and its Subsidiaries for such quarterly period and for the period from the beginning of the fiscal year to the end of such quarter, and unaudited consolidated and consolidating balance sheets of the Company and its Subsidiaries as of the end of such quarterly period.

5.6.2 As soon as available after the end of each fiscal year but in any event within ninety (90) days after the end of each fiscal year, audited consolidated and consolidating statements of income or operations, stockholders’ equity (or the equivalent) and cash flows of the Company and its Subsidiaries for such fiscal year, and consolidated and consolidating balance sheets of the Company and its Subsidiaries as of the end of such fiscal year.

5.6.3 With reasonable promptness, such other financial data and information concerning the Company and its Subsidiaries as any Information Recipient may reasonably request in writing.

5.6.4 Notwithstanding the foregoing, to the extent the financing arrangements of the Company or its Subsidiaries permit longer delivery timelines for the foregoing information to the lenders under such financing arrangements, such longer delivery timelines shall be substituted for the timelines set forth in this Section 5.6; provided that, to the extent

such financing arrangements do not provide for any particular timelines for such delivery, the timelines contemplated herein shall govern.

5.7 Affiliate Transactions . The Company shall not, and shall not permit any of its Subsidiaries to, enter into or amend any agreement or arrangement with a Stockholder or any of its Affiliates (other than the Company and its Subsidiaries), Subsidiaries, directors or officers except for (a) the agreements to be entered into in connection with the Initial Public Offering of the Company; (b) any agreement or transaction among any member of the Company Group and any of the Affiliates of SLP IV or any portfolio company of SLP IV or any of such portfolio company’s Subsidiaries entered into in the ordinary course of business of the Company or its Subsidiaries and on arms’-length terms (other than agreements providing for payment of fees for monitoring, advising or similar services); (c) any agreement or transaction among any member of the Company Group and any of the Affiliates of Thoma Bravo or any portfolio company of Thoma Bravo or any of such portfolio company’s Subsidiaries entered into in the ordinary course of business of Company or its Subsidiaries and on arms’-length terms (other than agreements providing for payment of fees for monitoring, advising or similar services); (d) any agreements or transactions among any member of the Company Group and Affiliates of SLP IV if Thoma Bravo or any of its Affiliates is not a party to such agreement or transaction or to a substantially similar agreement or transaction (so long as Thoma Bravo or a Thoma Bravo Director approves such agreement or transaction); (e) any agreements or transactions among any member of the Company Group and Affiliates of Thoma Bravo if SLP IV or any of its Affiliates is not a party to such agreement or transaction or to a substantially similar agreement or transaction (so long as SLP IV or a Silver Lake Director approves such agreement or transaction); (f) any agreement with any Stockholder other than the Lead Investors or an Affiliate, Subsidiary, director or officer of such Stockholder that has been approved in writing by the Lead Investors; and (g) any agreement or transactions among any member of the Company Group, Thoma Bravo or any of its Affiliates and SLP IV or any of its Affiliates that has been approved in writing by the Majority Co-Investors.

5.8 Acquisition of Shares . After the date hereof, each of the Equity Investors agrees that, for so long as any such party has obligations under Section 2 or Section 3, if such party acquires beneficial ownership (as defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act) of additional Shares, such party shall promptly (and in no event later than two (2) calendar days following the date of such acquisition) notify the Lead Investors. In addition, each of the TB Co-Investors agrees that, for so long as any such party has obligations under Section 2 or Section 3, such party shall not acquire beneficial ownership (as defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act) of additional Shares without the prior written consent of Thoma Bravo. For the avoidance of doubt, this Section 5.8 shall apply to any acquisition of Shares by Affiliates of the Equity Investors and TB Co-Investors, as applicable, to the extent such acquisition of Shares would result in an Equity Investor or TB Co-Investor, as applicable, acquiring beneficial ownership (as defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act) of such Shares.

5.9 Notice of Lock-Up Release or Waiver . If the Company receives notice or otherwise becomes aware of any release or waiver granted by the applicable underwriter(s) under any lock-up agreement entered into in connection with a Public Offering, the Company shall promptly, and

in any event within one (1) business day, provide each Lead Investor with written notice of such release or waiver.

5.10 Confidentiality . Each Stockholder agrees that it will keep confidential and will not disclose, divulge or use for any purpose, other than to monitor its investment in the Company and its Subsidiaries, any confidential information obtained from the Company, unless such confidential information (a) is known or becomes known to the public in general (other than as a result of a breach of this Section 5.10 by such Stockholder or its Affiliates), (b) is or has been independently developed or conceived by such Stockholder without use of the Company’s confidential information or (c) is or has been made known or disclosed to such Stockholder by a third party (other than an Affiliate of such Stockholder) without a breach of any obligation of confidentiality such third party may have; provided, however, that a Stockholder may disclose confidential information (v) to its attorneys, accountants, consultants, and other professionals to the extent necessary to obtain their services in connection with monitoring its investment in the Company, (w) to any prospective purchaser of any Shares from such Stockholder in any Transfer permitted under this Agreement as long as such prospective purchaser agrees prior to such disclosure to be bound by a confidentiality agreement no less favorable to the Company than the provisions of this Section 5.10, (x) to any Affiliate, partner, member or related investment fund of such Stockholder and their respective directors, employees and consultants, in each case in the ordinary course of business, including, in respect of the Lead Investors and the Co-Investors, in reporting and marketing materials issued by them in the ordinary course of business and in fund reporting materials issued by them and their Affiliates to their respective direct and indirect limited partners (including prospective limited partners) in connection with effecting a capital call, related ordinary course fund reporting and fundraising efforts, (y) as may be reasonably determined by such Stockholder to be necessary in connection with such Stockholder’s enforcement of its rights in connection with this Agreement or its investment in the Company and its Subsidiaries or (z) as may otherwise be required by law or legal, judicial or regulatory process or requested by any regulatory or self-regulatory authority or examiner, provided that such Stockholder takes reasonable steps to minimize the extent of any required disclosure described in this clause (z); and provided, further, however, that the acts and omissions of any Person to whom such Stockholder may disclose confidential information pursuant to clauses (v) through (x) of the preceding proviso will be attributable to such Stockholder for purposes of determining such Stockholder’s compliance with this Section 5.10. Each party hereto acknowledges that the Lead Investors, the Co-Investors or any of their respective Affiliates and related investment funds may review the business plans and related proprietary information of many enterprises, including enterprises which may have products or services which compete directly or indirectly with those of the Company and its Subsidiaries, and may trade in the securities of such enterprises. Nothing in this Section 5.10 will preclude or in any way restrict the Lead Investors, the Co-Investors or their respective Affiliates or related investment funds from investing or participating in any particular enterprise, or trading in the securities thereof, whether or not such enterprise has products or services that compete with those of the Company and its Subsidiaries. In addition, nothing in this Section 5.10 will prevent any Stockholder from making disclosures pursuant to and in accordance with the whistleblower policy or other similar policies of the Company.


6.	AMENDMENT, TERMINATION, ETC.

6.1 Oral Modifications . This Agreement may not be orally amended, modified, extended or terminated, nor will any oral waiver of any of its terms be effective.

6.2 Written Modifications . This Agreement (including any specific term set forth herein or portion hereof) may be amended, modified, extended or terminated, and the provisions hereof may be waived, only by an agreement in writing signed by all of the Lead Investors; provided , however , that (a) the consent of the Majority Co-Investors will be required for any amendment, modification, extension, termination or waiver which has a materially adverse and disproportionate effect on the rights of the holders of Co-Investor Shares relative to other Stockholders under this Agreement and (b) the consent of the Majority Managers will be required for any amendment, modification, extension, termination or waiver which has a materially adverse and disproportionate effect on the rights of the holders of Management Shares relative to other Stockholders under this Agreement. Each such amendment, modification, extension, termination and waiver will be binding upon each party hereto and each holder of Shares subject hereto. In addition, each party hereto and each holder of Shares subject hereto may waive any right hereunder by an instrument in writing signed by such party or holder. The effectiveness of this Agreement is expressly conditioned upon the occurrence of the Effective Time and if the Initial Public Offering of the Company is terminated, withdrawn or otherwise abandoned prior to the Effective Time then this Agreement may be terminated by the Lead Investors and the Original Agreement shall remain in full force and effect.

6.3 Effect of Termination . No expiration or termination of this Agreement or any part hereof will relieve any Person of liability for a breach at or prior to such expiration or termination.


7.	DEFINITIONS. For purposes of this Agreement:

7.1 Certain Matters of Construction . In addition to the definitions referred to or set forth below in this Section 7:

(a) the words “hereof”, “herein”, “hereunder” and words of similar import refer to this Agreement as a whole and not to any particular Section or provision of this Agreement, and references to a particular Section of this Agreement include all subsections thereof;

(b) the word “including” means including, without limitation;

(c) definitions are equally applicable to both nouns and verbs and the singular and plural forms of the terms defined; and

(d) the masculine, feminine and neuter genders shall each be deemed to include the other.

7.2 Definitions . The following terms shall have the following meanings:

“ Affiliate ” means, with respect to any specified Person, (i) any other Person which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person (for the purposes of this definition, “control” (including, with

correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise) and (ii) with respect to any natural person, any Member of the Immediate Family of such natural person.

“ Aggregate Silver Lake Ownership ” means the total number of (i) Lead Investor Shares owned, in the aggregate and without duplication, by Silver Lake and (ii) Co-Investor Shares owned, in the aggregate and without duplication, by the SL Co-Investor, as of the date of such calculation.

“ Aggregate Thoma Bravo Ownership ” means the total number of (i) Lead Investor Shares owned, in the aggregate and without duplication, by Thoma Bravo and (ii) Co-Investor Shares owned, in the aggregate and without duplication, by the TB Co-Investors, as of the date of such calculation.

“ Award Agreement ” shall have the meaning set forth in a Management Equity Plan.

“ Award Stock ” means Common Stock issued pursuant to a Management Equity Plan.

“ Awards ” means any award of equity securities issued pursuant to a Management Equity Plan.

“ Board ” means the board of directors of the Company.

“ business day ” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in the City of New York.

“ Change of Control ” means any transaction or series of related transactions (whether by merger, consolidation, recapitalization, liquidation or sale or transfer of Common Stock or assets (including equity securities of Subsidiaries) or otherwise) as a result of which any Person or group, within the meaning of Section 13(d)(3) of the Exchange Act (other than Equity Investors and their respective Affiliates, any group of which the foregoing are members and any other members of such a group), obtains ownership, directly or indirectly, of (i) Shares that represent more than 50% of the total voting power of the outstanding capital stock of the Company or any applicable successor entity or (ii) all or substantially all of the assets of the Company and its Subsidiaries on a consolidated basis.

“ Co-Investor Shares ” means (i) all Common Stock originally issued to, or issued with respect to shares of Common Stock originally issued to, or held by, a Co-Investor, whenever issued, including all Common Stock issued upon the exercise, conversion or exchange of any Awards, Options, Warrants or Convertible Securities and (ii) all Awards, Options, Warrants or Convertible Securities originally granted or issued to, or held by, a Co-Investor (treating such Awards, Options, Warrants or Convertible Securities as a number of shares of Common Stock equal to the number of Equivalent Shares represented by such Awards, Options, Warrants or Convertible Securities for all purposes of this Agreement except as otherwise specifically set forth herein), except that any Co-Investor

Shares transferred to a Lead Investor or Manager will cease to be Co-Investor Shares and will become Lead Investor Shares or Management Shares, as the case may be.

“ Co-Investors ” means the SL Co-Investor and the TB Co-Investors.

“ Common Stock ” means the Common Stock, par value $0.001 per share, of the Company (or any successor of the Company by combination of shares, recapitalization, merger, consolidation or other reorganization) and any stock into which any such Common Stock shall have been changed or any stock resulting from any reclassification of any such Common Stock.

“ Company Bylaws ” means the Amended and Restated Bylaws of the Company as in effect at the Effective Time.

“ Company Charter ” means the Amended and Restated Certificate of Incorporation of the Company as in effect at the Effective Time.

“ Company Group ” means the Company and its Subsidiaries.

“ Convertible Securities ” means any evidence of indebtedness, shares of stock (other than Common Stock) or other securities (other than Award, Options and Warrants) which are directly or indirectly convertible into or exchangeable or exercisable for shares of Common Stock.

“ Covered Person ” means (i) each Equity Investor, in each case in his, her or its capacity as such, and each such Person’s successors, heirs, estates or legal representative, (ii) any Affiliate, in his, her or its capacity as such, of each Equity Investor, in his, her or its capacity as such and (iii) any Affiliate, officer, director, shareholder, partner, manager, member, employee representative or agent of any of the foregoing, in each case in clauses (i) or (ii) whether or not such Person continues to have the applicable status referred to in such clauses.

“ Director ” means any of the individuals elected or appointed to serve on the Board.

“ Equity Investors ” mean, collectively, Silver Lake, Thoma Bravo, the SL Co-Investor and the TB Co-Investors.

“ Equivalent Shares ” means, at any date of determination, (i) as to any outstanding shares of Common Stock, such number of shares of Common Stock and (ii) as to any outstanding Awards, Options, Warrants or Convertible Securities which constitute Shares, the maximum number of shares of Common Stock for which or into which such Awards, Options, Warrants or Convertible Securities may at the date of determination be exercised, converted or exchanged (or which will become exercisable, convertible or exchangeable on or prior to, or by reason of, the transaction or circumstance in connection with which the number of Equivalent Shares is to be determined) and any Award Stock other than any shares of Award Stock that are not then vested or will not become vested on or prior to, or by reason of, the transaction or circumstance in connection with which the number of Equivalent Shares is to be determined.

“ Exchange Act ” means the Securities Exchange Act of 1934, as in effect from time to time.

“ Form 8-A Effective Time ” means the date and time on which the registration statement on Form 8-A filed by the Company under the Exchange Act with the SEC to register the Common Stock becomes effective

“ Independent Director ” means a Director who qualifies, as of the date of such Director’s election or appointment to the Board (or any committee thereof) and as of any other date on which the determination is being made, as an “independent director” under the applicable rules of the Stock Exchange, as determined by the Board and, to the extent applicable with respect to Audit Committee membership, an “Independent Director” under Rule 10A-3 under the Exchange Act and any corresponding requirement of Stock Exchange rules for audit committee members, as well as any other requirement of the U.S. securities laws that is then applicable to the Company, as determined by the Board.

“ Initial Public Offering ” or “ IPO ” means the initial Public Offering pursuant to the IPO Registration Statement.

“ IPO Registration Statement ” means the registration statement on Form S-1 (SEC File No. 333-[●]) filed with the SEC on [●], 2018 and declared effective on [●], 2018.

“ Lead Investor Shares ” means (i) all shares of Common Stock originally issued to, or issued with respect to shares originally issued to, or held by, a Lead Investor, whenever issued, including all shares of Common Stock issued upon the exercise, conversion or exchange of any Awards, Options, Warrants or Convertible Securities and (ii) all Awards, Options, Warrants and Convertible Securities originally granted or issued to, or held by, a Lead Investor (treating such Awards, Options, Warrants and Convertible Securities as a number of Shares equal to the number of Equivalent Shares represented by such Awards, Options, Warrants and Convertible Securities for all purposes of this Agreement except as otherwise specifically set forth herein), except that any Lead Investor Shares transferred to a Co-Investor or Manager will cease to be Lead Investor Shares and will become Co-Investor Shares or Management Shares, as the case may be.

“ Lead Investors ” means Silver Lake and Thoma Bravo, collectively. Any approval, determination or other action to be taken by the “Lead Investors” shall require the mutual approval, determination or action, as applicable, of both of the Lead Investors.

“ Losses ” means any loss, liability, claim, charge, action, suit, proceeding, assessed interest, penalty, damage, tax, expense and causes of action of any nature whatsoever.

“ Majority Co-Investors ” means, as of any date, the holders of a majority of the Co-Investor Shares outstanding on such date.

“ Majority Managers ” means, as of any date, the holders of a majority of the Management Shares outstanding on such date.

“ Management Equity Plan ” shall mean the Company’s incentive equity plan(s) as approved by the Board (as modified by a Manager’s Award Agreement, if applicable).

“ Management Shares ” means (i) all shares of Common Stock originally issued to, or issued with respect to shares originally issued to, or held by, a Manager, whenever issued, including all shares of Common Stock issued upon the exercise, conversion or exchange of any Awards, Options, Warrants or Convertible Securities, (ii) all Awards, Options, Warrants and Convertible Securities originally granted or issued to, or held by, a Manager (treating such Awards, Options, Warrants and Convertible Securities as a number of Shares equal to the number of Equivalent Shares represented by such Awards, Options, Warrants and Convertible Securities for all purposes of this Agreement except that such Awards, Options, Warrants and Convertible Securities shall not constitute Shares as otherwise specifically set forth herein) and (iii) all unvested Options originally granted or issued to a Manager (treating such unvested Options as a number of Shares equal to the number of Equivalent Shares represented by such unvested Options for all purposes of this Agreement except that such unvested Options shall not constitute Shares as otherwise specifically set forth herein), except that any Management Shares transferred to a Lead Investor or Co-Investor will cease to be Management Shares and will become Lead Investor Shares or Co-Investor Shares, as the case may be.

“ Member of the Immediate Family ” means, with respect to any individual, each parent, spouse or child or other descendants of such individual (including by adoption), each trust created solely for the benefit of one or more of the aforementioned Persons and their spouses and each custodian or guardian of any property of one or more of the aforementioned Persons in his capacity as such custodian or guardian.

“ Options ” means any options to subscribe for, purchase or otherwise directly acquire Common Stock.

“ Person ” means any individual, partnership, corporation, company, association, trust, joint venture, limited liability company, unincorporated organization, entity or division, or any government, governmental department or agency or political subdivision thereof.

“ Public Offering ” means a public offering and sale of Common Stock for cash pursuant to an effective registration statement under the Securities Act.

“ SEC ” means the U.S. Securities and Exchange Commission.

“ Securities Act ” means the Securities Act of 1933, as in effect from time to time.

“ Shares ” means (i) any and all shares of Common Stock and all other equity securities of the Company, securities of the Company convertible into, or exchangeable or exercisable for, such shares, and Options, Warrants or other rights to acquire such shares, including all Lead Investor Shares, Co-Investor Shares and Management Shares and (ii) any equity securities issued or issuable directly or indirectly with respect to the shares referred to in clause (i) above by way of equity distribution or equity split or in connection with a combination of equity, recapitalization, merger, consolidation, reorganization or other transaction.

“ Stock Exchange ” means the New York Stock Exchange or other national securities exchange or interdealer quotation system on which the Common Stock is at any time listed or quoted.

“ Subsidiary ” shall mean any Person in which the Company owns, directly or indirectly, stock or other shares or interests possessing fifty percent (50%) or more of the total combined voting power of such Person or otherwise has the power to direct the management and policies of such Person, whether through ownership of shares, by contract or otherwise.

“ Third-Party Claim ” means any (i) claim brought by a Person other than a Covered Person or the Company or any of its Subsidiaries and (ii) any derivative claim brought in the name of the Company or any of its Subsidiaries that is initiated by any Person other than a Covered Person.

“ Transfer ” means any sale, pledge, assignment, encumbrance or other transfer or disposition to any other Person, whether directly, indirectly, voluntarily, involuntarily, by operation of law, pursuant to judicial process or otherwise, and “ Transferred ”, “ Transferee ”, “ Transferability ”, and “ Transferor ” shall each have a correlative meaning. For the avoidance of doubt, transfers of limited partner interests in the Lead Investors by limited partners in the Lead Investors shall not constitute a “ Transfer ” for the purposes hereof.

“ Unvested Shares ” means, as of any given time, any Common Stock, Shares, Options or Awards that are subject to vesting or a forfeiture provision pursuant to any Award Agreement (including any Award Agreement entered into prior to the date hereof) or any Management Equity Plan and which have not yet vested or as to which such forfeiture provision shall not have lapsed in accordance with the terms of such Award Agreement

“ Warrants ” means any warrants to subscribe for, purchase or otherwise directly acquire Common Stock.


8.	MISCELLANEOUS.

8.1 Authority; Effect . Each party hereto represents and warrants to and agrees with each other party hereto that (a) the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized on behalf of such party and do not violate any agreement or other instrument applicable to such party or by which such party’s assets are bound and (b) this Agreement constitutes a legal, valid and binding obligation of such party, enforceable against such party in accordance with its terms, except to the extent that the enforcement of the rights and remedies created hereby is subject to (i) bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors generally and (ii) general principles of equity. This Agreement does not, and shall not be construed to, give rise to the creation of a partnership among any of the parties hereto, or to constitute any of such parties members of a joint venture or other association.

8.2 Notices . Any notices and other communications required or permitted in this Agreement shall be effective if in writing and (a) delivered personally or (b) sent (i) by nationally-

known, reputable overnight carrier, (ii) by registered or certified mail, postage prepaid, or (iii) by email of a “portable document format” (.pdf) document, in each case, addressed as follows:

If to the Company, to:

c/o SolarWinds Corporation
7171 Southwest Parkway, Building 400
Austin, Texas 78735
Attention: Jason W. Bliss
Email: Jason.Bliss@solarwinds.com

with a copy to (which copy shall not constitute notice):

DLA Piper LLP (US)
401 Congress Avenue, Suite 2500
Austin, Texas 78701
Attention: John J. Gilluly III, P.C.
Email: John.Gilluly@dlapiper.com

If to any Lead Investor, to:

c/o Thoma Bravo, LLC

600 Montgomery Street, 20 ^th Floor

San Francisco, CA 94111


Attention:	Seth Boro

Robert Sayle

Michael Hoffman

Email: sboro@thomabravo.com; rsayle@thomabravo.com; mhoffman@thomabravo.com

c/o Silver Lake Partners

9 West 57 ^th Street, 32 ^nd Floor

New York, NY 10019

Attention: Andrew J. Schader

Email: andy.schader@silverlake.com

with a copy to (which copy shall not constitute notice):

Kirkland & Ellis LLP

300 N. LaSalle Street

Chicago, IL 60654


Attention:	Gerald T. Nowak, P.C.

Corey D. Fox, P.C.

Bradley C. Reed

Facsimile: (312) 862-2200

Email: gnowak@kirkland.com; cfox@kirkland.com; breed@kirkland.com

If to a Co-Investor or a Manager, to the applicable address set forth in the stock record book of the Company.

Notice to the holder of record of any shares of capital stock will be deemed to be notice to the holder of such shares for all purposes hereof.

Unless otherwise specified herein, such notices or other communications will be deemed effective (a) on the date received, if personally delivered, (b) one business day after being sent by nationally-known, reputable overnight carrier, (c) three business days after deposit with the U.S. Postal Service, if sent by registered or certified mail or (d) on the date sent by email of a “portable document format” (.pdf) document if sent during normal business hours of the recipient and on the next business day if sent after normal business hours of the recipient. Each party hereto is entitled to specify a different address by giving notice as aforesaid to the Company and the Lead Investors.

8.3 Binding Effect, Etc. Except for restrictions on the Transfer of Shares set forth in other agreements, plans or other documents, this Agreement constitutes the entire agreement of the parties with respect to its subject matter, supersedes all prior or contemporaneous oral or written agreements or discussions with respect to such subject matter (including, for the avoidance of doubt, the Original Agreement), and is binding upon and will inure to the benefit of the parties hereto and their respective heirs, representatives, successors and assigns. Except as otherwise expressly provided herein, no Stockholder party hereto may assign any of its respective rights or delegate any of its respective obligations under this Agreement without the prior written consent of the Company and the Lead Investors, and any attempted assignment or delegation in violation of the foregoing will be null and void.

8.4 Descriptive Headings . The descriptive headings of this Agreement are for convenience of reference only, are not to be considered a part hereof and will not be construed to define or limit any of the terms or provisions hereof.

8.5 Counterparts . This Agreement may be executed in multiple counterparts, each of which will be deemed an original, but all of which taken together constitute one instrument. A facsimile or electronic signature will be considered due execution and will be binding upon the signatory thereof with the same force and effect as if the signature were an original.

8.6 Severability . In the event that any provision hereof would, under applicable law, be invalid or unenforceable in any respect, such provision will be construed by modifying or limiting it so as to be valid and enforceable to the maximum extent compatible with, and possible under, applicable law and the parties will negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the fullest extent possible. The provisions hereof are severable, and in the event any provision hereof is held invalid or unenforceable in any respect, that will not invalidate, render unenforceable or otherwise affect any other provision hereof.

8.7 No Recourse . Notwithstanding anything that may be expressed or implied in this Agreement, each party to this Agreement covenants, agrees and acknowledges that no recourse under this Agreement or any documents or instruments delivered in connection with this Agreement will be had against any former, current or future, direct or indirect director, officer, employee, agent or Affiliate of a Lead Investor, any former, current or future, direct or indirect holder of any equity interests or securities of a Lead Investor (whether such holder is a limited or general partner, member, stockholder or otherwise), any former, current or future assignee of a Lead Investor or any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder, Affiliate, controlling person, representative or assignee of any of the foregoing (collectively, the “ No Recourse Persons ”), as such, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other applicable law, it being expressly agreed and acknowledged that no personal liability whatsoever will attach to, be imposed on or otherwise be incurred by any No Recourse Person for any obligation of any Lead Investor under this Agreement or any documents or instruments delivered in connection with this Agreement for any claim based on, in respect of or by reason of such obligations or their creation.


9.	GOVERNING LAW.

9.1 Governing Law . This Agreement and all Covered Actions will be governed by and construed in accordance with the domestic substantive laws of the State of Delaware without giving effect to any choice or conflict of laws provision or rule that would cause the application of the domestic substantive laws of any other jurisdiction. As used herein, the term “ Covered Action ” means any action claim, cause of action or suit (whether based in contract, tort or otherwise), inquiry, proceeding or investigation arising out of, based upon or relating to (a) this Agreement or relating to the subject matter hereof, (b) the corporate affairs, corporate governance or internal affairs of the Company and its Subsidiaries, whether or not specifically addressed in this Agreement, (c) any derivative action or proceeding brought by any Stockholder on behalf of the Company, (d) relating to any breach or alleged breach of fiduciary duty owed by any director or officer of the Company to the Company or its Stockholders or (e) relating to any breach or alleged breach of fiduciary duty by any director or officer of any Subsidiary of the Company to such Subsidiary or to the Company.

9.2 Consent to Jurisdiction; Venue; Service . Each party to this Agreement, by its execution hereof, (a) hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the city of Wilmington in the State of Delaware for the purpose of any Covered Action, (b) hereby waives to the extent not prohibited by applicable law, and agrees not to assert, and agrees not to allow any of its Subsidiaries to assert, by way of motion, as a defense or otherwise, in any Covered Action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that any such proceeding brought in one of the above-named courts is improper, or that this Agreement or any Covered Action or the subject matter hereof or thereof may not be enforced in or by such court and (c) hereby agrees not to commence or maintain any Covered Action other than before one of the above-named courts nor to make any motion or take any other action seeking or intending to cause the transfer or removal of any such Covered Action to any court other than one of the above-named courts whether on the grounds of inconvenient forum or otherwise. Each party consents to service of process in any Covered Action in any manner permitted by Delaware law, and agrees that service

of process by registered or certified mail, return receipt requested, at its address specified pursuant to Section 8.2 hereof is reasonably calculated to give actual notice. Notwithstanding the foregoing in this Section 9.2, a party may commence any action in a court other than the above-named courts solely for the purpose of enforcing an order or judgment issued by one of the above-named courts.

9.3 WAIVER OF JURY TRIAL . TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH PARTY HERETO HEREBY WAIVES AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE OR ACTION, CLAIM, CAUSE OF ACTION OR SUIT (IN CONTRACT, TORT OR OTHERWISE), INQUIRY, PROCEEDING OR INVESTIGATION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING. EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE OTHER PARTIES HERETO THAT THIS SECTION 9.3 CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH THEY ARE RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT. ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 9.3 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

9.4 Exercise of Rights and Remedies . The Company and each Stockholder will have all remedies available at law, in equity or otherwise in the event of any breach or violation of this Agreement or any default hereunder by the Company or any Stockholder. The parties acknowledge and agree that in the event of any breach of this Agreement, in addition to any other remedies that may be available, each of the parties hereto will be entitled to specific performance of the obligations of the other parties hereto and, in addition, to such other equitable remedies (including preliminary or temporary relief) as may be appropriate in the circumstances. No delay of or omission in the exercise of any right, power or remedy accruing to any party as a result of any breach or default by any other party under this Agreement will impair any such right, power or remedy, nor shall it be construed as a waiver of or acquiescence in any such breach or default, or of any similar breach or default occurring later; nor will any such delay, omission or waiver of any single breach or default be deemed a waiver of any other breach or default occurring before or after that waiver.

9.5 Waiver of Sovereign Immunity .

9.5.1 With respect to the liability of each Equity Investor to perform its obligations under this Agreement, with respect to itself or its property, each Equity Investor:

(a) agrees that, for purposes of the doctrine of sovereign immunity, the execution, delivery and performance by it of this Agreement constitutes private and commercial acts done for private and commercial purposes;

(b) agrees that, should any proceedings be brought against it or its assets in any jurisdiction in relation to this Agreement or any transaction contemplated by this Agreement

in accordance with the terms hereof, the Equity Investor is not entitled to any immunity on the basis of sovereignty in respect of its obligations under this Agreement, and no immunity from such proceedings (including, without limitation, immunity from service of process from suit, from the jurisdiction of any court, from an order or injunction of such court or the enforcement of same against its assets) shall be claimed by or on behalf of such party or with respect to its assets;

(c) waives, in any such proceedings, to the fullest extent permitted by law, any right of immunity which it or any of its assets now has or may acquire in the future in any jurisdiction;

(d) subject to the terms and conditions hereof, consents generally in respect of the enforcement of any judgment or award against it in any such proceedings to the giving of any relief or the issue of any process in any jurisdiction in connection with such proceedings (including, without limitation, pre-judgment attachment, post-judgment attachment, the making, enforcement or execution against or in respect of any assets whatsoever irrespective of their use or intended use of any order or judgment that may be made or given in connection therewith); and

(e) specifies that, for the purposes of this provision, “assets” shall be taken as excluding “premises of the mission” as defined in the Vienna Convention on Diplomatic Relations signed at Vienna, April 18, 1961, “consular premises” as defined in the Vienna Convention on Consular Relations signed in 1963, and military property or military assets or property of the Equity Investor.

[Signature Pages Follow.]

IN WITNESS WHEREOF, each of the undersigned has duly executed this Agreement (or caused this Agreement to be executed on its behalf by its officer or representative thereunto duly authorized) as of the date first above written.



THE COMPANY:	SOLARWINDS CORPORATION

	By:	/s/ KEVIN B. THOMPSON
	Name:	Kevin B. Thompson
	Title:	President and Chief Executive Officer



THE LEAD INVESTORS:	THOMA BRAVO FUND XI, L.P.

	By:	Thoma Bravo Partners XI, L.P.
	Its:	General Partner

	By:	Thoma Bravo, LLC
	Its:	General Partner

	By:	/s/ SETH BORO
	Name:	Seth Boro
	Title:	Authorized Signatory



	THOMA BRAVO FUND XI-A, L.P.

	By:	Thoma Bravo Partners XI, L.P.
	Its:	General Partner

	By:	Thoma Bravo, LLC
	Its:	General Partner

	By:	/s/ SETH BORO
	Name:	Seth Boro
	Title:	Authorized Signatory



	THOMA BRAVO EXECUTIVE FUND XI, L.P.

	By:	Thoma Bravo Partners XI, L.P.
	Its:	General Partner

	By:	Thoma Bravo, LLC
	Its:	General Partner

	By:	/s/ SETH BORO
	Name:	Seth Boro
	Title:	Authorized Signatory