Form of Stock Option Agreement under 2008 Stock Plan



 Exhibit 10.5 
 SOLARWINDS, INC. 
 2008 EQUITY INCENTIVE PLAN 
 NOTICE OF GRANT OF STOCK OPTION 
 Unless otherwise defined herein, the terms defined in the SolarWinds, Inc. 2008 Equity Incentive Plan (the “Plan”) will have the same defined meanings in this Notice of Grant of Stock Option (the “Notice of Grant”) and
Terms and Conditions of Stock Option Grant, attached hereto as Exhibit A (together, the “Agreement”). 
  

									
				
	Participant:	  	  
	  		  	
				
	Address:	  	  
	  		  	
				
		  	  
	  		  	

 Participant has been granted an Option to purchase Common Stock, subject to the terms and
conditions of the Plan and this Agreement, as follows: 

									
				
	Grant Number	 	  
	 		 	
				
	Date of Grant	 	  
	 		 	
				
	Vesting Commencement Date	 	  
	 		 	
				
	Number of Shares Granted	 	  
	 		 	
				
	Exercise Price per Share	 	 $
	 		 	
				
	Total Exercise Price	 	 $
	 		 	
				
	Type of Option	 	         Incentive Stock Option	 		 	
				
		 	         Nonstatutory Stock Option	 		 	
				
	Term/Expiration Date	 	  
	 		 	
				
	Vesting Schedule:	 		 		 	

 Subject to accelerated vesting as set forth below or in the Plan, this Option will be exercisable,
in whole or in part, in accordance with the following schedule: 
  
  

 
  
  
  
  







 Termination Period: 
 This Option will be exercisable for three (3) months after Participant ceases to be a Service Provider, unless such termination is due to Participant’s death or Disability, in which case this Option will be
exercisable for twelve (12) months after Participant ceases to be a Service Provider. Notwithstanding the foregoing, in no event may this Option be exercised after the Term/Expiration Date as provided above and may be subject to earlier
termination as provided in Section 15(c) of the Plan. 
 By Participant’s signature and the signature of the Company’s
representative below, Participant and the Company agree that this Option is granted under and governed by the terms and conditions of the Plan and this Agreement. Participant has reviewed the Plan and this Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Agreement and fully understands all provisions of the Plan and Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of
the Administrator upon any questions relating to the Plan and Agreement. Participant further agrees to notify the Company upon any change in the residence address indicated below. 
  

					
	 PARTICIPANT
	 		 	SOLARWINDS, INC.
			
	  
	 		 	  

	 Signature
	 		 	By
			
	  
	 		 	  

	 Print Name
	 		 	Title
			
	 Address:
	 		 	
			
	  
	 		 	
			
	  
	 		 	

  

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 EXHIBIT A 
 TERMS AND CONDITIONS OF STOCK OPTION GRANT 
 1. Grant. The Company hereby grants to the
Participant named in the Notice of Grant (the “Participant”) an option (the “Option”) to purchase the number of Shares, as set forth in the Notice of Grant, at the exercise price per Share set forth in the Notice of Grant (the
“Exercise Price”), subject to all of the terms and conditions in this Agreement and the Plan, which is incorporated herein by reference. Subject to Section 20(c) of the Plan, in the event of a conflict between the terms and conditions
of the Plan and the terms and conditions of this Agreement, the terms and conditions of the Plan will prevail. 
 If designated in the Notice
of Grant as an Incentive Stock Option (“ISO”), this Option is intended to qualify as an ISO under Section 422 of the Code. However, if this Option is intended to be an ISO, to the extent that it exceeds the $100,000 rule of Code
Section 422(d) it will be treated as a Nonstatutory Stock Option (“NSO”). 
 2. Vesting Schedule. Except as provided in
Section 3, the Option awarded by this Agreement will vest in accordance with the vesting provisions set forth in the Notice of Grant. Shares scheduled to vest on a certain date or upon the occurrence of a certain condition will not vest in
Participant in accordance with any of the provisions of this Agreement, unless Participant will have been continuously a Service Provider from the Date of Grant until the date such vesting occurs. 
 3. Administrator Discretion. The Administrator, in its discretion, may accelerate the vesting of the balance, or some lesser portion of the
balance, of the unvested Option at any time, subject to the terms of the Plan. If so accelerated, such Option will be considered as having vested as of the date specified by the Administrator. 
 4. Exercise of Option. This Option may be exercised only within the term set out in the Notice of Grant, and may be exercised during such term
only in accordance with the Plan and the terms of this Agreement. 
 This Option is exercisable by delivery of an exercise notice, in the
form attached as Exhibit B (the “Exercise Notice”) or in a manner and pursuant to such procedures as the Administrator may determine, which will state the election to exercise the Option, the number of Shares in respect of which the
Option is being exercised (the “Exercised Shares”), and such other representations and agreements as may be required by the Company pursuant to the provisions of the Plan. The Exercise Notice will be completed by Participant and delivered
to the Company. The Exercise Notice will be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares together with any applicable tax withholding. This Option will be deemed to be exercised upon receipt by the Company of
such fully executed Exercise Notice accompanied by such aggregate Exercise Price. 
 5. Method of Payment. Payment of the aggregate
Exercise Price will be by any of the following, or a combination thereof, at the election of Participant: 
 (a) cash; 
  

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 (b) check; or 
 (c) consideration received by the Company under a formal cashless exercise program adopted by the Company in connection with the Plan. 
 6. Tax Obligations. 
 (a) Withholding of Taxes. Notwithstanding any contrary provision of this
Agreement, no certificate representing the Shares will be issued to Participant, unless and until satisfactory arrangements (as determined by the Administrator) will have been made by Participant with respect to the payment of income, employment and
other taxes which the Company determines must be withheld with respect to such Shares. To the extent determined appropriate by the Company in its discretion, it will have the right (but not the obligation) to satisfy any tax withholding obligations
by reducing the number of Shares otherwise deliverable to Participant. If Participant fails to make satisfactory arrangements for the payment of any required tax withholding obligations hereunder at the time of the Option exercise, Participant
acknowledges and agrees that the Company may refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time of exercise. 
 (b) Notice of Disqualifying Disposition of ISO Shares. If the Option granted to Participant herein is an ISO, and if Participant sells or
otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (i) the date two (2) years after the Grant Date, or (ii) the date one (1) year after the date of exercise, Participant will
immediately notify the Company in writing of such disposition. Participant agrees that Participant may be subject to income tax withholding by the Company on the compensation income recognized by Participant. 
 (c) Code Section 409A. Under Code Section 409A, an option that vests after December 31, 2004 that was granted with a per Share exercise
price that is determined by the Internal Revenue Service (the “IRS”) to be less than the Fair Market Value of a Share on the date of grant (a “Discount Option”) may be considered “deferred compensation.” A Discount
Option may result in (i) income recognition by Participant prior to the exercise of the option, (ii) an additional twenty percent (20%) federal income tax, and (iii) potential penalty and interest charges. The Discount Option may
also result in additional state income, penalty and interest charges to the Participant. Participant acknowledges that the Company cannot and has not guaranteed that the IRS will agree that the per Share exercise price of this Option equals or
exceeds the Fair Market Value of a Share on the Date of Grant in a later examination. Participant agrees that if the IRS determines that the Option was granted with a per Share exercise price that was less than the Fair Market Value of a Share on
the date of grant, Participant will be solely responsible for Participant’s costs related to such a determination. 
 7. Rights as
Stockholder. Neither Participant nor any person claiming under or through Participant will have any of the rights or privileges of a stockholder of the Company in respect of any Shares deliverable hereunder unless and until certificates
representing such Shares will have been issued, recorded on the records of the Company or its transfer agents or registrars, and delivered to Participant. After such issuance, recordation and delivery, Participant will have all the rights of a
stockholder of the Company with respect to voting such Shares and receipt of dividends and distributions on such Shares. 
  

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 8. No Guarantee of Continued Service. PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE VESTING OF
SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING PARTICIPANT) AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE
OPTION OR ACQUIRING SHARES HEREUNDER. PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND WILL NOT INTERFERE IN ANY WAY WITH PARTICIPANT’S RIGHT OR THE RIGHT OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING PARTICIPANT) TO
TERMINATE PARTICIPANT’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE. 
 9. Address for Notices. Any
notice to be given to the Company under the terms of this Agreement will be addressed to the Company at SolarWinds, Inc., 3711 South MoPac Expressway, Building Two, Austin, Texas 78746, or at such other address as the Company may hereafter designate
in writing. 
 10. Grant is Not Transferable. This Option may not be transferred in any manner otherwise than by will or by the laws
of descent or distribution and may be exercised during the lifetime of Participant only by Participant. 
 11. Binding Agreement.
Subject to the limitation on the transferability of this grant contained herein, this Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto. 
 12. Additional Conditions to Issuance of Stock. If at any time the Company will determine, in its discretion, that the listing, registration or
qualification of the Shares upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory authority is necessary or desirable as a condition to the issuance of Shares to Participant (or his
or her estate), such issuance will not occur unless and until such listing, registration, qualification, consent or approval will have been effected or obtained free of any conditions not acceptable to the Company. The Company will make all
reasonable efforts to meet the requirements of any such state or federal law or securities exchange and to obtain any such consent or approval of any such governmental authority. Assuming such compliance, for income tax purposes the Exercised Shares
will be considered transferred to Participant on the date the Option is exercised with respect to such Exercised Shares. 
 13. Plan
Governs. This Agreement is subject to all terms and provisions of the Plan. In the event of a conflict between one or more provisions of this Agreement and one or more provisions of the Plan, the provisions of the Plan will govern. Capitalized
terms used and not defined in this Agreement will have the meaning set forth in the Plan. 
  

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 14. Administrator Authority. The Administrator will have the power to interpret the Plan and this
Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules (including, but not limited to, the determination of whether or not any Shares
subject to the Option have vested). All actions taken and all interpretations and determinations made by the Administrator in good faith will be final and binding upon Participant, the Company and all other interested persons. No member of the
Administrator will be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or this Agreement. 
 15. Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to Options awarded under the Plan or future Options that may be awarded under the Plan by electronic
means or request Participant’s consent to participate in the Plan by electronic means. Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through any on-line or electronic system
established and maintained by the Company or another third party designated by the Company. 
 16. Captions. Captions provided herein
are for convenience only and are not to serve as a basis for interpretation or construction of this Agreement. 
 17. Agreement
Severable. In the event that any provision in this Agreement will be held invalid or unenforceable, such provision will be severable from, and such invalidity or unenforceability will not be construed to have any effect on, the remaining
provisions of this Agreement. 
 18. Modifications to the Agreement. This Agreement constitutes the entire understanding of the
parties on the subjects covered. Participant expressly warrants that he or she is not accepting this Agreement in reliance on any promises, representations, or inducements other than those contained herein. Modifications to this Agreement or the
Plan can be made only in an express written contract executed by a duly authorized officer of the Company. Notwithstanding anything to the contrary in the Plan or this Agreement, the Company reserves the right to revise this Agreement as it deems
necessary or advisable, in its sole discretion and without the consent of Participant, to comply with Code Section 409A or to otherwise avoid imposition of any additional tax or income recognition under Code Section 409A in connection to
this Option. 
 19. Amendment, Suspension or Termination of the Plan. By accepting this Award, Participant expressly warrants that he
or she has received an Option under the Plan, and has received, read and understood a description of the Plan. Participant understands that the Plan is discretionary in nature and may be amended, suspended or terminated by the Company at any time.

 20. Governing Law. This Agreement will be governed by the laws of the State of Texas, without giving effect to the conflict of law
principles thereof. For purposes of litigating any dispute that arises under this Option or this Agreement, the parties hereby submit to and consent to the jurisdiction of the State of Texas, and agree that such litigation will be conducted in the
courts of Travis County, Texas, or the federal courts for the United States for the Western District of Texas, and no other courts, where this Option is made and/or to be performed. 
  

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 EXHIBIT B 
 SOLARWINDS, INC. 
 2008 EQUITY INCENTIVE PLAN 
 EXERCISE NOTICE 
 SolarWinds, Inc. 
 1301 South MoPac Expressway, Suite 360 
 Austin, Texas 78746 
 Attention:                      
 1. Exercise of Option. Effective as of today,             ,
        , the undersigned (“Purchaser”) hereby elects to purchase              shares (the “Shares”) of the Common
Stock of SolarWinds, Inc. (the “Company”) under and pursuant to the 2008 Equity Incentive Plan (the “Plan”) and the Stock Option Agreement dated              (the
“Agreement”). The purchase price for the Shares will be $            , as required by the Agreement. 
 2. Delivery of Payment. Purchaser herewith delivers to the Company the full purchase price of the Shares and any required tax withholding to be
paid in connection with the exercise of the Option. 
 3. Representations of Purchaser. Purchaser acknowledges that Purchaser has
received, read and understood the Plan and the Agreement and agrees to abide by and be bound by their terms and conditions. 
 4. Rights
as Stockholder. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the Shares, no right to vote or receive dividends or any other rights as a
stockholder will exist with respect to the Shares subject to the Option, notwithstanding the exercise of the Option. The Shares so acquired will be issued to Participant as soon as practicable after exercise of the Option. No adjustment will be made
for a dividend or other right for which the record date is prior to the date of issuance, except as provided in Section 15 of the Plan. 
 5. Tax Consultation. Purchaser understands that Purchaser may suffer adverse tax consequences as a result of Purchaser’s purchase or disposition of the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or disposition of the Shares and that Purchaser is not relying on the Company for any tax advice. 
 6. Entire Agreement; Governing Law. The Plan and Agreement are incorporated herein by reference. This Exercise Notice, the Plan and the Agreement constitute the entire agreement of the parties with respect to
the subject matter hereof and supersede in their entirety all prior 

  

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undertakings and agreements of the Company and Purchaser with respect to the subject matter hereof, and may not be modified adversely to the Purchaser’s
interest except by means of a writing signed by the Company and Purchaser. This agreement is governed by the internal substantive laws, but not the choice of law rules, of the State of Texas. 
  

					
	 Submitted by:
	 		 	Accepted by:
			
	 PURCHASER
	 		 	SOLARWINDS, INC.
			
	  
	 		 	  

	 Signature
	 		 	By
			
	  
	 		 	  

	 Print Name
	 		 	Its
			
	 Address:
	 		 	
			
	  
	 		 	
			
	  
	 		 	
			
		 		 	  

		 		 	Date Received

  

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