0001104659-06-045180.txt : 20060703 0001104659-06-045180.hdr.sgml : 20060703 20060703172006 ACCESSION NUMBER: 0001104659-06-045180 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20060703 DATE AS OF CHANGE: 20060703 GROUP MEMBERS: FRANCISCO PARTNERS GP II MANAGEMENT, LLC GROUP MEMBERS: FRANCISCO PARTNERS GP II, L.P. GROUP MEMBERS: FRANCISCO PARTNERS PARALLEL FUND II, L.P. GROUP MEMBERS: SCGF III MANAGEMENT, LLC GROUP MEMBERS: SEQUOIA CAPITAL GROWTH FUND III GROUP MEMBERS: SEQUOIA CAPITAL GROWTH III PRINCIPALS FUND GROUP MEMBERS: SEQUOIA CAPITAL GROWTH PARTNERS III SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: BLUE COAT SYSTEMS INC CENTRAL INDEX KEY: 0001095600 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER STORAGE DEVICES [3572] IRS NUMBER: 911715963 STATE OF INCORPORATION: DE FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-57213 FILM NUMBER: 06941085 BUSINESS ADDRESS: STREET 1: 650 ALMANOR AVENUE CITY: SUNNYVALE STATE: CA ZIP: 94085 BUSINESS PHONE: 4082202200 MAIL ADDRESS: STREET 1: 650 ALMANOR AVENUE CITY: SUNNYVALE STATE: CA ZIP: 94085 FORMER COMPANY: FORMER CONFORMED NAME: CACHEFLOW INC DATE OF NAME CHANGE: 19990923 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Francisco Partners II LP CENTRAL INDEX KEY: 0001333356 IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 2882 SAND HILL ROAD STREET 2: STE 280 CITY: MENLO PARK STATE: CA ZIP: 94025 BUSINESS PHONE: 6502332906 MAIL ADDRESS: STREET 1: 2882 SAND HILL ROAD STREET 2: STE 280 CITY: MENLO PARK STATE: CA ZIP: 94025 SC 13D 1 a06-14776_1sc13d.htm BENEFICIAL OWNERSHIP OF 5% OR MORE

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

SCHEDULE 13D

Under the Securities Exchange Act of 1934
(Amendment No. )*

BLUE COAT SYSTEMS, INC.

(Name of Issuer)

Common Stock, $0.0001 par value per share

(Title of Class of Securities)

126946102

(CUSIP Number)

Francisco Partners II, L.P.
2882 Sand Hill Road
Menlo Park, California 94025
Attention: Keith Geeslin
Telephone: (650) 233-2900

with a copy to:

Michael J. Kennedy, Esq.
O’Melveny & Myers LLP
Embarcadero Center West
275 Battery Street, Suite 2600
San Francisco, California 94111
Telephone: (415) 984-8700

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

June 22, 2006

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP No. 126946102						Page __ of __ Pages

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) Francisco Partners II, L.P. 20-3134319

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			o
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) AF, WC (see Item 3)

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization State of Delaware

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power 0

			8.	Shared Voting Power 2,400,000*†

			9.	Sole Dispositive Power 0

			10.	Shared Dispositive Power 1,420,313*

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 2,400,000* (see Item 5)

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 14.2% (see Item 5)

	14.	Type of Reporting Person (See Instructions) PN

CUSIP No. 126946102						Page __ of __ Pages

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) Francisco Partners Parallel Fund II, L.P. 20-4495943

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			o
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) AF, WC (see Item 3)

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization State of Delaware

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power 0

			8.	Shared Voting Power 2,400,000*†

			9.	Sole Dispositive Power 0

			10.	Shared Dispositive Power 19,686*

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 2,400,000* (see Item 5)

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 14.2% (see Item 5)

	14.	Type of Reporting Person (See Instructions) PN

CUSIP No. 126946102						Page __ of __ Pages

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) Francisco Partners GP II, L.P. 20-3134312

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			o
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) OO (see Item 3)

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization United States

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power 0

			8.	Shared Voting Power 2,400,000*†

			9.	Sole Dispositive Power 0

			10.	Shared Dispositive Power 1,440,000*

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 2,400,000* shares of Common Stock (see Item 5)

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 14.2% (see Item 5)

	14.	Type of Reporting Person (See Instructions) PN

CUSIP No. 126946102						Page __ of __ Pages

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) Francisco Partners GP II Management, LLC 20-3134326

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			o
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) OO (see Item 3)

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization State of Delaware

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power 0

			8.	Shared Voting Power 2,400,000*†

			9.	Sole Dispositive Power 0

			10.	Shared Dispositive Power 1,440,000*

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 2,400,000* shares of Common Stock (see Item 5)

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 14.2% (see Item 5)

	14.	Type of Reporting Person (See Instructions) OO

CUSIP No. 126946102						Page __ of __ Pages

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) Sequoia Capital Growth Fund III 20-2812490

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			o
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) AF, WC (see Item 3)

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization State of Delaware

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power 0

			8.	Shared Voting Power 2,400,000*†

			9.	Sole Dispositive Power 0

			10.	Shared Dispositive Power 905,677*

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 2,400,000* shares of Common Stock (see Item 5)

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 14.2% (see Item 5)

	14.	Type of Reporting Person (See Instructions) PN

CUSIP No. 126946102						Page __ of __ Pages

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) Sequoia Capital Growth Partners III 20-3735244

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			o
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) AF, WC (see Item 3)

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization State of Delaware

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power 0

			8.	Shared Voting Power 2,400,000*†

			9.	Sole Dispositive Power 0

			10.	Shared Dispositive Power 9,985*

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 2,400,000* shares of Common Stock (see Item 5)

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 14.2% (see Item 5)

	14.	Type of Reporting Person (See Instructions) PN

CUSIP No. 126946102						Page __ of __ Pages

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) Sequoia Capital Growth III Principals Fund 20-3737763

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			o
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) AF, WC (see Item 3)

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization State of Delaware

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power 0

			8.	Shared Voting Power 2,400,000*†

			9.	Sole Dispositive Power 0

			10.	Shared Dispositive Power 44,336*

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 2,400,000* shares of Common Stock (see Item 5)

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 14.2% (see Item 5)

	14.	Type of Reporting Person (See Instructions) PN

CUSIP No. 126946102						Page __ of __ Pages

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) SCGF III Management, LLC 20-2812373

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			o
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) OO (see Item 3)

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization State of Delaware

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power 0

			8.	Shared Voting Power 2,400,000*†

			9.	Sole Dispositive Power 0

			10.	Shared Dispositive Power 960,000**

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 2,400,000* shares of Common Stock (see Item 5)

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 14.2% (see Item 5)

	14.	Type of Reporting Person (See Instructions) OO

* Consists of shares of Common Stock issuable upon conversion of Series A Preferred Stock.

† Shared voting power includes shares of both the FP Reporting Persons and the Sequoia Reporting Persons. See Items 5 and 6.

The information set forth in response to each separate Item below shall be deemed to be a response to all Items where such information is relevant.

Item 1. Security and Issuer.

This Statement on Schedule 13D (this “Statement”) relates to the shares of Common Stock, $0.0001 par value per share (“Common Stock”), of Blue Coat Systems, Inc., a Delaware corporation (the “Company”). The principal executive offices of the Company are located at 450 North Mary Avenue, Sunnyvale, California 94085.

Item 2. Identity and Background.

(a) This Statement is being filed jointly by the following (each a “Reporting Person” and collectively, the “Reporting Persons”): (1) Francisco Partners II, L.P., a Delaware limited partnership (“Francisco Partners II”), (2) Francisco Partners Parallel Fund II, L.P., a Delaware limited partnership (“Francisco Partners Parallel Fund”), (3) Francisco Partners GP II, L.P., a Delaware limited partnership (“Francisco Partners GP II”), Francisco Partners GP II Management, LLC, a Delaware limited liability company (“Francisco Partners Management” and, together with Francisco Partners II, Francisco Partners Parallel Fund and Francisco Partners GP II, the “FP Reporting Persons”), (4) Sequoia Capital Growth Fund III, a Delaware limited partnership (“Sequoia Growth Fund”), (5) Sequoia Capital Growth Partners III, a Delaware limited partnership (“Sequoia Growth Partners”), (6) Sequoia Capital Growth III Principals Fund, a Delaware limited partnership (“Sequoia Growth Principals Fund”), and (7) SCGF III Management, LLC, a Delaware limited liability company (“SCGF Management”, and, together with Sequoia Growth Fund, Sequoia Growth Partners and Sequoia Growth Principals Fund, the “Sequoia Reporting Persons”). The agreement among the Reporting Persons relating to the joint filing of this statement is attached to this Schedule 13D as Exhibit 99.1.

(b) The address of the principal executive office of each of the FP Reporting Persons is located at 2881 Sand Hill Road, Menlo Park, California 94025. The address of the principal executive office of each of the Sequoia Reporting Persons is located at 3000 Sand Hill Road, Building 4, Suite 180, Menlo Park, California 94025.

(c) The principal business of each of Francisco Partners II and Francisco Partners Parallel Fund is to make direct and indirect investments in various companies. The general partner of each of Francisco Partners II and Francisco Partners Parallel Fund is Francisco Partners GP II. The principal business of Francisco Partners GP II is serving as the general partner of various limited partnerships, including Francisco Partners II and Francisco Partners Parallel Fund, whose principal business is investing directly or indirectly in various companies. The general partner of Francisco Partners GP II is Francisco Partners Management. The principal business of Francisco Partners Management is serving as general partner of Francisco Partners GP II and providing management services to Francisco Partners II and Francisco Partners Parallel Fund at the request of Francisco Partners GP II.

The principal business of each of Sequoia Growth Fund, Sequoia Growth Partners and Sequoia Growth Principals Fund is acquiring, holding and disposing of interests in various companies for investment purposes. The general partner of each of Sequoia Growth Fund, Sequoia Growth Partners and Sequoia Growth Principals Fund is SCGF Management. The principal business of SCGF Management is serving as general partner of Sequoia Growth Fund, Sequoia Growth Partners and Sequoia Growth Principals Fund.

(d) During the last five years, none of the Reporting Persons has been convicted in any criminal proceeding (excluding traffic violations and other minor offenses).

(e) During the last five years, none of the Reporting Persons has been party to any civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which such person was or is subject to any judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

(f) Each of the Reporting Persons is organized under the laws of the State of Delaware.

Item 3. Source and Amount of Funds or Other Consideration.

On June 22, 2006, under the terms of a private placement of Series A Preferred Stock (“Series A Preferred”) by the Company (the “Private Placement”), Francisco Partners II, Francisco Partners Parallel Fund, Sequoia Growth Fund, Sequoia Growth Partners and Sequoia Growth Principals Fund (each, a “Series A Investor”, and together, the “Series A Investors”) purchased in the aggregate 42,060 shares of Series A Preferred at a purchase price of $1000.00 per share.

In the Private Placement, Francisco Partners II purchased 24,891 shares of Series A Preferred; Francisco Partners Parallel Fund purchased 345 shares of Series A Preferred; Sequoia Growth Fund purchased 15,872; Sequoia Growth Partners purchased 175 shares of Series A Preferred; and Sequoia Growth Principals Fund purchased 777 shares of Series A Preferred. The securities were purchased pursuant to the Purchase Agreement (as defined below).

The funds used by the Series A Investors to purchase the Series A Preferred described above were obtained by such entities from capital contributions by their partners and from the available funds of such entities.

Item 4. Purpose of Transaction.

The Reporting Persons consummated the transactions described herein in order to acquire an interest in the Company for investment purposes. The Reporting Persons intend to review continuously their position in the Company. Depending upon future evaluations of the business prospects of the Company and upon other developments, including, but not limited to, general economic and business conditions and stock market conditions, the Reporting Persons may retain or from time to time increase their holdings or dispose of all or a portion of their holdings, subject to any applicable legal and contractual restrictions on their ability to do so.

In addition, the matters set forth in Item 6 below are incorporated in this Item 4 by reference as if fully set forth herein.

Except as set forth in this Item 4 (including the matters described in Item 6 below which are incorporated in this Item 4 by reference), the Reporting Persons have no present plans or proposals that relate to or that result in any of the actions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D.

Item 5. Interest in Securities of the Issuer.

(a) As of June 20, 2006, there were 14,563,522 shares of Common Stock outstanding.

The Reporting Persons may be deemed to share beneficial ownership of 2,400,000 shares of Common Stock issuable upon conversion of 42,060 shares of Series A Preferred, which would constitute approximately 14.2% of the outstanding shares of Common Stock, to the extent that they may be deemed to share voting power of the shares of Series A Preferred under the terms of the Voting Agreement (as defined below). The filing of this Statement shall not be construed as an admission that the Reporting Persons share beneficial ownership of these shares.

Francisco Partners II would beneficially own an aggregate of 1,420,313 shares of Common Stock upon conversion of 24,891 shares of Series A Preferred, which would constitute approximately 8.4% of the outstanding shares of Common Stock. Francisco Partners Parallel Fund would beneficially own an aggregate of 19,686 shares of Common Stock upon conversion of 345 shares of Series A Preferred, which would constitute approximately 0.1% of the outstanding shares of Common Stock. Francisco GP II, as the general partner of Francisco Partners II and Francisco Partners Parallel Fund, and Francisco Partners Management, as the general partner of Francisco Partners GP II, may be deemed to beneficially own an aggregate of 1,440,000 shares of Common Stock upon conversion of 25,236 shares of Series A Preferred, which would constitute approximately 8.5% of the outstanding shares of Common Stock. Except to the extent of its interests as general partner in Francisco Partners II and Francisco Partners Parallel Fund, Francisco Partners GP II expressly disclaims such beneficial ownership and the filing of this Statement shall not be construed as an admission that Francisco Partners GP II is a beneficial owner of the shares of

Series A Preferred owned by Francisco Partners II and Francisco Partners Parallel Fund. Except to the extent of its interest as general partner in Francisco Partners GP, Francisco Partners Management expressly disclaims such beneficial ownership and the filing of this Statement shall not be construed as an admission that Francisco Partners Management is a beneficial owner of the shares of Series A Preferred owned by Francisco Partners II and Francisco Partners Parallel Fund.

Sequoia Growth Fund would beneficially own an aggregate of 905,677 shares of Common Stock upon conversion of 15,872 shares of Series A Preferred, which would constitute approximately 5.3% of the outstanding shares of Common Stock. Sequoia Growth Partners would beneficially own an aggregate of 9,985 shares of Common Stock upon conversion of 175 shares of Series A Preferred, which would constitute approximately 0.1% of the outstanding shares of Common Stock. Sequoia Growth Principals Fund would beneficially own an aggregate of 44,336 shares of Common Stock upon conversion of 777 shares of Series A Preferred, which would constitute approximately 0.3% of the outstanding shares of Common Stock. SCGF Management, as the general partner of Sequoia Growth Fund, Sequoia Growth Partners and Sequoia Growth Fund Principals Fund may be deemed to beneficially own an aggregate of 960,000 shares of Common Stock upon conversion of 16,824 shares of Series A Preferred, which would constitute approximately 5.7% of the outstanding shares of Common Stock. Except to the extent of its interests as general partner in Sequoia Growth Fund, Sequoia Growth Partners and Sequoia Growth Principals Fund, SCGF Management expressly disclaims such beneficial ownership and the filing of this Statement shall not be construed as an admission that SCGF Management is a beneficial owner of the shares of Series A Preferred owned by Sequoia Growth Fund, Sequoia Growth Partners and Sequoia Growth Principals Fund.

By virtue of the relationships described herein, the Reporting Persons may be deemed to constitute a “group” within the meaning of Rule 13d-5 under the Exchange Act. As a member of a group, each Reporting Person may be deemed to share voting and dispositive power with respect to, and therefore beneficially own, the shares beneficially owned by members of the group as a whole. The filing of this Statement shall not be construed as an admission that the Reporting Persons beneficially own those shares held by any other members of the group.

(b) The Reporting Persons may be deemed to share beneficial ownership of 2,400,000 shares of Common Stock upon conversion of 42,060 shares of Series A Preferred to the extent that they may be deemed to share voting power of the shares of Series A Preferred under the terms of the Voting Agreement (as defined below). The filing of this Statement shall not be construed as an admission that the Reporting Persons share beneficial ownership of these shares.

The FP Reporting Persons:

Because Francisco Partners Management is the general partner of Francisco Partners GP II, which is in turn the general partner of Francisco Partners II and Francisco Partners Parallel Fund, Francisco Partners Management may be deemed to have beneficial ownership of 1,440,000 shares of Common Stock issuable upon conversion of 25,236 shares of Series A Preferred, comprising of 24,891 shares of Series A Preferred held by Francisco Partners II, over which Francisco Partners Management has shared voting and dispositive power, and 345 shares of Series A Preferred held by Francisco Partners Parallel Fund, over which Francisco Partners Management has shared voting and dispositive power.

Because Francisco Partners GP II is the general partner of Francisco Partners II and Francisco Partners Parallel Fund, Francisco Partners GP II may be deemed to have beneficial ownership of 1,440,000 shares of Common Stock issuable upon conversion of 25,236 shares of Series A Preferred, comprising of 24,891 shares of Series A Preferred held by Francisco Partners II, over which Francisco Partners GP II has shared voting and dispositive power, and 345 shares of Series A Preferred held by Francisco Partners Parallel Fund, over which Francisco Partners GP II has shared voting and dispositive power.

Francisco Partners II may be deemed to have beneficial ownership of 1,420,313 shares of Common Stock issuable upon conversion of 24,891 shares of Series A Preferred, over which it has shared voting and dispositive power with Francisco Partners GP II and Francisco Partners Management.

Francisco Partners Parallel Fund may be deemed to have beneficial ownership of 19,686 shares of

Common Stock issuable upon conversion of 345 shares of Series A Preferred, over which it has shared voting and dispositive power with Francisco Partners GP II and Francisco Partners Management.

The filing of this statement shall not be construed as an admission that any of the FP Reporting Persons share beneficial ownership for purposes of Section 13(d) of the Exchange Act.

The Sequoia Reporting Persons

Because SCGF Management is the general partner of Sequoia Growth Fund, Sequoia Growth Partners and Sequoia Growth Principals Fund, SCGF Management may be deemed to have beneficial ownership of 960,000 shares of Common Stock issuable upon conversion of 16,824 shares of Series A Preferred, comprising of 15,872 shares of Series A Preferred held by Sequoia Growth Fund, over which SCGF Management has shared voting and dispositive power, 175 shares of Series A Preferred held by Sequoia Growth Partners, over which SCGF Management has shared voting and dispositive power, and 777 shares of Series A Preferred held by Sequoia Growth Principals Fund, over which SCGF Management has shared voting and dispositive power.

Sequoia Growth Fund may be deemed to have beneficial ownership of 905,677 shares of Common Stock issuable upon conversion of 15,872 shares of Series A Preferred, over which it has shared voting and dispositive power with SCGF Management.

Sequoia Growth Partners may be deemed to have beneficial ownership of 9,985 shares of Common Stock issuable upon conversion of 175 shares of Series A Preferred, over which it has shared voting and dispositive power with SCGF Management.

Sequoia Growth Principals Fund may be deemed to have beneficial ownership of 44,336 shares of Common Stock issuable upon conversion of 777 shares of Series A Preferred, over which it has shared voting and dispositive power with SCGF Management.

The filing of this statement shall not be construed as an admission that any of the Sequoia Reporting Persons share beneficial ownership for purposes of Section 13(d) of the Exchange Act.

(c) Except as set forth in Item 3 above, no transactions in the Series A Preferred were effected during the past sixty days by the Reporting Persons.

(d) None.

(e) Not applicable.

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

The matters set forth in Item 2 are incorporated in this Item 6 by reference as if fully set forth herein.

Series A Preferred Stock Purchase Agreement

Pursuant to the Series A Preferred Stock Purchase Agreement, dated as of June 22, 2006 (the “Purchase Agreement”), by and among the Company and the Series A Investors, the Company agreed to sell and the Series A Investors agreed to purchase in the aggregate 42,060 shares of Series A Preferred (the “Series A Preferred Shares”) at a purchase price of $1,000 per share. On June 22, 2006 (the “Closing”), the Company sold to the Series A Investors the Series A Preferred Shares. Under the Purchase Agreement, provided any Series A Preferred or Common Stock issued upon conversion of the Series A Preferred are outstanding, the Company agrees to (i) use its commercially reasonable efforts to cause the Common Stock to continue to be registered under Sections 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), (ii) comply on and after April 30,

2007 in all respects with its reporting and filing obligations under the Exchange Act, and (iii) not take any action or file any document (whether or not permitted by the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act or the rules thereunder) to terminate or suspend on and after April 30, 2007 its reporting and filing obligations under said acts, except as permitted herein or pursuant to the Investors’ Rights Agreement (as defined below). Under the Purchase Agreement the Series A Investors are restricted from transferring any Series A Preferred Shares or Common Stock issued upon conversion other than pursuant to registration under the Securities Act or pursuant to an available exemption therefrom. The Series A Investors also shall not engage in any transaction with the Company that would constitute a Business Combination (as defined therein) prior to the third anniversary of the Closing without the approval of a majority of the Company’s board of directors, excluding the Series A Director (as defined below). The foregoing summary of the Purchase Agreement is not intended to be complete and is qualified in its entirety by reference to the Purchase Agreement, a copy of which is filed herewith as Exhibit 99.2 and is incorporated herein by reference.

Certificate of Designation, Preferences and Rights of Series A Preferred Stock

In connection with the Private Placement, the board of directors of the Company approved and adopted the Certificate of Designation, Preferences and Rights of Series A Preferred Stock (the “Certificate of Designation”) to create the series of preferred stock designated as Series A Preferred Stock. The holders of Series A Preferred participate equally and ratably with the holders of Common Stock in all dividends paid on the Common Stock. Subject to compliance with the rules and regulations of the Nasdaq Stock Market, the Series A Preferred are convertible at any time at the option of the holders into shares of Common Stock at an initial conversion ratio that is based on a conversion price of $17.525 per share. The conversion ratio is subject to adjustment in the event of, without limitation, dividends or distributions of Common Stock payable in Common Stock, subdivisions, splits, combinations, consolidations, mergers or reclassifications. The Series A Preferred Shares will be automatically redeemable by the Company on June 12, 2012. In the event the Company does not close an acquisition by the Company, whether by merger, consolidation, the purchase of assets or otherwise, of another entity, or of certain businesses or assets of another entity, for at least $18,000,000 in cash, within 150 days of the Closing, at the option of either the Company or the holders of Series A Preferred, the Company will redeem the Series A Preferred.

In the event of any liquidation or winding up of the Company (defined broadly to include certain change of control transactions), the holders of Series A Preferred Shares will be entitled to receive in preference to the holders of Common Stock a per share amount equal to $1,000 plus any declared but unpaid dividends. Thereafter the holders of Series A Preferred Shares will not participate with the Common Stock in the distribution of any remaining cash or other assets. Subject to compliance with the rules and regulations of the Nasdaq Stock Market, the Series A Preferred Shares will be entitled to vote together with the Common Stock on an as-converted basis without limitation and, until the date that is one year after the Closing, the holders of a majority of the Series A Preferred Shares will be entitled to elect one director to the Company’s board of directors (the “Series A Director”). The foregoing summary of the Certificate of Designation is not intended to be complete and is qualified in its entirety by reference to the Certificate of Designation, a copy of which is filed herewith as Exhibit 99.3 and is incorporated herein by reference.

Investors’ Rights Agreement

Pursuant to the Investors’ Rights Agreement, dated as of June 22, 2006, by and among the Company, the Series A Investors and Network Appliance, Inc. (“NetApp”) (the “Investors’ Rights Agreement”), the Series A Investors, NetApp and each person who becomes a Holder (as defined therein) have certain piggyback registration rights and, after September 22, 2006, provided the Company is eligible to use a registration statement on Form S-3, demand registration rights on Form S-3, with respect to the Registrable Securities (as defined therein). Under the Investors’ Rights Agreement, so long as the Series A Investors hold at least 60% of the Common Stock originally purchased in the Purchase Agreement (assuming full conversion of the Series A Preferred into Common Stock), the Series A Investors shall have the right to nominate one candidate for election to the Company’s board of directors. The foregoing summary of the Investors’ Rights Agreement is not intended to be complete and is qualified in its entirety by reference to the Investors’ Rights Agreement, a copy of which is filed herewith as Exhibit 99.4 and is incorporated herein by reference.

Voting Agreement

Pursuant to the Voting Agreement, dated as of June 22, 2006, by and among the Company and the Series A Investors (the “Voting Agreement”), the Series A Investors agree to hold and vote their respect shares of Series A Preferred at each election of or action by written consent to elect directors in which the holders of Series A Preferred, voting as a separate class, are entitled to elect directors of the Company, so as to elect one individual designated by Francisco Partners II, which individual shall initially be Keith Geeslin. Each Series A Investor also appoints Francisco Partners II or its designee as such Series A Investor’s true and lawful proxy and attorney, with the power to vote all of such Series A Investor’s Series A Preferred Shares as set forth in the Voting Agreement and to execute all appropriate and necessary instruments consistent with the Voting Agreement. The foregoing summary of the Voting Agreement is not intended to be complete and is qualified in its entirety by reference to the Voting Agreement, a copy of which is filed herewith as Exhibit 99.5 and is incorporated herein by reference.

Based on the foregoing and the transactions and relationships described herein, the Reporting Persons may be deemed to constitute a “group” for purposes of Section 13(d)(3) of the Exchange Act. The filing of this statement shall not be construed as an admission that the Reporting Persons are a group, or have agreed to act as a group.

Item 7. Material to Be Filed as Exhibits.

99.1		Joint Filing Agreement dated June 30, 2006, by and among Francisco Partners II, L.P., Francisco Partners Parallel Fund II, L.P., Francisco Partners GP II, L.P., Francisco Partners GP II Management, LLC, Sequoia Capital Growth Fund III, Sequoia Capital Growth Partners III, Sequoia Capital Growth III Principals Fund and SCGF III Management, LLC.

99.2		Series A Preferred Stock Purchase Agreement dated June 22, 2006, by and among Blue Coat Systems, Inc., Francisco Partners II, L.P., Francisco Partners Parallel Fund II, L.P., Sequoia Capital Growth Fund III, Sequoia Capital Growth Partners III and Sequoia Capital Growth III Principals Fund.

99.3		Certificate of Designation, Preferences and Rights of Series A Preferred Stock.

99.4		Investors’ Rights Agreement dated June 22, 2006, by and among Blue Coat Systems, Inc., Francisco Partners II, L.P., Francisco Partners Parallel Fund II, L.P., Sequoia Capital Growth Fund III, Sequoia Capital Growth Partners III, Sequoia Capital Growth III Principals Fund and Network Appliance, Inc.

99.5		Voting Agreement dated June 22, 2006, by and among Blue Coat Systems, Inc., Francisco Partners II, L.P., Francisco Partners Parallel Fund II, L.P., Sequoia Capital Growth Fund III, Sequoia Capital Growth Partners III and Sequoia Capital Growth III Principals Fund.

SIGNATURE

After reasonable inquiry and to the best of each of the undersigned’s knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

Dated: June 30, 2006
	FRANCISCO PARTNERS II, L.P.
	By:	Francisco Partners GP II, L.P., General Partner
	By:	Francisco Partners GP II Management,LLC, General Partner

	By:	/s/ Keith B. Geeslin
	Name: Keith B. Geeslin
	Title: Managing Member


	FRANCISCO PARTNERS PARALLEL FUND II, L.P.
	By:	Francisco Partners GP II, L.P., General Partner
	By:	Francisco Partners GP II Management,LLC, General Partner

	By:	/s/ Keith B. Geeslin
	Name: Keith B. Geeslin
	Title: Managing Member


	FRANCISCO PARTNERS GP II, L.P.
	By:	Francisco Partners GP II Management, LLC, General Partner

	By:	/s/ Keith B. Geeslin
	Name: Keith B. Geeslin
	Title: Managing Member


	FRANCISCO PARTNERS GP II MANAGEMENT, LLC

	By:	/s/ Keith B. Geeslin
	Name: Keith B. Geeslin
	Title: Managing Member


	SEQUOIA CAPITAL GROWTH FUND III
	By:	SCGF III Management, LLC, General Partner

	By:	/s/ Jim Goetz
	Name: Jim Goetz
	Title: Managing Member


	SEQUOIA CAPITAL GROWTH PARTNERS III
	By:	SCGF III Management, LLC, General Partner

	By:	/s/ Jim Goetz
	Name: Jim Goetz
	Title: Managing Member

	SEQUOIA CAPITAL GROWTH III PRINCIPALS FUND
	By:	SCGF III Management, LLC, General Partner

	By:	/s/ Jim Goetz
	Name: Jim Goetz
	Title: Managing Member


	SCGF III MANAGEMENT, LLC

	By:	/s/ Jim Goetz
	Name: Jim Goetz
	Title: Managing Member

INDEX TO EXHIBITS

Exhibit Number		Document

99.1		Joint Filing Agreement dated June 30, 2006, by and among Francisco Partners II, L.P., Francisco Partners Parallel Fund II, L.P., Francisco Partners GP II, L.P., Francisco Partners GP II Management, LLC, Sequoia Capital Growth Fund III, Sequoia Capital Growth Partners III, Sequoia Capital Growth III Principals Fund and SCGF III Management, LLC.

99.2		Series A Preferred Stock Purchase Agreement dated June 22, 2006, by and among Blue Coat Systems, Inc., Francisco Partners II, L.P., Francisco Partners Parallel Fund II, L.P., Sequoia Capital Growth Fund III, Sequoia Capital Growth Partners III and Sequoia Capital Growth III Principals Fund.

99.3		Certificate of Designation, Preferences and Rights of Series A Preferred Stock.

99.4		Investors’ Rights Agreement dated June 22, 2006, by and among Blue Coat Systems, Inc., Francisco Partners II, L.P., Francisco Partners Parallel Fund II, L.P., Sequoia Capital Growth Fund III, Sequoia Capital Growth Partners III, Sequoia Capital Growth III Principals Fund and Network Appliance, Inc.

99.5		Voting Agreement dated June 22, 2006, by and among Blue Coat Systems, Inc., Francisco Partners II, L.P., Francisco Partners Parallel Fund II, L.P., Sequoia Capital Growth Fund III, Sequoia Capital Growth Partners III and Sequoia Capital Growth III Principals Fund.

EX-99.1 2 a06-14776_1ex99d1.htm EX-99

EXHIBIT 99.1

JOINT FILING AGREEMENT

In accordance with Rule 13d-1(k) promulgated under the Securities Exchange Act of 1934, as amended, we, the signatories of the statement on Schedule 13D to which this joint filing agreement is attached, hereby agree that such statement is, and any amendments thereto filed by any of us will be, filed on behalf of each of us.

Dated: June 30, 2006
	FRANCISCO PARTNERS II, L.P.
	By:	Francisco Partners GP II, L.P., General Partner
	By:	Francisco Partners GP II Management,LLC, General Partner

	By:	/s/ Keith B. Geeslin
	Name: Keith B. Geeslin
	Title: Managing Member


	FRANCISCO PARTNERS PARALLEL FUND II, L.P.
	By:	Francisco Partners GP II, L.P., General Partner
	By:	Francisco Partners GP II Management,LLC, General Partner

	By:	/s/ Keith B. Geeslin
	Name: Keith B. Geeslin
	Title: Managing Member


	FRANCISCO PARTNERS GP II, L.P.
	By:	Francisco Partners GP II Management, LLC,General Partner

	By:	/s/ Keith B. Geeslin
	Name: Keith B. Geeslin
	Title: Managing Member


	FRANCISCO PARTNERS GP II MANAGEMENT, LLC

	By:	/s/ Keith B. Geeslin
	Name: Keith B. Geeslin
	Title: Managing Member


	SEQUOIA CAPITAL GROWTH FUND III
	By:	SCGF III Management, LLC, General Partner

	By:	/s/ Jim Goetz
	Name: Jim Goetz
	Title: Managing Member

	SEQUOIA CAPITAL GROWTH PARTNERS III
	By:	SCGF III Management, LLC, General Partner

	By:	/s/ Jim Goetz
	Name: Jim Goetz
	Title: Managing Member


	SEQUOIA CAPITAL GROWTH III PRINCIPALS FUND
	By:	SCGF III Management, LLC, General Partner

	By:	/s/ Jim Goetz
	Name: Jim Goetz
	Title: Managing Member


	SCGF III MANAGEMENT, LLC

	By:	/s/ Jim Goetz
	Name: Jim Goetz
	Title: Managing Member

EX-99.2 3 a06-14776_1ex99d2.htm EX-99

Exhibit 99.2

SERIES A PREFERRED STOCK PURCHASE AGREEMENT

This SERIES A PREFERRED STOCK PURCHASE AGREEMENT (this “Agreement”) dated June 22, 2006, is entered into by and among Blue Coat Systems, Inc., a Delaware corporation (the “Company”), and each of the parties set forth on Schedule A attached hereto (each, an “Investor” and, collectively, the “Investors”).

THE PARTIES TO THIS AGREEMENT enter into this Agreement on the basis of the following facts, intentions and understandings:

WHEREAS, concurrently with the execution and delivery of this Agreement, the Company and Network Appliance, Inc., a Delaware corporation (“Seller”), have entered into an Asset Purchase Agreement, dated as of the date hereof (including all license agreements, transition services agreements and other agreements and instruments entered into in connection therewith on or after the date hereof, the “Asset Purchase Documents”), pursuant to which the Company will purchase certain assets and assume certain liabilities of Seller (the “Acquisition”); and

WHEREAS, upon the terms and subject to the conditions hereof, the Investors desire to make an investment in the Company for the purpose of, among other things, providing funding for the Acquisition.

NOW THEREFORE, in consideration of the mutual promises made herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

Section 1. Authorization.

The Company has authorized (a) the sale and issuance of up to 42,060 shares of the Company’s Series A Preferred Stock, par value $0.0001 per share (the “Series A Preferred Shares”), having the rights, privileges, preferences and restrictions set forth in the Certificate of Designation, Preferences and Rights of Series A Preferred Stock, in the form attached hereto as Exhibit A (the “Certificate of Designation”) and (b) reserved up to 2,400,000 shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), for issuance upon conversion of the Series A Preferred Shares (the “Conversion Shares”).

Section 2. Purchase and Sale of Securities.

In consideration of and upon the basis of the representations, warranties and agreements and subject to the terms and conditions set forth in this Agreement, each Investor agrees to purchase from the Company and the Company agrees to sell to each Investor on the Closing Date (as defined in Section 3 hereof), the number of Series A Preferred Shares set forth opposite such Investor’s name on Schedule A attached hereto for a price per share equal to $1,000.00 (the “Private Placement”). For purposes of this Agreement, the “Purchase Price” shall mean $42,060,000.00, representing the total purchase price for all Series A Preferred Shares purchased pursuant to this Agreement.

Section 3. Closing.

(a) The closing of the sale of the Series A Preferred Shares (the “Closing”) shall take place upon the satisfaction or, if applicable, waiver of the conditions set forth in Sections 8 and 9 hereof, or at such other date and time as the Investors purchasing a majority of the Series A Preferred Shares sold pursuant to this Agreement (the “Majority Investors”) and the Company shall mutually agree (such date and time being referred to herein as the “Closing Date”). At or prior to the Closing, the Majority Investors shall receive confirmation (which confirmation may be telephonic) from Computershare, the Company’s transfer agent, that the Investors shall be listed as a record owner of the Series A Preferred Shares that the Investors are purchasing pursuant to this Agreement. At the Closing, each Investor will pay the Purchase Price for the Investor’s shares by check or wire transfer of immediately available funds.

(b) As soon as reasonably practicable, the Company shall deliver to each Investor a certificate representing the Series A Preferred Shares that each Investor is purchasing, duly registered on the books of the Company in the name of such Investor.

Section 4. Use of Proceeds.

The Company shall use the Purchase Price for general corporate purposes; provided, however, that up to $24,000,000 of the Purchase Price may be used by the Company for any acquisition by the Company of another entity, whether by merger, consolidation, the purchase of assets or otherwise, or of certain businesses or assets of another entity, including the Acquisition.

Section 5. Representations and Warranties of the Company.

Except as otherwise specifically described in (i) the Company’s annual report on Form 10-K for the year ended April 30, 2005, the Company’s quarterly reports on Form 10-Q for the quarterly periods ended July 31, 2005, October 31, 2005 and January 31, 2006 and any current reports on Form 8-K filed subsequent to the date of filing of the Form 10-K for the year ended April 30, 2005 and through the date of this Agreement with the Securities and Exchange Commission (the “SEC”) by the Company (including the information incorporated by reference therein, the “SEC Documents”), or (ii) a Schedule of Exceptions (the “Schedule of Exceptions”), provided to each Investor and its counsel on the date hereof, each of which qualify the following representations and warranties in their entirety, the Company hereby represents and warrants to each Investor as follows:

(a) Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as presently conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a material adverse effect on the business, properties, financial condition or operating results of the Company, as such business is presently conducted. Each Significant Subsidiary (as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of the Company is duly organized, validly existing and in good standing under the laws of its respective jurisdiction and has all requisite corporate power and authority to carry on its business as presently conducted, except where the failure to

be in good standing would not have a material adverse effect on the business, properties, financial condition or operating results of the Company, as such business is presently conducted.

(b) Authorization. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement and the Investors’ Rights Agreement (as defined in Section 8), the performance of all obligations of the Company hereunder and thereunder, and the authorization, issuance, sale and delivery of the Series A Preferred Shares being sold hereunder and the Common Stock being issued upon conversion thereof has been taken or will be taken prior to the Closing, and this Agreement and the Investors’ Rights Agreement constitute valid and legally binding obligations of the Company, enforceable in accordance with their respective terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.

(c) No Violation or Default. Neither the Company nor any Significant Subsidiary of the Company is in violation or default of any provision of its certificate of incorporation, bylaws or other organizational documents, as amended, or of any judgment, order, writ, or decree by which it is bound. Neither the Company nor any Significant Subsidiary of the Company is in violation or default of any instrument or Material Contract (as defined herein) to which it is a party or by which it is bound, or, to its knowledge, of any provision of any federal or state statute, rule or regulation applicable to the Company in which such violation or default of such instrument, Material Contract or provision of such federal or state statute, rule or regulation applicable to the Company would have, either individually or in the aggregate, a material adverse effect on the business, properties, financial condition or operating results of the Company, as such business is presently conducted. Neither the Company nor any Significant Subsidiary of the Company has received notice from any other party to a Material Contract that such party intends to terminate such Material Contract. The execution, delivery and performance of this Agreement and the Investors’ Rights Agreement, and the consummation of the transactions contemplated hereby and thereby will not result in any such violation or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any such provision, instrument, judgment, order, writ, decree or Material Contract or an event that results in the creation of any lien, charge or encumbrance upon any assets of the Company or any Significant Subsidiary of the Company or the suspension, revocation, impairment, forfeiture, or nonrenewal of any material permit, license, authorization, or approval applicable to the Company, its business or operations or any of its assets or properties. For purposes of this Agreement, “Material Contract” shall mean (i) any contract to which the Company is a party that is or is required to be filed as an exhibit to the SEC Documents and (ii) any contract to which the Company or any Significant Subsidiary is a party which is material to the business, properties, financial condition or operating results of the Company or any Significant Subsidiary, as such business is presently conducted (a “Material Contract”).

(d) Consents. No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority on the part of the Company is required in connection with the consummation of the transactions contemplated by this Agreement, except (i) the filing pursuant to Regulation D promulgated by the SEC under the Securities Act of 1933, as amended (the “Securities Act”),

which filing will be effected within 15 days of the Closing, or such other post-closing filings as may be required and (ii) such filings and/or qualifications that may be required pursuant to the Nasdaq Marketplace Rules (the “Nasdaq Rules”), which filings and qualifications will be made on a timely basis, but in any event prior to the Closing.

(e) Litigation. There is no action, suit, proceeding or investigation pending or, to the Company’s knowledge, currently threatened in writing against the Company or any subsidiary or any of their respective directors and officers that questions the validity of this Agreement or the Investors’ Rights Agreement, or the right of the Company to enter into such agreements or to consummate the transactions contemplated hereby or thereby. There is no action, suit, proceeding or investigation pending or, to the knowledge of the Company, currently threatened in writing against the Company or any subsidiary or any of their respective directors and officers which would have, either individually or in the aggregate, a material adverse effect on the business, properties, financial condition or operating results of the Company, as such business is presently conducted.

(f) Filings. The Company has filed all forms, reports and documents required to be filed by it with the SEC since March 31, 2005 (collectively, the “Company SEC Reports”). As of the respective dates they were filed (and if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing), (i) the Company SEC Reports complied in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such Company SEC Reports, and (ii) none of the Company SEC Reports contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. None of the Company’s subsidiaries is required to file any forms, reports or documents with the SEC. The Company has previously furnished to the Investors a complete and correct copy of any amendments or modifications, which have not yet been filed with the SEC but which are required to be filed to any Company SEC Reports which had been filed by Company with the SEC prior to the date hereof.

(g) Financial Statements. The consolidated financial statements (including any notes thereto) contained in the Company SEC Reports (i) complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto, (ii) were prepared in accordance with United States generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q or 8-K promulgated by the SEC) and (iii) each presented fairly, in all material respects, the consolidated financial position of the Company and its consolidated subsidiaries as of the respective dates thereof and for the respective periods indicated therein, except as otherwise noted therein (subject, in the case of unaudited statements, to normal and recurring year-end adjustments which were not and are not expected, individually or in the aggregate, to have a material adverse effect on the business, properties, financial condition or operating results of the Company, as such business is presently conducted). The Company does not intend to correct or restate, nor, to the Company’s knowledge, is there any basis for any correction or restatement of, any aspect of any of the consolidated financial statements contained in the Company SEC Reports. The

Company has not had any material disagreement with any of its auditors regarding accounting matters or policies during any of its past three full years or during the current fiscal year-to-date which disagreements would require disclosure to the Company’s Board of Directors. The books and records of the Company and each subsidiary have been, and are being maintained in all material respects in accordance with applicable legal and accounting requirements and the consolidated financial statements contained in the Company SEC Reports are consistent with such books and records.

(h) Internal Controls. The Company and each of its subsidiaries has established and maintains, adheres to and enforces a system of internal accounting and disclosure controls which are effective in providing assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP (including the consolidated financial statements contained in the Company SEC Reports), including policies and procedures that (i) require the maintenance of records that in reasonable detail accurately and fairly reflect in all material respects the transactions and dispositions of the assets of the Company and its subsidiaries, (ii) provide assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company and its subsidiaries are being made only in accordance with appropriate authorizations of management and the Board of Directors of the Company and (iii) provide assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the material assets of the Company and its subsidiaries. Neither the Company nor any of its subsidiaries (including any employee thereof) nor, to the Company’s knowledge, the Company’s independent auditors, has identified or been made aware of (i) any significant deficiency or material weakness in the system of internal accounting controls utilized by the Company and its subsidiaries, (ii) any fraud, whether or not material, that involves the Company’s management or other employees who have a role in the preparation of financial statements or the internal accounting controls utilized by the Company and its subsidiaries or (iii) any claim or allegation regarding any of the foregoing.

(i) Changes. Since the date of the Company’s most recent quarterly report on Form 10-Q filed with the SEC, (i) there has not been any Company development that has not otherwise been publicly disclosed that would have or could reasonably be expected to have a material adverse effect on the business, properties, financial condition or operating results of the Company, as such business is presently conducted, (ii) the Company and its subsidiaries have not incurred any debts or liabilities except for debts or liabilities incurred in the ordinary course of business and except in connection with obligations under contracts and commitments incurred in the ordinary course of business, (iii) the Company and its subsidiaries have not entered into or terminated or contemplated entering into or terminating any Material Contract and (iv) there has not been any change in the assets, liabilities, financial condition or operating results of the Company and its subsidiaries from that reflected in the consolidated financial statements included with the most recent quarterly report on Form 10-Q, except changes in the ordinary course of business that have not been, in the aggregate, materially adverse.

(j) Registration Rights. Except as set forth in the Investors’ Rights Agreement, the Company has not granted or agreed to grant any registration rights, including piggy-back rights, to any person or entity.

(k) Capitalization.

(i) As of June 20, 2006, the authorized capital stock of the Company consisted of 10,000,000 shares of Preferred Stock, none of which were issued and outstanding, and 200,000,000 shares of Common Stock, 14,563,522 shares of which were issued and outstanding (the “Preferred Stock” and the “Common Stock” are collectively referred to herein as the “Capital Stock”). All of the issued and outstanding shares of Capital Stock have been duly authorized, validly issued and are fully paid and nonassessable. The Company has options granted and shares available under the 1999 Stock Incentive Plan, 1999 Director Option Plan, Employee Stock Purchase Plan and 2000 Supplemental Stock Option Plan. In addition, the Company has options outstanding under the 1996 Stock Option Plan and under the option plans that it assumed in connection with its acquisitions of Entera, Inc, Springbank Networks, Inc., Cerberian, Inc., and Permeo Technologies, Inc. (together with the 1996 Stock Option Plan, 1999 Stock Incentive Plan, 1999 Director Option Plan, Employee Stock Purchase Plan and 2000 Supplemental Stock Option Plan, the “Plans”). As of the date hereof, options to purchase 3,337,382 shares of Common Stock were outstanding under the Plans and, in addition to the aforementioned options, the Company has reserved an additional 734,424 shares of its Common Stock for purchase upon exercise of options to be granted in the future under the Plans. The Company has reserved: (i) the Series A Preferred Shares for issuance pursuant to this Agreement and 2,400,000 shares of Common Stock (as may be adjusted in accordance with the provisions of the Certificate of Designation) for issuance upon conversion of the Series A Preferred Shares. Except as otherwise set forth in this Agreement and except for (A) the conversion privileges of the Series A Preferred Shares, (B) options granted (or remaining available for grant) pursuant to the Plans, (C) warrants to purchase 626 shares of Common Stock of the Company, and (D) as provided in the Schedule of Exceptions, there are no outstanding options, warrants, rights (including conversion or preemptive rights), agreements, arrangements or commitments of any character, whether or not contingent, relating to the issued or unissued Capital Stock of the Company or obligating the Company to issue or sell any share of Capital Stock of, or other equity interest in, the Company.

(ii) The Series A Preferred Shares that are being purchased by the Investors hereunder, when issued, sold or delivered in accordance with the terms hereof, for the consideration expressed herein, will be duly and validly issued, fully paid and nonassessable. The Conversion Shares have been duly and validly reserved and, when issued in compliance with the provisions of this Agreement, the Certificate of Designation and applicable law, will be validly issued, fully paid and nonassessable. The Series A Preferred Shares and the Conversion Shares will be free of any liens and encumbrances created by the Company and, subject to the accuracy of the representations of each Investor in this Agreement, will be issued in compliance with (and the offer, sale and issuance of the Series A Preferred Shares and the Conversion Shares are exempt from the registration requirements of) all applicable federal and state securities laws.

(l) Registration of Common Stock. The Company’s Common Stock is registered pursuant to Section 12(g) of the Exchange Act and is listed on the Nasdaq Stock Market, and the Company has taken no action with the intention of, or likely to have the effect

of, terminating the registration of the Common Stock under the Exchange Act or delisting the Common Stock from the Nasdaq Stock Market. The Company has not been notified by the Nasdaq Stock Market of any action or potential action by Nasdaq or of any violation of any Nasdaq Rules that could result in the delisting of the Company’s Common Stock from the Nasdaq Stock Market.

(m) Manipulation of Price. The Company has not taken and will not take any action outside the ordinary course of business designed to or that might reasonably be expected to cause or result in unlawful manipulation of the price of the Common Stock to facilitate the sale or resale of the Series A Preferred Shares or the Conversion Shares.

(n) Intellectual Property. To its knowledge (with respect to patents, trademarks, service marks and trade names only), the Company has sufficient title and ownership of all patents, trademarks, service marks, trade names, domain names, copyrights, trade secrets, information, proprietary rights and processes (“IP Rights”) necessary for its business as presently conducted without any violation or infringement of the rights of others, except for any such violation or infringement the occurrence of which would not have a material adverse effect on the business, properties, financial condition or operating results of the Company, as such business is presently conducted. The Company and its subsidiaries have not received written notice from a third party that the Company’s or the subsidiary’s products infringe on such third party’s IP Rights.

(o) Authority. The Company has the requisite corporate power and authority to enter into and to perform its obligations under this Agreement and the Investors’ Rights Agreement. Prior to the date of this Agreement, the Board of Directors has (a) determined that this Agreement is fair to, advisable and in the best interests of the Company and the stockholders of the Company and (b) approved the transactions contemplated by this Agreement. The foregoing action taken by the Board of Directors constitutes approval, for purposes of Section 203 of the Delaware General Corporation Law (“DGCL”), of the Private Placement and any other transactions that would make any Investor or the Investors an “interested stockholder” as defined in Section 203(c)(5) of the DGCL (an “Interested Stockholder Transaction”), such that Section 203 of the DGCL does not apply to this Agreement, the transactions effected hereunder, any transaction consummated subsequent to the date of the Interested Stockholder Transaction that would constitute a “business combination” (as defined in Section 203(c)(3) of the DGCL) (a “Business Combination”), and such approval has not been amended, rescinded or modified.

Section 6. Representations and Warranties of the Investors.

Each Investor hereby represents and warrants to the Company on the date hereof, and agrees with the Company, as follows:

(a) No Endorsement. Each Investor understands that no United States federal or state agency has passed on, reviewed or made any recommendation or endorsement of the Series A Preferred Shares or the Conversion Shares.

(b) Authorization. Each Investor has full power and authority to enter into this Agreement and the Investors’ Rights Agreement, and such agreements constitute valid and legally binding obligations, enforceable in accordance with their respective terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.

(c) Investment Intent. This Agreement is made with each Investor in reliance upon such Investor’s representation to the Company, which by such Investor’s execution of this Agreement such Investor hereby confirms, that the Series A Preferred Shares and the Conversion Shares to be received by such Investor (together, the “Securities”) will be acquired for investment for such Investor’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that such Investor has no present intention of selling, granting any participation in, or otherwise distributing the same. Notwithstanding the foregoing, Francisco Partners II, L.P. and Francisco Partners Parallel Fund II, L.P. may transfer shares of Series A Preferred Stock to one another over the sixty (60) day period following the date of this Agreement.

(d) Investment Experience. Each Investor is an investor in securities of companies in the development stage and acknowledges that it can bear the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Securities. Each Investor also represents it has not been organized for the purpose of acquiring the Securities.

(e) Accredited Investor. Each Investor is an “accredited investor” within the meaning of SEC Rule 501(a) of Regulation D, as presently in effect.

(f) Exemption from Registration. Each Investor understands that the Securities are being offered and sold in reliance on a transactional exemption from the registration requirements of Federal and state securities laws and that the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of each Investor set forth herein in order to determine the applicability of such exemptions and the suitability of each Investor to acquire the Securities.

(g) Rule 144. Each Investor understands that the Securities it is purchasing are characterized as “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act, only in certain limited circumstances. In this connection, each Investor represents that it is familiar with SEC Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

(h) Restrictions on Transfer. Without in any way limiting the representations set forth above, each Investor further agrees not to make any disposition of all or any portion of the Securities unless and until the transferee has agreed in writing for the benefit of the Company

to be bound by the provisions of this Section 5(h) provided and to the extent such provisions are then applicable, and:

(i) There is then in effect a Registration Statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such Registration Statement; or

(ii) (i) Such Investor shall have notified the Company of the proposed disposition and shall have furnished the Company with a statement in reasonable detail of the circumstances surrounding the proposed disposition, and (ii) if reasonably requested by the Company, such Investor shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration of such shares under the Securities Act. It is agreed that the Company will not require opinions of counsel for transactions made pursuant to Rule 144.

(i) It is understood that the certificates evidencing the Securities will bear the following legends:

“These securities have not been registered under the Securities Act of 1933, as amended. They may not be sold, offered for sale, pledged or hypothecated in the absence of a registration statement in effect with respect to the securities under such Act, pursuant to Rule 144 of such Act or an exemption from the registration requirements of the Securities Act, in which case an opinion of counsel satisfactory to the Company that such registration is not required may be required.”

(j) No Advice. Each Investor understands that nothing in this Agreement or the Investors’ Rights Agreement or any other materials presented to such Investor in connection with the purchase and sale of the Securities constitutes legal, tax or investment advice. Each Investor has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Securities.

(k) Disclosure of Information. Each Investor believes it has received all the information it considers necessary or appropriate for deciding whether to purchase the Series A Preferred Shares. Such Investor further represents that it has had an opportunity to ask questions and receive answers from the Company regarding terms and conditions of the offering of the Series A Preferred Shares and the business, properties, prospects and financial condition of the Company. The foregoing, however, does not limit or modify the representations and warranties of the Company in Section 4 of this Agreement or the right of the Investors to rely thereon.

Section 7. Covenants

(a) Registration of Common Stock. The Company covenants and agrees with each Investor that for so long as any of the Series A Preferred Shares or the Conversion Shares are outstanding, the Company (i) will use its commercially reasonable efforts to cause its Common Stock to continue to be registered under Sections 12(b) or 12(g) of the Exchange Act, (ii) will comply on and after April 30, 2007 in all respects with its reporting and filing obligations under said act, and (iii) will not take any action or file any document (whether or not permitted by the Securities Act or the Exchange Act or the rules thereunder) to terminate or

suspend on and after April 30, 2007 its reporting and filing obligations under said acts, except as permitted herein or pursuant to the Investors’ Rights Agreement. For so long as any of the Series A Preferred Shares or the Conversion Shares are outstanding, the Company will use its commercially reasonable efforts to continue the listing or trading of its Common Stock on and after April 30, 2007 on the Nasdaq Stock Market or on a national securities exchange (as defined in the Exchange Act) and will comply on and after April 30, 2007 in all respects with the Company’s reporting, filing and other obligations under the Nasdaq Rules. Notwithstanding the foregoing, the provisions of this subsection shall not in any way restrict the Company’s ability to negotiate and consummate the consolidation, reorganization or merger of the Company with or into any other corporation or corporations or the sale, conveyance, or other disposition of all or substantially all of the Company’s property or business.

(b) Section 203 Restrictions. No Investor, individually or as part of a “group” (as defined in Rule 13d-5(b)(1) under the Exchange Act), shall engage in any transaction with the Company that would constitute a Business Combination prior to the third anniversary of the Closing Date without the approval of a majority of the Company’s Board of Directors, excluding any directors elected solely by the holders of Series A Preferred Shares in accordance with Section 7(d) of the Certificate of Designation (a “Series A Director”) or nominated by the Investors pursuant to Section 2 of the Investors’ Rights Agreement; provided, however, that a Series A Director may be counted in determining the presence of a quorum at a meeting of the Company’s Board of Directors approving a Business Combination.

(c) Restrictions on Transfer. Each Investor covenants and agrees with the Company that neither such Investor nor any of such Investor’s affiliates nor any person acting on its or their behalf will at any time offer or sell any of the Securities other than pursuant to registration under the Securities Act or pursuant to an available exemption therefrom.

(d) Company SEC Reports. The Company shall, prior to filing a Form 8-K with the SEC describing the private placement contemplated by this Agreement, furnish to the Investors for review a copy of such Form 8-K.

Section 8. Conditions Precedent to Investor’s Obligations.

The obligations of each Investor under Section 2 of this Agreement are subject to the fulfillment on or before the Closing of each of the following conditions, unless such condition or conditions are expressly waived in writing by the Majority Investors:

(a) The representations and warranties of the Company contained in Section 5 shall be true in all material respects on and as of the Closing as though such representations and warranties had been made on and as of the Closing Date, except for representations and warranties made as of a particular date, which shall be true and correct as of such date.

(b) The Company shall have performed and complied in all material respects with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing.

(c) The Chief Executive Officer of the Company shall deliver to each Investor at the Closing a certificate stating that the conditions specified in Sections 8(a) and 8(b) have been fulfilled.

(d) No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this Agreement.

(e) Each Investor shall have received from Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP, counsel for the Company (“Gunderson”), an opinion, dated as of the Closing Date, in substantially the form attached hereto as Exhibit B.

(f) The Company and the Investors shall have entered into that certain Investors’ Rights Agreement in substantially the form attached hereto as Exhibit C (the “Investors’ Rights Agreement”).

(g) The Company shall have filed a listing application with the Nasdaq Stock Market for the Conversion Shares, and either (a) fifteen (15) days shall have lapsed from the filing of such listing application without objection from the Nasdaq Stock Market or (b) the Nasdaq Stock Market shall have accepted or indicated that it will not object to such listing application prior to the expiration of such fifteen (15) day period. The Company shall continue to have its shares of Common Stock listed for trading on the Nasdaq Stock Market.

(h) (i) Keith Geeslin shall have been appointed to the Board of Directors of the Company, (ii) Mr. Geeslin shall be named as an additional insured under the Company’s directors and officers liability insurance in an amount not less than $10,000,000 and (iii) the Company shall have entered into an Indemnification Agreement with Mr. Geeslin in substantially the form attached hereto as Exhibit D.

Section 9. Conditions Precedent to the Company’s Obligations.

The obligations of the Company to each Investor under this Agreement are subject to the fulfillment on or before the Closing of each of the following conditions by the Investors, unless such condition or conditions are expressly waived in writing by the Company:

(a) The representations and warranties of each of the Investors contained in Section 6 shall be true on and as of the Closing in all material respects as though such representations and warranties had been made on and as of the Closing Date, except for representations and warranties made as of a particular date, which shall be true and correct as of such date.

(b) Each Investor shall have performed and complied in all material respects with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing.

(c) No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental

authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this Agreement.

(d) Each Investor shall have delivered the Purchase Price for the Series A Preferred Shares.

Section 10. Fees and Expenses.

Irrespective of whether the Closing is effected, the Company shall pay all costs and expenses that it incurs with respect to the Private Placement and the Acquisition, including the negotiation, execution, delivery and performance of this Agreement, the Investors’ Rights Agreement and the Asset Purchase Documents. If the Closing is effected, the Company shall reimburse the Investors for their reasonable fees and out-of-pocket expenses of O’Melveny & Myers LLP (“OMM”) and Deloitte & Touche LLP (“D&T”) that relate to either the Private Placement or the Acquisition. If the Acquisition closes within 150 days of the date of this Agreement, the Company shall pay AFK Inc. (“AFK”) an amount determined by Francisco Partners Management, LLC not to exceed $500,000. If the Acquisition does not close within 150 days of the date of this Agreement, the Investors shall promptly repay to the Company all fees and expenses paid to OMM, D&T and AFK (or to the Investors on behalf of OMM, D&T or AFK) pursuant to this paragraph (which includes all fees and expenses related to both the Private Placement and the Acquisition). The repayment obligations described in the preceding sentence will be allocated among the Investors pro rata based on the number of Shares purchased by each such Investor pursuant to this Agreement.

Section 11. Survival of the Representations, Warranties, etc.

The respective representations, warranties, and agreements made herein by or on behalf of the parties hereto shall remain in full force and effect for a period of one (1) year from the Closing Date, regardless of any investigation made by or on behalf of any party to this Agreement or any officer, director or employee of, or person controlling or under common control with, such party and will survive delivery of and payment for the Series A Preferred Shares; provided, however, that Sections 7(a) and 7(b) shall survive until the Series A Preferred Shares or the Conversion Shares are no longer held by any Investor.

Section 12. Notices.

All notices, requests, consents and other communications hereunder shall be in writing; shall be mailed (a) if within the domestic United States, by first-class registered or certified airmail, by nationally recognized overnight express courier, postage prepaid, or by facsimile or (b) if delivered to or from outside the United States, by International Federal Express or facsimile; shall be deemed given: (i) if delivered by first-class registered or certified mail domestic, three business days after so mailed, (ii) if delivered by nationally recognized overnight carrier, one business day after so mailed, (iii) if delivered by International Federal Express, two business days after so mailed or (iv) if delivered by facsimile, upon electronic confirmation of receipt; and shall be delivered as addressed as follows:

(a) if to the Company, to:

Blue Coat Systems, Inc.
420 North Mary Avenue
Sunnyvale, California 94085
Attn: General Counsel
Phone: (408) 220-2200
Telecopy: (408) 220-2250

(b) with a copy mailed to:

Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP
155 Constitution Drive
Menlo Park, California 94025
Attn: Daniel E. O’Connor, Esq.
Phone: (650) 321-2400
Telecopy: (650) 321-2800

(c) if to the Investors, at the addresses set forth on Schedule A hereto, or at such other address or addresses as may be furnished to the Company in writing.

Section 13. Miscellaneous.

(a) This Agreement may be executed in two or more counterparts and it is not necessary that signatures of all parties appear on the same counterpart, but such counterparts together shall constitute one and the same agreement.

(b) Any provision of this Agreement may be amended, waived or modified only upon the written consent of the Company and the Majority Investors. Any amendment or waiver affected in accordance with this Section 13(b) shall be binding upon each Investor and the Company.

(c) This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns.

(d) This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of California without regard to principles of conflict of laws.

(e) The provisions of this Agreement are severable, and if any clause or provision hereof shall be held invalid, illegal or unenforceable in whole or in part, such invalidity or unenforceability shall not in any manner affect any other clause or provision of this Agreement.

(f) The headings of the sections of this document have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.

(g) This Agreement and the Investors’ Rights Agreement constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, between the parties hereto with respect to the subject matter of this Agreement and is not intended to confer upon any person other than the parties hereto any rights or remedies hereunder.

(h) Notwithstanding any provision of this Agreement to the contrary, any confidential disclosure agreement previously executed by the Company and any Investor in connection with the transactions contemplated by this Agreement shall remain in full force and effect in accordance with its terms following the execution of this Agreement and the consummation of the transactions contemplated hereby.

(i) Notwithstanding any provision of this Agreement to the contrary, any party to this Agreement (and any of such party’s respective employees, representatives, or other agents) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated by this Agreement and all materials of any kind (including opinions or other tax analyses) that are provided to it relating to such tax treatment and tax structure; provided, however, that for this purpose, (a) the “tax treatment” of a transaction means the purported or claimed federal income tax treatment of the transaction and (b) the “tax structure” of a transaction means any fact that may be relevant to understanding the purported or claimed federal income tax treatment of the transaction.

(j) The Company will provide the Investors and their counsel with a copy of any proposed announcement of, or Form 8-K regarding, this transaction and a reasonable opportunity to review and comment on any such materials.

IN WITNESS WHEREOF, each of the parties hereto has executed this Series A Preferred Stock Purchase Agreement as of the date first written above

	BLUE COAT SYSTEMS, INC.

	By:	/s/ Brian NeSmith
		Name: Brian NeSmith
		Title: President and Chief Executive Officer

SIGNATURE PAGE TO THE BLUE COAT SYSTEMS, INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT

	INVESTORS

	FRANCISCO PARTNERS II, L.P.

	By:	FRANCISCO PARTNERS GP II, L.P.
		its General Partner

	By:	FRANCISCO PARTNERS GP II
		MANAGEMENT, LLC
		its General Partner

	By	/s/ Keith B. Geeslin
		Name: Keith B. Geeslin
		Title: Manager


	FRANCISCO PARTNERS PARALLEL FUND II, L.P.

	By:	FRANCISCO PARTNERS GP II, L.P.,
		its General Partner

	By:	FRANCISCO PARTNERS GP II
		MANAGEMENT, LLC,
		its General Partner

	By	/s/ Keith B. Geeslin
		Name: Keith B. Geeslin
		Title: Manager

	INVESTORS

	SEQUOIA CAPITAL GROWTH FUND III

	By:	SCGF III Management, LLC
		A Delaware Limited Liability Company
		General Partner

	By:	/s/ Jim Goetz
		Name: Jim Goetz
		Title: Managing Member

	SEQUOIA CAPITAL GROWTH PARTNERS III

	By:	SCGF III Management, LLC
		A Delaware Limited Liability Company
		General Partner

	By:	/s/ Jim Goetz
		Name: Jim Goetz
		Title: Managing Member

	SEQUOIA CAPITAL GROWTH III PRINCIPALS FUND

	By:	SCGF III Management, LLC
		A Delaware Limited Liability Company
		General Partner

	By:	/s/ Jim Goetz
		Name: Jim Goetz
		Title: Managing Member

SCHEDULE A

Investor	Shares			Purchase Price
Francisco Partners II, L.P.	Series A Preferred	:	24,891	$	24,891,000
Francisco Partners Parallel Fund II, L.P.	Series A Preferred	:	345	$	345,000
Sequoia Capital Growth Fund III	Series A Preferred	:	15,872	$	15,872,000
Sequoia Capital Growth Partners III	Series A Preferred	:	175	$	175,000
Sequoia Capital Growth III Principals Fund	Series A Preferred	:	777	$	777,000
			42,060	$	42,060,000

EX-99.3 4 a06-14776_1ex99d3.htm EX-99

Exhibit 99.3

BLUE COAT SYSTEMS, INC.

CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF SERIES A PREFERRED STOCK

(Pursuant to Section 151(g) of the General Corporation
Law of the State of Delaware.)

BLUE COAT SYSTEMS, INC., a corporation organized and existing under the laws of the State of Delaware (the “Company”), DOES HEREBY CERTIFY THAT, pursuant to authority conferred upon the board of directors of the Company (the “Board”) by the Amended and Restated Certificate of Incorporation of the Company, as amended (the “Certificate of Incorporation”), the Board, at a meeting held on June 22, 2006, adopted the following resolutions authorizing the issuance of Series A Preferred Stock of the Company, which resolutions are still in full force and effect and are not in conflict with any provisions of the Certificate of Incorporation or the Bylaws of the Company:

RESOLVED, that pursuant to authority vested in the Board by the Certificate of Incorporation, the Board does hereby establish a series of preferred stock of the Company from the Company’s authorized class of 10,000,000 shares of $0.0001 par value preferred shares (“Preferred Stock”), such series to consist of 42,060 shares, which number may be decreased (but not below the number of shares thereof then outstanding) from time to time by the Board, and does hereby fix and state the voting rights, designation, powers, preferences and relative participating, optional or other special rights and the qualifications, limitations or restrictions thereof, as follows:

1. Definitions. Unless otherwise specified herein, the following capitalized terms shall have the meanings ascribed to them below:

“Affiliate” shall mean, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled by or is under common Control with such specified Person.

“Acquisition” shall mean the acquisition by the Company, whether by merger, consolidation, the purchase of assets or otherwise, of another entity, or of certain businesses or assets of another entity, for at least $18,000,000 in cash.

“Available Assets” shall have the meaning set forth in Section 4(a).

“Board” shall have the meaning set forth in the Introductory Paragraph of this Certificate of Designation.

“Certificate of Designation” shall mean this Certificate of Designation, Preferences and Rights of Series A Preferred Stock.

“Certificate of Incorporation” shall have the meaning set forth in the Introductory Paragraph of this Certificate of Designation.

“Change of Control” shall be deemed to have occurred (i) if any “person” (as defined in Section 13(d)(3) of the Exchange Act) shall directly or indirectly acquire beneficial ownership (determined in accordance with Rule 13d-3 of the Exchange Act) of more than 50% of the total voting power of all shares of the Company’s capital stock that are entitled to vote generally in elections of directors, (ii) upon consummation of a merger or consolidation of the Company into or with another Person in which the stockholders of the Company immediately prior to the consummation of such transaction shall own less than 50% of the voting securities of the surviving Person (or the parent Person of the surviving Person where the surviving Person is wholly-owned by the parent Person) immediately following the consummation of such transaction, or (iii) the consummation of the sale, transfer or lease (but not including a transfer or lease by pledge or mortgage to a bona fide lender) of all or substantially all of the assets of the Company.

“Closing Date” shall mean June 22, 2006.

“Common Stock” shall mean shares the shares of the Company’s common stock, par value $0.0001 per share.

“Company” shall have the meaning set forth in the Introductory Paragraph of this Certificate of Designation.

“Company Redemption Date” shall have the meaning set forth in Section 5(d)(i).

“Company Redemption Notice” shall have the meaning set forth in Section 5(d)(i).

“Constituent Person” shall have the meaning set forth in Section 6(g)(i).

“Control” (including the terms “Controlled by” and “under common Control with”), with respect to the relationship between or among two or more Persons, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, by contract or otherwise.

“Conversion Date” shall have the meaning set forth in Section 6(c)(iii).

“Conversion Notice” shall have the meaning set forth in Section 6(c)(i).

“Conversion Price” shall have the meaning set forth in Section 6(a).

“Conversion Ratio” shall have the meaning set forth in Section 6(a).

“DGCL” shall mean the Delaware General Corporation Law.

“Exchange Act” shall mean the United States Securities Exchange Act of 1934, as amended.

“Face Amount” shall mean (i) with respect to each share of Series A Preferred Stock, $1,000.00, and (ii) with respect to any other series of Preferred Stock, the face amount as set forth in the certificate of designations, voting rights, powers, preferences and relative participating, optional or other special rights and the qualifications, limitations or restrictions, in each case as such amount may be proportionately adjusted to reflect any combination, consolidation, reclassification or like adjustment.

“Holder Redemption Date” shall have the meaning set forth in Section 5(d)(ii).

“Holder Redemption Notice” shall have the meaning set forth in Section 5(d)(ii).

“Liquidation Event” shall mean a liquidation or winding up of the Company in a single transaction or series of transactions or a Change of Control.

“Liquidation Amount” shall have the meaning set forth in Section 4(a).

“Market Price” shall have the meaning set forth in Section 6(f).

“Maturity Date” shall mean June 21, 2012.

“Non-Electing Share” shall have the meaning set forth in Section 6(g)(i).

“Non-Cash Assets” shall have the meaning set forth in Section 4(a).

“Person” shall be construed broadly and means any natural person, firm, corporation, partnership, limited liability company, association, trust or other entity.

“Preferred Stock” shall have the meaning set forth in the first resolution of this Certificate of Designation.

“Redemption Amount” shall have the meaning set forth in Section 5(a).

“Securities Act” shall mean the United States Securities Act of 1933, as amended.

“Series A Director” shall have the meaning set forth in Section 7(d).

“Series A Preferred Stock” shall have the meaning set forth in Section 2.

2. Designation of Series; Issuance, Face Amount and Rank. This series of preferred stock is hereby designated “Series A Preferred Stock” (hereinafter the “Series A Preferred Stock”), and the number of shares which shall constitute such series shall be 42,060, which number may be decreased (but not below the number thereof then outstanding) from time to time by the Board. The shares of Series A Preferred Stock shall be issued by the Company in certificated form for their Face Amount (as herein defined), in such amounts, at such times and to such Persons as shall be specified by the Board, from time to time. Except as otherwise expressly set forth herein, the shares of Series A Preferred Stock shall rank prior to the shares of Common Stock and any other class of stock of the Company ranking junior to the Series A Preferred Stock with respect to dividends, redemption, liquidation, dissolution, and winding up

of the Company. Subject to compliance with the protective provisions set forth in Section 8, but notwithstanding any other rights of the Series A Preferred Stock, the rights, privileges, preferences and restrictions of any additional series of Preferred Stock may be subordinate to, pari passu with (including, without limitation, inclusion in provisions with respect to liquidation and acquisition preferences, redemption and/or approval of matters by vote or written consent), or senior to any of those of the Series A Preferred Stock, any additional series of Preferred Stock or Common Stock.

3. Dividends. The Series A Preferred Stock shall participate equally and ratably with the holders of Common Stock in all dividends paid on the Common Stock, when, as and if declared by the Board, out of funds of the Company legally available therefor, as if such shares of Series A Preferred Stock had been converted to shares of Common Stock immediately prior to the record date for the payment of such dividend. In the event that full dividends, if declared, are not paid to the holders of Series A Preferred Stock and Common Stock and funds available for payment of dividends shall be insufficient to permit payment in full to holders of all such stock of the amounts to which they are entitled, then, subject to the rights of any series of Preferred Stock that may from time to time come into existence that is senior to or on parity with the Series A Preferred Stock with respect to dividends, the entire amount available for payment of dividends shall be distributed ratably among all holders of such stock in proportion to the full amount to which they would otherwise be respectively entitled. Notwithstanding anything contained herein to the contrary, no dividends shall be declared by the Board or paid or set apart for payment by the Company at such time if such declaration or payment shall be restricted or prohibited by law.

4. Liquidation Preference.

(a) General. Upon a Liquidation Event, subject to the rights of any series of Preferred Stock that may from time to time come into existence that is senior to or on parity with the Series A Preferred Stock with respect to liquidation preference, the holders of Series A Preferred Stock then outstanding shall be entitled to be paid, out of the assets of the Company available for distribution to its stockholders, whether from capital, surplus or earnings (“Available Assets”), the greater of (x) an amount equal to the Face Amount plus an amount equal to all declared but unpaid dividends on each share, if any, or (y) the amount that would be received in connection with such Liquidation Event if such holder’s Series A Preferred Stock were converted into fully-paid and non-assessable shares of Common Stock at the then-effective Conversion Ratio for such shares (in the aggregate, the “Liquidation Amount”). If upon a Liquidation Event, the Available Assets shall be insufficient to pay the holders of Series A Preferred Stock the full Liquidation Amount described in clause (x) of the immediately preceding sentence, then, subject to the rights of any series of Preferred Stock that may from time to time come into existence that is senior to or on parity with the Series A Preferred Stock with respect to liquidation preference, the holders of Series A Preferred Stock shall share ratably in any distribution of assets according to the respective amounts which would be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to said shares were paid in full. The Liquidation Amount shall be paid to the holders of Series A Preferred Stock in cash; provided, however, that in the event of a Liquidation Event in which all or part of the consideration received by the Company or its stockholders consists of assets other than cash, then the Liquidation Amount shall be paid to the holders of Series A

Preferred Stock in such non-cash assets (“Non-Cash Assets”) and cash, if any, such that the amount of Non-Cash Assets as a percentage of the total amount of Non-Cash Assets and cash received by the holders of Series A Preferred Stock upon such Liquidation Event and, if any amount is paid to the holders of Common Stock upon such Liquidation Event, the holders of Common Stock is, as nearly as practicable, the same. Subject to the rights of the holders of any series of Preferred Stock that rank senior to or on parity with the Series A Preferred Stock with respect to liquidation preference, after payment has been made in full to the holders of the Series A Preferred Stock, holders of securities ranking junior to the Series A Preferred Stock (including the Common Stock) shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of Series A Preferred Stock shall not be entitled to share therein.

(b) Valuation of Non-Cash Assets. In any Liquidation Event, if the holders of Series A Preferred Stock are to be paid in Non-Cash Assets or if the proceeds of such Liquidation Event are Non-Cash Assets, the value of such Non-Cash Assets will be deemed their fair market value as determined below.

(i) The method of valuation of Non-Cash Assets that are securities not subject to investment letter or other restrictions on free marketability is as follows:

(A) If traded on a securities exchange or through The Nasdaq Stock Market, the value shall be deemed to be the average of the closing prices of the securities on such exchange or system over the twenty (20) trading day period ending three (3) trading days prior to the closing of the Liquidation Event;

(B) If actively traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the twenty (20) trading day period ending three (3) trading days prior to the closing of the Liquidation Event; and

(C) If there is no active public market, the value shall be the fair market value thereof, as mutually determined by the Board and the holders of at least a majority of the then-outstanding shares of Series A Preferred Stock.

(ii) The method of valuation of Non-Cash Assets that are securities subject to investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a stockholder’s status as an affiliate or former affiliate) shall be to make an appropriate discount from the market value determined as above in (i) (A), (B) or (C) to reflect the approximate fair market value thereof, as mutually determined by the Board and the holders of at least a majority of the then-outstanding shares of Series A Preferred Stock, voting together as a separate class.

(iii) The fair market value of all Non-Cash Assets other than securities shall be as mutually determined by the Board and the holders of at least a majority of the then-outstanding shares of Series A Preferred Stock, voting together as a separate class.

(iv) In the event of a Change of Control, the foregoing methods for valuing Non-Cash Assets to be distributed to holders of Series A Preferred Stock in

connection with the Change of Control shall, upon approval by the holders of at least a majority of the then-outstanding shares of Series A Preferred Stock, voting together as a separate class, of the definitive agreements governing the Change of Control, be superseded by any determination of such value set forth in the definitive agreements governing the Change of Control.

Notice Required. Written notice of any voluntary or involuntary Liquidation Event, stating the payment date and the place where the distributable amount shall be payable, shall be given by mail, postage prepaid, not less than fifteen (15) days prior to the Liquidation Event stated therein, to the holders of record of the Series A Preferred Stock at their respective addresses as the same shall then appear on the books of the Company.

5. Redemption.

(a) Mandatory Redemption at Maturity. Upon the Maturity Date, subject to the rights of any series of Preferred Stock that may from time to time come into existence that is senior to or on a parity with the Series A Preferred Stock with respect to mandatory redemption rights, the Company shall redeem all (but not less than all) of the shares of Series A Preferred Stock then outstanding. Upon such date, each holder of shares of Series A Preferred Stock shall have the right to receive in respect of each share owned by such holder a sum in cash equal to the Face Amount plus an amount equal to all declared but unpaid dividends on each share, if any (the “Redemption Amount”).

(b) Company Optional Redemption. In the event that the Company does not close an Acquisition within one hundred fifty (150) days after the Closing Date, the Company may at its option redeem, in whole or in part, out of funds legally available therefor, the outstanding shares of Series A Preferred Stock by providing written notice to the holders thereof pursuant to Section 5(d)(i) below. The redemption shall take place at any time after the expiration of such one hundred fifty (150) day period and within one hundred eighty (180) days after the Closing Date and shall be at a price equal to the current Redemption Amount. In the case of a redemption of less than all of the shares of Series A Preferred Stock at the time outstanding, the shares to be redeemed shall be selected pro rata or by lot as reasonably determined by the Board to be equitable.

(c) Holder Optional Redemption. In the event that the Company does not close an Acquisition within one hundred fifty (150) days after the Closing Date, at the election of a holder of Series A Preferred Stock, the Company shall redeem, out of funds legally available therefor, the number of outstanding shares of Series A Preferred Stock held by such holder and identified by such holder in a written notice to the Company pursuant to Section 5(d)(ii) below. The redemption shall take place at any time after the expiration of such one hundred fifty (150) day period and within one hundred eighty (180) days after the Closing Date at a price equal to the current Redemption Amount.

(d) Redemption Mechanics.

(i) Company Redemption Notice. Notice of any redemption pursuant to Sections 5(a) or 5(b) (a “Company Redemption Notice”) shall be sent by or on behalf

of the Company at least ten (10) but not more than thirty (30) days prior to the date specified for redemption in such notice (the “Company Redemption Date”), by first class mail, postage prepaid, to all holders of record of shares of Series A Preferred Stock at their last address as they shall appear on the books of the Company; provided that with respect to a redemption made pursuant to Section 5(a), no failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any shares of Series A Preferred Stock. In addition to any information required by law, such Company Redemption Notice shall state (A) whether such redemption is being made pursuant to the mandatory redemption provision set forth in Section 5(a) or the optional redemption provision set forth in Section 5(b), (B) the Company Redemption Date, (C) the aggregate number of shares of Series A Preferred Stock to be redeemed and, if less than all of the outstanding shares of Series A Preferred Stock are to be redeemed, then the number of such shares to be redeemed from the applicable holder and (D) the place or places where certificates for such shares are to be surrendered for payment.

(ii) Holder Redemption Notice. Notice of any redemption pursuant to Section 5(c) (a “Holder Redemption Notice”) shall be sent by or on behalf of a holder of Series A Preferred Stock at least ten (10) but not more than thirty (30) days prior to the date specified for redemption in such notice (the “Holder Redemption Date”), by first class mail, postage prepaid, to the Company. The Holder Redemption Notice shall state (A) the Holder Redemption Date and (B) the aggregate number of shares of Series A Preferred Stock to be redeemed for such holder.

(iii) Redemption Payment. The Company shall redeem the shares of each holder of Series A Preferred Stock being redeemed pursuant to this Section 5 by making the applicable cash payments to such holder in respect of each share owned by such holder and being redeemed.

(iv) Retirement of Shares. Any shares of Series A Preferred Stock redeemed pursuant to the provisions of this Section 5 shall be retired and given the status of authorized and unissued Preferred Stock, undesignated as to series, subject to reissuance by the Company as shares of Preferred Stock of one or more series, as may be determined from time to time by the Board.

(v) Surplus Under DGCL. On the Maturity Date, the liquidation preference of any shares of capital stock of the Company shall not be included in “total liabilities” in connection with determining “surplus” under the DGCL.

6. Conversion.

(a) Optional Conversion. Each share of Series A Preferred Stock shall be convertible, at any time and from time to time at the option of the holder thereof, into the number of fully paid and non-assessable shares of Common Stock equal to the Face Amount of such share of Series A Preferred Stock divided by the appropriate Conversion Price. The initial “Conversion Price” per share of Series A Preferred Stock shall be $17.525 and shall be subject to adjustment from time to time as set forth in Section 6(g). The number of shares of Common

Stock into which each share of Series A Preferred Stock is convertible, after taking into account any such adjustments, is hereinafter referred to as the “Conversion Ratio.” Upon any decrease or increase in the Conversion Price as described in Section 6(g), the Conversion Ratio shall be appropriately increased or decreased. The date and time the right to convert shares of Series A Preferred Stock will terminate shall be at the close of business on the day immediately preceding the Maturity Date (unless the Company shall default in making the payment of the Redemption Amount due on the Maturity Date, in which case the right of the holder to convert its whole shares of Series A Preferred Stock shall terminate on the date the payment of the Redemption Amount is made and such shares of Series A Preferred Stock are redeemed).

(b) Automatic Conversion. Each share of Series A Preferred Stock shall be automatically converted into fully-paid, non-assessable shares of Common Stock at the then effective Conversion Ratio for such share upon the approval of the holders of at least a majority of the then-outstanding Series A Preferred Stock, voting as a separate class.

(c) Conversion Mechanics.

(i) In order to exercise the conversion privilege pursuant to Section 6(a), a holder of the shares of Series A Preferred Stock to be converted shall surrender the certificate representing such shares at the office of the Company, with a written notice of election to convert completed and signed, specifying the number of shares to be converted (the “Conversion Notice”). Unless the shares issuable on conversion are to be issued in the same name as the name in which such shares of Series A Preferred Stock are registered, each share surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the Company, duly executed by the holder or the holder’s duly authorized attorney and an amount sufficient to pay any transfer or similar tax.

(ii) As promptly as practicable after the surrender by the holder of the certificates for shares of Series A Preferred Stock for conversion pursuant to Section 6(a), the Company shall issue and deliver to such holder or on the holder’s written order to the holder’s transferee a certificate or certificates for, or make or cause to be made a book-entry notation of, the whole number of shares of Common Stock issuable upon conversion.

(iii) Each conversion shall be deemed to have been effected on the Conversion Date. The “Conversion Date” shall mean (A), in the case of an optional conversion pursuant to Section 6(a), immediately prior to the close of business on the first date on which both the certificates for shares of Series A Preferred Stock were surrendered and the Conversion Notice was received by the Company and (B) in the case of an automatic conversion pursuant to Section 6(b), on the date and at such time determined by the approval of the holders of at least a majority of the then-outstanding Series A Preferred Stock, which time and date may be conditional on the occurrence of any event. The Person in whose name or names any certificate or certificates for shares of Common Stock are issuable upon such conversion shall be deemed to have become the holder of record of the shares of Common Stock represented thereby on the Conversion Date, and such conversion shall be into a number of shares of Common Stock equal to

the product of the number of shares of Series A Preferred Stock surrendered times the Conversion Ratio in effect on the Conversion Date. All shares of Common Stock delivered upon conversion of the Series A Preferred Stock will upon delivery be duly and validly issued and fully paid and non-assessable, free of all liens and charges and not subject to any preemptive rights. Upon the surrender of certificates representing shares of Series A Preferred Stock, such shares shall no longer be deemed to be outstanding and all rights of a holder with respect to such shares surrendered for conversion shall immediately terminate except the right to receive Common Stock and other amounts payable pursuant to this Section 6; provided, however, that in the case of an automatic conversion pursuant to Section 6(b), each outstanding shares of Series A Preferred Stock shall be converted automatically into a share of Common Stock on the Conversion Date without any further action by the holder of such share and whether or not the certificates representing such shares are surrendered to the Company; provided, further, that the Company shall not be obligated to issue certificates evidencing shares of Common Stock issuable upon such automatic conversion unless either the certificates representing the shares of Series A Preferred Stock are surrendered to the Company.

(iv) Except as provided above and in Section 6(g), the Company shall make no payment or adjustment for declared but unpaid dividends on shares of Series A Preferred Stock on conversion of such shares or for dividends in cash on the shares of Common Stock issued upon such conversion.

(d) Issuance of Shares.

(i) The Company shall at all times reserve and keep available, free from preemptive rights, such number of its authorized but unissued shares of Common Stock as may be required to effect conversions of the Series A Preferred Stock. The Company shall from time to time in accordance with the DGCL increase the authorized amount of its Common Stock if at any time the number of shares of Common Stock remaining unissued and available for issuance shall not be sufficient to permit conversion of the Preferred Stock in accordance with any applicable conversion provisions applicable to such Preferred Stock.

(ii) Prior to the delivery of any securities that the Company is obligated to deliver upon conversion of the Series A Preferred Stock, the Company shall comply with all applicable federal and state laws and regulations which require action by the Company. The Company will list such shares on each national securities exchange or automated quotation system on which the Common Stock is listed or quoted.

(e) Transfer Taxes. The Company shall pay any and all issuance, delivery and transfer taxes in respect of the issuance or delivery of shares of Common Stock on conversion of the Series A Preferred Stock pursuant hereto. However, if any such certificate is to be issued in a name other than that of the holder of the shares of Series A Preferred Stock converted, the Person or Persons requesting the issuance thereof shall pay to the Company the amount of any tax payable in respect of any transfer involved in such issuance or shall establish to the satisfaction of the Company that such tax has been paid.

(f) Fractional Shares. In connection with the conversion of any shares of Series A Preferred Stock, no fractions of shares of Common Stock shall be issued. In lieu thereof the Company shall pay a cash adjustment in respect of such fractional interest in an amount equal to such fractional interest multiplied by the Market Price on the day on which such shares of Series A Preferred Stock are deemed to have been converted. The “Market Price” shall be (i) if the Common Stock is then traded on a national securities exchange or The Nasdaq Stock Market (or a similar national quotation system), then the value shall be computed based on the closing price on such exchange or system on such day, (ii) if the Common Stock is actively traded over-the-counter, then the value shall be computed based on the closing price on such day, and (iii) if there is no public market for the Common Stock, then the value shall be computed based on fair market value thereof, as determined in good faith by the Board on such day.

(g) Adjustments.

(i) If the Company at any time after the date of issue of the Series A Preferred Stock (A) declares a dividend or makes a distribution on Common Stock payable in Common Stock, (B) subdivides or splits the outstanding Common Stock, (C) combines or reclassifies the outstanding Common Stock into a smaller number of shares, (D) issues any shares of its capital stock in a reclassification of Common Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation), or (E) consolidates with, merges with or into or is converted into any other Person, the Conversion Price in effect at the time of the record date for such dividend or distribution or of the effective date of such subdivision, split, combination, consolidation, conversion, merger or reclassification shall be adjusted so that the conversion of the Series A Preferred Stock after such time shall entitle the holder to receive the aggregate number of shares of Common Stock or other securities of the Company (or shares of any security into which such shares of Common Stock have been combined, consolidated, converted, merged or reclassified pursuant to Sections 6(g)(i)(C), 6(g)(i)(D) or 6(g)(i)(E)) which, if this Series A Preferred Stock had been converted immediately prior to such time, such holder would have owned upon such conversion and been entitled to receive by virtue of such dividend, distribution, subdivision, split, combination, consolidation, conversion, merger or reclassification, assuming such holder of Common Stock (x) is not a Person with which the Company consolidated or into which the Company merged or which merged into the Company or to which such recapitalization, sale or transfer was made, as the case may be (a “Constituent Person”), or an affiliate of a Constituent Person and (y) failed to exercise any rights of election as to the kind or amount of securities, cash and other property receivable upon such reclassification, consolidation, conversion, merger, recapitalization, sale or transfer (provided, however, that if the kind or amount of securities, cash and other property receivable upon such reclassification, consolidation, conversion, merger, recapitalization, sale or transfer is not the same for each share of Common Stock held immediately prior to such reclassification, consolidation, conversion, merger, recapitalization, sale or transfer by other than a Constituent Person or an affiliate thereof and in respect of which such rights of election shall not have been exercised (the “Non-Electing Share”), then for the purpose of this Section 6(g) the kind and amount of securities, cash and other property receivable upon such reclassification, consolidation, conversion, merger, recapitalization, sale or transfer by each Non-Electing Share shall be

deemed to be the kind and amount so receivable per share by a plurality of the Non-Electing Shares). Such adjustment shall be made successively whenever any event listed above shall occur. If a record date is fixed for any dividend or distribution referred to in Section 6(g)(i)(A) but such dividend or distribution is not so made, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such record date had not been fixed.

(ii) All calculations under this Section 6(g) shall be made to the nearest four decimal points.

(iii) If, at any time as a result of the provisions of this Section 6(g), holders of Series A Preferred Stock upon subsequent conversion shall become entitled to receive any shares of capital stock of the Company other than Common Stock, the number of such other shares so receivable upon conversion of this Series A Preferred Stock shall thereafter be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions contained herein.

(h) No Impairment. The Company will not, by amendment of this Certificate of Designation or the Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times assist in the carrying out of all the provisions of this Section 6 and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the holders of the Series A Preferred Stock against impairment.

7. Voting Rights.

(a) Preferred Stock. Each holder of Series A Preferred Stock shall be entitled to the number of votes equal to the number of shares of Common Stock into which the shares of Series A Preferred Stock held by such holder could be converted as of the record date. The holders of shares of Series A Preferred Stock shall be entitled to vote on all matters on which the Common Stock shall be entitled to vote. Holders of Series A Preferred Stock shall be entitled to notice of any stockholders’ meeting in accordance with the Bylaws of the Company. Fractional votes shall not, however, be permitted and any fractional voting rights resulting from the above formula (after aggregating all shares into which shares of Preferred Stock held by each holder could be converted), shall be disregarded.

(b) Restricted Class Voting. Other than as provided herein or required by law, the holders of Series A Preferred Stock and the holders of Common Stock shall vote together as a single class.

(c) No Series Voting. Other than as provided herein or required by law, there shall be no series voting.

(d) Election of Directors. Until the date that is one (1) year after the Closing Date, the holders of at least a majority of the then-outstanding Series A Preferred Stock, voting as a separate class, shall be entitled to elect one (1) director to the Board on the Closing Date and

at each meeting or pursuant to each consent of the Company’s stockholders for the election of directors (the “Series A Director”). The Series A Director shall only be removed by the holders of at least a majority of the then-outstanding Series A Preferred Stock, voting as a separate class.

8. Protective Provisions. As long as any of the Series A Preferred Stock shall be issued and outstanding, the Company shall not, without first obtaining the approval (by vote or written consent as provided by law) of the holders of at least a majority of the then-outstanding Series A Preferred Stock, voting as a separate class:

(a) alter or change the rights, privileges, preferences and restrictions of the Series A Preferred Stock in a manner adverse to the holders thereof, by merger, consolidation or otherwise; or

(b) amend or waive any provisions of the Corporation’s Certificate of Incorporation in a manner adverse to the holders of the outstanding shares of Series A Preferred Stock; provided, however, that the mere authorization, creation and issuance of any additional series of Preferred Stock with rights, privileges, preferences and restrictions subordinate to, pari passu with or senior to any of those of the Series A Preferred Stock shall not require approval of holders of at least a majority of the then-outstanding Series A Preferred Stock pursuant to this Section 8(b).

Except as expressly required under law, on any matter on which holders of Series A Preferred Shares shall be entitled to vote under this Section 8, such holders shall be entitled to one vote per share.

9. No Sinking Fund. No sinking fund shall be established for the retirement or redemption of shares of Series A Preferred Stock.

10. Preemptive or Subscription Rights. No holder of shares of Series A Preferred Stock shall have any preemptive or subscription rights in respect of any securities of the Company that may be issued.

11. No Other Rights. The shares of Series A Preferred Stock shall not have any designations, preferences or relative, participating, optional or other special rights except as expressly set forth in the Company’s Certificate of Incorporation, this Certificate or as otherwise required by law.

RESOLVED, FURTHER, that the Secretary of the Company be, and he hereby is, authorized, empowered and directed to execute an Certificate of Designation, Preferences and Rights of Series A Preferred Stock and that such Certificate be delivered to and filed with the Secretary of State of the State of Delaware pursuant to the provisions of Section 103 and Section 151(g) of the DGCL, both as amended.

* * * * *

IN WITNESS WHEREOF, Blue Coat Systems, Inc. has caused this Certificate of Designation to be executed by its duly authorized officer as of June 22, 2006.

	BLUE COAT SYSTEMS, INC.

	By:	/s/ Brian NeSmith
		Brian NeSmith
		President and Chief Executive Officer

EX-99.4 5 a06-14776_1ex99d4.htm EX-99

Exhibit 99.4

INVESTORS’ RIGHTS AGREEMENT

TABLE OF CONTENTS

		Page
SECTION 1. REGISTRATION RIGHTS		1
1.1 Definitions		3
1.2 Piggyback Registration		4
1.3 Shelf Registration		4
1.4 Obligations of the Company		6
1.5 Information from Holder		6
1.6 Expenses of Registration		6
1.7 Delay of Registration		6
1.8 Indemnification		6
1.9 Reports Under the 1934 Act		9
1.10 Assignment of Registration Rights		9
1.11 Limitations on Subsequent Registration Rights		9
1.12 Termination of Registration Rights		10
SECTION 2. DIRECTOR NOMINATION RIGHT		10
SECTION 3. MISCELLANEOUS		10
3.1 Successors and Assigns		10
3.2 Governing Law		11
3.3 Counterparts		11
3.4 Remedies		11
3.5 Titles and Subtitles		11
3.6 Notices		11
3.7 Expenses		12
3.8 Entire Agreement; Amendments and Waivers		12
3.9 Severability		12
3.10 Aggregation of Stock		12

INVESTORS’ RIGHTS AGREEMENT

This INVESTORS’ RIGHTS AGREEMENT (this “Agreement”) is made as of the 22nd day of June, 2006, by and among Blue Coat Systems, Inc., a Delaware corporation (the “Company”), the investors listed on Schedule A attached hereto (the “Series A Investors”) and the investor listed on Schedule B attached hereto (the “Asset Purchase Investor”, together with the Series A Investors, the “Investors”, and, each individually, an “Investor”).

THE PARTIES TO THIS AGREEMENT enter into this Agreement on the basis of the following facts, intentions and understandings:

WHEREAS, the Company and the Series A Investors are parties to the Series A Preferred Stock Purchase Agreement of even date herewith (the “Purchase Agreement”); and

WHEREAS, in order to induce the Series A Investors to purchase shares of Series A Preferred Stock, par value $0.0001 per share, of the Company (“Series A Preferred Stock”) and invest funds in the Company pursuant to the Purchase Agreement, the Series A Investors and the Company hereby agree that this Agreement shall govern the rights of such Investors to cause the Company to register the shares of Common Stock, par value $0.0001 per share, of the Company (“Common Stock”) issued or issuable upon conversion of Series A Preferred Stock (such issued or issuable shares of Common Stock being referred to as the “Conversion Shares”) and certain other matters as set forth herein; and

WHEREAS, the Company and the Asset Purchase Investor are parties to the Asset Purchase Agreement of even date herewith (the “Asset Agreement”); and

WHEREAS, in order to induce the Asset Purchase Investor to accept shares of Common Stock (such shares of Common Stock, the “Asset Shares”) in partial payment for certain assets being acquired by the Company pursuant to the Asset Agreement, the Asset Purchase Investor and the Company hereby agree that this Agreement shall govern the right of such Investor to cause the Company to register the shares of Common Stock received by such Investor.

NOW, THEREFORE, the parties hereby agree as follows:

Section 1. Registration Rights. The Company covenants and agrees as follows:

1.1 Definitions. For purposes of this Section 1:

(a) The term “Act” means the Securities Act of 1933, as amended.

(b) The term “Anniversary Date” means the first anniversary of the date of this Agreement.

(c) The term “Form S-3” means such form under the Act as in effect on the date hereof or any successor registration form under the Act subsequently adopted by the SEC.

(d) The term “Form S-4” means such form under the Act as in effect on the date hereof or any successor registration form under the Act subsequently adopted by the SEC.

(e) The term “Holder” means any person owning or having the right to acquire Registrable Securities or any assignee thereof in accordance with Section 1.10 hereof.

(f) The term “1934 Act” means the Securities Exchange Act of 1934, as amended.

(g) The terms “register,” “registered,” and “registration” refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Act, and the declaration or ordering of effectiveness of such registration statement or document.

(h) The term “Other Registrable Securities” means any (i) Registrable Securities (as defined in that certain Registration Rights Agreement, dated as of September 18, 2003, by and among the Company and the investors named therein (the “Existing Registration Rights Agreement”)) and (ii) other securities of the Company (A) that are issued by the Company in connection with a financing, merger or acquisition transaction occurring subsequent to the date of the Purchase Agreement and (B) that have been granted registration rights by the Company in connection with such transaction.

(i) The term “Registrable Securities” means (i) the Conversion Shares and the Asset Shares and (ii) any Common Stock of the Company issued as (or issuable upon the conversion or exercise of any warrant, right or other security that is issued as) a dividend or other distribution with respect to, or in exchange for, or in replacement of, the shares referenced in (i) above, excluding in all cases, however, any Registrable Securities sold by a person in a transaction in which his rights under this Section 1 are not assigned.

(j) The “number of shares of Registrable Securities” outstanding shall be determined by the number of shares of Common Stock outstanding that are, and the number of shares of Common Stock issuable pursuant to then exercisable or convertible securities that are, Registrable Securities.

(k) The “number of shares of Other Registrable Securities” outstanding shall be determined by the number of shares of Common Stock outstanding that are, and the number of shares of Common Stock issuable pursuant to then exercisable or convertible securities that are, Other Registrable Securities.

(l) The term “Rule 144” shall mean Rule 144 under the Act.

(m) The term “Rule 144(k)” shall mean subsection (k) of Rule 144 under the Act.

(n) The term “SEC” shall mean the Securities and Exchange Commission.

1.2 Piggyback Registration.

(a) If (but without any obligation to do so) the Company proposes to register (including for this purpose a registration effected by the Company for stockholders other than the Holders) any of its capital stock or other securities under the Act in connection with the public offering of such securities (other than a registration relating solely to the sale of securities of participants in a Company stock plan, a registration effected on Form S-4 or a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities), the Company shall, at such time, give each Holder written notice of such registration. Upon the written request of each Holder given within twenty (20) days after delivery of such notice by the Company in accordance with Section 3.5, the Company shall, subject to the provisions of Section 1.2(c), use all commercially reasonable efforts to cause to be registered under the Act all of the Registrable Securities that each such Holder requests to be registered.

(b) Right to Terminate Registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 1.2 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration. The expenses of such withdrawn registration shall be borne by the Company in accordance with Section 1.6 hereof.

(c) Underwriting Requirements. In connection with any offering involving an underwriting of shares of the Company’s capital stock, the Company shall not be required under this Section 1.2 to include any of the Holders’ securities in such underwriting unless they accept the terms of the underwriting as reasonably agreed upon between the Company and the underwriters selected by the Company (or by other persons entitled to select the underwriters) and enter into an underwriting agreement in customary form with such underwriters, and then only in such quantity as the underwriters determine in their sole discretion will not jeopardize the success of the offering by the Company. If the total amount of securities, including Registrable Securities and Other Registrable Securities, requested by stockholders to be included in such offering exceeds the amount of securities sold other than by the Company that the underwriters determine in their sole discretion is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, that the underwriters determine in their sole discretion will not jeopardize the success of the offering. In no event shall (i) any Registrable Securities and Other Registrable Securities be excluded from such offering unless all other stockholders’ securities (other than Registrable Securities and Other Registrable Securities) have been first excluded or (ii) the amount of Registrable Securities and Other Registrable Securities included in the offering be reduced below twenty percent (20%) of the total amount of securities included in such offering.

In the event that less than all of the Registrable Securities and Other Registrable Securities requested to be registered can be included in such offering, then the number of Registrable Securities included in the offering shall equal the total number of Registrable Securities and Other Registrable Securities included in the offering, as determined pursuant to the immediately preceding paragraph, multiplied by a fraction (i) the numerator of which is the number of Registrable Securities then held by all Holders that request to include Registrable

Securities in the offering and (ii) the denominator of which is the sum of the number of Registrable Securities then held by all Holders that request to include Registrable Securities in the offering and the number of Other Registrable Securities then held by all holders of Other Registrable Securities that request to include Other Registrable Securities in the offering. The number of Registrable Securities included in the offering pursuant to the immediately preceding sentence shall be apportioned pro rata among the selling Holders based on the number of Registrable Securities held by all selling Holders or in such other proportions as shall mutually be agreed to by all such selling Holders. For purposes of the preceding sentence concerning apportionment, for any selling stockholder that is a Holder of Registrable Securities and that is a venture capital fund, private equity fund, partnership or corporation, the affiliated venture capital funds, private equity funds, partners, retired partners and stockholders of such Holder, or the estates and family members of any such partners and retired partners and any trusts for the benefit of any of the foregoing persons shall be deemed to be a single “selling Holder,” and any pro rata reduction with respect to such “selling Holder” shall be based upon the aggregate amount of Registrable Securities owned by all such related entities and individuals.

1.3 Shelf Registration.

(a) After September 22, 2006, as soon as the Company is eligible to use Form S-3, the Company will prepare and file with the SEC a registration statement on Form S-3 for the purpose of registering under the Securities Act all of the Registrable Securities for resale by, and for the account of, the Holders as selling stockholders thereunder (the “Shelf Registration Statement”). The Shelf Registration Statement shall permit the Holders to offer and sell, on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, any or all of the Registrable Securities. The Company agrees to use commercially reasonable efforts to cause the Shelf Registration Statement to become and remain effective as soon as reasonably possible until all of such Registrable Securities have been disposed of.

(b) The Company shall be required to keep the Shelf Registration Statement effective until such date that is the earlier of (i) the date as of which all of the Holders may sell all of the Registrable Securities without restriction pursuant to Rule 144(k) (or the successor rule thereto) promulgated under the Securities Act or (ii) the date when all of the Registrable Securities registered thereunder shall have been sold pursuant to the Shelf Registration Statement or Rule 144. Thereafter, the Company shall be entitled to withdraw the Shelf Registration Statement and the Holders shall have no further right to offer or sell any of the Registrable Securities pursuant to the Shelf Registration Statement (or any prospectus relating thereto).

1.4 Obligations of the Company. Whenever required under this Section 1 to effect the registration of any Registrable Securities, except as otherwise expressly provided herein, the Company shall, as expeditiously as reasonably possible:

(a) prepare and file with the SEC a registration statement with respect to such Registrable Securities and use all commercially reasonable efforts to cause such registration statement to become and remain effective;

(b) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Act with respect to the disposition of all securities covered by such registration statement;

(c) furnish to the Holders such number of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them;

(d) use all commercially reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions;

(e) in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering;

(f) notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing;

(g) cause all such Registrable Securities registered pursuant to this Section 1 to be listed on each securities exchange and trading system on which similar securities issued by the Company are then listed; and

(h) provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration.

Notwithstanding the provisions of this Section 1, the Company shall be entitled to postpone or suspend the filing, effectiveness or use of, or trading under, any registration statement during any period when (i) the Company is not eligible to use Form S-3, (ii) the SEC or The Nasdaq Stock Market requests that the Company amend or supplement the Shelf Registration Statement or the prospectus included therein or requests additional information relating thereto, (iii) the SEC or The Nasdaq Stock Market issues a stop order or similar order suspending the effectiveness or restricting the use of the Shelf Registration Statement or initiates proceedings to issue a stop order or similar order, (iv) the Board of Directors of the Company in good faith determines that the Shelf Registration Statement, the prospectus included therein, any amendment or supplement thereto or any document incorporated or deemed to be incorporated therein contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading, in light of the

circumstances then existing; provided, however, that the Company uses commercially reasonable efforts to prepare and file with the SEC such amendments and supplements to the such registration statement or amendment as shall be reasonably necessary to cure such untrue statement or omission, or (v) the Board of Directors of the Company in good faith determines that the failure to so postpone or suspend would require disclosure of material nonpublic information that, if disclosed at such time, would be materially harmful to the interests of the Company and its stockholders; provided, however, that during any such period all executive officers and directors of the Company and all stockholders of the Company with similar registration rights are also prohibited from selling securities of the Company; provided, further, however, that such postponement or suspension (A) shall not exceed a period of forty-five (45) days and (B) shall be exercised by the Company not more than twice in any twelve (12) month period (for a maximum of ninety (90) days within any such twelve (12) month period), provided that the second period of postponement or suspension within any twelve (12) month period shall not commence less than sixty (60) days after the end of the first period of postponement or suspension within any such twelve (12) month period.

In the event of the suspension of effectiveness of any registration statement pursuant to this Section 1.4, the applicable time period during which such registration statement is to remain effective shall be extended by that number of days equal to the number of days the effectiveness of such registration statement was suspended.

1.5 Information from Holder. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 1 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as shall be reasonably required to effect the registration of such Holder’s Registrable Securities.

1.6 Expenses of Registration. All expenses (other than (i) underwriting discounts and commissions relating to the Registrable Securities that are being sold by the Holders and (ii) fees of any counsel for the selling Holders) that are incurred in connection with registrations, filings or qualifications pursuant to Sections 1.2 and 1.3, including (without limitation) all registration, filing and qualification fees, printers’ and accounting fees, fees and disbursements of counsel for the Company shall be borne by the Company.

1.7 Delay of Registration. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 1.

1.8 Indemnification. In the event any Registrable Securities are included in a registration statement under this Section 1:

(a) To the extent permitted by law, the Company will indemnify and hold harmless each Holder, the partners, officers, directors and stockholders of each Holder, legal counsel and accountants for each Holder, any underwriter (as defined in the Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Act or the 1934 Act, against any losses, claims, damages or liabilities (joint or several) to

which they may become subject under the Act, the 1934 Act, any state securities laws or any rule or regulation promulgated under the Act, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a “Violation”): (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state in such registration statement a material fact required to be stated therein, or necessary to make the statements therein not misleading or (iii) any violation or alleged violation by the Company of the Act, the 1934 Act, any state securities laws or any rule or regulation promulgated under the Act, the 1934 Act or any state securities laws, and the Company will reimburse each such Holder, underwriter, controlling person or other aforementioned person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the indemnity agreement contained in this subsection l.8(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable to a person claiming indemnification in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation that occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by such Holder, underwriter, controlling person or other aforementioned person that is claiming indemnification; provided, further, however, that the foregoing indemnity agreement with respect to any preliminary prospectus shall not inure to the benefit of any such Holder or underwriter or other aforementioned person, or any person controlling such Holder or underwriter, from whom the person asserting any such losses, claims damages or liabilities purchased shares in the offering, if a copy of the most current prospectus was not sent or given by or on behalf of such Holder or underwriter or other aforementioned person to such person, if required by law to have been so delivered, at or prior to the written confirmation of the sale of the shares of such person, and if the prospectus (as so amended or supplemented) would have cured the defect giving rise to such loss, claim, damage or liability.

(b) To the extent permitted by law, each selling Holder will, severally and not jointly, indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the registration statement, each person, if any, who controls the Company within the meaning of the Act, legal counsel and accountants for the Company, any underwriter, any other Holder selling securities in such registration statement and any controlling person of any such underwriter or other Holder, against any losses, claims, damages or liabilities (joint or several) to which any of the foregoing persons may become subject, under the Act, the 1934 Act, any state securities laws or any rule or regulation promulgated under the Act, the 1934 Act or any state securities laws, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such registration; and each such Holder will reimburse any person intended to be indemnified pursuant to this subsection l.8(b) for any legal or other expenses reasonably incurred by such person in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the indemnity agreement contained in this

subsection l.8(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder (which consent shall not be unreasonably withheld), and provided that in no event shall any indemnity under this subsection l.8(b) exceed the net proceeds from the offering received by such Holder.

(c) Promptly after receipt by an indemnified party under this Section 1.8 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 1.8, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of liability to the indemnified party under this Section 1.8 to the extent of such prejudice, but the omission to so deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 1.8.

(d) If the indemnification provided for in this Section 1.8 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and the indemnified party on the other hand in connection with the statements or omissions that resulted in such loss, liability, claim, damage or expense, as well as any other relevant equitable considerations; provided, however, that no contribution by any Holder, when combined with any amounts paid by such Holder pursuant to Section 1.8(b), shall exceed the net proceeds from the offering received by such Holder. The relative fault of the indemnifying party and the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

(e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into by any Holder claiming indemnification in connection with an underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control with respect to such Holder.

(f) The obligations of the Company and Holders under this Section 1.8 shall survive the completion of any offering of Registrable Securities in a registration statement under this Section 1 and otherwise.

1.9 Reports Under the 1934 Act. With a view to making available to the Holders the benefits of Rule 144 and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration beginning on the Anniversary Date, the Company agrees, to:

(a) make and keep public information available, as those terms are understood and defined in Rule 144, at all times on and after the Anniversary Date;

(b) file with the SEC in a timely manner all reports and other documents required of the Company under the Act and the 1934 Act after April 30, 2007;

(c) not later than the Anniversary Date, file with the SEC all reports and other documents required of the Company under the Act and the 1934 Act for the 12 months preceding the Anniversary Date; and

(d) furnish to any Holder on and after the Anniversary Date, so long as the Holder owns any Registrable Securities, forthwith upon request (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to avail any Holder of any rule or regulation of the SEC that permits the selling of any such securities without registration on or after the Anniversary Date.

1.10 Assignment of Registration Rights. The rights to cause the Company to register Registrable Securities pursuant to this Section 1 may be assigned (but only with all related obligations) by a Holder to any transferee or assignee of such securities, including any transferee or assignee that (i) is a subsidiary, parent, partner, limited partner, retired partner or stockholder of a Holder, or (ii) is a Holder’s family member or trust for the benefit of an individual Holder, provided: (a) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned; (b) such transferee or assignee agrees in writing to be bound by and subject to the terms and conditions of this Agreement; and (c) such assignment shall be effective only if immediately following such transfer the further disposition of such securities by the transferee or assignee is restricted under the Act.

1.11 Limitations on Subsequent Registration Rights. From and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of a majority of the Registrable Securities, enter into any agreement with any holder or prospective holder of any securities of the Company that would allow such holder or prospective holder to receive registration rights that are senior to the registration rights held by the Holders. For avoidance of doubt, any registration other than with respect to a registration relating solely to the sale of securities of participants in a Company stock plan, a registration effected on Form S-4 or

a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities, registration rights that allow a holder or prospective holder of securities of the Company to register any securities of the Company, or include any securities of the Company in a registered offering, without affording a pari passu right of registration or inclusion to the Holders shall be deemed to be registration rights senior to the registration rights held by the Holders.

1.12 Termination of Registration Rights. No Holder shall be entitled to exercise any right provided for in this Section 1 (i) after three (3) years following the date of this Agreement, (ii) as to any Holder, such earlier time after the date of this Agreement during which such Holder (A) can sell all shares held by it in compliance with Rule 144(k) or (B) holds one percent (1%) or less of the Company’s outstanding Common Stock and all Registrable Securities held by such Holder (together with any affiliate of the Holder with whom such Holder must aggregate its sales under Rule 144) can be sold in any three (3) month period without registration in compliance with Rule 144 or (iii) after such time at which such Holder receives freely-tradable securities in connection with any consolidation, reorganization or merger of the Company with or into any other corporation or corporations or a sale, conveyance, or other disposition of all or substantially all of the Company’s property or business.

Section 2. Director Nomination Right.

After the Anniversary Date, so long as the Series A Investors continue to hold at least sixty percent (60%) of the Common Stock originally purchased by them pursuant to the Purchase Agreement (assuming full conversion of the Series A Preferred Stock into Common Stock), the Series A Investors shall have the right to nominate one (1) candidate for election to the Board of Directors of the Company (the “Series A Director”). Such Series A Director nominee shall be mutually agreeable to Francisco Partners II, L.P. and the Board of Directors of the Company (which agreement by the Board of Directors of the Company shall not be unreasonably withheld). So long as the Series A Investors have such right, the Company and its Board of Directors agree to take all actions reasonably necessary to (i) if necessary, increase on the Anniversary Date and thereafter maintain the size of the Board of Directors so that the number of seats on the Board of Directors immediately after the Anniversary Date is at least as large as the number of authorized directors immediately prior to the Anniversary Date, (ii) if necessary, appoint the Series A Director to the fill the vacancy created, and (iii) include the Series A Director nominee in all proxy and other materials and endorse and recommend the Series A Director to the stockholders for election in connection with all meetings of the stockholders at which directors are to be elected, which endorsement and recommendation shall not be changed or withdrawn without consent of the Series A Investors, which shall not be unreasonably withheld.

Section 3. Miscellaneous.

3.1 Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of any shares of Registrable Securities). Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies,

obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

3.2 Governing Law. This Agreement shall be governed by and construed under the laws of the State of California as applied to agreements among California residents entered into and to be performed entirely within California.

3.3 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

3.4 Remedies. Each Investor shall be entitled to enforce its rights under this Agreement specifically to recover damages and costs (including reasonable attorney’s fees) for any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages are not an adequate remedy for any breach of the provisions of this Agreement and that the Investors are entitled to specific performance and/or other injunctive relief (without posting any bond or deposit) in order to enforce or prevent any violations of the provisions of this Agreement.

3.5 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

3.6 Notices. All notices, requests, consents and other communications hereunder shall be in writing; shall be mailed (a) if within the domestic United States, by first-class registered or certified airmail, by nationally recognized overnight express courier, postage prepaid, or by facsimile or (b) if delivered to or from outside the United States, by International Federal Express or facsimile; shall be deemed given: (i) if delivered by first-class registered or certified mail domestic, three business days after so mailed, (ii) if delivered by nationally recognized overnight carrier, one business day after so mailed, (iii) if delivered by International Federal Express, two business days after so mailed or (iv) if delivered by facsimile, upon electric confirmation of receipt; and shall be delivered as addressed as follows:

(a) if to the Company, to:

Blue Coat Systems, Inc.
420 North Mary Avenue
Sunnyvale, California 94085
Attention: General Counsel
Phone: (408) 220-2200
Telecopy: (408) 220-2250

(b) with a copy mailed to:

Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP
155 Constitution Drive
Menlo Park, California 94025
Attn: Daniel E. O’Connor, Esq.
Phone: (650) 321-2400
Telecopy: (650) 321-2800

(c) if to the Investors, at the addresses set forth on Schedule A or Schedule B attached hereto, or at such other address or addresses as may have been furnished to the Company in writing.

3.7 Expenses. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.

3.8 Entire Agreement; Amendments and Waivers. This Agreement constitutes the full and entire understanding and agreement among the parties with regard to the subjects hereof. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the holders of a majority of the then-outstanding Registrable Securities; provided, however, that any such amendment or waiver that adversely effects any Investor in a different manner than any other holder of Registrable Securities shall also require approval of such Investor. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each holder of any Registrable Securities, each future holder of all such Registrable Securities, and the Company. Each Holder acknowledges that by the operation of this Section 3.8, the holders of a majority of the then-outstanding Registrable Securities will have the right and power to diminish or eliminate all rights of such Holder under this Agreement.

3.9 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision(s) shall be excluded from this Agreement and the balance of this Agreement shall be interpreted as if such provision(s) were so excluded and shall be enforceable in accordance with its terms.

3.10 Aggregation of Stock. All shares of Registrable Securities held or acquired by affiliated entities (including affiliated venture capital funds) or persons shall be aggregated together for the purpose of determining the availability of any rights under this Agreement.

IN WITNESS WHEREOF, the parties have executed this Investors’ Rights Agreement as of the date first above written.

	BLUE COAT SYSTEMS, INC.

	By:	/s/ Brian NeSmith
		Name: Brian NeSmith
		Title: President and Chief Executive Officer

SIGNATURE PAGE TO THE BLUE COAT SYSTEMS, INC.

INVESTORS’ RIGHTS AGREEMENT

	INVESTORS

	FRANCISCO PARTNERS II, L.P.

	By:	FRANCISCO PARTNERS GP II, L.P.
		its General Partner

	By:	FRANCISCO PARTNERS GP II
		MANAGEMENT, LLC
		its General Partner

	By	/s/ Keith B. Geeslin
		Name: Keith B. Geeslin
		Title: Manager

	FRANCISCO PARTNERS PARALLEL FUND II, L.P.


	By:	FRANCISCO PARTNERS GP II, L.P.,
		its General Partner

	By:	FRANCISCO PARTNERS GP II
		MANAGEMENT, LLC,
		its General Partner

	By	/s/ Keith B. Geeslin
		Name: Keith B. Geeslin
		Title: Manager

	INVESTORS

	NETWORK APPLIANCE, INC.

	By
		Name:
		Title:

	INVESTORS

	SEQUOIA CAPITAL GROWTH FUND III

	By:	SCGF III Management, LLC
		A Delaware Limited Liability Company
		General Partner

	By:	/s/ Jim Goetz
		Name:
		Title: Managing Member

	SEQUOIA CAPITAL GROWTH PARTNERS III

	By:	SCGF III Management, LLC
		A Delaware Limited Liability Company
		General Partner

	By:	/s/ Jim Goetz
		Name:
		Title: Managing Member

	SEQUOIA CAPITAL GROWTH III PRINCIPALS FUND

	By:	SCGF III Management, LLC
		A Delaware Limited Liability Company
		General Partner

	By:	/s/ Jim Goetz
		Name:
		Title: Managing Member

Schedule A

Francisco Partners II, L.P.
Francisco Partners Parallel Fund II, L.P.
2882 Sand Hill Road, Suite 280
Menlo Park, California 94025

Sequoia Capital Growth Fund II
Sequoia Capital Growth Partners III
Sequoia Capital Growth Principals Fund
3000 Sand Hill Road
Building 4, Suite 180
Menlo Park, California 94025

Schedule B

Network Appliance, Inc.
495 East Java Drive
Sunnyvale, California 94089

EX-99.5 6 a06-14776_1ex99d5.htm EX-99

Exhibit 99.5

VOTING AGREEMENT

THIS VOTING AGREEMENT (the “Agreement”) is made and entered into as of this 22nd day of June, 2006, by and among Blue Coat Systems, Inc., a Delaware corporation (the “Company”) and the persons and entities listed on Exhibit A hereto (the “Investors”).

WITNESSETH

WHEREAS, the Investors are purchasing shares of the Company’s Series A Preferred Stock (the “Series A Preferred”), pursuant to that certain Series A Preferred Stock Purchase Agreement (the “Purchase Agreement”) of even date herewith (the “Financing”); and

WHEREAS, in connection with the consummation of the Financing, the Investors have agreed to provide for the future voting of their shares of the Company’s capital stock as set forth below.

NOW, THEREFORE, in consideration of these premises 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. VOTING.

1.1 Investor Shares. The Investors each agree to hold all shares of Series A Preferred registered in their respective names or beneficially owned by them as of the date hereof and any and all Series A Preferred legally or beneficially acquired by each of the Investors after the date hereof (hereinafter collectively referred to as the “Investor Shares”) subject to, and to vote the Investor Shares in accordance with, the provisions of this Agreement. Any shares of the Company’s Common Stock issued upon the conversion of any such Investor Shares shall not be Investor Shares and shall not be subject to the provisions of this Agreement.

1.2 Election of Series A Director. At each election of or action by written consent to elect directors in which the holders of Series A Preferred, voting as a separate class, are entitled to elect directors of the Company, the Investors shall vote all of their respective Investor Shares so as to elect one individual designated by Francisco Partners II, L.P., which individual shall initially be Keith Geeslin. Any vote taken to remove any director elected pursuant to this Section 1.2, or to fill any vacancy created by the resignation, removal or death of a director elected pursuant to this Section 1.2, shall also be subject to the provisions of this Section 1.2. Upon the request of any party entitled to designate a director as provided in this Section 1.2, each Investor agrees to vote its Investor Shares for the removal of such director.

1.3 No Liability for Election of Recommended Director. None of the parties hereto and no officer, director, stockholder, partner, employee or agent of any party makes any representation or warranty as to the fitness or competence of the nominee of any party hereunder to serve on the Board of Directors by virtue of such party’s execution of this Agreement or by the act of such party in voting for such nominee pursuant to this Agreement.

1.4 Legend.

(a) Concurrently with the execution of this Agreement, there shall be imprinted or otherwise placed on certificates representing the Investor Shares held by Francisco Partners II, L.P. and Francisco Partners Parallel Fund II, L.P. (collectively, the “FP Entities”) the following restrictive legend (the “Legend”):

“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF A VOTING AGREEMENT WHICH PLACES CERTAIN RESTRICTIONS ON THE VOTING OF THE SHARES REPRESENTED HEREBY. ANY PERSON ACCEPTING ANY INTEREST IN SUCH SHARES SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF SUCH AGREEMENT. A COPY OF SUCH VOTING AGREEMENT WILL BE FURNISHED TO THE RECORD HOLDER OF THIS CERTIFICATE WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS.”

(b) The Company agrees that, during the term of this Agreement, it will not remove, and will not permit to be removed (upon registration of transfer, reissuance of otherwise), the Legend from any such certificate and will place or cause to be placed the Legend on any new certificate issued to represent Investor Shares theretofore represented by a certificate carrying the Legend.

1.5 Successors. The provisions of this Agreement shall be binding upon the successors in interest to any of the Investor Shares held by either of the FP Entities as of the date hereof (and only to the successors in interest of such shares). The Company shall not permit the transfer of any of such Investor Shares on its books or issue a new certificate representing any of such Investor Shares unless and until the person to whom such security is to be transferred shall have executed a written agreement, substantially in the form of this Agreement, pursuant to which such person becomes a party to this Agreement and agrees to be bound by all the provisions hereof as if such person were an Investor. For the avoidance of doubt, any Investor Shares transferred by an Investor affiliated with Sequoia Capital shall not be subject to the terms of this Agreement following their transfer.

1.6 Other Rights. Except as provided by this Agreement or any other agreement entered into in connection with the Financing, each Investor shall exercise the full rights of a holder of capital stock of the Company with respect to the Investor Shares.

1.7 Irrevocable Proxy. To secure the Investor’s obligations to vote the Investor Shares in accordance with this Agreement, each Investor hereby appoints Francisco Partners II, L.P., or its designee, as such Investor’s true and lawful proxy and attorney, with the power to act alone and with full power of substitution, to vote all of such Investor’s Investor Shares as set forth in this Agreement and to execute all appropriate instruments consistent with this Agreement on behalf of such Investor if, and only if, such Investor fails to vote all of such Investor’s Investor Shares or execute such other instruments in accordance with the provisions of

this Agreement within five (5) days of the Company’s or any other party’s written request for such Investor’s written consent or signature. The proxy and power granted by each Investor pursuant to this Section are coupled with an interest and are given to secure the performance of such party’s duties under this Agreement. Each such proxy and power will be irrevocable for the term hereof. The proxy and power, so long as any party hereto is an individual, will survive the death, incompetency and disability of such party or any other individual holder of the Shares and, so long as any party hereto is an entity, will survive the merger or reorganization of such party or any other entity holding any Investor Shares.

2. TERMINATION. This Agreement shall continue in full force and effect from the date hereof through the earliest of the following dates, on which date it shall terminate in its entirety: (a) eighteen (18) months from the date of this Agreement; (b) the date of the closing of a Change of Control, as defined in the Company’s Amended and Restated Certificate of Incorporation as in effect as of the date hereof; or (c) the date as of which the parties hereto terminate this Agreement by written consent of the holders of a majority of the Investor Shares, specifically including Francisco Partners II, L.P.

3. MISCELLANEOUS.

3.1 Ownership. Each Investor represents and warrants to the other Investors that (a) such Investor will own upon the Closing (as defined in the Purchase Agreement) those shares being acquired pursuant to the Purchase Agreement free and clear of liens or encumbrances, and has not, prior to or on the date of this Agreement, executed or delivered any proxy or entered into any other voting agreement or similar arrangement other than one which has expired or terminated prior to the date hereof, and (b) such Investor has full power and capacity to execute, deliver and perform this Agreement, which has been duly executed and delivered by, and evidences the valid and binding obligation of, such Investor enforceable in accordance with its terms.

3.2 Specific Performance. The parties hereto hereby declare that it is impossible to measure in money the damages which will accrue to a party hereto or to their heirs, personal representatives, or assigns by reason of a failure to perform any of the obligations under this Agreement and agree that the terms of this Agreement shall be specifically enforceable. If any party hereto or his heirs, personal representatives, or assigns institutes any action or proceeding to specifically enforce the provisions hereof, any person against whom such action or proceeding is brought hereby waives the claim or defense therein that such party or such personal representative has an adequate remedy at law, and such person shall not offer in any such action or proceeding the claim or defense that such remedy at law exists.

3.3 Governing Law. This Agreement shall be governed by and construed under the laws of the State of California as such laws are applied to agreements among California residents entered into and performed entirely within the State of California, without reference to the conflict of laws provisions thereof.

3.4 Amendment or Waiver. This Agreement may be amended or modified (or provisions of this Agreement waived) only upon the written consent of holders of a majority of the Series A Preferred, specifically including Francisco Partners II, L.P. Any amendment or

waiver so effected shall be binding upon each of the parties hereto and any assignee of any such party.

3.5 Severability. In the event one or more of the provisions of this Agreement should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.

3.6 Successors and Assigns. Except as otherwise provided in Section 1.5, the provisions hereof shall inure to the benefit of, and be binding upon, the parties hereto and their respective successors, assigns, heirs, executors and administrators and other legal representatives.

3.7 Additional Shares. In the event that subsequent to the date of this Agreement any shares of Series A Preferred are issued on, or in exchange for, any of the Investor Shares by reason of any stock dividend, stock split, combination of shares, reclassification or the like, such shares or securities shall be deemed to be Investor Shares, as the case may be, for purposes of this Agreement.

3.8 Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which together shall constitute one instrument.

3.9 Waiver. No waivers of any breach of this Agreement extended by any party hereto to any other party shall be construed as a waiver of any rights or remedies of any other party hereto or with respect to any subsequent breach.

3.10 Delays or Omissions. It is agreed that no delay or omission to exercise any right, power or remedy accruing to any party, upon any breach, default or noncompliance by another party under this Agreement shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of or in any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character on any party’s part of any breach, default or noncompliance under this Agreement or any waiver on such party’s part of any provisions or conditions of the Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement by law, or otherwise afforded to any party, shall be cumulative and not alternative.

3.11 Attorney’s Fees. In the event that any suit or action is instituted under or in relation to this Agreement, including without limitation to enforce any provision in this Agreement, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Agreement, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals.

3.12 Notices. All notices required in connection with this Agreement shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be

notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient; if not, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written notification of receipt.

3.13 Entire Agreement. This Agreement and the Exhibits hereto, along with the Purchase Agreement and the other documents delivered pursuant thereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof and no party shall be liable or bound to any other in any manner by any oral or written representations, warranties, covenants and agreements except as specifically set forth herein and therein. Each party expressly represents and warrants that it is not relying on any oral or written representations, warranties, covenants or agreements outside of this Agreement.

[THIS SPACE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have executed this VOTING AGREEMENT as of the date first above written.

COMPANY:		INVESTORS:

BLUE COAT SYSTEMS, INC.		FRANCISCO PARTNERS II, L.P.

		By:	Francisco Partners GP II, L.P.
By:	/s/ Brian NeSmith	Its:	General Partner
	President
		By:	Francisco Partners GP II Management, LLC
		Its:	General Partner

		By:	/s/ Keith B. Geeslin
			Managing Director

		FRANCISCO PARTNERS PARALLEL FUND II, L.P.

		By:	Francisco Partners GP II, L.P.
		Its:	General Partner

		By:	Francisco Partners GP II Management, LLC
		Its:	General Partner

		By:	/s/ Keith B. Geeslin
			Managing Director

		SEQUOIA CAPITAL GROWTH FUND III

		By:	SCGF III Management, LLC
		Its:	General Partner

		By:	/s/ Jim Goetz
			Managing Member

		SEQUOIA CAPITAL GROWTH PARTNERS III

		By:	SCGF III Management, LLC
		Its:	General Partner

		By:	/s/ Jim Goetz
			Managing Member

		SEQUOIA CAPITAL GROWTH III PRINCIPALS FUND

		By:	SCGF III Management, LLC
		Its:	General Partner By: Managing Member

		Its:	/s/ Jim Goetz
			Managing Member

EXHIBIT A

LIST OF INVESTORS

Francisco Partners II, L.P.

Francisco Partners Parallel Fund II, L.P.

Sequoia Capital Growth Fund III

Sequoia Capital Growth Partners III

Sequoia Capital Growth III Principals Fund