exv10w3



 





Exhibit 10.3




PACKETEER, INC.

STOCK OPTION AGREEMENT




RECITALS




          A. The Board has adopted the Plan for the purpose of retaining the services of selected
Employees, non-employee members of the Board or of the board of directors of any Parent or
Subsidiary and consultants and other independent advisors who provide services to the Corporation
(or any Parent or Subsidiary).




          B. Optionee is to render valuable services to the Corporation (or a Parent or Subsidiary), and
this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in
connection with the Corporation’s grant of an option to Optionee.




          C. All capitalized terms in this Agreement shall have the meaning assigned to them in the
attached Appendix.




          NOW, THEREFORE, it is hereby agreed as follows:




          1. Grant of Option. The Corporation hereby grants to Optionee, as of the Grant Date, an option
to purchase up to the number of Option Shares specified in the Grant Notice. The Option Shares
shall be purchasable from time to time during the option term specified in Paragraph 2 at the
Exercise Price.




          2. Option Term. This option shall have a maximum term of ten (10) years measured from the
Grant Date and shall accordingly expire at the close of business on the Expiration Date, unless
sooner terminated in accordance with Paragraph 5 or 6.




          3. Limited Transferability.




               (a) This option shall be neither transferable nor assignable by
Optionee other than by will or by the laws of inheritance following Optionee’s death and may be
exercised, during Optionee’s lifetime, only by Optionee. However, Optionee may designate one or
more persons as the beneficiary or beneficiaries of this option, and this option shall, in
accordance with such designation, automatically be transferred to such beneficiary or beneficiaries
upon the Optionee’s death while holding such option. Such beneficiary or beneficiaries shall take
the transferred option subject to all the terms and conditions of this Agreement, including
(without limitation) the limited time period during which this option may, pursuant to Paragraph 5,
be exercised following Optionee’s death.



               (b) If this option is designated a Non-Statutory Option in the
Grant Notice, then this option may, in connection with the Optionee’s estate plan, be assigned
in whole or in part during Optionee’s lifetime to one or more members of Optionee’s immediate
family or to a trust established for the exclusive benefit of one or more such family members. The
assigned portion shall be exercisable only by the person or persons who acquire a proprietary
interest in the option pursuant to such assignment. The terms applicable to the assigned portion
shall be the same as those in effect for this option immediately prior to such assignment.



 









 





               4. Dates of Exercise. This option shall become exercisable for the Option Shares in one or
more installments as specified in the Grant Notice. As the option becomes exercisable for such
installments, those installments shall accumulate, and the option shall remain exercisable for the
accumulated installments until the Expiration Date or sooner termination of the option term under
Paragraph 5 or 6.



               5. Cessation of Service. The option term specified in Paragraph 2 shall terminate (and this
option shall cease to be outstanding) prior to the Expiration Date should any of the following
provisions become applicable:



                    (a) Should Optionee cease to remain in Service for any reason (other than death, Permanent
Disability or Misconduct) while holding this option, then Optionee shall have a period of three (3)
months (commencing with the date of such cessation of Service) during which to exercise this
option, but in no event shall this option be exercisable at any time after the Expiration Date.



                    (b) Should Optionee die while holding this option, then the personal representative of
Optionee’s estate or the person or persons to whom the option is transferred pursuant to Optionee’s
will or the laws of inheritance shall have the right to exercise this option. However, if Optionee
has designated one or more beneficiaries of this option, then those persons shall have the
exclusive right to exercise this option following Optionee’s death. Any such right to exercise this
option shall lapse, and this option shall cease to be outstanding, upon the earlier of (i) the
expiration of the twelve (12)-month period measured from the date of Optionee’s death or (ii) the
Expiration Date.



                    (c) Should Optionee cease Service by reason of Permanent Disability while holding this option,
then Optionee shall have a period of twelve (12) months (commencing with the date of such cessation
of Service) during which to exercise this option. In no event shall this option be exercisable at
any time after the Expiration Date.



                    (d) During the limited period of post-Service exercisability, this option may not be exercised
in the aggregate for more than the number of Option Shares for which the option is exercisable at
the time of Optionee’s cessation of Service. Upon the expiration of such limited exercise period or
(if earlier) upon the Expiration Date, this option shall terminate and cease to be outstanding for
any exercisable Option
Shares for which the option has not been exercised. However, this option shall, immediately
upon Optionee’s cessation of Service for any reason, terminate and cease to be outstanding with
respect to any Option Shares for which this option is not otherwise at that time exercisable.



                    (e) Should Optionee’s Service be terminated for Misconduct or should Optionee otherwise engage
in Misconduct while this option is outstanding, then this option shall terminate immediately and
cease to remain outstanding.



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          6. Special Acceleration of Option.




               (a) This option, to the extent outstanding at the time of a Corporate
Transaction but not otherwise fully exercisable, shall automatically accelerate so that this option
shall, immediately prior to the effective date of such Corporate Transaction, become exercisable
for all of the Option Shares at the time subject to this option and may be exercised for any or all
of those Option Shares as fully vested shares of Common Stock. No such acceleration of this option
shall occur, however, if and to the extent: (i) this option is, in connection with the Corporate
Transaction, to be assumed by the successor corporation (or parent thereof) or (ii) this option is
to be replaced with a cash incentive program of the successor corporation which preserves the
spread existing at the time of the Corporate Transaction on any Option Shares for which this option
is not otherwise at that time exercisable (the excess of the Fair Market Value of those Option
Shares over the aggregate Exercise Price payable for such shares) and provides for subsequent
payout in accordance with the same option exercise/vesting schedule set forth in the Grant Notice.



               (b) Immediately following the Corporate Transaction, this option shall terminate and cease to
be outstanding, except to the extent assumed by the successor corporation (or parent thereof) in
connection with the Corporate Transaction.



               (c) If this option is assumed in connection with a Corporate Transaction, then this option
shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the
number and class of securities which would have been issuable to Optionee in consummation of such
Corporate Transaction had the option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the Exercise Price, provided the
aggregate Exercise Price shall remain the same.



               (d) This Agreement shall not in any way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.



          7. Adjustment in Option Shares. Should any change be made to the Common Stock by reason of
any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or
other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of
consideration, appropriate adjustments shall be made to (i) the total number and/or class of
securities subject to this option and (ii) the Exercise Price in order to reflect such change and
thereby preclude a dilution or enlargement of benefits hereunder.




          8. Stockholder Rights. The holder of this option shall not have any stockholder rights with
respect to the Option Shares until such person shall have exercised the option, paid the Exercise
Price and become a holder of record of the purchased shares.




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          9. Manner of Exercising Option.




               (a) In order to exercise this option with respect to all or any part of the
Option Shares for which this option is at the time exercisable, Optionee (or any other person or
persons exercising the option) must take the following actions:




               (i) Execute and deliver to the Corporation a Notice of Exercise for the Option Shares
for which the option is exercised.




               (ii) Pay the aggregate Exercise Price for the purchased shares in one or more of the
following forms:




               (A) cash or check made payable to the Corporation;




               (B) a promissory note payable to the Corporation, but only to the extent
authorized by the Plan Administrator in accordance with Paragraph 13;




               (C) shares of Common Stock held by Optionee (or any other person or persons
exercising the option) for the requisite period necessary to avoid a charge to the
Corporation’s earnings for financial reporting purposes and valued at Fair Market
Value on the Exercise Date; or




               (D) through a special sale and remittance procedure pursuant to which Optionee
(or any other person or persons exercising the
option) shall concurrently provide irrevocable instructions (i) to a
Corporation-designated brokerage firm to effect the immediate sale of the purchased
shares and remit to the Corporation, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate Exercise Price payable for
the purchased shares plus all applicable Federal, state and local income and
employment taxes required to be withheld by the Corporation by reason of such
exercise and (ii) to the Corporation to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete the sale.




     Except to the extent the sale and remittance procedure is utilized in
connection with the option exercise, payment of the Exercise Price must accompany
the Notice of Exercise delivered to the Corporation in connection with the option
exercise.




               (iii) Furnish to the Corporation appropriate documentation that the person or persons
exercising the option (if other than Optionee) have the right to exercise this option.



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               (iv) Make appropriate arrangements with the Corporation (or Parent or Subsidiary
employing or retaining Optionee) for the satisfaction of all Federal, state and local
income and employment tax withholding requirements applicable to the option exercise.



               (b) As soon as practical after the Exercise Date, the Corporation shall issue to or on behalf
of Optionee (or any other person or persons exercising this option) a certificate for the purchased
Option Shares, with the appropriate legends affixed thereto.



               (c) In no event may this option be exercised for any fractional shares.



          10. Compliance with Laws and Regulations.




               (a) The exercise of this option and the issuance of the Option Shares
upon such exercise shall be subject to compliance by the Corporation and Optionee with all
applicable requirements of law relating thereto and with all applicable regulations of any stock
exchange (or the Nasdaq National Market, if applicable) on which the Common Stock may be listed for
trading at the time of such exercise and issuance.



               (b) The inability of the Corporation to obtain approval from
any regulatory body having authority deemed by the Corporation to be necessary to the lawful
issuance and sale of any Common Stock pursuant to this option shall relieve the Corporation of any
liability with respect to the non-issuance or sale of the Common Stock as to which such approval
shall not have been obtained. The Corporation, however, shall use its best efforts to obtain all
such approvals.



          11. Successors and Assigns. Except to the extent otherwise provided in Paragraphs 3 and 6,
the provisions of this Agreement shall inure to the benefit of, and be binding upon, the
Corporation and its successors and assigns and Optionee, Optionee’s assigns, the legal
representatives, heirs and legatees of Optionee’s estate and any beneficiaries of this option
designated by Optionee.




          12. Notices. Any notice required to be given or delivered to the Corporation under the terms
of this Agreement shall be in writing and addressed to the Corporation at its principal corporate
offices. Any notice required to be given or delivered to Optionee shall be in writing and addressed
to Optionee at the address indicated below Optionee’s signature line on the Grant Notice. All
notices shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, postage
prepaid and properly addressed to the party to be notified.




          13. Financing. The Plan Administrator may, in its absolute discretion and without any
obligation to do so, permit Optionee to pay the Exercise Price for the purchased Option Shares by
delivering a full-recourse promissory note payable to the Corporation. The terms of any such
promissory note (including the interest rate, the requirements for collateral and the terms of
repayment) shall be established by the Plan Administrator in its sole discretion.




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          14. Construction. This Agreement and the option evidenced hereby are made and granted pursuant
to the Plan and are in all respects limited by and subject to the terms of the Plan. All decisions
of the Plan Administrator with respect to any question or issue arising under the Plan or this
Agreement shall be conclusive and binding on all persons having an interest in this option.




          15. Governing Law. The interpretation, performance and enforcement of this Agreement shall be
governed by the laws of the State of California without resort to that State’s conflict-of-laws
rules.




          16. Excess Shares. If the Option Shares covered by this Agreement exceed, as of the Grant
Date, the number of shares of Common Stock which may without stockholder approval be issued under
the Plan, then this option shall be void with respect to those excess shares, unless stockholder
approval of an amendment sufficiently increasing the number of shares of Common Stock issuable
under the Plan is obtained in accordance with the provisions of the Plan.




          17. Additional Terms Applicable to an Incentive Option. In the event this option is designated
an Incentive Option in the Grant Notice, the following terms and conditions shall also apply to the
grant:




               (a) This option shall cease to qualify for favorable tax treatment as an Incentive Option if
(and to the extent) this option is exercised for one or more Option Shares: (A) more than three (3)
months after the date Optionee ceases to be an Employee for any reason other than death or
Permanent Disability or (B) more than twelve (12) months after the date Optionee ceases to be an
Employee by reason of Permanent Disability.



               (b) No installment under this option shall qualify for favorable tax treatment as an Incentive
Option if (and to the extent) the aggregate Fair Market Value (determined at the Grant Date) of the
Common Stock for which such installment first becomes exercisable hereunder would, when added to
the aggregate value (determined as of the respective date or dates of grant) of the Common Stock or
other securities for which this option or any other Incentive Options granted to Optionee prior to
the Grant Date (whether under the Plan or any other option plan of the Corporation or any Parent or
Subsidiary) first become exercisable during the same calendar year, exceed One Hundred Thousand
Dollars ($100,000) in the aggregate. Should such One Hundred Thousand Dollar ($100,000) limitation
be exceeded in any calendar year, this option shall nevertheless become exercisable for the excess
shares in such calendar year as a Non-Statutory Option.



               (c) Should the exercisability of this option be accelerated upon a Corporate Transaction, then
this option shall qualify for favorable tax treatment as an Incentive Option only to the extent the
aggregate Fair Market Value (determined at the Grant Date) of the Common Stock for which this
option first becomes exercisable in the calendar year in which the Corporate Transaction occurs
does not, when added to the aggregate value (determined as of the respective date or dates of
grant) of the Common Stock or other securities for which this option



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or one or more other Incentive Options granted to Optionee prior to the Grant Date (whether under
the Plan or any other option plan of the Corporation or any Parent or Subsidiary) first become
exercisable during the same calendar year, exceed One Hundred Thousand Dollars ($100,000) in the
aggregate. Should the applicable One Hundred Thousand Dollar ($100,000) limitation be exceeded in
the calendar year of such Corporate Transaction, the option may nevertheless be exercised for the
excess shares in such calendar year as a Non-Statutory Option.



               (d) Should Optionee hold, in addition to this option, one or more other options to purchase
Common Stock which become exercisable for the first
time in the same calendar year as this option, then the foregoing limitations on the
exercisability of such options as Incentive Options shall be applied on the basis of the order in
which such options are granted.




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EXHIBIT I

NOTICE OF EXERCISE




          I hereby notify Packeteer, Inc. (the “Corporation”) that I elect to purchase                                         
shares of the Corporation’s Common Stock (the “Purchased Shares”) at the option exercise price of $                    
per share (the “Exercise Price”) pursuant to that certain option (the “Option”) granted to me under
the Corporation’s 1999 Stock Incentive Plan on ____,                     .




          Concurrently with the delivery of this Exercise Notice to the Corporation, I shall hereby pay
to the Corporation the Exercise Price for the Purchased Shares in accordance with the provisions of
my agreement with the Corporation (or other documents) evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a condition for exercise.
Alternatively, I may utilize the special broker-dealer sale and remittance procedure specified in
my agreement to effect payment of the Exercise Price.




	 	, 	 	 	 
	 


	 	 

	 	 
	Date
	 	 	 	 






	 	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Optionee	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Address:	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Print name in exact manner it is to
appear on the stock certificate:
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Address to which certificate is to
be sent, if different from address
above:
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	Social Security Number:
	 	 	 	 	 	 
	 	 	 	 	 





 









 





APPENDIX




The following definitions shall be in effect under the Agreement:




     A. Agreement shall mean this Stock Option Agreement.



     B. Board shall mean the Corporation’s Board of Directors.



     C. Common Stock shall mean shares of the Corporation’s common stock.



     D. Code shall mean the Internal Revenue Code of 1986, as amended.



     E. Corporate Transaction shall mean either of the following stockholder-approved
transactions to which the Corporation is a party:




          (i) a merger or consolidation in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Corporation’s outstanding securities are
transferred to a person or persons different from the persons holding those securities
immediately prior to such transaction, or




          (ii) the sale, transfer or other disposition of all or substantially all of the
Corporation’s assets in complete liquidation or dissolution of the Corporation.



     F. Corporation shall mean Packeteer, Inc., a Delaware corporation, and any successor
corporation to all or substantially all of the assets or voting stock of Packeteer, Inc. which
shall by appropriate action adopt the Plan.



     G. Employee shall mean an individual who is in the employ of the Corporation (or any Parent or
Subsidiary), subject to the control and direction of the employer entity as to both the work to be
performed and the manner and method of performance.



     H. Exercise Date shall mean the date on which the option shall have been exercised in
accordance with Paragraph 9 of the Agreement.



     I. Exercise Price shall mean the exercise price per Option Share as specified in the Grant
Notice.



     J. Expiration Date shall mean the date on which the option expires as specified in the Grant
Notice.



     K. Fair Market Value per share of Common Stock on any relevant date shall be determined in
accordance with the following provisions:



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          (i) If the Common Stock is at the time traded on the Nasdaq National Market, then the
Fair Market Value shall be deemed equal to the closing selling price per share of Common
Stock on the date in question, as the price is reported by the National Association of
Securities Dealers on the Nasdaq National Market. If there is no closing selling price for
the Common Stock on the date in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such quotation exists, or




          (ii) If the Common Stock is at the time listed on any Stock Exchange, then the Fair
Market Value shall be deemed equal to the closing selling price per share of Common Stock
on the date in question on the Stock Exchange determined by the Plan Administrator to be
the primary market for the Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is no closing selling price for
the Common Stock on the date in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such quotation exists.



     L. Grant Date shall mean the date of grant of the option as specified in the Grant
Notice.




     M. Grant Notice shall mean the Notice of Grant of Stock Option accompanying the Agreement,
pursuant to which Optionee has been informed of the basic terms of the option evidenced hereby.



     N. Incentive Option shall mean an option which satisfies the requirements of Code Section 422.



     O. Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by
Optionee, any unauthorized use or disclosure by Optionee of confidential information or trade
secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by
Optionee adversely affecting the business or affairs of the Corporation (or any Parent or
Subsidiary) in a material manner. The foregoing definition shall not be deemed to be inclusive of
all the acts or omissions which the Corporation (or any Parent or Subsidiary) may consider as
grounds for the dismissal or discharge of Optionee or any other individual in the Service of the
Corporation (or any Parent or Subsidiary).



     P. Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code
Section 422.



     Q. Notice of Exercise shall mean the notice of exercise in the form attached hereto as Exhibit
I.



     R. Option Shares shall mean the number of shares of Common Stock subject to the option as
specified in the Grant Notice.



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     S. Optionee shall mean the person to whom the option is granted as specified in the Grant
Notice.



     T. Parent shall mean any corporation (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation, provided each corporation in the unbroken chain (other
than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of the other corporations
in such chain.



     U. Permanent Disability shall mean the inability of Optionee to engage in any substantial
gainful activity by reason of any medically determinable physical or mental impairment which is
expected to result in death or has lasted or can be expected to last for a continuous period of
twelve (12) months or more.



     V. Plan shall mean the Corporation’s 1999 Stock Incentive Plan.



     W. Plan Administrator shall mean either the Board or a committee of the Board
acting in its capacity as administrator of the Plan.




     X. Service shall mean the Optionee’s performance of services for the Corporation (or any
Parent or Subsidiary) in the capacity of an Employee, a non-employee member of the board of
directors or a consultant or independent advisor.



     Y. Stock Exchange shall mean the American Stock Exchange or the New York Stock Exchange.



     Z. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation, provided each corporation (other than the last
corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.




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