Document:

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                                                                    EXHIBIT 10.3

                              JEFFERIES GROUP, INC.
                                OPTION AGREEMENT

      AGREEMENT dated as of [date] ("Grant Date"), between JEFFERIES GROUP,
INC., a Delaware corporation (the "Company") and [name] ("Optionee"). By
accepting the grant of the Option, the Optionee has agreed to the terms of this
Agreement.

I.    Options Granted

      The Company hereby confirms the grant, pursuant to the Company's 2003
Incentive Compensation Plan (the "Plan"), to Optionee, on Grant Date, of the
stock options specified in Part II below. Each of the options specified below
(each an "Option") represents the right to purchase the specified number of
shares of the Company's Common Stock, $.0001 par value per share, at the
specified Exercise Price per share, at such times as the right to exercise has
Vested and prior to the expiration of the Option and subject to such other terms
and conditions as are specified in Part II below and elsewhere in this
Agreement, including the Terms and Conditions of Option Grant(s) attached
hereto. The number of Shares Purchasable and the Exercise Price are subject to
adjustment as specified in the Plan.

II.   Principal Terms of Option

      Shares Purchasable:    [ ] shares
      Exercise Price:        [$XX] per share
      Vesting Date:          [date of vesting]
      Expiration Date:       2:00 p.m., Pacific Time, on the earlier of (i) the
                             date of Optionee's termination of employment with
                             the Company and its subsidiaries if such
                             termination occurs before the Vesting Date, (ii)
                             the 60th day following the termination of
                             Optionee's employment with the Company and its
                             subsidiaries if such termination occurs on or after
                             the Vesting Date, or (iii) [insert expiration date]

<PAGE>

                     TERMS AND CONDITIONS OF OPTION GRANT(S)

The following Terms and Conditions apply to each Option granted to you by
Jefferies Group, Inc. (the "Company") identified on the preceding page. Certain
specific terms of each Option, including number of Shares Purchasable, the
Vesting and Expiration Dates, and Exercise Price, are set forth on the preceding
page.

      1. Each Option is a non-qualified stock option granted to you under the
Company's 2003 Incentive Compensation Plan (the "Plan"), a copy of which is
available to you on the Company's Intranet (www.corp.jefco.com -- go to
PeopleNet, then to Plan Documents). You may also request a copy from the
Secretary of the Company. All of the terms, conditions and other provisions of
the Plan are incorporated by reference herein. If there is any conflict between
the provisions of this document and the provisions of the Plan, the provisions
of the Plan govern. By accepting the grant of each Option, you agree to be bound
by all the terms and provisions of the Plan (as presently in effect or later
amended), rules and regulations under the Plan adopted from time to time, and
decisions and determinations of the Company's Compensation Committee (the
"Committee") made from time to time.

      2. Subject to all applicable laws, rules, regulations and Section 6 of the
Plan, you may exercise each Option if and to the extent it has become vested and
exercisable on and after the specified Vesting Date and prior to the Expiration
Date of the Option.

      3. To exercise each Option, you must (a) give written notice, signed by
you, to the Secretary of the Company and (b) pay the Exercise Price of the
Option for the number of shares of Common Stock being purchased in full to the
Company in cash (including by check), payable in United States dollars, or as
otherwise permitted under the Plan or this Section 3. The notice will be deemed
to have been received on the earlier of personal delivery to the Secretary or
the date of delivery by overnight mail or other courier service to the office of
the Secretary (the "Exercise Date"). However, if your exercise notice and
payment are received after 1:59 p.m., Pacific Time, the Exercise Date will be
the next business day.

      Once you give notice of exercise, your notice may not be revoked. When you
exercise the Option, or part thereof, the Company will transfer or will cause to
be issued a certificate or certificates for the Common Stock being purchased as
promptly as practicable, with any legend deemed necessary or advisable by the
Secretary affixed to such certificate(s). You do not have any rights as a
stockholder with respect to any shares of Common Stock covered by the Option
until the Option has been properly exercised by you and the Exercise Price for
the shares has been paid.

      Unless otherwise determined by the Committee, you may pay all or part of
the Exercise Price by delivery and transfer to the Company of that number of
shares of the Company's Common Stock owned by you (and not acquired by exercise
of an option or otherwise under a Company plan within the prior six months,
unless otherwise determined by the Committee) with an aggregate Fair Market
Value equal to the aggregate Exercise Price to be paid thereby, or in any other
manner then permitted by the Committee, in accordance with any rules and
regulations adopted by the Committee.

<PAGE>

      4. As a condition to the exercise of each Option, the Company may require
you to make any representation and/or warranty to the Company as may be required
under any applicable law or regulation. In addition, each Option is subject to
cancellation or rescission if you fail to comply with certain conditions
relating to non-competition, confidential information, and intellectual
property, and in certain cases you may be required to repay amounts realized
upon exercise of the Option upon a failure to comply with such conditions, as
provided in Section 7.4 of the Plan.

      5. By accepting the grant of each Option, you agree to take any action
that the Company reasonably deems necessary to comply with federal and state
laws, or the rules and regulations of the New York Stock Exchange or any other
stock exchange.

      6. Unless otherwise determined by the Committee, you may not transfer any
Option to any third party other than by will or the laws of descent and
distribution, and, during your lifetime, only you or your duly appointed
guardian or legal representative may exercise the Option. You may designate one
or more beneficiaries to exercise your rights under the Option upon your death,
in the manner and to the extent permitted by the Committee under rules and
regulations adopted by the Committee under the Plan.

      7. The terms and conditions of each Option and the Plan are binding upon
the heirs, executors, administrators and successors of you and the Company.
These terms and the obligations of the Company and your rights hereunder may not
be added to or modified except in a writing signed by the Company.

      8. No Option or granting of the Option shall constitute or be evidence of
any agreement or understanding, express or implied, that you have a right to
continue as an officer or employee of the Company for any period of time, or at
any particular rate of compensation.

<PAGE>

                              JEFFERIES GROUP, INC.
                           DEFERRED COMPENSATION PLAN
                  As Amended and Restated as of January 1, 2003

                            SHARE OPTION CERTIFICATE

                              FIRST NAME, LAST NAME

      The SHARE OPTION CERTIFICATE, dated as of the __________________ (the
"Date of Issuance"), evidences and sets forth terms and conditions of the Share
Option (the "Option") granted by JEFFERIES GROUP, INC., a Delaware corporation
(the "Company") to ("Optionee"). By accepting the grant of the Option, the
Optionee has agreed to the terms set forth and incorporated into this
Certificate.

I.    Share Option Granted

      The Company hereby confirms the grant, pursuant to the Company's Deferred
Compensation Plan (the "DCP"), together with the 2003 Incentive Compensation
Plan (the "2003 ICP" and, with the DCP, the Plans) from which the Option shares
are drawn, of the Option specified in Part II below. The Option represents the
right to purchase the specified number of shares of the Company's Common Stock,
$.0001 par value per share, at the specified Exercise Price per share, following
the Date of Issuance and prior to the expiration of the Option and subject to
such other terms and conditions as are specified in Part II below and elsewhere
in this CERTIFICATE including the Terms and Conditions of Option Grant(s)
attached hereto. The number of Shares Purchasable and the Exercise Price are
subject to adjustment as specified in the Plans.

II.   Principal Terms of the Option:

      Shares Purchasable under the Option and the corresponding Exercise Prices
are as follows:

<TABLE>
<CAPTION>
SHARES PURCHASABLE                   EXERCISE PRICE PER SHARE                  STATED EXPIRATION DATE
------------------                   ------------------------                  ----------------------
<S>                                  <C>                                       <C>
</TABLE>

      Vesting Date:      Option is fully Vested at Date of Issuance

      Expiration Date:        2:00 p.m., Pacific Time, on the Stated Expiration
                         Date (relating to the specified shares in the table
                         above), provided that, if Optionee's employment with
                         the Company and its subsidiaries terminates at least 60
                         days before that date, the Expiration Date will

<PAGE>

                         be the 60th day following the later of the date of such
                         termination of employment or the Date of Issuance of
                         this Certificate.

                      TERMS AND CONDITIONS OF SHARE OPTIONS

The following Terms and Conditions apply to each Option granted to you by
Jefferies Group, Inc. (the "Company") and evidenced by the Share Option
Certificate ("Certificate") to which these Terms and Conditions are attached.
Certain specific terms of each Option, including number of shares purchasable,
the Vesting and Expiration Dates, and Exercise Price, are set forth on the
preceding page.

      1. Each Option is a non-qualified stock option granted to you under the
Company's Deferred Compensation Plan (the "DCP"), which is implemented under and
subject to the Company's 2003 Incentive Compensation Plan (the "2003 ICP" and,
with the DCP, the Plans), copies of which are available to you on the Company's
Intranet (www.corp.jefco.com -- go to PeopleNet, then to Plan Documents). You
may also request a copy from the Secretary of the Company. All of the terms,
conditions and other provisions of the Plans are incorporated by reference
herein. If there is any conflict between the provisions of this document and the
provisions of the Plans, the provisions of the Plans govern. By accepting the
grant of each Option, you agree to be bound by all the terms and provisions of
the Plans (as presently in effect or later amended), rules and regulations
adopted from time to time, and decisions and determinations made from time to
time by the Company's Compensation Committee (the "Committee") and any other
committee authorized to administer the Plan.

      2. Subject to all applicable laws, statutes, rules, regulations and
applicable provisions of the Plans, you may exercise each Option if and to the
extent it has become vested and exercisable on and after the specified Vesting
Date and prior to the Expiration Date of the Option.

      3. To exercise each Option, you must (a) give written notice, signed by
you, to the Secretary of the Company and (b) pay the Exercise Price of the
Option for the number of shares of Common Stock being purchased in full to the
Company in cash (including by check), payable in United States dollars or as
otherwise permitted under the Plans or this Section 3. This notice will be
deemed to have been received on the earlier of personal delivery to the
Secretary or the date of delivery by overnight mail or other courier service to
the office of the Secretary (the "Exercise Date"). However, if your exercise
notice and payment are received after 1:59 p.m., Pacific Time, the Exercise Date
will be the next business day.

      Once you give notice of exercise, your notice may not be revoked. When you
exercise the Option, or part thereof, the Company will transfer or will cause to
be issued a certificate or certificates for the Common Stock being purchased as
promptly as practicable, with any legend deemed necessary or advisable by the
Secretary affixed to such share certificate(s). You do not have any rights as a
stockholder with respect to any shares of Common Stock covered by the Option
until the Option with respect to such shares has been properly exercised by you
and the Exercise Price for the shares has been paid.

      Unless otherwise determined by the Committee, you may pay all or part of
the Exercise Price by delivery and transfer to the Company of that number of
shares of the Company's Common

<PAGE>

Stock owned by you (and not acquired by exercise of an option or otherwise under
a Company plan within the prior six months, unless otherwise determined by the
Committee) with an aggregate Fair Market Value equal to the aggregate Exercise
Price to be paid thereby, or in any other manner then permitted by the
Committee, in accordance with any rules and regulations adopted by the
Committee.

      4. As a condition to the exercise of each Option, the Company may require
you to make any representation and/or warranty to the Company as may be required
under any applicable law or regulation. The provisions of Section 7.4 of the
2003 ICP will not apply to the Option(s).

      5. By accepting the grant of each Option, you agree to take any action
that the Company reasonably deems necessary to comply with federal and state
laws, or the rules and regulations of the New York Stock Exchange or any other
stock exchange.

      6. Unless otherwise determined by the Committee, you may not transfer any
Option to any third party other than by will or the laws of descent and
distribution, and, during your lifetime, only you or your duly appointed
guardian or legal representative may exercise the Option. You may designate one
or more beneficiaries to exercise your rights under the Option upon your death,
in the manner and to the extent permitted by the Committee under rules and
regulations adopted by the Committee under the Plan.

      7. The terms and conditions of each Option and the Plan are binding upon
the heirs, executors, administrators and successors of you and the Company.
These terms and the obligations of the Company and the rights of Optionee
hereunder may not be added to or modified except in a writing signed by the
Company.

      8. No Option or granting of the Option will constitute or be evidence of
any agreement or understanding, express or implied, that you have a right to
continue as an officer or employee of the Company for any period of time, or at
any particular rate of compensation.<PAGE>
                                                                    EXHIBIT 10.1

                              SEPARATION AGREEMENT

This Separation Agreement ("Agreement") is entered into by mutual agreement by
and between BindView Development Corporation ("BindView" or "Company") and DAVID
S. FLAME ("Executive") in connection with the Executive's resignation. This
Agreement amends (i) the Executive Employment Agreement between the Executive
and the Company ("Employment Agreement"); (ii) the Change of Control Agreement
between the Executive and the Company; and (iii) any stock or stock option
agreement(s), if any ("Stock Agreement(s)"); between the Executive and the
Company. In the case of any inconsistencies or conflict between any of those
agreements on the one hand and this Agreement on the other hand, the terms of
this Agreement shall govern. Such agreements otherwise remain in effect in
accordance with their terms.

1.  The parties agree that:

    a.  The Executive will resign voluntarily, in furtherance of the parties'
        mutual interests, effective November 2, 2004, with his last day of
        employment being the same date.

    b.  For purposes of the Employment Agreement and the Change of Control
        Agreement, such resignation will be treated as though the Executive had
        Resigned for Good Reason effective November 2, 2004 and will receive the
        severance benefits specified in those agreements.

    c.  The Executive will be paid a sales commission, computed and paid as set
        forth in subparagraph 1(d) below, and subject to the exclusion in
        subparagraph 1(e) below, for each sale by the Company that meets all of
        the following conditions:

           i.    the sale is in a territory for which the Executive would have
                 been paid commissions had he remained in his position as the
                 Company's vice president, Americas sales and field operations
                 through December 31, 2004;

           ii.   the sales process for such specific sale was initiated on or
                 before November 1, 2004 as shown by the Company's records;

           iii.  the sale is closed on or before December 31, 2004.

    d.  The sales commissions referred to in subparagraph 1(c) shall be based on
        the revenues recorded in the Company's books and records in accordance
        with generally accepted accounting principles consistently applied, as
        certified by the regular annual audit of the Company's financial
        statements. Such commissions will be paid within ten (10) business days
        after the Company files its Annual Report on Form 10-K for the fiscal
        year ending December 31, 2004, subject to the same terms and conditions
        as if the Executive had remained in his position as the Company's vice
        president, Americas sales and field operations.

    e.  Notwithstanding subparagraphs 1(c) and 1(d), the Executive will not be
        entitled to commissions on any revenues from professional services in
        connection with the preparation and/or production of video-based
        training materials.

    f.  This subparagraph addresses variable compensation to which the Executive
        would have been entitled if he had achieved certain management
        objectives ("MBOs") previously set by the Company as a target for the
        Executive to attempt to achieve in the year 2004. If the Company
        determines that such MBO(s) had been achieved by the Executive on an
        interim basis as of

                                                                     PAGE 1 OF 3

<PAGE>

        October 31, 2004, then the Company will pay the Executive ten twelfths
        (10/12) of the amount to which the Executive would have been entitled
        had he remained in his position at the Company through December 31,
        2004. Payment of any such variable compensation will be due five
        business days after the execution of this Agreement.

    g.  Section 6.1 of the Employment Agreement (noncompetition covenant) is
        amended so that the one-year period referred to therein is reduced to
        nine (9) months.

2.  As a material condition of receiving the severance benefits described in
    paragraph 1 above:

    a.  the Executive represents that to the best of his knowledge, he has not
        participated or been involved in any improper practices that would
        warrant termination of an employee for cause; and

    b.  the Executive agrees to cooperate fully with the Company and its counsel
        in (i) the investigation, by the Company's Audit Committee, of certain
        of the Company's transactions in Latin America referred to in the
        Company's press release dated October 28, 2004; (ii) any other
        investigation by the Company or its Board of Directors or any committee
        thereof; and (iii) any administrative or legal proceedings that may
        arise in respect thereto. In connection therewith, the Company will
        reimburse the Executive, in accordance with the Company's standard
        reimbursement policies, for all reasonable expenses, if any, that the
        Executive may incur at the request of the Company.

3.  The Executive will be entitled to payment of unpaid amounts due for salary,
    expense reimbursement, pay in lieu of unused vacation, and any other unpaid
    amounts due, in accordance with Section 5.7 of the Employment Agreement. The
    Executive shall also be entitled to exercise his stock options that are
    vested but unexercised as of his last day of employment in accordance with
    the procedures set forth in the applicable Stock Agreement(s).

4.  Subject to but without limiting paragraphs 1(c) and 1(f) above, any
    commissions or other variable compensation earned by the Executive in any
    period ending on or before October 31, 2004, that were not previously paid
    as of the date of this Agreement, will be paid at the later of (i) the time
    called for by the applicable compensation plan as though the Executive were
    not resigning, or (ii) five business days after the execution of this
    Agreement.

5.  Except as set forth in this Agreement, the Executive shall not be entitled
    to any further compensation, benefits, or reimbursement of any kind from the
    Company, including but not limited to salary, commissions, vacation accrual,
    insurance coverage, stock option vesting rights (including but not limited
    to accelerated vesting) or exercise rights (including but not limited to
    extended periods of time to exercise vested options), severance payments, or
    other compensation or benefits.

6.  Neither the Company nor the Executive shall make any false or misleading
    statement concerning the other in any public statement or comment, nor shall
    the Company do so in its internal communications. The Company will refer all
    requests for references concerning the Executive (e.g., from recruiters or
    prospective employers) to the Company's chief executive officer.

7.  The Executive acknowledges that he continues to be bound by the Employment
    Agreement, without limitation, Sections 8 (confidentiality), Section 9
    (intellectual property), and Section 10 (noncompetition covenant) thereof,
    which are also incorporated into this Agreement by reference as though fully
    set forth herein.

                                                                     PAGE 2 OF 3
<PAGE>

8.  Sections 12 (arbitration) and 13 (general provisions) of the Employment
    Agreement are incorporated into this Agreement by reference as though fully
    set forth herein.

9.  The Executive is contemporaneously executing a release substantially in the
    form set forth as an exhibit to the Employment Agreement. Such release is
    subject to the terms and conditions stated therein, including but not
    limited to the Executive's right to consider the release before executing it
    and his right to revoke the release during a stated period of time. If the
    Executive duly revokes such release in accordance with the terms and
    conditions set forth therein, this Agreement shall be rescinded and shall be
    of no force or effect.

THIS AGREEMENT CONTAINS PROVISIONS REQUIRING BINDING ARBITRATION OF DISPUTES,
WHICH HAVE THE EFFECT OF WAIVING EACH PARTY'S RIGHT TO A JURY TRIAL. By signing
this Agreement, the Executive acknowledges that the Executive (1) has read and
understood the entire Agreement; (2) has received a copy of it (3) has had the
opportunity to ask questions and consult counsel or other advisors about its
terms; and (4) agrees to be bound by it.

EXECUTED the dates written below, to be effective November 2, 2004.

<Table>
<S>                                                              <C>
AGREED:                                                          AGREED:
BINDVIEW DEVELOPMENT CORPORATION, by:

/s/ Eric J. Pulaski                                              /s/ David S. Flame
------------------------------                                   ------------------------------
Eric J. Pulaski, Chairman and                                    David S. Flame
Chief Executive Officer

November 3, 2004                                                 November 3, 2004
------------------------------                                   ------------------------------
Date signed                                                      Date signed
</Table>

STATE OF TEXAS

ON NOVEMBER 3, 2004, personally appeared before me, the undersigned Notary
Public for the State of Texas, DAVID S. FLAME, known to me or identified by
sufficient evidence, who acknowledged that he had executed the foregoing
instrument for the purposes and consideration therein stated.

Date:  Nov. 3, 2004                        /s/ Teresa Y. Fish
                                           -------------------------------------
                                           Teresa Y. Fish
                                           My commission expires:  Feb. 10, 2005

ON NOVEMBER 3, 2004, personally appeared before me, the undersigned Notary
Public for the State of Texas, ERIC J. PULASKI, Chairman and Chief Executive
Officer of BindView Development Corporation, known to me or identified by
sufficient evidence, who acknowledged that he had executed the foregoing
instrument in the capacity and for the purposes and consideration therein
stated.

Date:  Nov. 3, 2004                        /s/ Teresa Y. Fish
                                           -------------------------------------
                                           Teresa Y. Fish
                                           My commission expires:  Feb. 10, 2005

                                                                     PAGE 3 OF 3

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