Blue Coat Announces Private Placement of $80 Million in Convertible Notes to Partially Fund the Acquisition of Packeteer

Blue Coat Systems, Inc. (NASDAQ:BCSI), a leader in WAN Application Delivery and Secure Web Gateway, today announced that it has agreed to issue zero coupon convertible notes, in the aggregate principal amount of $80 million, to Francisco Partners II, L.P. and an affiliate of Elliott Associates, L.P. (the "Purchasers”) in a private placement. Blue Coat will use the proceeds from the private placement to partially fund the acquisition of Packeteer, Inc. (see separate press release also issued today). The issuance of the notes is subject to the closing of the Packeteer transaction. The notes are due in 2013 and will be convertible into shares of Blue Coat common stock at the holders’ option at any time prior to maturity at an initial conversion price of $20.76, which represents a 5% conversion premium based on the closing price of Blue Coat’s common stock of $19.77 per share on April 18, 2008. The notes will not bear interest. In connection with the issuance of the notes, Blue Coat has agreed to issue to the purchasers warrants to acquire 385,000 shares of Blue Coat at the initial conversion price of the notes. Elliott Associates will terminate its previously announced tender offer for all of the shares of Packeteer and has agreed to sell its 9.9% interest in Packeteer to Blue Coat at the same price Blue Coat will offer to Packeteer shareholders. Blue Coat has offered the notes to the Purchasers in reliance on the exemption from registration provided by Section 4(2) of the Securities Act. The Company relied on this exemption from registration based in part on representations made by the investors in the purchase agreement relating to the notes. "The investment by Francisco Partners and Elliott Associates enables us to make a valuable investment to further our strategic objectives,” said Brian NeSmith, president and chief executive officer of Blue Coat Systems, Inc. "Adding Packeteer technology, expertise, channel partners and customer base will give us a competitive advantage that will help drive future business.” "We are pleased to join with Elliott Associates to facilitate Blue Coat’s acquisition of Packeteer,” said Keith Geeslin, Managing Director of Francisco Partners. "We believe this acquisition will give Blue Coat a decisive advantage in the evolving market for WAN optimization.” "We are excited to participate as an investor in Blue Coat Systems, a proven leader and innovator in the WAN Optimization and Secure Web Gateway markets,” said Jesse A. Cohn of Elliott Associates. "Packeteer’s industry-leading visibility and QoS technologies serve as a perfect complement to Blue Coat’s products and help solidify Blue Coat’s position as the clear market leader in this rapidly growing space.” To discuss both this transaction and the acquisition of Packeteer, Blue Coat will host a conference call on Monday, April 21, 2008 at 8:00 a.m. Eastern time (5:00 a.m. Pacific time). A live Webcast of the call will also be available at http://www.bluecoat.com/aboutus/investor_relations. The live conference call can be accessed by dialing (800) 947-5265 with the passcode 44648746. About Blue Coat Systems Blue Coat secures Web communications and accelerates business applications across the distributed enterprise. Blue Coat’s family of appliances and client-based solutions – deployed in branch offices, Internet gateways, end points, and data centers – provide intelligent points of policy-based control enabling IT organizations to optimize security and accelerate performance between users and applications. Blue Coat has installed more than 40,000 appliances worldwide. Blue Coat is headquartered in Sunnyvale, California, and can be reached at (408) 220-2200 or www.bluecoat.com. About Francisco Partners Francisco Partners is a leading global private equity firm focused exclusively on investments in technology and technology-enabled businesses. With approximately $5.0 billion of committed capital, Francisco Partners is one of the world’s largest technology-focused private equity funds. The firm was founded to pursue structured investments in technology companies undergoing strategic, technological and operational inflection points. Francisco Partners targets majority and minority investments in private companies, public companies and divisions of public companies, with transaction values ranging from $30 million to $2.0 billion. www.franciscopartners.com About Elliott Associates Elliott Associates, L.P. and its sister fund, Elliott International, L.P. have more than $10.5 billion of capital under management. Founded in 1977, Elliott is one of the oldest hedge funds under continuous management. The Elliott funds’ investors include large institutions, high-net-worth individuals and families, and employees of the firm. FORWARD LOOKING STATEMENTS: This document contains certain forward-looking statements about Blue Coat Systems, Inc. ("Blue Coat”) and Packeteer, Inc. and the proposed combination of the two companies. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including the expected benefits and costs of the transaction; management plans relating to the transaction; the anticipated timing of filings and approvals relating to the acquisition; the expected timing of the completion of the transaction; the ability to complete the transaction considering the various closing conditions, including those conditions related to antitrust regulations; any projections of earnings, revenues, synergies, accretion, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations, including the execution of integration plans; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Risks, uncertainties and assumptions include the possibility that expected benefits may not materialize as expected; risks related to the timing or ultimate completion of the transaction; that, prior to the completion of the transaction, the party’s respective businesses may not perform as expected due to uncertainty; that the parties are unable to successfully implement integration strategies; and other risks that are described from time to time in the Securities and Exchange Commission reports filed by Blue Coat, including but not limited to the risks described in Blue Coat’s Annual Report on Form 10-K for the year ended April 30, 2007, and Quarterly Report on Form 10-Q for the quarter ended January 31, 2008. Accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what impact they will have on the results of operations or financial condition of Blue Coat or Packeteer. Blue Coat assumes no obligation and does not intend to update these forward-looking statements. THIS DOCUMENT IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT AN OFFER TO BUY OR THE SOLICITATION OF AN OFFER TO SELL ANY SECURITIES. THE SOLICITATION AND THE OFFER TO BUY SHARES OF COMMON STOCK OF PACKETEER, INC. WILL ONLY BE MADE PURSUANT TO AN OFFER TO PURCHASE AND RELATED MATERIALS THAT BLUE COAT INTENDS TO FILE WITH THE SECURITIES AND EXCHANGE COMMISSION. ONCE FILED, PACKETEER STOCKHOLDERS SHOULD READ THESE MATERIALS CAREFULLY PRIOR TO MAKING ANY DECISIONS WITH RESPECT TO THE OFFER BECAUSE THEY CONTAIN IMPORTANT INFORMATION, INCLUDING THE TERMS AND CONDITIONS OF THE OFFER. ONCE FILED, PACKETEER STOCKHOLDERS WILL BE ABLE TO OBTAIN THE OFFER TO PURCHASE AND RELATED MATERIALS WITH RESPECT TO THE OFFER FREE OF CHARGE AT THE SEC'S WEBSITE AT WWW.SEC.GOV, FROM THE INFORMATION AGENT NAMED IN THE TENDER OFFER MATERIALS OR FROM BLUE COAT SYSTEMS, INC. Note: Blue Coat and other applicable product names are trademarks or registered trademarks of Blue Coat Systems, Inc. in the United States and other countries. All other trademarks, trade names or service marks used or mentioned herein belong to their respective owners.