**EXHIBIT 10.35**

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**WITNESS SYSTEMS, INC.**

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**AMENDED & RESTATED**EMPLOYEE STOCK PURCHASE PLANJanuary 1, 2006

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ARTICLE I

*PURPOSE OF PLAN*

 

WitnessSystems, Inc. has adopted this employee stock purchase plan to encourage theemployees of the Company (and its participating affiliated companies) toacquire a proprietary interest, or to increase their existing proprietaryinterest, in the Company. The Board of Directors of the Company believes thatemployee ownership of the Company’s stock will serve as an incentive, encouragingemployees to continue their employment and to perform diligently their dutiesas employees. It is further intended that the Plan qualify as an “employeestock purchase plan” within the meaning of Code §423.

 

ARTICLE II

*DEFINITIONS*

 

Whenused in this Plan with initial capital letters, the following terms shall havethe meanings set forth below:

 

2.1           *Board* shall mean the Board of Directors ofthe Company.

 

a.             2.2           *Code* shall mean the Internal Revenue Codeof 1986, as amended.

 

b.             2.3           *Committee* shall mean the group ofindividuals appointed by the Board to administer the Plan, pursuant to Section10.1. In the absence of any such appointment, the Company’s Human ResourceDirector and Chief Financial Officer shall function as the Committee.

 

c.             2.4           *Common Stock* shall mean the common stockof the Company.

 

d.             2.5           *Company* shall mean Witness Systems, Inc.

 

e.             2.6           *Effective Date* shall mean the day on whichthe Common Stock is initially offered for purchase to the public by theCompany. This Amended & Restated Plan shall be effective as of January 1,2006.

 

f.              2.7           *Eligible Employee*shall mean, with respect to an Offering Period, an Employee who is notdescribed by the following:

 

(a)           anyEmployee who is regularly scheduled to work (determined as of the EnrollmentDate for such Offering Period) 20 hours or less per week;

 

(b)           anyEmployee who is regularly scheduled to work (determined as of the EnrollmentDate for such Offering Period) for not more than five (5) months in anycalendar year; and

 

(c)           anyEmployee who, immediately after an option would be granted hereunder, would ownshares of the Common Stock, or of the stock of a parent or subsidiarycorporation of the Company, possessing 5% or more of the total combined votingpower or value of all classes of such stock. In determining whether an Employeeowns 5% of such shares, (A) the attribution of ownership rules of Code §424(d)shall apply, and (B) an Employee shall be deemed to own the shares of stockunderlying any outstanding option which he has been granted (whether under thePlan or any other plan or arrangement).

 

g.             2.8           *Employee* shall mean any individual who isa common-law employee of any Participating Company. Certain Employees are noteligible to participate in the Plan, pursuant to Section 3.2 hereof.

 

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h.             2.9           *Enrollment Date* shall mean the lastbusiness day of the calendar month immediately preceding each OfferingCommencement Date, except that, with respect to the initial Offering Period,the Enrollment Date shall be the last business day of the calendar monthimmediately following the calendar month in which the initial registrationstatement registering the shares of Common Stock issuable hereunder pursuant tothe Securities Act of 1933, as amended, is declared effective.

 

i.              2.10         *Fair Market Value*shall mean, as of any date, the value of Common Stock determined as follows:

 

(a)           Forpurposes of making purchases under the Plan which are made on the open market,the Fair Market Value of the Common Stock shall be the actual market closeprice on the date and at the time of the purchase;

 

(b)           Forpurposes other than making purchases under the Plan, the Fair Market Value ofthe Common Stock shall be determined as follows:

 

(i)            Ifthe Common Stock is listed on any established stock exchange or a nationalmarket system, including without limitation the National Market of the NationalAssociation of Securities Dealers, Inc. Automated Quotation (“NASDAQ”) System,its Fair Market Value per share shall be the closing sale price for the CommonStock (or the mean of the closing bid and asked prices, if no sales werereported), as quoted on such exchange or system on the date of suchdetermination, as reported by NASDAQ, or such other source as the Committeedeems reliable;

 

(ii)           Ifthe Common Stock is not listed on any established stock exchange or a nationalmarket system, its Fair Market Value per share shall be the average of theclosing dealer “bid” and “ask” prices of a share of the Common Stock asreflected on the NASDAQ interdealer quotation system of the NationalAssociation of Securities Dealers, Inc. on the date of such determination;

 

(iii)          Inthe absence of an established market for the Common Stock, the Fair MarketValue thereof shall be determined in good faith by the Board.

 

(iv)          If,for any reason, the Fair Market Value per share cannot be ascertained or isunavailable for the date in question, the Fair Market Value per share shall bedetermined as of the nearest preceding date on which such Fair Market Value canbe ascertained under the appropriate method indicated above.

 

### **(c)           Notwithstanding the above provisions,for purposes of making purchases under the Plan during the initial OfferingPeriod, the Fair Market Value per share of the Common Stock as of the EffectiveDate shall be deemed to be the price per share at which the Common Stock isoffered to the public by the Company pursuant to the Company’s initial publicoffering.**

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j.              2.11         *Offering CommencementDate* shall mean the first day of each Offering Period.

 

k.             2.12         *Offering Ending Date*shall mean the last day of each Offering Period.

 

l.              2.13         *Offering Period*shall mean the period during which each option to purchase stock grantedpursuant to the Plan is in effect. The duration and timing of Offering Periodsmay be changed by the Committee pursuant to Section 4.2 of this Plan.

 

m.            2.14         *Offering Period Pay* shall mean, withrespect to an Offering Period, the product of (i) the number of completepayroll periods in such Offering Period, times (ii) such Employee’s Total Payfor the payroll period which ends on or immediately prior to the OfferingCommencement Date of such Offering Period.

 

n.             2.15         *Participating Company*shall mean (i) the Company, and (ii) any “parent corporation” or “subsidiarycorporation” (as defined in Code §§424(e) and (f)) of the Company which havebeen designated by the

 

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Board and which haveadopted (by formal written resolutions of the board of directors of suchcorporation) the Plan for the benefit of its employees.

 

o.             2.16         *Plan* shallmean the Witness Systems, Inc. Amended & Restated Employee Stock PurchasePlan.

 

p.             2.17         *Total Pay*shall mean, with respect to an Employee, all of his regular straight-timeearnings, plus commissions, overtime, shift premium, incentive compensation,incentive payments, bonuses, and other compensation, all as reported to theInternal Revenue Service for federal income tax purposes on Form W-2, plus anybefore-tax contributions made to plans covered by Code §§401(k) and 125.

 

ARTICLE III

*ELIGIBILITY*

 

q.             3.1           *Participation by Eligible Employees*. An EligibleEmployee of a Participating Company shall be eligible to participate in thePlan as of the first day of the Offering Period which next begins following thedate of hire of such Eligible Employee by the Company if the Employee is anEligible Employee as of such date.

 

r.              3.2           *Transfers to/fromEligible Class*. An Employee who ceases to be an Eligible Employeeduring an Offering Period but who remains an Employee shall be treated as if hehad made an election to modify his payroll deductions to zero effective forpayroll periods ending on or after the date on which such Employee ceased to bean Eligible Employee. An Employee who becomes an Eligible Employee during anOffering Period and who was an Employee prior to the date on which suchEmployee became an Eligible Employee hereunder shall be entitled to participatein the Plan as of the first day of the Offering Period which next begins on orafter the date on which such Employee becomes an Eligible Employee if theEmployee is an Eligible Employee as of such date.

 

ARTICLE IV

*OFFERINGPERIODS*

 

s.             4.1           Quarterly*Offering Periods*. The Plan shall beimplemented by a continuous series of Offering Periods. Prior to January 1,2006, the Offering Periods under the Plan shall be the six-month periods ofJanuary 1 through June 30, and July 1 through December 31, with the initialOffering Period beginning on the Effective Date and ending on June 30, 2000. Onand after January 1, 2006, the Offering Periods under the Plan shall be thethree-month periods of January 1 through March 31, April 1 through June 30,July 1 through September 30, and October 1 through December 31.

 

t.              4.2           *Other Offering Periods*.Without amendment to the Plan, the Committee may, in its sole discretion,designate other periods as Offering Periods. These periods may be more or lessfrequent and may be in addition to or in lieu of the semi-annual OfferingPeriods described in Section 4.1 above. However, notwithstanding the foregoing,in no event shall Offering Periods be designated which would cause the Plan toviolate the requirements of Code §423(b)(7).

 

ARTICLE V

*ELECTIONTO PARTICIPATE*

 

u.             5.1           *Election*. Each employee who is eligible toparticipate in the Plan may file with the Committee or their designatedrepresentative on or before the close of business on any Enrollment Date(within such time period as provided by the Committee), an election formauthorizing specified regular payroll deductions over the next succeedingOffering Period; provided, however, with respect to the initial Enrollment Date,no election shall be valid unless given with a period specified by theCommittee prior to such date. These payroll deductions shall be on an after-taxbasis, so that all applicable federal, state, local and Social Security taxesshall apply. At the time an Employee files his election form, he shall elect tohave payroll deductions made on each payday during the Offering Period (or, forthe initial Offering Period, during the period beginning immediately followingthe initial Enrollment Date and ending on the initial Offering Ending Date) inan amount which is not less than 1% nor greater than 15% of such Employee’sTotal Pay for each payroll period. No cash contributions or payments may bemade by an Employee to the Plan. Payroll deductions for an Employee shallcommence on the first payroll period beginning after the Offering CommencementDate (or, for the initial Offering Period, the Enrollment Date) and shall

 

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end on the last payrollin the Offering Period before the Offering Ending Date, to which suchauthorization is applicable, unless sooner terminated by the Employee.

 

v.             5.2           *Deemed Election*. An Employee who hasentered into a written agreement with the Company not to be eligible forparticipation in this Plan and/or any employee benefit plans of the Companyshall, by entering into such written agreement, automatically be considered tohave elected to have none of his pay deducted under this Plan during anyOffering Period which begins while such written agreement is in effect.

 

w.            5.3           *Accounts*. The Committee or theirdesignated representatives shall establish a bookkeeping account for eachEmployee in the Plan and shall credit each Employee’s payroll deductions to hisaccount. Any funds actually held in Accounts shall remain part of the general assetsof the Company and may be used by the Company for any corporate purpose.

 

x.             5.4           *Withdrawals*. By written notice to theCommittee or their designated representatives during an Offering Period (onsuch form or in such manner as the Committee may specify), but at least thirty(30) days prior to the Offering Ending Date for such Offering Period, anEmployee may elect to cease his payroll deductions effective as soon asadministratively practicable following receipt of such election, and theEmployee may also elect to withdraw the total amount (but not less than thetotal amount) credited to his Account. Any such withdrawn amount shall be paidto the Employee, in cash or its equivalent, without interest, as promptly asadministratively practicable. An Employee who elects to withdraw the totalamount credited to his Account shall cease participation in the Planimmediately. 

 

y.             5.5           *Modifications*. An Employee may not electto modify his payroll deductions during an Offering Period, except as providedin Section 5.4 above.

 

z.             5.6           *Leave of Absence*. For purposes ofparticipation in the Plan, an Employee who is on a leave of absence shall bedeemed to be an Employee for the first ninety (90) days of such leave ofabsence; provided, that as of the close of business on the ninetieth (90th)day of such leave of absence, the Employee’s employment (solely for purposes ofthe Plan) shall be deemed to have terminated unless the Employee shall havereturned to his regular employment prior to the close of business on such ninetieth(90th) day, except as otherwise required by law. If an Employee’semployment is terminated earlier by the Company, for any reason, his right toparticipate in the Plan shall terminate simultaneously.

 

aa.           5.7           *Interest*. No interest will accrue or bepaid on any payroll deductions contributed to the Plan or credited to theAccount of any Employee.

 

ARTICLE VI

*GRANTINGOF OPTIONS*

 

bb.          6.1           *Number of Option Shares*.

 

cc.           (a)           Oneach Offering Commencement Date prior to January 1, 2006, each Employee who iseligible to participate in this Plan shall be granted an option to purchase amaximum number of shares of the Common Stock determined by dividing 15% of hisexpected Offering Period Pay by 85% of the Fair Market Value of one share ofthe Common Stock on such Offering Commencement Date and rounding the resultdown to the nearest whole number.

 

dd.          (b)           Oneach Offering Commencement Date on or after January 1, 2006, each Employee whois eligible to participate in this Plan shall be granted an option to purchasea maximum number of shares of the Common Stock determined by dividing the 1% to15% of his Offering Period Pay contribution by 95% of the Fair Market Valueclose price of one share of the Common Stock on such Offering Ending Date androunding the result down to the nearest whole number.

 

ee.           6.2           *Duration*. Each option granted on anOffering Commencement Date shall terminate on the immediately followingOffering Exercise Date, unless terminated earlier pursuant to the terms of thePlan.

 

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ff.            6.3           *Annual Limit on Options Granted*. No optionto purchase shares under the Plan shall be granted to an Employee if suchoption, when combined with all other options granted under all of the Code §423 employee stock purchase plans of the Company, its parents and itssubsidiary corporations, would permit such Employee to purchase shares of theCommon Stock with a Fair Market Value (determined at the time the option isgranted) in excess of $25,000 for each calendar year in which the option isoutstanding at any time, determined in accordance with Code §423(b)(8).

 

gg.          6.4           *Option Exercise Price*.

 

hh.          (a)           Foran option to purchase stock granted prior to January 1, 2006, the price of eachshare of the Common Stock shall be the lesser of (i) 85% of the Fair MarketValue of such share on the Offering Commencement Date, or (ii) 85% of the FairMarket Value of such share on the Offering Exercise Date.

 

ii.             (b)           Foran option to purchase stock granted on or after January 1, 2006, the price ofeach share of the Common Stock shall be 95% of the Fair Market Value marketclose price of such share on the Offering Ending Date.

 

ARTICLE VII

*EXERCISEOF OPTIONS*

 

jj.             7.1           *Automatic Purchase*. As of each OfferingEnding Date and except as provided in Sections 7.2 and 7.3 hereof, the Committeeor their designee shall purchase, for each Employee having funds credited tohis Account, the number of whole shares of the Common Stock which is the lesserof (i) the maximum number of such shares for which such Employee has beengranted an option to purchase during such Offering Period, or (ii) the numberof whole shares of the Common Stock determined by dividing the amount creditedto his Account by the Share Purchase Price. No fractional shares shall beissued, and, except as provided in Sections 7.2 and 7.3 hereof, any amount inan Employee’s Account that could have represented the purchase of suchfractional shares, or that exceeds the Share Purchase Price for the shares ofthe Common Stock purchased on such Offering Ending Date, shall be either (1) carriedforward in such Employee’s Account and shall be available for purchasing sharesof Common Stock in the next succeeding Offering Period or (2) refunded to theemployee as soon as administratively practical.

 

kk.           7.2           *Maximum Amount of Common Stock Purchased*.Notwithstanding any provisions to the contrary contained herein, no Employeemay use the amount credited to his Account pursuant to the Plan during anycalendar year for purchase of Common Stock exceeding $25,000 in Fair MarketValue (determined as of the Offering Commencement Date). When this amount ofCommon Stock has been purchased, any excess amount credited to an Employee’sAccount (including any excess resulting from an inability to purchase a wholeshare) shall be returned to such Employee, payroll deductions for such Employeeshall cease, and such Employee shall be ineligible to participate in anysubsequent Offering Period occurring during that same calendar year. SuchEmployee’s election automatically shall become effective on the first OfferingCommencement Date of the next succeeding calendar year, subject to thetermination provisions herein. To the extent that the amount credited to hisAccount pursuant to the Plan for purchase of Common Stock during any calendaryear is greater than necessary for such purchase, any excess shall be returnedto such Employee as promptly as administratively practicable.

 

ARTICLE VIII

*DELIVERYOF COMMON STOCK; SHAREHOLDER RIGHTS*

 

ll.             As soon as practicable after eachOffering Exercise Date, the Company shall issue and deliver to each Employeecertificates, or electronic facsimile, representing the shares of the CommonStock, if any, purchased for such Employee, together with any cash to which hemay be entitled hereunder. Upon issuance of such certificates (but not priorthereto), the Employee shall have all of the rights and privileges of ashareholder of the Company with respect to such shares. Common Stock to bedelivered to an Employee pursuant to the Plan shall be registered in the nameof the Employee.

 

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ARTICLE IX

*STOCKRESERVED FOR OPTIONS*

 

mm.         9.1           *Shares Reserved for Use By Plan*. TheCompany shall reserve a total of five hundred fifty thousand (550,000) sharesof the Common Stock for issuance and purchase by Employees under the Plan;provided, however, this total number of shares of Common Stock that may beissued pursuant to this Plan shall be automatically increased on the lasttrading day of the final month of each calendar year of the Company, beginningwith the calendar year ending December 31, 2000, by (1) a number of Sharesequal to 2% of the number of shares of Common Stock outstanding on the lasttrading day of the month preceding the final month of each such calendar yearor (2) such lesser amount as may be determined by the Board in its solediscretion, but in no event shall any such annual increase exceed five hundredthousand (500,000) Shares (as adjusted for any change contemplated in ArticleXII hereof). The number of shares of the Common Stock reserved for the Plan maybe adjusted as provided in Article XII. The shares of the Common Stock reservedfor the Plan may be shares now or hereafter authorized but unissued or may beshares of treasury stock.

 

nn.          9.2           *Shares Subject to Unexercised Options*. Ifand to the extent that any right to purchase reserved shares of the CommonStock shall not be exercised by the Employee who is the holder of such right,or if such right shall terminate as provided herein, then the shares subject tosuch right to purchase (i) shall again become available for purposes of thePlan, unless the Plan shall have been terminated, and (ii) shall not be deemedto increase the number of shares of the Common Stock reserved for purposes ofthe Plan.

 

ARTICLE X

*ADMINISTRATIONOF PLAN*

 

oo.          10.1         *Appointment of Committee*. The Plan shallbe administered by a Committee, which shall consist of those persons sodesignated by the Board. The Board from time to time may remove members from,or add members to, the Committee. Vacancies on the Committee shall be filled bythe Board.

 

pp.          10.2         *Meetings*. The Committee shall select oneof its members as Chairman and shall hold meetings at such times and places asthe Chairman shall determine. A majority of the members of the Committee shallconstitute a quorum, and the Committee may act by vote of a majority of itsmembers at a meeting at which a quorum is present, or without a meeting by awritten consent to their action signed by all members of the Committee.

 

qq.          10.3         *Authority*. The Committee may requestadvice or assistance or employ such other persons as are necessary for properadministration of the Plan. Subject to the express provisions of the Plan, theCommittee shall have authority to interpret the Plan, to prescribe rules andregulations for administering the Plan, and to make all other determinationsnecessary or advisable in administering the Plan; all of such determinationsshall be final and binding upon all persons, unless otherwise determined by theBoard. Without amendment to the Plan, the Committee shall be authorized to:

 

(a)           limitthe frequency and/or number of changes in the payroll deduction amountswithheld during an Offering Period;

 

(b)           permitpayroll withholding in excess of the amount designated by an Employee in orderto adjust for delays or mistakes in the Company’s processing of properlycompleted election forms;

 

(c)           establishreasonable waiting and adjustment periods and/or accounting and creditingprocedures to ensure that amounts applied toward the purchase of Company Stockfor each Employee properly correspond with amounts withheld from the Employee’spaychecks; and

 

(d)           establishsuch other limitations or procedures as it may determine, in its solediscretion, advisable which are consistent with the terms of the Plan.

 

ARTICLE XI

*RIGHTSNOT TRANSFERABLE*

 

Rightsunder the Plan are not transferable by an Employee other than by will or thelaws of descent and distribution and are exercisable during his lifetime onlyby him.

 

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ARTICLE XII

*ADJUSTMENTIN CASE OF CHANGES*

*AFFECTINGTHE COMPANY’S STOCK*

 

rr.            12.1         *General Rule*. In the event of a split,subdivision or consolidation of outstanding shares of the Common Stock, or inthe event of any “corporate transaction”, as defined in Treas. Reg.§1.425-1(a)(1)(ii), other than a transaction described in Section 12.2 hereof,the number of shares of the Common Stock reserved or authorized to be reservedunder the Plan and the number and price of such shares subject to purchasepursuant to options outstanding hereunder, in the sole discretion of theCommittee, may be adjusted in such manner as may be deemed necessary orequitable by the Committee to give proper effect to such event. If anyadjustment hereunder would create a fractional share or a right to acquire afractional share, such fractional share shall be disregarded, and the number ofshares available under the Plan or the number of shares to which any Employeeshall be entitled will be the next lower number of shares, rounding allfractions downward. Notwithstanding anything herein to the contrary, alladjustments to the shares of the Common Stock shall be made in such a manner asto comply with the requirements of Code §424 and to preserve the options’status under Code §423.

 

ss.           12.2         *Dissolution or Certain Mergers*. Adissolution or liquidation of the Company or a merger or consolidation in whichthe Company is not the surviving corporation, shall cause each outstandingoption to terminate; provided, that each Employee shall, in such event, havepaid to him in cash the amount credited to his Account at that time prior tosuch dissolution or liquidation, or merger or consolidation in which theCompany is not the surviving corporation.

 

tt.            12.3         *Rights of Employees*. Except as hereinaboveexpressly provided, no Employee shall have any rights by reason of anysubdivision or consolidation of shares of stock of any class or any otherincrease or decrease in the number of shares of stock of any class by reason ofany dissolution, liquidation, merger or consolidation or spin-off of the assetsor stock of another corporation; and any issue by the Company of shares ofstock of any class, or securities convertible into shares of stock of anyclass, shall not affect, and no adjustment by reason thereof shall be made withrespect to, the number or price of shares of the Common Stock subject to theoption. The grant of an option pursuant to the Plan shall not affect in any waythe right or power of the Company to make adjustments, reclassifications,reorganizations or changes of its capital or business structure or to merge orto consolidate or to dissolve, liquidate or sell, or transfer all or any partof its business or assets.

 

ARTICLE XIII

*TERMINATIONOF EMPLOYMENT OR DEATH OF EMPLOYEE*

 

uu.          13.1         *Termination of Employment*. In the event ofan Employee’s termination of employment (for any reason other than death)during a Offering Period (other than the last day of such Offering Period), anyoption granted to him under the Plan shall terminate immediately upon the datehis employment ends, and the amount credited to his Account shall be refundedto him in cash as soon as practicable after the earlier of (1) the OfferingEnding Date of such Offering Period, or (2) the payroll period next followinghis termination of employment.

 

vv.          13.2         *Death*. In the event of an Employee’s deathduring a Offering Period (other than the last day of such Offering Period), anyoption granted to him under the Plan for such Offering Period shall terminateimmediately upon the date of his death, and the amount credited to his Accountfor such Offering Period shall be paid in cash to the Estate of such Employeeas soon as practicable after the earlier of (1) the Offering Ending Date ofsuch Offering Period, or (2) the payroll period next following his terminationof employment. Also, in the event any shares of the Common Stock and/or anycash is payable to the deceased Employee with respect to an Offering Periodending on or before his date of death, such shares and/or cash shall be paid tothe Estate of such Employee.

 

ARTICLE XIV

*AMENDMENTAND TERMINATION OF THE PLAN*

 

ww.         14.1         *Amendment*. The Board may amend the Plan inany respect; provided, any amendment (i) increasing the number of shares of theCommon Stock reserved under the Plan, (ii) changing the designated class ofemployees eligible to participate in the Plan, or (iii) materially increasingthe benefits accruing to Employees

 

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under the Plan, must beapproved within 12 months of the adoption of such an amendment by the holdersof a majority of the voting power of the outstanding shares of the Common Stock.

 

xx.            14.2         *Termination*. The Plan and all rights ofEmployees hereunder shall terminate:

 

(a)           asof the Offering Ending Date that Employees become entitled to purchase a numberof shares of the Common Stock that substantially exhausts the number of such sharesavailable for issuance under the Plan, to such an extent that the Board and theCommittee determine that no subsequent options are practicable; or

 

(b)           inthe sole discretion of the Board, as of the end of any Offering Period withrespect to future Offering Periods.

 

yy.          14.3         *Compliance*. To the extent necessary forcompliance with Code §423 (or any successor provisions), the Company shallobtain shareholder approval in such a manner and to such a degree as may berequired for any amendment to or termination of the Plan.

 

ARTICLE XV

*NOTICES*

 

Allnotices or other communications by an Employee to the Committee pursuant to orin connection with the Plan shall be deemed to have been duly given whenreceived in the form specified by the Committee at the location, or by theperson, designated by the Committee for the receipt thereof.

 

ARTICLE XVI

*INDEMNIFICATIONOF COMMITTEE*

 

Inaddition to such other rights of indemnification as they may have as directors,the members of the Committee shall be indemnified by the Company againstreasonable expenses (including, without limitation, attorneys’ fees) actuallyand necessarily incurred in connection with the defense of any action, suit orproceeding, or in connection with any appeal, to which they or any of them maybe a party by reason of any action taken or failure to act under or inconnection with the Plan or any option granted hereunder, and against allamounts paid by them in settlement thereof (provided such settlement isapproved to the extent required by and in the manner provided by the Bylaws ofthe Company relating to indemnification of directors) or paid by them insatisfaction of a judgment in any such action, suit or proceeding, except inrelation to matters as to which it shall be adjudged in such action, suit orproceeding that such Committee member or members did not act in good faith andin a manner he reasonably believed to be in or not opposed to the bestinterests of the Company.

 

ARTICLE XVII

*WITHHOLDINGREQUIREMENTS*

 

At thetime the option is exercised, in whole or in part, or at the time some or allof the Common Stock issued under the Plan is disposed of, the Employee mustmake adequate provision for the Company’s federal, state, or other taxwithholding obligations, if any, which arise upon the exercise of the option orthe disposition of the Common Stock. At any time, the Company may, but will notbe obligated to, withhold from the Employee’s compensation the amount necessaryfor the Company to meet applicable withholding obligations, including anywithholding required to make available to the Company any tax deductions orbenefits attributable to sale or early disposition of Common Stock by theEmployee.

 

ARTICLE XVIII

*CONSTRUCTIONOF PLAN*

 

Forpurposes of the Plan, masculine, feminine, neuter, singular or plural pronounsshall be deemed to refer to such person, persons or entity as may beappropriate in the context.

 

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ARTICLE XIX

*EXPENSESOF PLAN*

 

TheCompany shall pay all operational expenses of the Plan, including, withoutlimitation, all brokerage commissions due and payable for the purchase and saleof Common Stock.

 

ARTICLE XX

*COMPLIANCE*

 

ThePlan is intended to comply with the requirements of Code §423 (and any of itssuccessor provisions). Pursuant to Code §423, an Employee may be eligible forcertain favorable tax treatment with regard to Common Stock purchased under thePlan, if no disposition of the Common Stock is made by such Employee within 2years after the date of the granting of the option to him under the Plan norwithin 1 year after the transfer of the Common Stock to him.

 

ARTICLE XXI

*EMPLOYEESTATEMENTS AND REPORTING*

 

On orbefore January 31 of each calendar year, the Committee shall provide astatement, either on paper or electronically, to each Employee who exercised anoption to purchase shares under the Plan during the previous calendar year. TheEmployee’s statement shall contain the following information: the name, addressand employer identification number of the Company, the date the Common Stockwas transferred to the Employee, the number of shares which were transferred tothe Employee, and the type of option under which the transferred shares wereacquired. In addition, pursuant to Code §6039, the Committee shall make any andall filings necessary to the Internal Revenue Service with regard to optionsgranted and exercised under the Plan.

 

ARTICLE XXII

*EFFECTIVEDATE OF PLAN*

 

ThePlan shall become effective as of the Effective Date; provided, within 12months of the adoption of the Plan by the Board, the Plan is approved by theholders of a majority of the voting power of the outstanding shares of theCommon Stock. If the Plan is not so approved, the Plan shall not becomeeffective and any prior grant of options hereunder shall be null and void *ab initio*.

 

***IN WITNESS WHEREOF***, the Plan is hereby executed by a dulyauthorized officer of the Company, on this 30th day of November 2005.

 

 
|       |       | COMPANY:                       |
|------------|------------|--------------------------------|
|       |       |                           |
| ** ** | ** ** | **WITNESS SYSTEMS, INC.**      |
|       |       |                           |
|       |       | By: William Evans              |
|       |       |                           |
|       |       | Title: Chief Financial Officer |   |

 

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