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EXHIBIT 10.37
 TOLLGRADE COMMUNICATIONS, INC.
2006 LONG-TERM INCENTIVE COMPENSATION PLAN
 EMPLOYEE RESTRICTED SHARES AGREEMENT
    1. Definitions .
 (a)
    
    Agreementmeans this Employee Restricted Shares Agreement between the
Participant and the Company.
 (b)
    
    Adjusted EBITDAmeans, with respect to this Agreement, net income
from operations of the Company and its consolidated subsidiaries during the
specified period, determined prior to the charges, costs and expenses associated
with interest and income taxes, depreciation and amortization, and adjusted to
remove the effects of: restructuring charges, including severance or retirement,
whether cash or non-cash; impairment charges under FAS 142 or FAS 144 or successor
standards; fees paid to external advisors in connection with the pursuit of
strategic alternatives; and any other unusual charges of a non-recurring nature
not included in the Companys applicable operating plan for that fiscal year.
Adjusted EBITDA shall also be adjusted to exclude the expense related to any
Restricted Shares by the Company under the Plan, during or attributable to the
specified period. Adjusted EBITDA shall be determined by the Committee within
thirty (30) days following the end of the applicable fiscal year.
 (c)
    
    Change in Controlshall have the meaning set forth in Section 2.7of
the Plan.
 (d)
    
    Committeeshall have the meaning set forth in Section 2.9of the
Plan.
 (e)
    
    Disabilityshall mean a disability within the meaning of Section
422(c)(6) of the Internal Revenue Code of 1986, as amended from time to time.
 (f)
    
    Grant Datemeans the date the Restricted Shares were granted, as set
forth in Section 2hereof.
 (g)
    
    Planmeans the Companys 2006 Long-Term Incentive Compensation Plan,
as amended.
 (h)
    
    Restricted Sharesshall mean those shares of the Companys common
stock, par value $.20, issued pursuant to the restrictions set forth in this
Agreement.
 2. Issuance of
Restricted Shares .
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3. Vesting .
 (a)
    
    Two-Year Performance-Based.Subject to subsection3(b) below,
_________ (______) Restricted
Shares shall become vested on December 31, 20___, provided that the Companys
cumulative Adjusted EBITDA was at least $_________ for the twenty-four (24) month
period ending _________, 20___.
 (b)
    
    Accelerator.If the Companys Adjusted EBITDA was
at least $_________ for
the twelve (12) month period ending _________, 20___, then one-half of the Restricted
Shares identified in subsection3(a) above shall become vested on the first anniversary of
the Grant Date. To the extent the vesting for these Restricted Shares is accelerated as
provided in this subsection, those shares shall be subtracted from the number of shares
identified in subsection3(a) above.
 (c)
    
    Time-Based. _________
(______) Restricted Shares shall become vested on the third
anniversary of the Grant Date; provided that, if the Participants employment is
involuntarily terminated by the Company without Cause prior
to _________, 20___, a portion of
the unvested Restricted Shares identified in this subsection3(c) shall still vest on
_________, 20___ on
a pro-rata basis; the number of shares that will vest will be
determined pro-rata based on the number of months of service rendered by the Participant
during the three-year period, divided by 36, times the total number of shares identified in
this subsection 3(c).
 (d)
    
    Additional Vesting.All of the Restricted Shares shall vest in the event of a Change
of Control of the Company or upon the death, Disability or Retirement of the Participant.
 4. Forfeiture . Section 3 subsection 3(c) Section 4
 5. Delivery of Vested Restricted Shares .
 6. Representations of Participant .
    7. Restrictions on Transfer . Section 3 Section 7
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8. Dividend and Voting Rights .
 9. Capital Adjustments and Distributions . Section 4.4
 10. Legend .
  11. Withholding of Tax .
 12. Indemnification .
 13. Effectiveness and Term .
 14. Interpretation of Plan and Agreement . Section 8.2
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15. Effect of Agreement on Rights of Company and Participant .
 16. Binding Effect .
 17. Entire Agreement
 18. Amendment .
 19. Governing Law .
  TOLLGRADE COMMUNICATIONS, INC.By:Title:PARTICIPANTSignature:Print Name:
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