8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 22, 2009

WEBSENSE, INC.

(Exact name of registrant as specified in its charter)

DELAWARE	000-30093	#51-0380839
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification Number)

10240 Sorrento Valley Road, San Diego, CA	92121
(Address of Principal Executive Offices)	(Zip Code)

(858) 320-8000

Registrant’s Telephone Number, Including Area Code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

(a) On July 28, 2009, Websense, Inc. (“Websense” or the “Company”) issued the press release attached hereto as Exhibit 99.1 announcing that, on July 26, 2009, the Company entered into an employment agreement with Arthur S. Locke III (the “Agreement”). Pursuant to the Agreement, Mr. Locke will serve as Senior Vice President, Chief Financial Officer of Websense, with employment commencing on a full-time basis on July 31, 2009, and continuing at will until either party gives notice of termination.

Under the Agreement, Mr. Locke will receive a base salary at an annual rate of $350,000. Mr. Locke will be eligible to receive an annual performance bonus (“Bonus”) of up to 50% of his annual base salary, based upon the Company’s achievement of billings and operating income targets as may be established by the Compensation Committee of the Company’s Board of Directors. For 2009, the Bonus is guaranteed on a pro-rata basis. On the Company’s quarterly restricted stock unit grant date of August 10, 2009 (the “Grant Date”), Mr. Locke will be granted 105,000 restricted stock units for the Company’s common stock pursuant to the Company’s 2009 Equity Incentive Plan (the “RSUs”). 100,000 of the RSUs vest as follows: 25% vest on the one-year anniversary of the Grant Date and the remaining 75% vest semi-annually for the following three year period. The remaining 5,000 of the RSUs, which are intended to offset certain of Mr. Locke’s relocation expenses, vest as follows: 50% vest on the one-year and two-year anniversaries, respectively, of the Grant Date.

Mr. Locke is eligible to participate in the Company’s standard benefit plans for executives, which include life, long-term disability, dental, vision and medical insurance and an optional 401(k) savings plan, Employee Stock Purchase Plan, cafeteria (flex 125) plan, health club discount membership, and Employee Assistance Plan. The Agreement also provides for the reimbursement and offset of relocation and temporary housing expenses of up to $200,000.

Pursuant to the Agreement, if Websense terminates Mr. Locke’s employment without cause (a “Termination Event”), Mr. Locke is entitled to a separation payment in the form of six months of his annual base salary in effect as of the date of such termination paid in six (6) equal monthly installments, less standard deductions and withholdings. The above severance benefit is contingent upon Mr. Locke providing the Company with a fully-effective waiver and release of claims in a form satisfactory to the Company and his compliance with the Company’s standard non-competition and non-solicitation requirements. Cause is defined in the Agreement.

Mr. Locke will also be a participant in the Company’s Officer Change in Control Severance Benefit Plan (the “Severance Plan”). Under the Severance Plan, Mr. Locke is entitled to receive severance benefits if his employment with the Company is involuntarily terminated without Cause (as defined in the Severance Plan) or if he voluntarily resigns with Good Reason, as defined in Mr. Locke’s participation agreement, during the period beginning two months prior to a specified Change in Control (as defined in the Severance Plan) and ending 18 months following a Change in Control.

The foregoing is a summary description of the terms and conditions of the Agreement and is qualified in its entirety by the text of the Agreement, a copy of which is filed with the Securities and Exchange Commission as Exhibit 10.1 hereto, and the text of the Severance Plan and participation agreement filed as an Exhibit to the Company’s Current Report on Form 8-K filed on July 23, 2008 and incorporated herein by reference.

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On July 28, 2009, the Company issued a press release announcing its financial results for the quarter ended June 30, 2009. A copy of the press release is attached as Exhibit 99.2. The information in this Item and the exhibit attached hereto are being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Item and the exhibit attached hereto shall not be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, whether filed before or after the date hereof, regardless of any general incorporation language in such filing.

ITEM 5.02. DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS

(b) On July 26, 2009, in order to hire Mr. Locke as the Company’s Chief Financial Officer, Douglas C. Wride resigned from his position as the Company’s Chief Financial Officer, effective as of July 31, 2009. Mr. Wride will remain Chief Operating Officer of the Company.

(c) Please see Item 1.01 above.

On July 28, 2009, Websense announced that Arthur S. Locke III, age 45, has been appointed as the Company’s Senior Vice President, Chief Financial Officer, effective as of July 31, 2009. Mr. Locke was previously employed by MicroStrategy Incorporated,

a publicly traded worldwide provider of business intelligence software and services, from January 2001 to March 2009, ultimately serving as Executive Vice President, Finance and Chief Financial Officer. Mr. Locke is a certified public accountant and received a Bachelor of Science in Business Administration in Accounting and Computer Systems from American University. The Company is not aware of any transaction requiring disclosure under Item 404(a) of Regulation S-K.

ITEM 8.01. OTHER INFORMATION

On July 22, 2009, the Company’s Board of Directors approved an amendment to the 2000 Employee Stock Purchase Plan (the “ESPP”) to (a) eliminate the April 2010 termination date and (b) eliminate the automatic annual increases in the shares of common stock available for issuance under the ESPP after January 2010 (which is the final stockholder-approved increase in shares under the ESPP). The amendment is effective immediately following the close of the current purchase interval on October 30, 2009 and the ESPP, as amended, is attached as Exhibit 99.3 to this current report on Form 8-K and incorporated by reference herein.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS

(a) Not applicable

(b) Not applicable

(c) Not applicable

(d) Exhibits.

Number	Description
10.1	Employment Agreement, effective July 26, 2009 between Websense, Inc. and Arthur Locke.
99.1	Press release issued by Websense, Inc. on July 28, 2009 relating to its Chief Financial Officer.
99.2	Press release issued by Websense, Inc. on July 28, 2009 relating to financial results.
99.3	2000 Employee Stock Purchase Plan, as amended.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

	WEBSENSE, INC.
Date: July 28, 2009	/s/    Douglas C. Wride
	Douglas C. Wride
	Chief Financial Officer (principal financial and accounting officer)

INDEX TO EXHIBITS

Number	Description
10.1	Employment Agreement, effective July 26, 2009 between Websense, Inc. and Arthur Locke.
99.1	Press release issued by Websense, Inc. on July 28, 2009 relating to its Chief Financial Officer.
99.2	Press release issued by Websense, Inc. on July 28, 2009 relating to financial results.
99.3	2000 Employee Stock Purchase Plan, as amended.

EX-10.1

Exhibit 10.1

July 22, 2009

Dear Mr. Locke:

We are pleased to offer you a position with Websense, Inc. This letter summarizes the offer’s terms and conditions.

Compensation

Websense agrees to employ you in the position of Senior Vice President, Chief Financial Officer, beginning July 31, 2009. Your beginning salary while employed by Websense will be $13,461.54 biweekly ($350,000 annualized). An additional 50% of your base compensation may be earned as part of a mid-year and year-end bonus, based upon the completion of our corporate objectives. For 2009, your bonus is guaranteed, on a pro-rata basis (approximately $64,000). Your job is exempt, which means you are not subject to the minimum wage and overtime provisions of the Federal Fair Labor Standards Act (FLSA). You will initially report to Gene Hodges, CEO.

Subject to the approval of the Board of Directors of Websense, you will receive 100,000 restricted stock units (RSUs) for Websense common stock. An RSU is a grant of a pre-determined number of shares of Websense stock that you will receive at a future date or dates. After you satisfy each time-based vesting requirement, Websense will issue you the number of shares vested at that time, less the amount of shares owed to cover employee income tax and other withholdings because the shares are employee compensation. You will not need to pay any purchase price for these shares. One quarter of your RSUs would cliff vest one year after the grant date, with the remaining RSUs vesting semi-annually for the remaining three years. The Board of Directors of Websense generally grants RSUs on a quarterly basis, in February, May, August and November, with RSUs being granted for employment commencement dates in the preceding three months (for example, employees starting in May, June or July generally have their RSUs granted in August).

Relocation Expenses

Websense will directly pay for the reasonable and customary costs, through our relocation program, of transporting your personal belongings to San Diego, temporary storage, and final move of these household goods once you purchase a home in San Diego. These costs will be capped at $50,000 and must be approved by Websense’s Human Resources department before they are incurred.

Upon the close of escrow for a home in San Diego, Websense will provide a bonus of $100,000 to be used toward the reimbursement of relocation expenses. Both of these reimbursements are subject to payroll tax and withholding requirements. Should you terminate your employment with Websense within one year of joining, these relocation expenses ($150,000) must be repaid to the company.

Websense will also reimburse you up to $50,000 in temporary housing expense for you and your family.

In addition, and subject to the approval of the Board of Directors of Websense, you will receive 5,000 RSUs for Websense common stock to offset any additional expenses you may incur in moving to San Diego. One half of your RSUs would cliff vest one year after the grant date, with the remaining RSUs vesting two years after the grant date. These RSUs will be granted at the same time as your new hire grant.

Severance

In the event the Company terminates your employment other than for Cause as defined below, you will receive severance pay in the form of six months of base salary paid in six equal monthly installments, less standard deductions and withholdings. The severance benefits are contingent upon you providing the Company with a fully-effective waiver and release of claims in a form satisfactory to the Company and your compliance with the Company’s standard non-competition and non-solicitation requirements.

“Cause” for termination shall mean a termination of your employment by the Company based upon a good faith determination by the Company that one or more of the following has occurred: (a) your commission of a material act of fraud with respect to the Company, (b) your intentional refusal or willful failure to carry out the reasonable instructions of the Company, (c) your conviction of, or plea of nolo contendere to, at any time, a misdemeanor crime of moral turpitude or a felony (even if such has occurred prior to your employment with the Company), (d) your gross misconduct in connection with the performance of your duties, or (e) your material breach of your obligations to the Company or any agreement between you and the Company.

If the Company determines that any cash severance payment benefit payable to you fails to satisfy the distribution requirement of Section 409A(a)(2)(A) of the Internal Revenue Code of 1986, as amended (the “Code”), as a result of Section 409A(a)(2)(B)(i) of the Code, then the payment schedule will be modified as follows: If acceleration of the benefit will avoid application of Section 409(a)(1) of the Code, then the Company will accelerate the payment of the benefit to the minimum extent necessary so that the benefit is not subject to the provisions of Section 409A(a)(1) of the Code. If acceleration of the benefit would not avoid the application of Section 409A(a)(1) of the Code, however, then the Company will delay the benefit to the minimum extent necessary so that the benefit is not subject to the provisions of Section 409A(a)(1) of the Code. If any payments are delayed as a result of the previous sentence, all such delayed payments shall become payable in a lump sum on the first day they can be paid following the termination date. Thereafter, payments will resume in accordance with the payment schedule set forth in this letter. The Company may attach conditions to or adjust the severance amounts paid to preserve, as closely as possible, the economic consequences that would have applied in the absence of these requirements; provided, however, that no such condition or adjustment shall result in the payments being subject to Section 409A(a)(1) of the Code.

Page 2

Benefits

Included in your compensation is a comprehensive benefits package: life, long-term disability, dental, vision, medical insurance, an optional 401(k) savings plan, Employee Stock Purchase Plan (ESPP) cafeteria (flex 125) plan, health club discount membership, and Employee Assistance Plan. Websense, Inc. currently pays 90% of your health and dental premiums and 70% of the premiums for your dependents. You are eligible to participate in the Websense insurance plans the first day of the month following your date of hire. In addition, you will receive fifteen days of accrued paid vacation per twelve month period, ten days of holiday pay and five days of sick leave per year.

As an employee of Websense, Inc., you will be required to comply with all company policies and procedures. In particular, you will be required to familiarize yourself with and to comply with Websense, Inc.’s policy prohibiting unlawful harassment and discrimination and the policy concerning drugs and alcohol. Violations of these policies may lead to immediate termination of employment. All employees are required to sign a proprietary invention agreement as a condition of employment. In addition, and in accordance with the Federal Immigration Reform Act of 1986, our offer is contingent upon your being able to furnish, on the first day you report to work, documents which verify both your identity and eligibility for employment in the United States.

Websense reserves the right to change or eliminate any or all of its benefits at any time. Websense is an “at will” employer. This means that you may terminate your employment at Websense at any time for any reason whatsoever, simply by notifying Human Resources. Likewise, Websense may terminate your employment at any time for any reason whatsoever, with or without cause or advance notice. This at will employment relationship cannot be changed except in writing signed by the Chief Executive Officer of Websense. The employment terms in this letter supersede any other agreements or promises made to you by anyone, whether oral or written.

Page 3

If this letter accurately reflects your understanding of this employment relationship, please sign below to indicate your acceptance, and return it to me no later than July 17, 2009. If you would like to fax this letter back to me, please fax it to my confidential fax number: (858) 784-4040. We look forward to having you join our team!

Sincerely,

/s/ Susan Brown

Susan Brown

Vice President, Human Resources and Administration

Websense, Inc.

Accepted By:
/s/ Arthur Locke	July 26, 2009
Arthur Locke III

Page 4

EX-99.1

Exhibit 99.1

INVESTOR CONTACT:	MEDIA CONTACT:
Kate Patterson	Cas Purdy
Websense, Inc.	Websense, Inc.
(858) 320-8072	(858) 320-9493
kpatterson@websense.com	cpurdy@websense.com

N E W S R E L E A S E

Websense Expands Management Team to Support Growing Leadership in

Internet Security and Data Loss Prevention

New Executive Vice President of Worldwide Sales and Senior Vice President and Chief

Financial Officer Focused on Driving Growth and Shareholder Value

SAN DIEGO – July 28, 2009 – Websense, Inc. (NASDAQ: WBSN) today announced the expansion of its management team with the appointments of Didier Guibal as Executive Vice President of Worldwide Sales, effective immediately, and Arthur S. Locke, who will join the company as Senior Vice President and Chief Financial Officer (CFO) on July 31, 2009.

Guibal brings more than 20 years of experience in sales and marketing and more than 12 years as a senior executive at publicly-traded and private companies, including security and software-as-a-service providers McAfee, RightNow Technologies, and Panda Security, where he was most recently president.

Locke has more than 23 years of experience in finance, tax and accounting and most recently was Executive Vice President & CFO at MicroStrategy Incorporated, a publicly-traded worldwide provider of business intelligence software and services.

“I’m delighted to welcome Didier and Art to the executive team. Websense has the right strategy, and adding depth to our management team will help us hone our ability to execute during these difficult financial times,” said Websense Chief Executive Officer Gene Hodges. “Their extensive industry experience will play a pivotal role in the continued growth of Websense and the innovation and delivery of our content-based security product suite.”

Guibal to Integrate Sales Globally to Drive Future Growth

At Panda Security, Guibal oversaw the company’s U.S. corporate and consumer security products business and architected the company’s turnaround strategy. Reporting to the CEO, he worked closely with the board and management team to define and roll out best practices throughout the organization and to bring the organization back to growth.

For more than six years, Guibal was vice president of sales at RightNow Technologies, a successful pioneer in software-as-a-service (SaaS) business applications. There he grew the business from the early start-up phase to a successful initial public offering and beyond.

At security vendor McAfee, he grew through the ranks and held multiple strategic roles from Managing Director for Southern Europe to Vice President of EMEA and Latin America Sales. He was appointed Vice President Worldwide of Marketing and Alliances and Vice President of Sales for the Americas. His background also includes sales roles at Sun Microsystems, Wyse Technologies and UNILOG.

Locke to Lead Finance, Tax and Accounting

Arthur S. Locke will join Websense as Senior Vice President and Chief Financial Officer (CFO), reporting to Hodges, on July 31, 2009. Websense announced the search for a new CFO on March 12, 2009.

Locke most recently was Executive Vice President & CFO at MicroStrategy Inc. During his eight year tenure he led the global accounting and finance team as the company grew from 809 employees with $148 million in revenue to 1,915 employees with $360 million in revenue, while the business expanded its operations worldwide. He has led finance, tax and accounting at multiple publicly-traded and private companies including EIS International, Inc. and Biospherics Inc.

Doug Wride, who joined Websense in 1999 as CFO and became Chief Operating Officer (COO) in January 2009, will retain the title of COO through at least the end of 2009.

“Doug Wride will reduce his operational responsibilities sometime in the first half of 2010 and will be working to hand off many of his key responsibilities to Art Locke, Didier Guibal and John McCormack,” added Hodges. “Given the depth and breadth of his experience with Websense, there will be many operational areas where he will be able to contribute meaningfully. We expect he will remain actively involved with Websense for years to come.”

About Websense, Inc.

Websense, Inc. (NASDAQ: WBSN), a global leader in integrated Web, data and email security solutions, provides Essential Information Protection™ for approximately 44 million product seats under subscription. Distributed through its global network of channel partners, Websense software and hosted security

solutions help organizations block malicious code, prevent the loss of confidential information and enforce Internet use and security policies. For more information, visit www.websense.com.

###

Websense is a registered trademark of Websense, Inc. in the United States and certain international markets. Websense has numerous other registered and unregistered trademarks in the United States and internationally. All other trademarks are the property of their respective owners.

Follow Websense on Twitter: http://www.twitter.com/websense.

This news release contains forward-looking statements that involve risks, uncertainties, assumptions and other factors which, if they do not materialize or prove correct, could cause Websense results to differ materially from historical results or those expressed or implied by such forward-looking statements. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including statements about our technology and product leadership, growth trends and expense management, and statements containing the words "planned," "expects," "believes," "strategy," "opportunity," "anticipates" and similar words. The potential risks and uncertainties which contribute to the uncertain nature of these statements include, among others, risks associated with launching new product offerings, customer acceptance of the company's services, products and fee structures in a changing market; the success of Websense brand development efforts; the volatile and competitive nature of the Internet and security industries; changes in domestic and international market conditions, risks relating to currency exchange rates and impacts of macro-economic conditions on our customers, risks relating to the required use of cash for debt servicing, the risks of ongoing compliance with the covenants in the senior secured credit facility, risks related to changes in accounting interpretations and the other risks and uncertainties described in Websense public filings with the Securities and Exchange Commission, available at www.websense.com/investors. Websense assumes no obligation to update any forward-looking statement to reflect events or circumstances arising after the date on which it was made.

EX-99.2

Exhibit 99.2

INVESTOR CONTACT:	MEDIA CONTACT:
Kate Patterson	Cas Purdy
Websense, Inc.	Websense, Inc.
(858) 320-8072	(858) 320-9493
kpatterson@websense.com	cpurdy@websense.com

N E W S  R E L E A S E

Websense Confirms Second Quarter 2009 Results

Company returns to GAAP profitability

SAN DIEGO, July 28, 2009 — Websense, Inc. (NASDAQ: WBSN) today confirmed financial results for the second quarter of 2009 consistent with preliminary results for billings, non-GAAP revenue and non-GAAP earnings per diluted share announced on July 7, 2009. Separately, the company announced that it has expanded its management team with the additions of Art Locke as Senior Vice President and Chief Financial Officer and Didier Guibal as Executive Vice President, Worldwide Sales.

Second Quarter 2009 GAAP Financial Highlights

• Revenue, calculated in accordance with generally accepted accounting principles (GAAP), increased 9 percent from the second quarter of 2008 to $79.5 million.

• Operating income was $2.7 million, compared to an operating loss of $8.1 million in the second quarter of 2008.

• Net income was $3.1 million, or 7 cents per diluted share, compared to a net loss of $8.2 million, or 18 cents per diluted share, in the second quarter of 2008.

Second Quarter 2009 Non-GAAP Financial Highlights

• Billings, which represent the full amount of subscription contracts billed to customers during the period, totaled $82.2 million, compared to $87.3 million in the second quarter of 2008.

• International billings were approximately $40.1 million, compared to $46.5 million in the second quarter of 2008. Using the same currency exchange rates that prevailed in the second quarter of 2008, international billings would have been approximately $45.1 million.

• Non-GAAP revenue of $84.1 million included approximately $4.6 million of revenue from SurfControl that would have been recognized during this period had SurfControl remained an independent operating company reporting under GAAP. This subscription revenue was included in SurfControl’s deferred revenue as of the date of the acquisition, but was not recognized as revenue on a post-acquisition basis under GAAP due to a required write-down

of SurfControl’s deferred revenue to fair value as of the acquisition date. Non-GAAP revenue in the second quarter of 2008 was $88.2 million, and included approximately $15.2 million of revenue from SurfControl that would have been recognized during this period had SurfControl remained an independent company.

• Non-GAAP operating income was $23.5 million, representing 28.0 percent of non-GAAP revenue. This compares to $27.6 million in the second quarter of 2008, representing 31.3 percent of non-GAAP revenue.

• Non-GAAP net income was $14.5 million, or 32 cents per diluted share, compared to $17.1 million, or 37 cents per diluted share, in the second quarter of 2008.

“Our second quarter billings results reflected two widely divergent buying patterns by our customers. A significant number of our customers were financially distressed and shortened the duration of their contracts and reduced seats under subscription, resulting in lower billings overall. At the same time, many customers with adequate financial resources chose to upgrade to our Web security gateway solutions, including the V10000 appliance, and extend the duration of their contracts,” said Websense Chief Executive Officer Gene Hodges. “Incremental billings associated with the Web security gateway, data loss prevention and hosted security, were up substantially from both the second quarter of 2008 and the first quarter of 2009. Although we expect the global recession to continue to impact our business through at least 2009, our incremental billings performance gives us confidence our product portfolio is competitive and our strategy is aligned with market requirements.”

Quarterly Business Metrics Summary:

Dollars in thousands, except earnings per diluted share, product seats under subscription, average contract value, average contract duration and all percentage metrics.

	Q2’09			Q2’08
Billings	$	82,227		$	87,291
GAAP revenue		79,464			72,958
GAAP operating income (loss)		2,700			(8,082	)
GAAP net income (loss)		3,121			(8,194	)
GAAP net income (loss) per diluted share	$	0.07		($	0.18	)
Non-GAAP* revenue		84,101			88,180
Non-GAAP* operating income		23,517			27,637
Non-GAAP* net income		14,465			17,071
Non-GAAP* earnings per diluted share	$	0.32		$	0.37
Product seats under subscription (millions)		43.6			42.1
International billings (% of total)		49	%		53	%
Average contract value	$	7,300		$	7,800
Billings from renewals (% of total)		75-80	%		75-80	%
Average contract duration (months)		23.2			21.8

* A detailed description of the company’s non-GAAP financial data appears under “Non-GAAP Financial Measures” and a full reconciliation of GAAP to non-GAAP results is included at the end of this news release in the table “Reconciliation of GAAP to Non-GAAP Financial Measures.”

Balance Sheet and Operating Cash Flow Metrics

Highlights of the balance sheet and cash flow performance compared to the second quarter of 2008 included:

• Cash, cash equivalents and restricted cash worldwide of $77.6 million, compared with $65.1 million at the end of the second quarter of 2008.

• Total GAAP deferred revenue of $321.6 million, an increase of 6 percent compared to $302.5 million at the end of the second quarter of 2008.

• Non-GAAP deferred revenue of $331.7 million, a decrease of 3 percent compared to non-GAAP deferred revenue of $340.7 million at the end of the second quarter of 2008. Non-GAAP deferred revenue at the end of the second quarter of 2009 included approximately $10.2 million of deferred revenue from SurfControl that was

included in SurfControl’s deferred revenue as of the date of the acquisition, but is not included in the company’s GAAP deferred revenue on a post-acquisition basis due to a required write-down of SurfControl’s deferred revenue to fair value as of the acquisition date. Non-GAAP deferred revenue at the end of the second quarter of 2008 included $38.1 million of deferred revenue from SurfControl that was included in SurfControl’s deferred revenue as of the date of acquisition, but was written down as of the acquisition date.

• Accounts receivable of $59.9 million, representing 65 days of sales outstanding. This compares to 68 days outstanding at the end of the first quarter of 2009 and 63 days outstanding at the end of the second quarter of 2008.

• Cash flow from operations during the second quarter of 2009 of $6.7 million, compared to $5.0 million in the second quarter of 2008.

• Capital expenditures of $2.7 million in the quarter, compared to $1.7 million in the second quarter of 2008.

During the quarter, the company repurchased a total of approximately 447,000 shares for approximately $7.5 million under a 10b5-1 stock repurchase plan.

Outlook for Fiscal Year 2009 and 2010

Websense updates its annual guidance on its anticipated financial performance for the fiscal year each quarter based on its assessment of the current business environment and historical seasonal trends in its business and prevailing exchange rates between the US dollar and other major currencies. In providing guidance, the company emphasizes that its forward-looking statements are based on current expectations and prevailing currency exchange rates on the date the guidance is provided and disclaims any obligation to update the statements as circumstances change.

	2009 Outlook (as of 07/28/09)
Billings	$340 – 350 million
Billings from renewals (% of total)	75 – 80%
GAAP revenue	$318 – 322 million
Non-GAAP revenue	$334 – 338 million
Non-GAAP operating margin	26 – 27%
Stock-based compensation expense	$26 – 28 million
Amortization of intangible assets (non-cash)	approximately $39 million
Net cash interest expense	$5 – 6 million
Non-GAAP earnings per diluted share	$1.23 – 1.27
Estimated Non-GAAP tax rate	33 – 34%
Average diluted shares outstanding	44 – 46 million

Billings guidance for 2009 assumes an average contract duration in the range of 22 to 23 months. GAAP cash flow from operations for the year, including cash severance expenses associated with cost containment actions of approximately $2 million in the third quarter, is now expected to be approximately $80 million, compared to $65.8 million in GAAP cash flow from operations in 2008.

Non-GAAP guidance for 2009 revenue and diluted earnings per share includes approximately $16.1 million in subscription revenue of SurfControl that would have been recognized under subscriptions that were included in deferred revenue as of the date of the acquisition that will not be recognized as revenue during the applicable period as revenue on a post acquisition basis under GAAP due to the impact of the write-down of the majority of SurfControl’s deferred revenue to fair value as of the acquisition date.

Additionally, non-GAAP revenue for the third quarter of 2009 is expected to decline by approximately $1 to $2 million from second quarter 2009 non-GAAP revenue. Non-GAAP revenue for the fourth quarter of 2009 is expected to be approximately equal to third quarter non-GAAP revenue.

For 2010, the company believes it has the potential to generate substantial growth in non-GAAP earnings per diluted share compared to 2009 non-GAAP earnings per diluted share, assuming the company generates 2009 billings within the current guidance range. The forecasted range will be published with the final fourth quarter 2009 results.

Conference Call

Management will host a conference call and simultaneous webcast to discuss the final results today, July 28, at 2:00 p.m. Pacific time. To participate in the conference call, investors should dial 877-741-4244 (domestic) or 719-325-4824 (international) ten minutes prior to the scheduled start of the call. A simultaneous audio-only webcast of the call may be accessed on the Internet at www.websense.com/investors.

An archive of the webcast will be available on the company’s Web site through September 30, 2009, and a taped replay of the call will be available for one week at 719-457-0820 or 888-203-1112, passcode 1160646.

Non-GAAP Financial Measures

This news release provides financial measures for the second quarter of 2009, including measures for revenue, gross margin, income from operations, net income and earnings per diluted share, that include revenue from SurfControl that would have been recognized during the second quarter of 2009 under subscriptions that were included in deferred revenue as of the date of the acquisition but will not be recognized as revenue on a post-acquisition basis under GAAP due to the impact of the write-down of a majority of SurfControl’s deferred revenue to fair value as of the acquisition date. In addition, second quarter GAAP operating results exclude certain cash and non-cash expenses relating to the company’s acquisitions, including amortization of intangible assets and deferred financing fees, restructuring costs relating to facility closures, integration travel, and professional fees, as well as stock based compensation expense and related tax effects. Based on the foregoing, the company’s presentation of non-GAAP revenue, gross margin, operating expenses, income from operations, net income and earnings per diluted share are not calculated in accordance with GAAP. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance that enhances management’s and investors’ ability to evaluate the company’s operating results, trends and prospects and to compare current operating results with historic operating results. A reconciliation of the GAAP and non-GAAP financial measures for the second quarter and a more detailed explanation of each non-GAAP financial measure and its uses are provided at the end of this news release.

This news release also provides guidance for the fiscal year 2009 and 2010, including guidance for revenue, income from operations, net income and earnings per diluted share, that include revenue from SurfControl that would have been recognized during the full year 2009 and 2010 under subscriptions that were included in deferred revenue as of the date of the acquisition but will not be recognized as revenue on a post-acquisition basis under GAAP due to the impact of the write-down of a majority of SurfControl’s deferred revenue to fair value as of the acquisition date.

This news release also includes financial measures for billings for the second quarter and for guidance for the fiscal year 2009 that are not numerical measures that can be calculated in accordance with GAAP. Websense provides this measurement in news releases reporting financial performance because this measurement provides a consistent basis for understanding the company’s sales activities in the current period. The company believes the billings measurement is useful to investors because the GAAP measurements of revenue and deferred revenue in the current period include subscription contracts commenced in prior periods. The roll-forwards of deferred revenue for the second quarter of 2009 are set forth at the end of this news release.

About Websense, Inc.

Websense, Inc. (NASDAQ: WBSN), a global leader in integrated Web, data and email security solutions, provides Essential Information Protection™ for approximately 44 million product seats under subscription. Distributed through its global network of channel partners, Websense software and hosted security solutions help organizations block malicious code, prevent the loss of confidential information and enforce Internet use and security policies. For more information, visit www.websense.com.

Websense is a registered trademark of Websense, Inc. in the United States and certain international markets. Websense has numerous other registered and unregistered trademarks in the United States and internationally. All other trademarks are the property of their respective owners.

Follow Websense on Twitter: http://www.twitter.com/websense.

# # #

This news release contains forward-looking statements that involve risks, uncertainties, assumptions and other factors which, if they do not materialize or prove correct, could cause Websense’s results to differ materially from historical results or those expressed or implied by such forward-looking statements. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including, our guidance and financial outlook for the company’s 2009 and 2010 fiscal years, and statements about our technology and product leadership, growth trends and expense management, and statements containing the words “planned,” “expects,” “believes,” “strategy,” “opportunity,” “anticipates” and similar words. The potential risks and uncertainties which contribute to the uncertain nature of these statements include, among others, risks associated with launching new product offerings, customer acceptance of the company’s services, products and fee structures in a changing market; the success of Websense’s brand development efforts; the volatile and competitive nature of the Internet and security industries; changes in domestic and international market conditions, risks relating to currency exchange rates and impacts of macro-economic conditions on our customers, risks relating to the required use of cash for debt servicing, the risks of ongoing compliance with the covenants in the senior secured credit facility, risks related to changes in accounting interpretations and the other risks and uncertainties described in Websense’s public filings with the Securities and Exchange Commission, available at www.websense.com/investors. Websense assumes no obligation to update any forward-looking statement to reflect events or circumstances arising after the date on which it was made.

Websense, Inc.

Consolidated Statements of Operations

(Unaudited and in thousands, except per share amounts)

	Three Months Ended						Six Months Ended
	June 30, 2009			June 30, 2008			June 30, 2009			June 30, 2008
Revenue	$	79,464		$	72,958		$	160,444		$	139,942
Cost of revenues:
Cost of revenues		9,166			8,587			17,742			17,454
Amortization of acquired technology		3,257			3,081			6,513			6,153
Total cost of revenues		12,423			11,668			24,255			23,607
Gross margin		67,041			61,290			136,189			116,335
Operating expenses:
Selling and marketing		41,614			44,338			81,446			87,159
Research and development		12,690			13,198			25,533			26,658
General and administrative		10,037			11,836			21,038			24,689
Total operating expenses		64,341			69,372			128,017			138,506
Income (loss) from operations		2,700			(8,082	)		8,172			(22,171	)
Interest expense		(1,747	)		(2,941	)		(3,959	)		(7,373	)
Other (expense) income, net		(3	)		1,113			355			1,004
Income (loss) before income taxes		950			(9,910	)		4,568			(28,540	)
(Benefit) provision for income taxes		(2,171	)		(1,716	)		5,742			(14,109	)
Net income (loss)	$	3,121		$	(8,194	)	$	(1,174	)	$	(14,431	)
Basic net income (loss) per share	$	0.07		$	(0.18	)	$	(0.03	)	$	(0.32	)
Diluted net income (loss) per share	$	0.07		$	(0.18	)	$	(0.03	)	$	(0.32	)
Basic common shares		44,384			45,208			44,603			45,299
Diluted common shares		44,857			45,208			44,603			45,299
Financial Data:
Total deferred revenue	$	321,563		$	302,541		$	321,563		$	302,541

Websense, Inc.

Consolidated Balance Sheets

(Unaudited and in thousands)

	June 30, 2009			December 31, 2008
Assets
Current assets:
Cash and cash equivalents	$	75,764		$	64,310
Cash and cash equivalents - restricted		1,803			2,673
Accounts receivable, net		59,928			82,032
Prepaid income taxes		3,973			3,723
Current portion of deferred income taxes		32,608			33,125
Other current assets		10,409			9,029
Total current assets		184,485			194,892
Property and equipment, net		16,232			14,312
Intangible assets, net		86,810			106,493
Goodwill		374,232			374,410
Deferred income taxes, less current portion		24,436			21,092
Deposits and other assets		3,319			3,933
Total assets	$	689,514		$	715,132
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	5,121		$	2,719
Accrued compensation and related benefits		18,662			19,087
Other accrued expenses		25,883			28,440
Current portion of income taxes payable		9,743			8,010
Current portion of senior secured term loan		11,217			4,112
Current portion of deferred tax liability		315			1,053
Current portion of deferred revenue		212,466			220,607
Total current liabilities		283,407			284,028
Income taxes payable, less current portion		12,846			10,098
Senior secured term loan, less current portion		98,783			120,888
Deferred tax liability, less current portion		8,658			10,523
Deferred revenue, less current portion		109,097			112,157
Other long term liabilities		1,513			2,617
Total liabilities		514,304			540,311
Stockholders’ equity:
Common stock		527			522
Additional paid-in capital		315,576			299,657
Treasury stock, at cost		(174,935	)		(159,842	)
Retained earnings		36,763			37,937
Accumulated other comprehensive loss		(2,721	)		(3,453	)
Total stockholders’ equity		175,210			174,821
Total liabilities and stockholders’ equity	$	689,514		$	715,132

Websense, Inc.

Consolidated Statements of Cash Flows

(Unaudited and in thousands)

	Six Months Ended
	June 30, 2009			June 30, 2008
Operating activities:
Net loss	$	(1,174	)	$	(14,431	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		25,495			31,490
Share-based compensation		12,563			12,175
Deferred income taxes		(5,904	)		(30,964	)
Unrealized loss (gain) on foreign exchange		189			(71	)
Tax shortfall from stock option exercises		1,621			678
Changes in operating assets and liabilities:
Accounts receivable		20,962			14,817
Other assets		(2,062	)		(1,761	)
Accounts payable		1,815			(1,660	)
Accrued compensation and related benefits		(492	)		(8,772	)
Other liabilities		(1,599	)		(5,293	)
Deferred revenue		(11,200	)		16,582
Income taxes payable		2,629			11,119
Net cash provided by operating activities		42,843			23,909
Investing activities:
Change in restricted cash and cash equivalents		913			(1,240	)
Purchase of property and equipment		(6,137	)		(4,109	)
Purchase of intangible assets		—			(940	)
Cash refunded from PortAuthority acquisition		—			147
Cash received from sale of CyberPatrol assets		—			1,400
Purchases of marketable securities		—			(20,160	)
Maturities of marketable securities		—			39,963
Net cash (used in) provided by investing activities		(5,224	)		15,061
Financing activities:
Principal payments on senior secured term loan		(15,000	)		(35,000	)
Proceeds from exercise of stock options		2,194			720
Proceeds from issuance of common stock for stock purchase plan		2,787			2,903
Tax shortfall from stock option exercises		(1,621	)		(678	)
Purchase of treasury stock		(14,648	)		(9,998	)
Net cash used in financing activities		(26,288	)		(42,053	)
Effect of exchange rate changes on cash and cash equivalents		123			512
Increase (decrease) in cash and cash equivalents		11,454			(2,571	)
Cash and cash equivalents at beginning of period		64,310			66,163
Cash and cash equivalents at end of period	$	75,764		$	63,592

Websense, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(Unaudited and in thousands, except per share amounts)

	Three Months Ended						Six Months Ended
	June 30, 2009			June 30, 2008			June 30, 2009			June 30, 2008
GAAP Revenue	$	79,464		$	72,958		$	160,444		$	139,942
Deferred revenue related to SurfControl acquisition (1)		4,637			15,222			10,122			34,777
Non-GAAP Revenue	$	84,101		$	88,180		$	170,566		$	174,719
GAAP Gross margin	$	67,041		$	61,290		$	136,189		$	116,335
Deferred revenue related to SurfControl acquisition (1)		4,637			15,222			10,122			34,777
Amortization of acquired technology (3)		3,036			2,942			6,072			5,885
Restructuring and integration related items (4)		—			303			4			866
Stock-based compensation (2)		392			316			691			677
Gross margin adjustment		8,065			18,783			16,889			42,205
Non-GAAP Gross margin	$	75,106		$	80,073		$	153,078		$	158,540
GAAP Operating expenses	$	64,341		$	69,372		$	128,017		$	138,506
Amortization of other intangible assets (3)		(6,590	)		(9,365	)		(13,181	)		(18,729	)
Restructuring and integration related items (4)		(135	)		(1,882	)		(221	)		(5,179	)
Stock-based compensation (2)		(6,027	)		(5,689	)		(11,872	)		(11,496	)
Operating expense adjustment		(12,752	)		(16,936	)		(25,274	)		(35,404	)
Non-GAAP Operating expenses	$	51,589		$	52,436		$	102,743		$	103,102
GAAP Income (loss) from operations	$	2,700		$	(8,082	)	$	8,172		$	(22,171	)
Gross margin adjustment		8,065			18,783			16,889			42,205
Operating expense adjustment		12,752			16,936			25,274			35,404
Non-GAAP Income from operations	$	23,517		$	27,637		$	50,335		$	55,438
GAAP Net income (loss)	$	3,121		$	(8,194	)	$	(1,174	)	$	(14,431	)
Gross margin adjustment		8,065			18,783			16,889			42,205
Operating expense adjustment		12,752			16,936			25,274			35,404
Amortization of deferred financing fees (5)		150			325			589			1,365
Impact of favorable tax ruling (6)		—			—			—			(2,682	)
Income tax effect on the above items (7)		(9,623	)		(10,779	)		(10,348	)		(28,666	)
Non-GAAP Net income	$	14,465		$	17,071		$	31,230		$	33,195
GAAP Net income (loss) per share	$	0.07		$	(0.18	)	$	(0.03	)	$	(0.32	)
Non-GAAP adjustments as described above per share, net of tax (1-7)		0.25			0.55			0.72			1.05
Non-GAAP Net income per share	$	0.32		$	0.37		$	0.69		$	0.73
GAAP Diluted common shares		44,857			45,208			44,603			45,299
Effect of dilutive securities (8)		—			369			393			377
Non-GAAP Diluted common shares		44,857			45,577			44,996			45,676

The non-GAAP financial measures included in the tables above are non-GAAP revenues, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP net income and non-GAAP net income per share, which adjust for the following items: acquisition related adjustments, stock-based compensation expense, amortization of intangible assets and certain other items. We believe the presentation of these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provides meaningful supplemental information regarding the Company’s operating performance for the reasons discussed below. Our management uses these non-GAAP financial measures in assessing the Company’s operating results, as well as when planning, forecasting and analyzing future periods. The annual operating plan approved by our Board of Directors is based upon non-GAAP financial measures and our management incentive plans also use non-GAAP financial measures as performance objectives. We believe that these non-GAAP financial measures also facilitate comparisons of the Company’s performance to prior periods and to our peers and that investors benefit from an understanding of these non-financial measures.

(1) Deferred revenue related to SurfControl. We completed our acquisition of SurfControl in October 2007. At the time of the acquisition, SurfControl had recorded deferred revenue related to subscriptions commenced in the past for which revenue would be recognized in future periods (during the term of the subscription) as revenue recognition criteria are satisfied. The purchase accounting rules required us to write down a significant portion of this deferred revenue to its then current fair value. Consequently, in post acquisition periods, we do not recognize the full amount of this deferred revenue. When measuring the performance of our business, however, we add back non-GAAP revenue associated with the SurfControl deferred revenue that would have been recognized during the relevant accounting period that was excluded as a result of these purchase accounting adjustments, as we believe this provides information about the impact on operations of the acquired business in a manner consistent with the revenue recognition for our pre-existing services. We further believe that the inclusion of non-GAAP revenue enables investors to better understand the impact of the acquisition on the baseline revenue of the combined company and provides useful information to investors on revenue trends impacting the combined business.

(2) Stock-based compensation. Consists of non-cash expenses for employee stock options, restricted stock units and our employee stock purchase plan determined in accordance with SFAS 123(R). When evaluating the performance of our business and developing short and long-term plans, we do not consider stock-based compensation charges. Although stock-based compensation is necessary to attract and retain quality employees, our consideration of stock-based compensation places its primary emphasis on overall shareholder dilution rather than the accounting charges associated with such grants. Because of varying available valuation methodologies, subjective assumptions and the variety of award types, we believe that the exclusion of stock-based compensation allows for more accurate comparison of our financial results to previous periods. In addition, we believe it is useful to investors to understand the specific impact of the application of SFAS 123(R) on our operating results.

(3) Amortization of acquired technology and other intangible assets. When conducting internal development of intangible assets (including developed technology, customer relationships, trade-marks, etc.), accounting rules require that we expense the costs as incurred. In the case of acquired businesses, however, we are required to allocate a portion of the purchase price to the accounting value assigned to intangible assets acquired and amortize this amount over the estimated useful lives of the acquired intangibles. The acquired company, in most cases, has itself previously expensed the costs incurred to develop the acquired intangible assets, and the purchase price allocated to these assets is not necessarily reflective of the cost we would incur in developing the intangible asset. We eliminate these amortization charges from our non-GAAP operating results to provide better comparability of pre and post-acquisition operating results and comparability to results of businesses utilizing internally developed intangible assets.

(4) Restructuring and integration. We have engaged in various restructuring and integration activities in connection with our acquisitions that have resulted in costs associated with severance, benefits, excess facilities, integration travel, retention bonuses and professional fees. Each restructuring and integration has been a discrete event based on a unique set of business objectives or circumstances, and each has differed from the others in terms of its operational implementation, business impact and scope. We do not engage in these activities in the ordinary course of our business. We believe that it is important to understand these charges; however, we do not believe that these charges are indicative of future operating results and that investors benefit from an understanding of our operating results without giving effect to them, including in comparison to operating results for periods where no restructuring and integration costs were incurred.

(5) Amortization of deferred financing fees. This is a non-cash charge that can vary significantly in size and frequency depending on the optional prepayments we make on our senior secured term loan and, therefore, are disregarded by the Company’s management when evaluating our ongoing performance and/or predicting our earnings trends, and excluded by us when presenting our non-GAAP financial measures. Further, we believe it is useful to investors to understand the specific impact of this charge on our operating results.

(6) Impact of favorable tax ruling. During the first quarter of 2008, we received a favorable state tax ruling regarding unrecognized state income tax benefits. Because the impact is non-recurring, we excluded the impact when presenting non-GAAP financial measures.

(7) Income tax effect on the above items. This amount adjusts the provision (benefit) for income taxes to reflect the effect of the non-GAAP adjustments on non-GAAP net income.

(8) Effect of dilutive securities. The effect of dilutive securities was excluded from GAAP diluted common shares due to the reported net loss under GAAP, but are included for non-GAAP diluted common shares since we have non-GAAP net income.

Websense, Inc.

Rollforward of GAAP Deferred Revenue

(Unaudited and in thousands)

GAAP deferred revenue balance at March 31, 2009	$	318,800
Net billings during second quarter 2009		82,227
Less GAAP revenue recognized during second quarter 2009		(79,464	)
GAAP deferred revenue balance at June 30, 2009	$	321,563
Websense, Inc.
Rollforward of Non-GAAP Deferred Revenue
(Unaudited and in thousands)
Non-GAAP deferred revenue balance at March 31, 2009	$	333,617
Net billings during second quarter 2009		82,227
Less Non-GAAP revenue recognized during second quarter 2009		(84,101	)
Non-GAAP deferred revenue balance at June 30, 2009	$	331,743
Websense, Inc.
Reconciliation of GAAP to Non-GAAP Deferred Revenue
(Unaudited and in thousands)
GAAP deferred revenue balance at June 30, 2009	$	321,563
Addback: Deferred revenue related to SurfControl acquisition		10,180
Non-GAAP deferred revenue balance at June 30, 2009	$	331,743

EX-99.3

Exhibit 99.3

WEBSENSE, INC.

2000 EMPLOYEE STOCK PURCHASE PLAN

As Amended by the Board July 22, 2009

I. PURPOSE OF THE PLAN

This Employee Stock Purchase Plan is intended to promote the interests of Websense, Inc., a Delaware corporation, by providing eligible employees with the opportunity to acquire a proprietary interest in the Corporation through participation in a payroll deduction-based employee stock purchase plan designed to qualify under Section 423 of the Code.

Capitalized terms herein shall have the meanings assigned to such terms in the attached Appendix.

II. ADMINISTRATION OF THE PLAN

The Plan Administrator shall have full authority to interpret and construe any provision of the Plan and to adopt such rules and regulations for administering the Plan as it may deem necessary in order to comply with the requirements of Code Section 423. Decisions of the Plan Administrator shall be final and binding on all parties having an interest in the Plan.

III. STOCK SUBJECT TO PLAN

A. The stock purchasable under the Plan shall be shares of authorized but unissued or reacquired Common Stock, including shares of Common Stock purchased on the open market. The number of shares of Common Stock initially reserved for issuance over the term of the Plan shall be limited to 250,000 shares.

B. The number of shares of Common Stock available for issuance under the Plan shall automatically increase on the first trading day of January each calendar year, beginning with calendar year 2001 and ending with (and including) calendar year 2010, by an amount equal to one percent (1%) of the total number of shares of Common Stock outstanding on the last trading day in December of the immediately preceding calendar year, but in no event shall any such annual increase exceed 375,000 shares.

C. 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 maximum number and class of securities issuable under the Plan, (ii) the maximum number and class of securities purchasable per Participant on any one Purchase Date, (iii) the maximum number

1.

and class of securities purchasable in total by all Participants on any one Purchase Date, (iv) the maximum number and/or class of securities by which the share reserve is to increase automatically each calendar year pursuant to the provisions of Section III.B of this Article One and (v) the number and class of securities and the price per share in effect under each outstanding purchase right in order to prevent the dilution or enlargement of benefits thereunder.

IV. OFFERING PERIODS

A. Shares of Common Stock shall be offered for purchase under the Plan through a series of overlapping offering periods until such time as (i) the maximum number of shares of Common Stock available for issuance under the Plan shall have been purchased or (ii) the Plan shall have been sooner terminated.

B. Each offering period shall be of such duration (not to exceed twenty-four (24) months) as determined by the Plan Administrator prior to the start date of such offering period. However, the initial offering period may have a duration in excess of 24 months and will start on the date the underwriting agreement for the initial public offering of Websense, Inc. is signed, and will end on the last business day in April 2002. Offering periods shall commence at semi-annual intervals on the first business day of May and November each year over the term of the Plan. Accordingly, two (2) separate offering periods shall commence in each calendar year the Plan remains in existence. However, the initial offering period shall commence at the Effective Time and terminate on the last business day in April 2002.

C. Each offering period shall consist of a series of one or more successive Purchase Intervals. Purchase Intervals shall run from the first business day in May to the last business day in October each year and from the first business day in November each year to the last business day in April in the following year. However, the first Purchase Interval in effect under the initial offering period shall commence at the Effective Time and terminate on the last business day in October 2000.

D. Should the Fair Market Value per share of Common Stock on any Purchase Date within an offering period be less than the Fair Market Value per share of Common Stock on the start date of that offering period, then that offering period shall automatically terminate immediately after the purchase of shares of Common Stock on such Purchase Date, and a new offering period shall commence on the next business day following such Purchase Date. The new offering period shall have a duration of twenty (24) months, unless a shorter duration is established by the Plan Administrator within five (5) business days following the start date of that offering period. All individuals participating in the terminated offering period shall automatically be transferred to the new offering period.

V. ELIGIBILITY

A. Each individual who is an Eligible Employee on the start date of any offering period under the Plan may enter that offering period on such start date. However, an Eligible Employee may participate in only one offering period at a time.

2.

B. To participate in the Plan for a particular offering period, the Eligible Employee must complete the enrollment forms prescribed by the Plan Administrator (including a stock purchase agreement and a payroll deduction authorization) and file such forms with the Plan Administrator (or its designate) on or before the start date of that offering period.

VI. PAYROLL DEDUCTIONS

A. The payroll deduction authorized by the Participant for purposes of acquiring shares of Common Stock during an offering period may be any multiple of one percent (1%) of the Cash Earnings paid to the Participant during each Purchase Interval within that offering period, up to a maximum of fifteen percent (15%). The deduction rate so authorized shall continue in effect throughout the offering period, except to the extent such rate is changed in accordance with the following guidelines:

(i) The Participant may, at any time during the offering period, reduce his or her rate of payroll deduction to become effective as soon as possible after filing the appropriate form with the Plan Administrator. The Participant may not, however, effect more than one (1) such reduction per Purchase Interval.

(ii) The Participant may, prior to the commencement of any new Purchase Interval within the offering period, increase the rate of his or her payroll deduction by filing the appropriate form with the Plan Administrator. The new rate (which may not exceed the fifteen percent (15%) maximum) shall become effective on the start date of the first Purchase Interval following the filing of such form.

B. Payroll deductions shall begin on the first pay day administratively feasible following the start of the offering period in which the Participant in enrolled and shall (unless sooner terminated by the Participant) continue through the pay day ending with or immediately prior to the last day of that offering period. The amounts so collected shall be credited to the Participant’s book account under the Plan, but no interest shall be paid on the balance from time to time outstanding in such account. The amounts collected from the Participant shall not be required to be held in any segregated account or trust fund and may be commingled with the general assets of the Corporation and used for general corporate purposes.

C. Payroll deductions shall automatically cease upon the termination of the Participant’s purchase right in accordance with the provisions of the Plan.

D. The Participant’s acquisition of Common Stock under the Plan on any Purchase Date shall neither limit nor require the Participant’s acquisition of Common Stock on any subsequent Purchase Date, whether within the same or a different offering period.

3.

VII. PURCHASE RIGHTS

A. GRANT OF PURCHASE RIGHTS. A Participant shall be granted a separate purchase right for each offering period in which he or she participates. The purchase right shall be granted on the start date of the offering period and shall provide the Participant with the right to purchase shares of Common Stock, in a series of successive installments during that offering period, upon the terms set forth below. The Participant shall execute a stock purchase agreement embodying such terms and such other provisions (not inconsistent with the Plan) as the Plan Administrator may deem advisable.

Under no circumstances shall purchase rights be granted under the Plan to any Eligible Employee if such individual would, immediately after the grant, own (within the meaning of Code Section 424(d)) or hold outstanding options or other rights to purchase, stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Corporation or any Corporate Affiliate.

B. EXERCISE OF THE PURCHASE RIGHT. Each purchase right shall be automatically exercised in installments on each successive Purchase Date within the offering period, and shares of Common Stock shall accordingly be purchased on behalf of each Participant on each such Purchase Date. The purchase shall be effected by applying the Participant’s payroll deductions for the Purchase Interval ending on such Purchase Date to the purchase of whole shares of Common Stock at the purchase price in effect for the Participant for that Purchase Date.

C. PURCHASE PRICE. The purchase price per share at which Common Stock will be purchased on the Participant’s behalf on each Purchase Date within the particular offering period in which he or she is participating shall be equal to eighty-five percent (85%) of the lower of (i) the Fair Market Value per share of Common Stock on the start date of that offering period or (ii) the Fair Market Value per share of Common Stock on that Purchase Date.

D. NUMBER OF PURCHASABLE SHARES. The number of shares of Common Stock purchasable by a Participant on each Purchase Date during the offering period shall be the number of whole shares obtained by dividing the amount collected from the Participant through payroll deductions during the Purchase Interval ending with that Purchase Date by the purchase price in effect for the Participant for that Purchase Date. However, the maximum number of shares of Common Stock purchasable per Participant on any one Purchase Date shall not exceed 1,250 shares, subject to periodic adjustments in the event of certain changes in the Corporation’s capitalization. In addition, the maximum number of shares of Common Stock purchasable in total by all Participants in the Plan on any one Purchase Date shall not exceed 150,000 shares, subject to periodic adjustments in the event of certain changes in the Corporation’s capitalization. However, the Plan Administrator shall have the discretionary authority, exercisable prior to the start of any offering period under the Plan, to increase or decrease the limitations to be in effect for the number of shares purchasable per Participant and in total by all Participants in that particular offering period on each Purchase Date which occurs during that offering period.

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E. EXCESS PAYROLL DEDUCTIONS. Any payroll deductions not applied to the purchase of shares of Common Stock on any Purchase Date because they are not sufficient to purchase a whole share of Common Stock shall be held for the purchase of Common Stock on the next Purchase Date. However, any payroll deductions not applied to the purchase of Common Stock by reason of the limitation on the maximum number of shares purchasable per Participant or in total by all Participants on the Purchase Date shall be promptly refunded.

F. TERMINATION OF PURCHASE RIGHT. The following provisions shall govern the termination of outstanding purchase rights:

(i) A Participant may, at any time prior to the next scheduled Purchase Date in the offering period, terminate his or her outstanding purchase right by filing the appropriate form with the Plan Administrator (or its designate), and no further payroll deductions shall be collected from the Participant with respect to the terminated purchase right. Any payroll deductions collected during the Purchase Interval in which such termination occurs shall, at the Participant’s election, be immediately refunded or held for the purchase of shares on the next Purchase Date. If no such election is made at the time such purchase right is terminated, then the payroll deductions collected with respect to the terminated right shall be refunded as soon as possible.

(ii) The termination of such purchase right shall be irrevocable, and the Participant may not subsequently rejoin the offering period for which the terminated purchase right was granted. In order to resume participation in any subsequent offering period, such individual must re-enroll in the Plan (by making a timely filing of the prescribed enrollment forms) on or before the start date of that offering period.

(iii) Should the Participant cease to remain an Eligible Employee for any reason (including death, disability or change in status) while his or her purchase right remains outstanding, then that purchase right shall immediately terminate, and all of the Participant’s payroll deductions for the Purchase Interval in which the purchase right so terminates shall be immediately refunded. However, should the Participant cease to remain in active service by reason of an approved unpaid leave of absence, then the Participant shall have the right, exercisable up until the last business day of the Purchase Interval in which such leave commences, to (a) withdraw all the payroll deductions collected to date on his or her behalf for that Purchase Interval or (b) have such funds held for the purchase of shares on his or her behalf on the next scheduled Purchase Date. In no event, however, shall any further payroll deductions be collected on the Participant’s behalf during such leave. Upon the Participant’s return to active service (x) within ninety (90) days following the commencement of such leave or (y) prior to the expiration of

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any longer period for which such Participant’s right to reemployment with the Corporation is guaranteed by statute or contract, his or her payroll deductions under the Plan shall automatically resume at the rate in effect at the time the leave began, unless the Participant withdraws from the Plan prior to his or her return. An individual who returns to active employment following a leave of absence that exceeds in duration the applicable (x) or (y) time period will be treated as a new Employee for purposes of subsequent participation in the Plan and must accordingly re-enroll in the Plan (by making a timely filing of the prescribed enrollment forms) on or before the start date of any subsequent offering period in which he or she wishes to participate.

G. CHANGE IN CONTROL. Each outstanding purchase right shall automatically be exercised, immediately prior to the effective date of any Change in Control, by applying the payroll deductions of each Participant for the Purchase Interval in which such Change in Control occurs to the purchase of whole shares of Common Stock at a purchase price per share equal to eighty-five percent (85%) of the lower of (i) the Fair Market Value per share of Common Stock on the start date of the offering period in which the Participant is enrolled at the time of such Change in Control (ii) the Fair Market Value per share of Common Stock immediately prior to the effective date of such Change in Control. However, the applicable limitation on the number of shares of Common Stock purchasable per Participant shall continue to apply to any such purchase, but not the limitation applicable to the maximum number of shares of Common Stock purchasable in total by all Participants in the Plan on any one Purchase Date.

The Corporation shall use its best efforts to provide at least ten (10) days’ prior written notice of the occurrence of any Change in Control, and Participants shall, following the receipt of such notice, have the right to terminate their outstanding purchase rights prior to the effective date of the Change in Control.

H. PRORATION OF PURCHASE RIGHTS. Should the total number of shares of Common Stock to be purchased pursuant to outstanding purchase rights on any particular date exceed the number of shares then available for issuance under the Plan, the Plan Administrator shall make a pro-rata allocation of the available shares on a uniform and nondiscriminatory basis, and the payroll deductions of each Participant, to the extent in excess of the aggregate purchase price payable for the Common Stock pro-rated to such individual, shall be refunded.

I. ASSIGNABILITY. The purchase right shall be exercisable only by the Participant and shall not be assignable or transferable by the Participant.

J. STOCKHOLDER RIGHTS. A Participant shall have no stockholder rights with respect to the shares subject to his or her outstanding purchase right until the shares are purchased on the Participant’s behalf in accordance with the provisions of the Plan and the Participant has become a holder of record of the purchased shares.

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VIII. ACCRUAL LIMITATIONS

A. No Participant shall be entitled to accrue rights to acquire Common Stock pursuant to any purchase right outstanding under this Plan if and to the extent such accrual, when aggregated with (i) rights to purchase Common Stock accrued under any other purchase right granted under this Plan and (ii) similar rights accrued under other employee stock purchase plans (within the meaning of Code Section 423)) of the Corporation or any Corporate Affiliate, would otherwise permit such Participant to purchase more than Twenty-Five Thousand Dollars ($25,000.00) worth of stock of the Corporation or any Corporate Affiliate (determined on the basis of the Fair Market Value per share on the date or dates such rights are granted) for each calendar year such rights are at any time outstanding.

B. For purposes of applying such accrual limitations to the purchase rights granted under the Plan, the following provisions shall be in effect:

(i) The right to acquire Common Stock under each outstanding purchase right shall accrue in a series of installments on each successive Purchase Date during the offering period on which such right remains outstanding.

(ii) No right to acquire Common Stock under any outstanding purchase right shall accrue to the extent the Participant has already accrued in the same calendar year the right to acquire Common Stock under one or more other purchase rights at a rate equal to Twenty-Five Thousand Dollars ($25,000.00) worth of Common Stock (determined on the basis of the Fair Market Value per share on the date or dates of grant) for each calendar year such rights were at any time outstanding.

C. If by reason of such accrual limitations, any purchase right of a Participant does not accrue for a particular Purchase Interval, then the payroll deductions that the Participant made during that Purchase Interval with respect to such purchase right shall be promptly refunded.

D. In the event there is any conflict between the provisions of this Article and one or more provisions of the Plan or any instrument issued thereunder, the provisions of this Article shall be controlling.

IX. EFFECTIVE DATE AND TERM OF THE PLAN

A. The Plan was adopted by the Board on February 11, 2000, and shall become effective at the Effective Time, provided no purchase rights granted under the Plan shall be exercised, and no shares of Common Stock shall be issued hereunder, until (i) the Plan shall have been approved by the stockholders of the Corporation and (ii) the Corporation shall have complied with all applicable requirements of the 1933 Act (including the registration of the shares of Common Stock issuable under the Plan on a Form S-8

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registration statement filed with the Securities and Exchange Commission), all applicable listing requirements of any stock exchange (or the Nasdaq National Market, if applicable) on which the Common Stock is listed for trading and all other applicable requirements established by law or regulation. In the event such stockholder approval is not obtained, or such compliance is not effected, within twelve (12) months after the date on which the Plan is adopted by the Board, the Plan shall terminate and have no further force or effect, and all sums collected from Participants during the initial offering period hereunder shall be refunded.

B. Unless sooner terminated by the Board, the Plan shall terminate upon the earlier of (i) the date on which all shares available for issuance under the Plan shall have been sold pursuant to purchase rights exercised under the Plan or (ii) the date on which all purchase rights are exercised in connection with a Change in Control. No further purchase rights shall be granted or exercised, and no further payroll deductions shall be collected, under the Plan following such termination.

X. AMENDMENT OF THE PLAN

A. The Board may alter, amend, suspend or terminate the Plan at any time to become effective immediately following the close of any Purchase Interval. However, the Plan may be amended or terminated immediately upon Board action, if and to the extent necessary to assure that the Corporation will not recognize, for financial reporting purposes, any compensation expense in connection with the shares of Common Stock offered for purchase under the Plan, should the financial accounting rules applicable to the Plan at the Effective Time be subsequently revised so as to require the Corporation to recognize compensation expense in the absence of such amendment or termination.

B. In no event may the Board effect any of the following amendments or revisions to the Plan without the approval of the Corporation’s stockholders: (i) increase the number of shares of Common Stock issuable under the Plan, except for permissible adjustments in the event of certain changes in the Corporation’s capitalization, (ii) alter the purchase price formula so as to reduce the purchase price payable for the shares of Common Stock purchasable under the Plan or (iii) modify the eligibility requirements for participation in the Plan.

XI. GENERAL PROVISIONS

A. All costs and expenses incurred in the administration of the Plan shall be paid by the Corporation; however, each Plan Participant shall bear all costs and expenses incurred by such individual in the sale or other disposition of any shares purchased under the Plan.

B. Nothing in the Plan shall confer upon the Participant any right to continue in the employ of the Corporation or any Corporate Affiliate for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any

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Corporate Affiliate employing such person) or of the Participant, which rights are hereby expressly reserved by each, to terminate such person’s employment at any time for any reason, with or without cause.

C. The provisions of the Plan shall be governed by the laws of the State of New York without resort to that State’s conflict-of-laws rules.

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SCHEDULE A

CORPORATIONS PARTICIPATING IN

EMPLOYEE STOCK PURCHASE PLAN

AS OF THE EFFECTIVE TIME

Websense, Inc.

APPENDIX

The following definitions shall be in effect under the Plan:

A. BOARD shall mean the Corporation’s Board of Directors.

B. CASH EARNINGS shall mean (i) the regular base salary paid to a Participant by one or more Participating Companies during such individual’s period of participation in one or more offering periods under the Plan plus (ii) all overtime payments, bonuses, commissions, profit-sharing distributions and other incentive-type payments received during such period. Such Cash Earnings shall be calculated before deduction of (A) any income or employment tax withholdings or (B) any contributions made by the Participant to any Code Section 401(k) salary deferral plan or any Code Section 125 cafeteria benefit program now or hereafter established by the Corporation or any Corporate Affiliate. However, Cash Earnings shall NOT include any contributions made by the Corporation or any Corporate Affiliate on the Participant’s behalf to any employee benefit or welfare plan now or hereafter established (other than Code Section 401(k) or Code Section 125 contributions deducted from such Cash Earnings).

C. CHANGE IN CONTROL shall mean a change in ownership of the Corporation pursuant to any of the following transactions:

(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 assets of the Corporation in complete liquidation or dissolution of the Corporation, or

(iii) the acquisition, directly or indirectly, by a person or related group of persons (other than the Corporation or a person that directly or indirectly controls, is controlled by or is under common control with the Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation’s outstanding securities pursuant to a tender or exchange offer made directly to the Corporation’s stockholders.

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

E. COMMON STOCK shall mean the Corporation’s common stock.

F. CORPORATE AFFILIATE shall mean any parent or subsidiary corporation of the Corporation (as determined in accordance with Code Section 424), whether now existing or subsequently established.

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G. CORPORATION shall mean Websense, Inc., a Delaware corporation, and any corporate successor to all or substantially all of the assets or voting stock of Websense, Inc. that shall by appropriate action adopt the Plan.

H. EFFECTIVE TIME shall mean the time at which the Underwriting Agreement is executed and the Common Stock priced for the initial public offering of such Common Stock. Any Corporate Affiliate that becomes a Participating Corporation after such Effective Time shall designate a subsequent Effective Time with respect to its employee-Participants.

I. ELIGIBLE EMPLOYEE shall mean any person who is employed by a Participating Corporation on a basis under which he or she is regularly expected to render more than twenty (20) hours of service per week for more than five (5) months per calendar year for earnings considered wages under Code Section 3401 (a).

J. FAIR MARKET VALUE per share of Common Stock on any relevant date shall be determined in accordance with the following provisions:

(i) If the Common Stock is at the time traded on the Nasdaq National Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq National Market and published in The Wall Street Journal. 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.

(ii) If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be 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 and published in The Wall Street Journal. 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.

(iii) For purposes of the initial offering period that begins at the Effective Time, the Fair Market Value shall be deemed to be equal to the price per share at which the Common Stock is sold in the initial public offering pursuant to the Underwriting Agreement.

K. 1933 ACT shall mean the Securities Act of 1933, as amended.

L. PARTICIPANT shall mean any Eligible Employee of a Participating Corporation who is actively participating in the Plan.

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M. PARTICIPATING CORPORATION shall mean the Corporation and such Corporate Affiliate or Affiliates as may be authorized from time to time by the Board to extend the benefits of the Plan to their Eligible Employees. The Participating Corporations in the Plan are listed in attached Schedule A.

N. PLAN shall mean the Corporation’s 2000 Employee Stock Purchase Plan, as set forth in this document.

O. PLAN ADMINISTRATOR shall mean the committee of two (2) or more Board members appointed by the Board to administer the Plan.

P. PURCHASE DATE shall mean the last business day of each Purchase Interval. The initial Purchase Date shall be October 31, 2000.

Q. PURCHASE INTERVAL shall mean each successive six (6)-month period within the offering period at the end of which there shall be purchased shares of Common Stock on behalf of each Participant.

R. STOCK EXCHANGE shall mean either the American Stock Exchange or the New York Stock Exchange.

S. UNDERWRITING AGREEMENT shall mean the agreement between the Corporation and the underwriter or underwriters managing the initial public offering of the Common Stock.

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