SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]

- --------------------------------------------------------------------------------

Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))

Concord Communications, Inc.
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement)

PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

1) Title of each class of securities to which transaction applies:

2) Aggregate number of securities to which transaction applies:

3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):

4) Proposed maximum aggregate value of transaction:

5) Total fee paid:

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

1) Amount Previously Paid:

2) Form, Schedule or Registration Statement No.:

3) Filing Party:

4) Date Filed:

- --------------------------------------------------------------------------------

CONCORD COMMUNICATIONS, INC.
600 NICKERSON ROAD
MARLBOROUGH, MASSACHUSETTS 01752

------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------------------

TO BE HELD ON APRIL 24, 2002

TO THE STOCKHOLDERS:

The Annual Meeting of Stockholders of Concord Communications, Inc., a
Massachusetts corporation (the "Corporation"), will be held on Wednesday April
24, 2002, at 8:00 A.M., at the offices of the Corporation, 600 Nickerson Road,
Marlborough, Massachusetts, 01752, to consider and act upon the following:

1. To elect one member to the Corporation's Board of Directors to
serve for a three-year term as a Class II Director or until his
successor is duly elected and qualified;

2. To approve the adoption of the Corporation's 2001 Non-Executive
Employee Stock Purchase Plan;

3. To approve an amendment to the Corporation's 1997 Non-Employee
Director Stock Option Plan, as amended, to increase the aggregate
number of shares of Common Stock that may be issued under the plan
by 200,000 shares;

4. To ratify the selection of the firm of Arthur Andersen LLP,
independent public accountants, as auditors for the fiscal year
ending December 31, 2002; and

5. To transact such other business as may properly come before the
meeting and any adjournments thereof.

Stockholders entitled to notice of and to vote at the meeting shall be
determined as of the close of business on February 25, 2002, the record date
fixed by the Board of Directors for such purpose. All stockholders are cordially
invited to attend the meeting in person. TO ENSURE YOUR REPRESENTATION AT THE
MEETING, HOWEVER, YOU ARE URGED TO MARK, SIGN, DATE, AND RETURN THE ENCLOSED
PROXY CARD AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE. You
may revoke your proxy in the manner described in the accompanying Proxy
Statement at any time before it has been voted at the Annual Meeting. Any
stockholder attending the Annual Meeting may vote in person even if he or she
has returned a proxy.

By Order of the Board of Directors,

DOUGLAS A. BATT, Clerk

Marlborough, Massachusetts
March 25, 2002

CONCORD COMMUNICATIONS, INC.
600 NICKERSON ROAD
MARLBOROUGH, MASSACHUSETTS 01752

------------------------------

PROXY STATEMENT
MARCH 25, 2002

Proxies in the form enclosed with this proxy statement are solicited by the
Board of Directors of Concord Communications, Inc. (the "Corporation") for use
at the Annual Meeting of Stockholders (the "Annual Meeting") to be held on April
24, 2002, at 8:00 A.M., at the offices of the Corporation, 600 Nickerson Road,
Marlborough, Massachusetts 01752.

Only stockholders of record as of the close of business on February 25,
2002, (the "Record Date") will be entitled to vote at the Annual Meeting and any
adjournments thereof. As of the Record Date, 16,959,504 shares (excluding
treasury shares) of Common Stock of the Corporation were issued and outstanding.
Each share outstanding as of the Record Date will be entitled to one vote, and
stockholders may vote in person or by proxy. A majority in interest of all
shares issued, outstanding, and entitled to vote at the Annual Meeting shall
constitute a quorum for the transaction of business, but a lesser number may
adjourn any meeting from time to time without further notice. Execution of a
proxy will not in any way affect a stockholder's right to attend the Annual
Meeting and vote in person. Any stockholder delivering a proxy has the right to
revoke it only by written notice to the Clerk delivered at any time before it is
exercised, including at the Annual Meeting.

The persons named as attorneys-in-fact in the proxies are officers of the
Corporation. All properly executed proxies returned in time to be cast at the
Annual Meeting will be voted. With respect to the election of the Class II
Director, any stockholder submitting a proxy has a right to withhold authority
to vote for any individual nominee by writing that nominee's name in the space
provided on the proxy. The proxies will be voted as stated below under "Election
of Directors." In addition to the election of Directors, the stockholders will
consider and vote upon proposals to: (1) approve the adoption of the
Corporation's 2001 Non-Executive Employee Stock Purchase Plan; (2) approve an
amendment to the Corporation's 1997 Non-Employee Director Stock Option Plan, as
amended, to increase the aggregate number of shares of Common Stock that may be
issued under the plan by 200,000 shares; and (3) ratify the selection of the
firm of Arthur Andersen LLP, independent public accountants, as auditors for the
fiscal year ending December 31, 2002. Where a choice has been specified on the
proxy with respect to the foregoing matters, the shares represented by the proxy
will be voted in accordance with the specification and will be voted FOR if no
specification is indicated. The proxies are authorized, in their discretion, to
vote upon such other business as may properly come before the Annual Meeting or
any adjournments thereof.

Votes withheld from any nominee, abstentions and broker "non-votes" are
counted as present or represented for purposes of determining the presence or
absence of a quorum for the meeting. A "non-vote" occurs when a nominee holding
shares for a beneficial owner votes on one proposal, but does not vote on
another proposal because the nominee does not have discretionary voting power
and has not received instructions from the beneficial owner. The Class II
Director will be elected by a plurality of the votes cast by stockholders
entitled to vote at the meeting. Stockholders do not have cumulative voting
rights with respect to the election of Directors. On all other matters being
submitted to stockholders, an affirmative vote of at least a majority of the
shares present, or represented, and entitled to vote at the meeting is required
for approval. An automated system administered by the Corporation's transfer
agent tabulates the votes. The vote on each matter submitted to stockholders is
tabulated separately. Abstentions are included in the number of shares present
or represented and voting on each separate matter. Broker "non-votes" are not so
included.

The Board of Directors knows of no other matter to be presented at the
Annual Meeting. If any other matter should be presented at the Annual Meeting
upon which a vote properly may be taken, shares represented by all proxies
received by the Board of Directors will be voted with respect thereto in
accordance with the judgment of the persons named as attorneys-in-fact in the
proxies.

This proxy statement and the accompanying proxy were first mailed to
stockholders on or about March 25, 2002. A copy of an Annual Report on Form 10-K
to Stockholders, containing financial statements for the fiscal year ended
December 31, 2001, also accompanied the proxy statement and proxy. The
Corporation will provide, without charge, to each person solicited by this proxy
statement, a copy of the Corporation's Annual Report on Form 10-K for the fiscal
year ended December 31, 2001, upon such person's written request to: Ms. Melissa
H. Cruz, Executive Vice President, Business Services and Chief Financial
Officer, Concord Communications, Inc., 600 Nickerson Road, Marlborough,
Massachusetts 01752.

ITEM 1

ELECTION OF DIRECTORS

The Corporation's Board of Directors is divided into three classes. Each
class serves three years, with the terms of office of the respective classes
expiring in successive years. The present term of office for the Class II
Director expires at the Annual Meeting. The Board of Directors has nominated and
recommended Frederick W.W. Bolander, who has been a member of the Board of
Directors since 1995, for re-election as a Class II Director. If re-elected, the
Class II nominee will hold office until the Annual Meeting of Stockholders to be
held in 2005, or until his successor shall have been elected and shall have been
qualified. Shares represented by all proxies received by the Board of Directors
and not so marked as to withhold authority to vote for any individual nominee
will be voted (unless the nominee is unable or unwilling to serve) for the
election of the Class II nominee. The Board of Directors knows of no reason why
any such nominee should be unable or unwilling to serve, but if such should be
the case, proxies will be voted for the election of some other person or the
Board of Directors will fix the number of Directors at a lesser number. As set
forth in the governing instruments of the Corporation, the Corporation is
currently authorized by its Board of Directors to elect up to seven directors.
At present, only five directors comprise the Board of Directors. In accordance
with its authority, the Board of Directors may add up to two directors upon
identification and qualification of suitable candidates. If the Board of
Directors determines that appointment of one or two additional directors is not
likely to occur within a reasonable period of time after the Annual Meeting, it
will take action to reduce the size of the Board of Directors as appropriate.
Accordingly, proxies voted in connection with the Annual Meeting cannot be voted
for a greater number of persons than the number of nominees named herein.

The following table sets forth the nominee to be elected at the Annual
Meeting and the other current Directors, the year each nominee or Director was
first appointed or elected a Director, the principal occupation of the nominee
and Directors during the past five years, and the ages of the nominee and each
of the Directors.

<Table>
<Caption>
PRINCIPAL OCCUPATION AND YEAR CURRENT
BUSINESS EXPERIENCE DURING TERM WILL EXPIRE
NOMINEE'S OR DIRECTOR'S NAME AND YEAR NOMINEE OR DIRECTOR FIRST PREVIOUS FIVE YEARS BY CLASS(1)
BECAME DIRECTOR ----------------------------------------------- ------------------------------- -------------------

John A. Blaeser......................................... President, Chief Executive 2003/III
1985 Officer and Director(2)

Frederick W.W. Bolander................................. Director(3) 2002/II
1995

Richard M. Burnes, Jr. ................................. Director(4) 2003/III
1995

Deepak Kamra............................................ Director(5) 2004/I
1993
Robert M. Wadsworth..................................... Director(6) 2004/I
1993
</Table>

- ---------------

(1) Effective immediately prior to the 2002 Annual Meeting of Stockholders.

(2) Mr. Blaeser, 60, has been President and Chief Executive Officer of the
Corporation since January 1996 and a Director of the Corporation since 1985.
Prior to joining the Corporation as President and Chief Executive Officer,
from 1991 until 1996, Mr. Blaeser was Managing General Partner of EG&G
Venture Management, a venture capital firm. Mr. Blaeser is also a director
of Network Engines, Inc.

(3) Mr. Bolander, 40, has been a Director of the Corporation since April 1995.
Since January 2000, Mr. Bolander has been a Managing Director of Gabriel
Venture Partners, a venture capital firm. From October 1994 to December
1998, Mr. Bolander was employed by Apex Investment Partners; where he acted
as a General Partner from April 1996 to December 1999 and as an Associate
from October 1994 to April 1996.

(4) Mr. Burnes, 61, has been a Director of the Corporation since December 1995.
Mr. Burnes has been a General Partner of Charles River Ventures, a venture
capital firm, since 1970. He is also a director of Speechworks
International, Inc.

(5) Mr. Kamra, 45, has been a Director of the Corporation since November 1993.
Mr. Kamra has been employed by Canaan Partners, a venture capital firm,
since March 1991, serving as a General Partner of the firm since March 1995.

(6) Mr. Wadsworth, 41, has been a Director of the Corporation since April 1993.
Mr. Wadsworth has been Vice President of Hancock Venture Partners, Inc.
since April 1990 and a Managing Director of HarbourVest Partners, LLC since
January 1997. Mr. Wadsworth is also a director of Trintech Group, PLC,
Network Engines, Inc., ePresence, Inc., and Switchboard, Inc.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" MR. BOLANDER AS A
CLASS II DIRECTOR.

BOARD OF DIRECTORS MEETINGS AND COMMITTEES

The Corporation has regular meetings of its Board of Directors and its
Audit and Compensation Committees. The Board of Directors of the Corporation met
four times and took action by unanimous written consent five times during the
fiscal year ended December 31, 2001. In addition to the members stated above,
Mr. John Robert Held and Mr. Robert Hawk served as Class I Directors of the
Corporation until their respective resignations immediately prior to the Annual
Meeting of Stockholders held on April 25, 2001. Both Mr. Held and Mr. Hawk
declined to be renominated as Class I Directors and their respective decisions
were not related to any disagreements with the Corporation or Board of Directors
with respect to the Corporation's operations, policies or practices. In
connection with the foregoing, the Board of Directors reclassified the Board of
Directors in conjunction with the resignations and nominated Messrs. Kamra and
Wadsworth as Class I Directors. Both Messrs. Kamra and Wadsworth were elected as
Class I Directors at the Annual Meeting of Stockholders held on April 25, 2001.

The Audit Committee, which oversees the accounting and financial functions
of the Corporation, including matters relating to the appointment and activities
of the Corporation's independent public auditors, met six times during the
fiscal year ended December 31, 2001. From January 1, 2001 to April 25, 2001, the
members of the Audit Committee consisted of Messrs. Burnes, Kamra and Held. In
conjunction with his resignation from the Board of Directors, Mr. Held resigned
as a member of the Audit Committee and, immediately following the 2001 Annual
Meeting of Stockholders, the Board of Directors elected Messrs. Burnes, Kamra
and Wadsworth to serve as members of the Audit Committee.

The Compensation Committee, which determines the compensation and benefits
of the Corporation's executive officers, met three times during the fiscal year
ended December 31, 2001. From January 1, 2001 to April 25, 2001, the members of
the Compensation Committee consisted of Messrs. Bolander, Burnes, Held and
Wadsworth. In conjunction with his resignation from the Board of Directors, Mr.
Held resigned as a member of the Compensation Committee and, immediately
following the 2001 Annual Meeting of Stockholders, the Board of Directors
elected Messrs. Bolander, Burnes, and Wadsworth to serve as members of the
Compensation Committee. All Directors, other than Messrs. Held and Hawk
(following their resignations from the Board on April 25, 2001), attended at
least 75% of the aggregate of the total number of meetings of the Board of
Directors and the total number of meetings of all committees of the Board on
which they served.

DIRECTOR COMPENSATION

DIRECTORS FEES

Commencing with the April 25, 2001 meeting, Directors who are not employees
of the Corporation (also referred to as "outside Directors"), who currently
consist of Messrs. Bolander, Burnes, Kamra and Wadsworth, received $1,000 for
each meeting of the Board of Directors in which they participated. Also,
beginning April 25, 2001, outside Directors of the Corporation were paid for
meetings of committees of the Board of Directors in which they participated as
follows: (1) $500 for each Audit Committee meeting and (2) $500 for each
Compensation Committee meeting. Directors are reimbursed for reasonable
out-of-pocket expenses incurred in attending such meetings. Outside Directors
are also eligible for participation in the Corporation's 1997 Non-Employee
Director Stock Option Plan, as amended, as discussed below.

1995 STOCK PLAN

Prior to the Corporation's initial public offering, the Corporation granted
non-qualified stock options to outside Directors under its 1995 Stock Plan (the
"1995 Plan"). Pursuant to the terms of the 1995 Plan, options granted under the
1995 Plan are exercisable within eight years of the original grant date and
generally vest over a period of four years from the date of grant. As of March
8, 2002, options to purchase 22,500 shares of Common Stock, at a weighted
average exercise price of $1.90 per share, were granted to existing outside
Directors of the Corporation under the 1995 Plan. Of that number, options to
purchase 19,687 shares of Common Stock have been exercised and no options to
purchase shares of Common Stock have been canceled. Each stock option agreement
governing options granted under the 1995 Plan provides for the acceleration of
vesting of the option by eighteen months upon the consummation of a "change in
control" of the Corporation. The Corporation's ability to make additional grants
or awards under the 1995 Plan was terminated upon the completion of the
Corporation's initial public offering in October 1997; however, the 1995 Plan
continues to govern all options, awards and other grants granted and outstanding
under the 1995 Plan.

1997 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

The 1997 Non-Employee Director Stock Option Plan, as amended (the
"Non-Employee Director Plan"), providing for the annual grant of stock options
to purchase shares of Common Stock to outside Directors, was adopted by the
Board of Directors in July 1997 and approved by the stockholders on September 9,
1997. As of December 31, 2001, a total of 130,000 shares of Common Stock were
reserved for issuance under the Non-Employee Director Plan.

As of March 8, 2002, options to purchase 97,500 shares of Common Stock, at
a weighted average exercise price of $29.08 per share, were outstanding to
outside Directors of the Corporation under the Non-Employee Director Plan. At
the Annual Meeting, approval is sought by the stockholders of a proposal to
increase the aggregate number of shares of Common Stock reserved for issuance
under the Non-Employee Director Plan by 200,000 shares to 330,000 shares. The
allocation of shares to outside Directors will be in accordance with the
Non-Employee Director Plan as currently adopted and as specified below. In this
regard, please note that on April 25, 2001, the Board of Directors adopted an
amendment to the Non-Employee Director Plan to increase the number of option
shares granted automatically to Directors immediately following the final
adjournment of each Annual Meeting of Stockholders from 5,000 shares to 7,500
shares. The proposal to increase the number of shares available for grant under
the Non-Employee Director Plan is explained in more detail under Item
3 -- Amendment to the Corporation's 1997 Non-Employee Director Stock Option
Plan, as amended. The Compensation Committee of the Board of Directors
administers the Non-Employee Director Plan. Under the Non-Employee Director
Plan, each new eligible Director will be granted an option to purchase 20,000
shares of Common Stock upon the Director's first appointment or election to the
Board of Directors and, as described above, each eligible Director will be
granted automatically an option to purchase 7,500 shares of Common Stock each
year following the final adjournment of the Corporation's Annual Meeting of
Stockholders.

each Director under the Non-Employee Director Plan will become exercisable over
a four-year period from the date of grant. Under their respective stock option
agreements, each Director's options will expire on the eighth anniversary of the
grant date. If an optionee ceases to be a Director of the Corporation, each
option which is not then exercisable will terminate, and any portion of his or
her options which are vested but not exercised may be exercised within sixty
days of the date such Director ceased to be a Director. In the event of a
merger, consolidation, or similar corporate transaction, the vesting of all
outstanding options under the Non-Employee Director Plan will be accelerated so
that all outstanding options are vested and exercisable in full prior to the
consummation of such transaction. If such options are not exercised prior to the
consummation of such transaction, and are not assumed or replaced by the
successor entity, such options will terminate.

SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of March 8, 2002, information relating to
the beneficial ownership of the Corporation's Common Stock by each Director,
each executive officer named in the Summary Compensation Table on page 8 and by
all Directors and executive officers as a group.

<Table>
<Caption>
AMOUNT AND NATURE PERCENT OF
NAME AND ADDRESS(1) OF OWNERSHIP (2)(3) CLASS
- ------------------- ------------------- ----------

John A. Blaeser............................................. 521,544 3.08%
Kevin J. Conklin............................................ 162,570 *
Melissa H. Cruz............................................. 50,623 *
Ferdinand Engel............................................. 231,007 1.36%
John F. Hamilton............................................ 51,714 *
Frederick W.W. Bolander..................................... 83,796 *
Richard M. Burnes, Jr....................................... 91,625 *
Deepak Kamra................................................ 25,125 *
Robert M. Wadsworth......................................... 40,725 *
All executive officers and directors as a group (10
people)................................................... 1,261,854(4)
</Table>

- ---------------

* less than 1%

(1) The address for each named person is c/o Concord Communications, Inc., 600
Nickerson Road, Marlborough, MA 01752.

(2) All named persons possess sole voting and sole dispositive power with
respect to the shares.

(3) Includes shares of Common Stock which have not been issued but which are
subject to options which either are presently exercisable or will become
exercisable within 60 days of March 8, 2002, as follows: Mr. Blaeser,
312,499 shares; Mr. Conklin, 149,570 shares; Ms. Cruz, 50,623 shares; Mr.
Engel, 170,812 shares; Mr. Hamilton, 51,673 shares; Ms. Ellen Kokos,
Executive Vice President of Marketing, 3,125 shares; Mr. Bolander, 13,125
shares; Mr. Burnes, 20,625 shares; Mr. Kamra, 15,938 shares; and Mr.
Wadsworth, 13,125 shares.

(4) The group is composed of the individuals named in the Summary Compensation
Table on page 7 below, and includes Ellen Kokos, Executive Vice President of
Marketing, and those persons who were directors of the Corporation on March
8, 2002. The total includes 801,115 shares of Common Stock that the
directors and executive officers as a group have the right to acquire,
either presently or within 60 days, by exercise of stock options granted
under the Corporation's stock plans.

Listed below are certain persons who, to the knowledge of the Corporation
on February 5, 2002, own beneficially more than five percent of the
Corporation's Common Stock outstanding at such date.

<Table>
<Caption>
AMOUNT AND NATURE PERCENT OF
NAME AND ADDRESS OF BENEFICIAL HOLDER OF OWNERSHIP CLASS
- ------------------------------------------------------------ -------------------- ----------

T. Rowe Price Associates, Inc. ............................. 1,069,000(1) 6.3%
100 E. Pratt Street
Baltimore, MD 21202

Firsthand Capital Management, Inc,.......................... 1,435,530(2) 8.6%
Silicon Capital Management, LLC,
Firsthand Funds, and Kevin M. Landis
125 South Market
San Jose, CA 95113

Brown Capital Management, Inc. ............................. 3,354,900(3) 20.06%
1201 N. Calvert Street
Baltimore, MD 21202
</Table>

- ---------------

(1) According to a Schedule 13G filed as of February 5, 2002, T. Rowe Price
Associates, Inc. has sole voting power of 191,800 shares of the
Corporation's Common Stock and sole power to dispose of 1,069,000 shares of
the Corporation's Common Stock. The securities are owned by various
individual and institutional investors, which T. Rowe Price Associates, Inc.
serves as investment adviser with power to direct investments and/or sole
power to vote the securities. For purposes of the reporting requirements of
the Securities Exchange Act of 1934, T. Rowe Price Associates, Inc. is
deemed to be a beneficial owner of such securities; however, Price
Associates expressly disclaims that it is, in fact, the beneficial owner of
such securities.

(2) According to a Schedule 13G jointly filed on January 28, 2002 by Firsthand
Capital Management, Inc., Silicon Capital Management, LLC, Firsthand Funds,
and Kevin M. Landis (collectively the "Joint Filers"), the Joint Filers have
sole voting power and sole power to dispose of 1,435,530 shares of the
Corporation's Common Stock. Kevin M. Landis is listed as a "control person"
within Schedule 13G. Kevin M. Landis disclaims beneficial ownership as to
all shares of the Corporation's Common Stock beneficially owned for purposes
of Schedule 13G by Firsthand Capital Management, Inc. and Silicon Capital
Management, LLC, and Firsthand Funds. Firsthand Funds disclaims beneficial
ownership of all shares of the Corporation's Common Stock beneficially owned
for purposes of Schedule 13G by Silicon Capital Management.

(3) According to a Schedule 13G filed on February 5, 2002 by Brown Capital
Management, Inc., Brown Capital Management, Inc. has sole voting power of
2,682,700 shares of the Corporation's Common Stock and sole power to dispose
of 3,354,900 shares of the Corporation's Common Stock.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Based on a review of the forms and written representations received by the
Corporation pursuant to Section 16(a) of the Securities Exchange Act of 1934,
the Corporation believes that, with respect to the fiscal year ended December
31, 2001, the directors and executive officers, other than Mr. John F. Hamilton
and Ms. Melissa H. Cruz, complied with all applicable Section 16 filing
requirements on a timely basis. Mr. Hamilton failed to file a Statement of
Changes in Beneficial Ownership of Securities on Form 4 during August 2001 for
one transaction and subsequently filed a late Form 4 for that transaction. In
May 2001, Ms. Cruz acquired 2,023 shares of the Corporation's Common Stock
pursuant to the Corporation's 1997 Employee Stock Purchase Plan, a transaction
that was exempt from Rule 16b-3, but failed to report, in subsequent Section 16
reports that were timely filed, the effect that such transaction had on the
number of securities beneficially owned by her at the end of the month. On
February 15, 2002, Ms. Cruz amended her Form 5 originally filed on February 1,
2002 to include such shares.

EXECUTIVE COMPENSATION

The following Summary Compensation Table sets forth the compensation
received by the Chief Executive Officer and the four other most highly
compensated executive officers of the Corporation for the three fiscal years
most currently ended (the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

<Table>
<Caption>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS(3)
--------------------------- SECURITIES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) OPTIONS(3) COMPENSATION
- --------------------------- ---- --------- -------- ---------------------- ------------

John A. Blaeser................ 2001 $330,012 $ 20,625 155,000 --
Chief Executive Officer 2000 300,011 128,250 100,000 --
And President 1999 270,000 162,000 245,000 --

Kevin J. Conklin............... 2001 215,008 -- 45,000 --
Executive Vice President, 2000 190,632 55,575 55,000 --
Business Development 1999 155,000 93,000 78,000 --

Melissa H. Cruz(4)............. 2001 200,007 -- 55,000 --
Chief Financial Officer, 2000 146,881 45,600 90,000 --
Executive Vice President, 1999 -- -- -- --
Business Services and
Treasurer

Ferdinand Engel................ 2001 265,010 -- 65,000 --
Executive Vice President, 2000 232,092 66,975 65,000 --
Engineering and Chief 1999 205,000 123,000 149,000 --
Technology Officer

John F. Hamilton(5)............ 2001 190,008 97,428 40,000 --
Executive Vice President of 2000 183,456 120,226 55,000 --
Worldwide Sales and 1999 -- -- -- --
Technical Services
</Table>

- ---------------

(1) The amounts in the "Salary" column represent the annual base salary for each
of the Named Executive Officers, which is paid semi-monthly.

(2) The amounts in the "Bonus" column represent bonuses earned in the year
during which services were rendered.

(3) The Corporation did not make any restricted stock awards, grant any stock
appreciation rights or make any long-term incentive payouts during fiscal
2001 to its executive officers.

(4) Ms. Cruz has been employed by the Corporation since August 29, 1997 and was
appointed to her current position in April 2000.

(5) Mr. Hamilton has been employed by the Corporation since July 28, 1997 and
was appointed to his current position in November 2000.

The following table provides information with respect to stock option
grants by the Corporation to the Named Executive Officers in 2001. The
Corporation did not grant any stock appreciation rights in 2001.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

<Table>
<Caption>
POTENTIAL REALIZED VALUE AT
NUMBER OF PERCENTAGE OF ASSUMED ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION OVER THE
UNDERLYING GRANTED TO EXERCISE OPTION TERM(2)
OPTIONS EMPLOYEES IN PRICE EXPIRATION -----------------------------
NAME GRANTED(1) FISCAL YEAR ($/SHARE) DATE 5% 10%
- ---- ---------- ------------- --------- ---------- ------------ --------------

John A. Blaeser...... 10,706 0.85% $ 9.34 7/18/2009 $ 47,742.70 $ 114,352.07
69,294 5.48% $ 9.34 7/18/2009 $309,012.01 $ 740,137.49
75,000 5.93% $13.05 11/14/2009 $467,309.52 $1,119,287.55
------- ----- ----------- -------------
Total.............. 155,000 12.26% $824,064.23 $1,973,777.11
Kevin J. Conklin..... 4,688 0.37% $ 9.34 7/18/2009 $ 20,905.83 $ 50,073.09
20,312 1.61% $ 9.34 7/18/2009 $ 90,580.02 $ 216,954.90
4,307 0.34% $13.05 11/14/2009 $ 26,836.03 $ 64,276.95
15,693 1.24% $13.05 11/14/2009 $ 97,779.84 $ 234,199.73
------- ----- ----------- -------------
Total.............. 45,000 3.56% $236,101.72 $ 565,504.67
Melissa H. Cruz...... 5,625 0.45% $ 9.34 7/18/2009 $ 25,084.32 $ 60,081.30
24,375 1.93% $ 9.34 7/18/2009 $108,698.70 $ 260,352.29
3,636 0.29% $13.05 11/14/2009 $ 22,655.17 $ 54,363.06
21,364 1.69% $13.05 11/14/2009 $133,114.67 $ 318,832.79
------- ----- ----------- -------------
Total.............. 55,000 4.36% $289,552.85 $ 693,529.44
Ferdinand Engel...... 32,500 2.57% $ 9.34 7/18/2009 $144,931.60 $ 347,136.38
7,500 .59% $ 9.34 7/18/2009 $ 33,445.75 $ 80,108.40
22,705 1.80% $13.05 11/14/2009 $141,470.17 $ 338,845.65
2,295 .18% $13.05 11/14/2009 $ 14,299.67 $ 34,250.20
------- ----- ----------- -------------
Total.............. 65,000 5.14% $334,147.19 $ 800,340.63
John F. Hamilton..... 7,296 0.58% $ 9.34 7/18/2009 $ 32,536.03 $ 77,929.45
12,704 1.01% $ 9.34 7/18/2009 $ 56,652.65 $ 135,692.94
4,978 0.39% $13.05 11/14/2009 $ 31,016.89 $ 74,290.85
15,022 1.19% $13.05 11/14/2009 $ 93,598.98 $ 224,185.83
------- ----- ----------- -------------
Total.............. 40,000 3.17% $213,804.55 $ 512,099.07
</Table>

- ---------------

(1) Stock options were granted under the Corporation's 1997 Stock Plan at an
exercise price equal to the fair market value of the Corporation's Common
Stock on the date of grant. Under their respective stock option agreements,
each executive officer's options will expire on the eighth anniversary from
the date of grant. The options generally become exercisable as follows: 25%
on the first anniversary of the date of grant and quarterly for the
remaining three years.

(2) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
term assuming the specified compounded rates of appreciation (5% and 10%) of
the Corporation's Common Stock over the term of the options. These numbers
are calculated based on rules promulgated by the Securities and Exchange
Commission and do not reflect the Corporation's estimate of future stock
price increases. Actual gains, if any, on stock option exercises and Common
Stock holdings are dependent on the timing of such exercise and the future
performance of the Corporation's Common Stock. There can be no assurance
that the rates of appreciation assumed in this table can be achieved or that
the amounts reflected will be received by the individuals.

The following table provides information on stock option exercises in 2001
by the Named Executive Officers and the value of such officers' unexercised
options at December 31, 2001.

AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES

<Table>
<Caption>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES ACQUIRED OPTIONS HELD AT IN-THE-MONEY OPTIONS AT
UPON OPTION DECEMBER 31, 2001 DECEMBER 31, 2001(1)
EXERCISE DURING VALUE --------------------------- ---------------------------
NAME 2001 REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- ---------- ----------- ------------- ----------- -------------

John A. Blaeser...... -- -- 275,312 330,313 $529,206 $2,521,950
Kevin J. Conklin..... 5,000 $67,000.00 139,383 116,001 $750,056 $ 748,895
Melissa H. Cruz...... 3,750 $25,125.00 41,280 121,720 $111,877 $ 844,770
Ferdinand Engel...... -- -- 147,688 168,813 $217,122 $1,061,260
John F. Hamilton..... 5,313 $71,775.31 45,181 92,775 $270,739 $ 798,802
</Table>

- ---------------

(1) Value is based on the difference between the option exercise price and the
fair market value at December 31, 2001, the fiscal year end ($20.650 per
share as quoted on the Nasdaq National Market on December 31, 2001, the last
day of trading in 2001), multiplied by the number of shares underlying the
option.

COMPENSATION COMMITTEE REPORT

PURPOSE OF THE COMPENSATION COMMITTEE

The Compensation Committee of the Corporation's Board of Directors (the
"Committee") has the exclusive authority to establish the level of base salary
payable to the Chief Executive Officer and other executive officers of the
Corporation and to administer the Corporation's stock option plans, including
the 1997 Stock Plan, the 1997 Non-Employee Director Stock Option Plan, the 1997
Employee Stock Purchase Plan, the 2000 Non-Executive Employee Equity Incentive
Plan and the 2001 Non-Executive Employee Stock Purchase Plan. In addition, the
Committee has the responsibility for approving the individual variable
compensation cash bonus programs to be in effect for the Chief Executive Officer
and other executive officers. The Committee is composed of Messrs. Bolander,
Burnes, and Wadsworth, all of whom are outside Directors who have never served
as officers of the Corporation.

GENERAL COMPENSATION POLICY

The Committee believes that the compensation programs for executive
officers of the Corporation should be designed to attract, motivate, and retain
talented executives responsible for the success of the Corporation and should be
determined within a competitive framework and based on the achievement of
overall financial results and individual contributions. The Committee's
objectives are to:

(1) offer a compensation package that is competitive with comparable
talent at comparable high-growth software companies;

(2) provide annual variable incentive awards in the form of cash
bonuses that take into account the Corporation's overall financial
performance relative to corporate objectives; and

(3) align the financial interests of executive officers with those of
the stockholders by providing significant equity-based, long-term incentive
awards.

Currently, compensation under the executive compensation program is
comprised of cash compensation in the form of annual base salary and bonus, and
long-term incentive compensation in the form of stock options.

COMPENSATION COMPONENTS AND PROCESS

BASE SALARY

The Committee reviews annually the cash compensation of its executive
officers. The base salary for each executive officer is set on the basis of the
responsibilities of the position held, the experience and performance of the
individual, and a review of comparable positions based on surveys of the
industry.

VARIABLE INCENTIVE AWARDS -- CASH BONUSES

The Corporation's Bonus Plan is designed to reward executive officers for
the achievement by the Corporation of its performance objectives. The cash bonus
to be paid to each executive officer is calculated as a percentage of his or her
base salary. A specific formula, based on the revenues and net income of the
Corporation, is in place to calculate the actual incentive payment for each
officer. A compensation target is set for each executive officer based on
compensation targets of comparable positions. In 2001, the Committee did not
award cash bonuses to any of the Corporation's executive officers other than Mr.
Blaeser, who received a cash bonus of $20,625, and Mr. Hamilton, who received a
bonus of $97,428. Mr. Blaeser was awarded a cash bonus based upon his
performance as President and Chief Executive Officer of the Corporation. Mr.
Hamilton was awarded a cash bonus as part of his regular compensation plan
provided to him in his capacity as Executive Vice President, Worldwide Sales and
Technical Services.

LONG TERM STOCK-BASED INCENTIVE AWARDS

During 2001, the Committee made option grants under the 1997 Stock Plan to
each of the executive officers. Each grant allows the officer to acquire shares
of the Corporation's Common Stock at a fixed price per share (the market price
on the grant date) over a specified period of time. Each option vests in
periodic installments over a four-year period, as specified in the option
agreements applicable to each executive. These option grants were made to each
of the executive officers in July 2001 and November 2001 at an exercise price
equal to the closing price of shares of the Corporation's Common Stock as
reported on the NASDAQ National Market on July 18, 2001 and November 14, 2001
respectively.

Generally, stock options are granted when an executive joins the
Corporation. Additional options are granted on the basis of the individual's
performance, potential for future responsibility and the number of unvested
options held by the individual at the time of the new grant. The grants are
designed to align the interests of executive officers with stockholders and to
provide each executive officer with a significant incentive to manage the
Corporation effectively.

In April 2000, the Committee granted additional stock options to existing
executive officers in order to retain and motivate these executive officers. In
November 2000, the Committee became aware that the options the Corporation
awarded to certain executive officers and key employees in both April 2000 and
August 1999 had exercise prices that were significantly above the November
market prices. The Committee was concerned that the option awards would not have
their intended effect of retaining and motivating key employees and executive
officers in their performance for the Corporation, particularly since the
Corporation is faced with a fiercely competitive market for the services of key
personnel. The Committee decided that rather than wait until January 2001, the
Corporation's usual time for executive officer and key employee retention and
incentive option awards, the Corporation would benefit from making an immediate
grant of stock option awards. Accordingly, in lieu of a January 2001 grant, the
Corporation awarded stock options to key employees and executive officers in
November 2000.

CHIEF EXECUTIVE OFFICER COMPENSATION

The 2001 compensation package for the Corporation's Chief Executive
Officer, Mr. Blaeser, was determined by the Committee and included: base salary,
cash bonus (based upon achieving performance targets), stock options, and other
employee benefits that are available to all employees of the Corporation. Mr.
Blaeser's compensation plan is composed of the same components as the
compensation plans for all other executive officers. In 2001, Mr. Blaeser
received a cash bonus of $20,625, which was substantially reduced

from his cash bonus in 2000; the cash bonus for 2001 was reduced based upon the
Corporation's partial achievement of its performance targets. Each year, the
Committee reviews the annual incentive plan and revises its targets for revenue
growth and profitability. The option grants made to Mr. Blaeser during the 2001
fiscal year were based upon his individual performance and leadership within the
Corporation. Furthermore, Mr. Blaeser's option grants represent a substantial
portion of his total compensation and were designed to tie his compensation to
the appreciation in the value of the Corporation's Common Stock over the option
term.

COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)

In general, under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), the Corporation cannot deduct, for federal income tax
purposes, compensation in excess of $1,000,000 paid to certain executive
officers. This deduction limitation does not apply, however, to compensation
that constitutes "qualified performance-based compensation" within the meaning
of Section 162(m) of the Code and the regulations promulgated thereunder. The
Committee has considered the limitations on deductions imposed by Section 162(m)
of the Code, and it is the Committee's present intention that, for so long as it
is consistent with its overall compensation objective, substantially all tax
deductions attributable to executive compensation will not be subject to the
deduction limitations of Section 162(m) of the Code.

OTHER ELEMENTS OF EXECUTIVE COMPENSATION

Executive officers are eligible for Corporation-wide medical and dental
benefits and participation in a 401(k) plan under which the Corporation provided
matching contributions in 2001 to all employees, including executive officers.
In addition, executives participate in a Corporation-wide long-term disability
insurance program and a group term life insurance program.

COMPENSATION COMMITTEE

Robert M. Wadsworth (Chair)
Frederick W.W. Bolander
Richard M. Burnes, Jr.

COMPENSATION COMMITTEE INTERLOCK AND INSIDER PARTICIPATION

Messrs. Bolander, Burnes, and Wadsworth comprised the Compensation
Committee for fiscal year ended December 31, 2001 with Mr. John Robert Held
acting as a member of the Compensation Committee until April 25, 2001, as noted
above. No member of the Committee was at any time during the past year an
officer or employee of the Corporation or any of its subsidiaries, was formerly
an officer of the Corporation or any of its subsidiaries, or had any
relationship with the Corporation requiring disclosure herein.

During the fiscal year ended December 31, 2001, no executive officer of the
Corporation served as a member of the Compensation Committee (or other Board
committee performing equivalent functions, or in the absence of any such
committee, the entire Board) of another entity, one of whose executive officers
served as a member of the Corporation's Compensation Committee or as a Director
of the Corporation. In addition, during the last fiscal year, no executive
officer of the Corporation served as a member of the compensation committee of
another entity.

EMPLOYMENT AGREEMENTS

As of December 31, 2001, the Corporation has entered into a Management
Change in Control Agreement (the "Management Agreements") with each of John A.
Blaeser, Kevin J. Conklin, Ferdinand Engel, Melissa H. Cruz, John F. Hamilton,
and Ellen R. Kokos. Pursuant to the terms of the Management Agreements, each of
the foregoing executive officers (other than Mr. Blaeser) is entitled to receive
a single severance payment in cash in an amount equal to six months' base annual
salary (and equal to twelve months' base annual salary in the case of Mr.
Blaeser) if any such executive officer is terminated by the Corporation without
cause or such executive officer voluntarily terminates his employment with the
Corporation for "good reason" (each a "Termination Event"), in each case within
six months of a change in control of the Corporation. In addition, effective
upon a change in control of the Corporation, the vesting date for each such
executive officer's unvested options shall be accelerated by a period of 24
months. If within 24 months of a change in control of the Corporation there is a
Termination Event, all of such executive officer's remaining unvested options
will become fully vested. Each such executive officer has entered into a
non-competition agreement with the Corporation pursuant to which each such
executive officer has agreed following a change in control of the Corporation
not to compete with the Corporation for a period of six months if such executive
officer has been terminated with or without cause by the Corporation or has
voluntarily terminated his employment for "good reason."

In addition, certain of John A. Blaeser's option agreements provide for
automatic acceleration of all of his unvested options following a merger,
consolidation, or a sale, conveyance or disposition of all or substantially all,
of the assets of the Corporation or if he is no longer a director of the
Corporation, other than by reason of death, disability, or resignation.

PERFORMANCE GRAPH(1)

The following graph compares the change in the Corporation's cumulative
total stockholder return in its Common Stock during the period from the
Corporation's initial public offering through December 31, 2001 with the
cumulative total return on the Nasdaq Stock Market -- U.S. Index and the H&Q
Software Sector Index. The comparison assumes $100.00 was invested on October
15, 1997 in the Corporation's Common Stock at the $14.00 initial public offering
price and in each of the foregoing indices and assumes reinvestment of
dividends, if any.

Performance Graph

<Table>
<Caption>
- --------------------------------------------------------------------------------------
10/15/97 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
- --------------------------------------------------------------------------------------

Corporation 100.00 148.21 405.36 316.96 62.50 147.50
H&Q Index 100.00 94.99 124.10 262.95 211.10 138.11
NASDAQ Index 100.00 91.37 128.75 232.61 144.04 111.18
</Table>

- ---------------

(1) This graph is not "soliciting material" under Regulation 14A or 14C of the
rules promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), is not deemed filed with the Securities and Exchange
Commission and is not to be incorporated by reference in any filing of the
Corporation under the Securities Act of 1933, as amended, or the Exchange
Act whether made before or after the date hereof and irrespective of any
general incorporation language in any such filing.

AUDIT COMMITTEE REPORT

The Board of Directors of the Corporation has appointed an Audit Committee
to assist the Board of Directors with its oversight responsibilities, including,
among other things:

- reviewing and maintaining the adequacy of the Corporation's internal
processes and controls in regards to its financial reporting and the
overall accuracy and reliability of the Corporation's financial reports
to the public;

- ascertaining the independence of, and overseeing the performance of, the
Corporation's external independent auditors; and

- providing guidance on the Corporation's compliance with legal and
regulatory requirements related to its financial reporting.

The Audit Committee is currently composed of three members of the Board of
Directors, Messrs. Burnes, Kamra and Wadsworth, each of whom, as evaluated by
the Board of Directors in its business judgment, (a) has met the independence
requirements of the Nasdaq (i.e., the Board of Directors has determined that
none of the committee members has a relationship to the Corporation that may
interfere with his independence from the Corporation and its management) and (b)
is financially literate. As noted earlier, Mr. Held was a member of the Audit
Committee until April 25, 2001.

The Audit Committee regularly discusses with management and the outside
auditors the financial information of the Corporation and the Corporation's
systems of internal controls and its audit process. The Audit Committee
recommends to the Board of Directors each fiscal year the appointment of the
independent auditors and reviews the performance of the auditors and their
independence from the management of the Corporation. The Audit Committee met
with the independent auditors (both independently and with the Corporation's
management) to review the issues required to be addressed by the Statement of
Accounting Standards 61 (Codification of Statements on Auditing Standards),
including various issues relevant to the audit, including: (1) the Corporation's
financial statements; (2) the report of the independent auditors on the results,
scope and terms of their work; and (3) the recommendations of the independent
auditors regarding the financial practices and policies employed by the
Corporation.

The Board of Directors has adopted a written charter for the Audit
Committee establishing the audit related functions required of the committee. A
copy of the charter was attached to the Corporation's 2001 proxy statement. As
part of its obligations, the Audit Committee reviewed the Corporation's audited
financial statements and met with both management and Arthur Andersen LLP, the
Corporation's independent auditors, to review and discuss the Corporation's
financial statements. Management has represented to the Audit Committee that the
financial statements were prepared in accordance with generally accepted
accounting principles. The Audit Committee has received from and discussed with
Arthur Andersen LLP the written disclosure, the letter required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees)
and the independence of Arthur Andersen LLP.

Based on these reviews and discussions, the Audit Committee recommended to
the Board of Directors that the Corporation's audited financial statements be
included in its Annual Report on Form 10-K for the fiscal year ended December
31, 2001.

Audit Fees

The aggregate fees billed by Arthur Andersen LLP for professional services
rendered for the audit of the Corporation's annual financial statements for the
fiscal year ended December 31, 2001 and for the review of the financial
statements included in the Corporation's Forms 10-Q for the fiscal year ended
December 31, 2001 were $95,250.

Financial Information Systems Design and Implementation Fees

The aggregate fees billed by Arthur Andersen LLP for financial information
systems design and implementation professional services for the fiscal year
ended December 31, 2001 were $0.
14

All Other Fees

The aggregate fees billed by Arthur Andersen LLP and KPMG, LLP for services
other than those described above including, without limitation, pooling reports,
pooling restatements, tax returns, and tax consulting, for the fiscal year ended
December 31, 2001 were $115,871. The Audit Committee determined that the
services provided by Arthur Andersen LLP described immediately above were
compatible with its independence.

The Corporation's Audit Committee has determined that the provision of the
services provided by Arthur Andersen LLP and KPMG, LLP as set forth herein are
compatible with maintaining the independence of Arthur Andersen LLP and KPMG,
LLP.

AUDIT COMMITTEE

Deepak Kamra (Chair)
Richard M. Burnes, Jr.
Robert M. Wadsworth

ITEM 2

PROPOSAL TO APPROVE THE 2001 NON-EXECUTIVE EMPLOYEE STOCK PURCHASE PLAN

The Corporation's stockholders are being asked to approve the Corporation's
2001 Non-Executive Employee Stock Purchase Plan (the "Non-Executive Purchase
Plan"). On October 29, 2001, the Board of Directors, acting by unanimous written
consent, adopted the Non-Executive Purchase Plan subject to approval by the
stockholders. The Corporation filed a Form S-8 with the Securities and Exchange
Commission on October 31, 2001 in regards to the Non-Executive Purchase Plan.
The Non-Executive Purchase Plan has reserved for issuance to eligible employees
500,000 shares of authorized, but unissued Common Stock of the Corporation. At
present, the Corporation employs approximately 465 employees who would be
eligible to participate in the Non-Executive Purchase Plan. Executive officers
and Directors of the Corporation are not eligible to participate in the
Non-Executive Purchase Plan. The Corporation expects that the 500,000 shares of
Common Stock under the Non-Executive Purchase Plan will satisfy any allocations
of shares to employees for a period of between three and four years. The Board
of Directors has approved and recommends to the stockholders that they approve
the Non-Executive Purchase Plan.

The Corporation relies on stock purchases as an essential component of the
compensation packages necessary for the Corporation to attract and retain
experienced employees. The Board of Directors believes that the Non-Executive
Purchase Plan is essential to permit the Corporation to provide long-term,
equity-based incentives to present and future employees.

DESCRIPTION OF THE NON-EXECUTIVE PURCHASE PLAN

The Non-Executive Purchase Plan is intended to provide an incentive to, and
to encourage stock ownership by, all eligible employees of the Corporation so
that they may share in the growth of the Corporation by acquiring or increasing
their equity interest in the Corporation. The Non-Executive Purchase Plan is
designed to encourage eligible employees to remain in the employ of the
Corporation and its participating subsidiaries. Under the Non-Executive Purchase
Plan, payroll deductions are used to purchase the Corporation's Common Stock for
eligible participating employees through the exercise of stock options. The text
of the Non-Executive Purchase Plan, as proposed above, is attached to this proxy
statement as Appendix A. The following is a summary of the Non-Executive
Purchase Plan and should be read together with the full Non-Executive Purchase
Plan text.

The Non-Executive Purchase Plan constitutes an "employee stock purchase
plan" within the meaning of Section 423(b) of the Internal Revenue Code of 1986,
as amended (the "Code").

The Non-Executive Purchase Plan is administered by the Board of Directors
of the Corporation or a committee which the Board may designate. The Board of
Directors, subject to the provisions of the Non-Executive Purchase Plan, has the
power to construe the Non-Executive Purchase Plan, to determine all questions
thereunder, and to adopt and amend such rules and regulations for administration
of the Non-Executive Purchase Plan as it may deem appropriate. The Board of
Directors may from time to time adopt amendments to the Non-Executive Purchase
Plan provided that, without the approval of the Corporation's stockholders, no
amendment may increase the number of shares that may be issued under the
Non-Executive Purchase Plan, change the class of employees eligible to receive
options under the Non-Executive Purchase Plan if such action would be treated as
the adoption of a new plan for purposes of Section 423(b) of the Code, or cause
Rule 16b-3 under the Securities Exchange Act of 1934 to be inapplicable to the
Non-Executive Purchase Plan.

The Non-Executive Purchase Plan may be terminated at any time by the Board
of Directors, provided that such termination will not affect options then
outstanding under the Non-Executive Purchase Plan. If at any time shares of
Common Stock reserved for issuance under the Non-Executive Purchase Plan remain
available for purchase, but not in sufficient number to satisfy all the
then-unfilled purchase requirements, the available shares will be apportioned
among participants in proportion to the amount of payroll deductions accumulated
on behalf of each participant that would otherwise be used to purchase stock,
and the Non-Executive Purchase Plan will terminate. Upon termination of the
Non-Executive Purchase Plan, all payroll

deductions not used to purchase Common Stock will be refunded to Non-Executive
Purchase Plan participants without interest.

The Non-Executive Purchase Plan authorizes the issuance of up to 500,000
shares of Common Stock (subject to adjustment for changes in the Corporation's
capital stock) pursuant to the exercise of non-transferable options granted to
participating employees. The Common Stock subject to the options under the
Non-Executive Purchase Plan includes shares of the Corporation's authorized but
unissued Common Stock. Option holders are generally protected against dilution
in the event of certain capital changes such as a recapitalization, stock split,
merger, consolidation, reorganization, combination, liquidation, stock dividend
or similar transaction.

An employee electing to participate in the Non-Executive Purchase Plan must
authorize an amount (a whole percentage not less than 1% nor more than 10% of
the employee's cash compensation, including base pay or salary and any overtime,
bonuses or commissions) to be deducted by the Corporation from the employee's
pay and applied toward the purchase of Common Stock under the Non-Executive
Purchase Plan. For the duration of the Non-Executive Purchase Plan, the Payment
Periods are defined as the six month periods commencing on May 1 and November 1
and ending on October 31 and April 30, respectively. The first Payment Period of
the Non-Executive Purchase Plan commenced on November 1, 2001.

Employees of the Corporation (and participating subsidiaries) whose
customary employment is more than 20 hours per week and for more than five
months in any calendar year are eligible to participate in the Non-Executive
Purchase Plan. An employee may not be granted an option under the Non-Executive
Purchase Plan if, after the granting of the option, such employee would be
treated as owning 5% or more of the total combined voting power or value of all
classes of stock of the Corporation or its subsidiaries. Executive Officers and
Directors of the Corporation who are "highly compensated employees" under the
applicable provisions of the Internal Revenue Code of 1986, as amended, are not
eligible to participate in the Non-Executive Purchase Plan.

On the first business day of each Payment Period, the Corporation will
grant to each Non-Executive Purchase Plan participant an option to purchase
shares of the Common Stock of the Corporation. On the last day of the Payment
Period, the employee will be deemed to have exercised this option, at the option
price, to the extent of such employee's accumulated payroll deductions, on the
condition that the employee remains eligible to participate in the Non-Executive
Purchase Plan throughout such Payment Period. In no event, however, may the
employee exercise an option granted under the Non-Executive Purchase Plan for
more than 20,000 shares during a Payment Period. If the amount of the
accumulated payroll deductions exceeds the aggregate purchase price of 20,000
shares, the excess deductions will be promptly refunded to the employee without
interest. Furthermore, no employee may be granted an option which permits the
employee's right to purchase shares of Common Stock under the Non-Executive
Purchase Plan and all other Section 423(b) plans of the Corporation and any
subsidiary corporations, to accrue at a rate which exceeds $25,000 of fair
market value of such stock (determined on the respective date(s) of grant) for
each calendar year in which the option is outstanding. Any excess accumulation
of payroll deductions will be promptly refunded to the employee without
interest. Under the terms of the Non-Executive Purchase Plan, the option price
is an amount equal to the lesser of (i) 85% of the average market price of the
Common Stock on the first business day of the Payment Period and (ii) 85% of the
average market price of the Common Stock on the last business day of the Payment
Period, in either event rounded up to the nearest cent. The Corporation will
accumulate and hold for the employee's account the amounts deducted from his or
her pay. No interest will be paid on these amounts.

For purposes of the Non-Executive Purchase Plan, the term "average market
price" on any date means (i) the average (on that date) of the high and low
prices of the Common Stock on the principal national securities exchange on
which the Common Stock is traded, if the Common Stock is then traded on a
national securities exchange; or (ii) the last reported sale price (on that
date) of the Common Stock on the NASDAQ National Market, if the Common Stock is
not then traded on a national securities exchange; or (iii) the average of the
closing bid and asked prices last quoted (on that date) by an established
quotation service for over-the-counter securities, if the Common Stock is not
reported on the NASDAQ National Market; or

(iv) if the Common Stock is not publicly traded, the fair market value of the
Common Stock as determined by the Board after taking into consideration all
factors which it deems appropriate, including, without limitation, recent sale
and offer prices of the Common Stock in private transactions negotiated at arm's
length. An employee may enter the Non-Executive Purchase Plan by delivering to
the Corporation, at least ten days before the first day of the next succeeding
Payment Period, an authorization stating the initial percentage to be deducted
from the employee's pay and authorizing the purchase of shares of Common Stock
for the employee in each Payment Period in accordance with the terms of the
Non-Executive Purchase Plan.

Unless an employee files a new authorization or withdraws from the
Non-Executive Purchase Plan, the deductions and purchases under the
authorization the employee has on file under the Non-Executive Purchase Plan
will continue from the initial Payment Period to succeeding Payment Periods as
long as the Non-Executive Purchase Plan is in effect. Deductions may be
increased or decreased during a Payment Period as set forth above.

An employee may withdraw from the Non-Executive Purchase Plan, in whole but
not in part, at any time prior to the last business day of each Payment Period
by delivering a withdrawal notice to the Corporation, in which event the
Corporation will refund the entire balance of the employee's deductions not
previously used to purchase stock under the Non-Executive Purchase Plan.

If an employee is not a participant in the Non-Executive Purchase Plan on
the last day of the Payment Period, the employee generally is not entitled to
exercise his or her option. An employee's rights under the Non-Executive
Purchase Plan generally terminate upon his voluntary withdrawal from the
Non-Executive Purchase Plan at any time, or when he ceases employment because of
retirement, voluntary or involuntary termination, resignation, layoff,
discharge, death, or for any other reason. An employee's employment shall be
treated as continuing intact which such employee is on military leave, sick
leave or other bona fide leave of absence, for up to 90 days or for so long as
the employee's right to re-employment is guaranteed either by statute or by
contract, if longer than 90 days.

An employee's rights under the Non-Executive Purchase Plan are the
employee's alone and may not be transferred to, assigned to, or availed of by,
any other person. Any option granted to an employee may be exercised, during the
employee's lifetime, only by the employee.

The proceeds received by the Corporation from the sale of Common Stock
pursuant to the Non-Executive Purchase Plan will be used for general corporate
purposes. The Corporation's obligation to deliver shares of Common Stock is
subject to the approval of any governmental authority required in connection
with the sale or issuance of such shares.

INCOME TAX CONSEQUENCES

The following general rules are currently applicable under United States
federal income tax law to options under the Corporation's Non-Executive Purchase
Plan:

The amounts deducted from an employee's pay under the Non-Executive
Purchase Plan will be included in the employee's compensation subject to federal
income tax. Generally, no additional income will be recognized by the employee
either at the time options are granted pursuant to the Non-Executive Purchase
Plan or at the time the employee purchases shares pursuant to the Non-Executive
Purchase Plan.

(a) the excess, if any, of the fair market value of the shares at the
time of disposition over the amount the employee paid for the shares, or

(b) 15% of the fair market value of the shares on the first business
day of the payment period.

amount the employee paid for the shares plus the amount, if any, taxed as
ordinary income). Capital gain or loss recognized on a disposition of shares
will be long-term capital gain or loss if the employee's holding period for the
shares exceeds one year.

If the employee disposes of shares purchased pursuant to the Non-Executive
Purchase Plan within two years after the first business day of the payment
period in which the employee acquired the shares, then upon disposition the
employee will recognize ordinary income in an amount equal to the excess, if
any, of the fair market value of the shares on the last business day of the
payment period over the amount the employee paid for the shares.

In addition, the employee generally will recognize capital gain or loss in
an amount equal to the difference between the amount realized upon the sale of
shares and the employee's tax basis in the shares (generally, the amount the
employee paid for the shares plus the amount, if any, taxed as ordinary income).
Capital gain or loss recognized on a disposition of shares will be long-term
capital gain or loss if the employee's holding period for the shares exceeds one
year. The purchase date begins the holding period for determining whether the
gain or loss realized is short or long term.

If the employee disposes of shares purchased pursuant to the Non-Executive
Purchase Plan more than two years after the first business day of the payment
period in which the employee acquired the shares, the Corporation will not be
entitled to any federal income tax deduction with respect to the options or the
shares issued upon their exercise. If the employee disposes of such shares prior
to the expiration of this two-year holding period, the Corporation generally
will be entitled to a federal income tax deduction in an amount equal to the
amount of ordinary income recognized by the employee as a result of such
disposition.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE
2001 NON-EXECUTIVE EMPLOYEE STOCK PURCHASE PLAN.

ITEM 3

AMENDMENT TO THE CORPORATION'S 1997 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN, AS
AMENDED

The Corporation's stockholders are being asked to approve an amendment to
the Corporation's 1997 Non-Employee Director Stock Option Plan, as amended (the
"Non-Employee Director Plan"), to increase the aggregate number of shares of
Common Stock that may be issued under the Plan by 200,000 shares. On February 6,
2002, the Board of Directors, acting by unanimous written consent, amended the
Non-Employee Director Plan to increase the aggregate number of shares of Common
Stock of the Corporation reserved for issuance thereunder by 200,000 shares to
330,000 shares, subject to the approval of the stockholders of the Corporation.

The Corporation relies on stock options as an essential inducement to
attract and retain qualified, experienced persons who are not employees or
officers of the Corporation to serve as members of its Board of Directors. The
Board of Directors believes that the increase in the number of shares available
under the Non-Employee Director Plan is essential to permit the Corporation to
continue to provide meaningful, long-term, equity-based incentives to present
and future Directors and to align the interests of the Board of Directors with
those of stockholders.

As of December 31, 2001, only 32,500 shares of Common Stock remained
available for grant under the Non-Employee Director Plan. The Non-Employee
Director Plan provides that each newly elected outside Director will be granted
automatically, on the date such person is first elected to the Board of
Directors, an option to purchase 20,000 shares of Common Stock of the
Corporation. Furthermore, each eligible Director will be automatically granted
an option to purchase 7,500 shares of Common Stock each year following the final
adjournment of the Corporation's Annual Meeting. If the increase in the number
of shares authorized for issuance under the Non-Employee Director Plan is not
approved, the Corporation may not be able to provide the grants scheduled to be
made in 2002 under the Non-Employee Director Plan. In addition, the Corporation
may generally become unable to provide suitable long-term equity based
incentives to present and future

outside Directors. The Corporation expects that the 200,000 additional shares of
Common Stock under the Non-Employee Director Plan will satisfy any allocations
of shares to outside Directors for a period of between four and five years.

DESCRIPTION OF THE NON-EMPLOYEE DIRECTOR PLAN

The Non-Employee Director Plan, providing for the annual grant of stock
options to purchase shares of Common Stock to outside Directors, was adopted by
the Board of Directors in July 1997 and approved by the stockholders on
September 9, 1997. On March 12, 1998, the Board of Directors adopted an
amendment to the Plan to increase the number of shares granted automatically to
Directors on the day such person is first elected to the Board from 7,500 shares
to 20,000 shares and to increase the number of option shares granted
automatically to Directors immediately following the final adjournment of each
Annual Meeting of Stockholders from 1,875 shares to 5,000 shares. On March 8,
2000 the Board of Directors adopted and on April 25, 2000 the stockholders
approved an amendment to the Non-Employee Director Plan that increased the
number of shares of Common Stock authorized for issuance under the Non-Employee
Director Plan by 35,000 shares to 130,000 shares. On April 25, 2001, the Board
of Directors adopted an amendment to the Non-Employee Director Plan to increase
the number of option shares granted automatically to Directors immediately
following the final adjournment of each Annual Meeting of Stockholders from
5,000 shares to 7,500 shares. On February 6, 2002, the Board of Directors
adopted an amendment to the Non-Employee Director Plan, subject to shareholder
approval, that increased the number of shares of Common Stock authorized for
issuance under the Non-Employee Director Plan by 200,000 shares to 330,000
shares, subject to the approval of the stockholders of the Corporation at the
next Annual Meeting of Stockholders to be held on April 24, 2002. The
Non-Employee Director Plan is administered by the Compensation Committee of the
Board of Directors. The class of participants eligible to participate in the
Non-Employee Director Plan is currently four members, who are all acting as
non-employee Directors.

The exercise price of options granted under the Non-Employee Director Plan
will be 100% of the fair market value per share of the Common Stock on the date
the option is granted. Options initially granted to each Director under the
Non-Employee Director Plan will become exercisable over a four-year period from
the date of grant. The options granted under the Non-Employee Director Plan will
expire up to the tenth anniversary of the grant date. If an optionee ceases to
be a Director of the Corporation, the option will terminate with respect to any
shares that are not then exercisable. Additionally, any portion of his or her
option that is vested, but has not been exercised, may be exercised within sixty
days of the date such Director ceased to be a Director. In the event of a
merger, consolidation, or similar corporate transaction, the vesting of all
outstanding options under the Non-Employee Director Plan will be accelerated so
that all outstanding options are vested and exercisable in full prior to the
consummation of such transaction. If such options are not exercised prior to the
consummation of such transaction, and are not assumed or replaced by the
successor entity, such options will terminate. The complete text of the 1997
Non-Employee Director Stock Plan, as amended to date, is attached hereto as
Appendix B.

As of March 8, 2002, options to purchase 97,500 shares of Common Stock were
outstanding and options to purchase 32,500 shares of Common Stock were available
for grant under the Non-Employee Director Plan. As of March 8, 2002, the market
value of the shares of Common Stock subject to outstanding options under the
Non-Employee Director Plan was $2,835,473.

INCOME TAX CONSEQUENCES

The following general rules are applicable under current federal income tax law
to options ("Options") granted under the Non-Employee Director Plan:

1. The optionee generally does not realize any taxable income upon the
grant of an Option, and the Company is not allowed a federal income tax
deduction by reason of such grant.

2. The optionee generally will recognize ordinary compensation income
at the time of exercise of an Option in an amount equal to the excess, if
any, of the fair market value of the shares on the date of exercise over
the exercise price.
20

3. When the optionee sells the shares acquired pursuant to an Option,
he or she generally will recognize a capital gain or loss in an amount
equal to the difference between the amount realized upon the sale of the
shares and his or her basis in the shares (generally, the exercise price
plus the amount taxed to the optionee as compensation income). If the
optionee's holding period for the shares exceeds one year, such gain or
loss will be a long-term capital gain or loss.

4. The Company generally should be entitled to a corresponding tax
deduction for federal income tax purposes when the optionee recognizes
compensation income.

5. An optionee may be entitled to exercise an Option by delivering
shares of the Company's Common Stock to the Company in payment of the
exercise price. If an optionee exercises an Option in such fashion, special
rules will apply.

6. Special rules apply if the stock acquired is subject to vesting, or
is subject to certain restrictions on resale under federal securities laws
applicable to directors, officers or 10% stockholders.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE
AMENDMENT TO THE NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN, AS AMENDED.

ITEM 4

RATIFICATION OF SELECTION OF AUDITORS

The Board of Directors has selected the firm of Arthur Andersen LLP,
independent certified public accountants, to serve as auditors for the fiscal
year ending December 31, 2002. Arthur Andersen LLP has served as the
Corporation's auditors since 1986. It is expected that a member of the firm will
be present at the Annual Meeting with the opportunity to make a statement if so
desired and will be available to respond to appropriate questions. If the
stockholders do not ratify the selection of Arthur Andersen LLP as the
Corporation's independent public accountants for the fiscal year ended December
31, 2002, the Corporation's Board of Directors will evaluate what would be in
the best interests of the Corporation and its stockholders and consider whether
to select new independent public accountants for the current fiscal year. The
ratification of this selection is not required under the laws of the
Commonwealth of Massachusetts, where the Corporation is incorporated, but the
results of this vote will be considered by the Board of Directors in selecting
the Corporation's auditors.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR RATIFICATION OF THIS
SELECTION OF AUDITORS.

STOCKHOLDER PROPOSALS

Proposals of stockholders intended for inclusion in the Corporation's proxy
materials to be furnished to all stockholders entitled to vote at the 2003
Annual Meeting of Stockholders pursuant to SEC Rule 14a-8 must be received at
the Corporation's principal executive offices not later than November 18, 2002.

Under the Corporation's By-Laws, stockholders who wish to make a proposal
at the 2003 Annual Meeting, other than one that will be included in the
Corporation's proxy materials, must send notice to the Clerk of the Corporation
(whose name appears on the cover of this proxy statement) at the Corporation's
principal executive offices. To be considered timely, the notice must be
delivered to or mailed to and received at the principal executive offices not
less than 60 days nor more than 90 days prior to the annual meeting, regardless
of any postponements, deferrals, or adjournments of the 2003 Annual Meeting to a
later date. If a stockholder who wishes to present a proposal fails to notify
the Corporation by these deadlines, the stockholder would not be entitled to
present the proposal at the meeting. If, however, notwithstanding the
requirements of the Corporation's Restated By-Laws, the proposal is brought
before the meeting, then under the SEC's proxy rules the proxies solicited by
management with respect to the 2003 Annual Meeting will confer discretionary
voting authority with respect to the stockholder's proposal on the persons
selected by management to vote the proxies. If a stockholder makes a timely
notification, the proxies may still exercise discretionary voting authority
under circumstances consistent with the SEC's proxy rules. In order to minimize
controversy as to

the date on which a proposal was received by the Corporation, it is suggested
that proponents submit their proposals by Certified Mail -- Return Receipt
Requested.

EXPENSES AND SOLICITATION

The cost of solicitation of proxies will be borne by the Corporation, and
in addition to soliciting stockholders by mail through its regular employees,
the Corporation may request banks and brokers to solicit their customers who
have stock of the Corporation registered in the names of a nominee and, if so,
will reimburse such banks and brokers for their reasonable out-of-pocket costs.
Solicitation by officers and employees of the Corporation may also be made of
some stockholders in person or by mail, telephone or telegraph following the
original solicitation. Such officers and employees will receive no additional
compensation for such service. The Corporation may, if appropriate, retain an
independent proxy solicitation firm to assist in soliciting proxies. If the
Corporation does so, it will pay such firm's customary fees and expenses.

APPENDIX A

CONCORD COMMUNICATIONS, INC.

2001 NON-EXECUTIVE EMPLOYEE STOCK PURCHASE PLAN

ARTICLE 1 -- PURPOSE.

This 2001 Non-Executive Employee Stock Purchase Plan (the "Plan") is
intended to encourage stock ownership by all eligible employees of CONCORD
COMMUNICATIONS, INC. (the "Company"), a Massachusetts corporation, and its
participating subsidiaries (as defined in Article 17) so that they may share in
the growth of the Company by acquiring or increasing their proprietary interest
in the Company. The Plan is designed to encourage eligible employees to remain
in the employ of the Company and its participating subsidiaries. The Plan is
intended to constitute an "employee stock purchase plan" within the meaning of
Section 423(b) of the Internal Revenue Code of 1986, as amended (the "Code").

ARTICLE 2 -- ADMINISTRATION OF THE PLAN.

The Plan may be administered by the Compensation Committee of the Board of
Directors or a committee appointed by the Board of Directors of the Company (the
"Committee"). The Committee shall consist of not less than two members of the
Company's Board of Directors. The Board of Directors may from time to time
remove members from, or add members to, the Committee. Vacancies on the
Committee, howsoever caused, shall be filled by the Board of Directors. The
Committee may select one of its members as Chairman, and shall hold meetings at
such times and places as it may determine. Acts by a majority of the Committee,
or acts reduced to or approved in writing by a majority of the members of the
Committee, shall be the valid acts of the Committee.

The interpretation and construction by the Committee of any provisions of
the Plan or of any option granted under it shall be final, unless otherwise
determined by the Board of Directors. The Committee may from time to time adopt
such rules and regulations for carrying out the Plan as it may deem best,
provided that any such rules and regulations shall be applied on a uniform basis
to all employees under the Plan. No member of the Board of Directors or the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any option granted under it.

In the event the Board of Directors fails to appoint or refrains from
appointing a Committee, the Board of Directors shall have all power and
authority to administer the Plan. In such event, the word "Committee" wherever
used herein shall be deemed to mean the Board of Directors.

ARTICLE 3 -- ELIGIBLE EMPLOYEES.

All employees, (excluding Officers and Directors as described below), of
the Company or any of its participating subsidiaries whose customary employment
is more than 20 hours per week and for more than five months in any calendar
year shall be eligible to receive options under the Plan to purchase common
stock of the Company, and all eligible employees shall have the same rights and
privileges hereunder. Persons who are eligible employees on the first business
day of any Payment Period (as defined in Article 5) shall receive their options
as of such day. Persons who become eligible employees after any date on which
options are granted under the Plan shall be granted options on the first day of
the next succeeding Payment Period on which options are granted to eligible
employees under the Plan. In no event, however, may an employee be granted an
option if such employee, immediately after the option was granted, would be
treated as owning stock possessing five percent or more of the total combined
voting power or value of all classes of stock of the Company or of any parent
corporation or subsidiary corporation, as the terms "parent corporation" and
"subsidiary corporation" are defined in Section 424(e) and (f) of the Code. For
purposes of determining stock ownership under this paragraph, the rules of
Section 424(d) of the Code shall apply, and stock which the employee may
purchase under outstanding options shall be treated as stock owned by the
employee. Notwithstanding the foregoing, Officers and Directors of the Company,
who are "highly compensated employees" (within the meaning of Section 414(q) of
the Code), shall not be eligible employees and shall not

A-1

be eligible to receive options under the Plan. For purpose of the Plan, (a)
"Officers" shall mean a person who is an officer of the Company within the
meaning of the interpretations of the National Association of Securities
Dealers, Inc. ("NASD") under Section 4350(i)(1)(a) of the NASD Marketplace Rules
and (b) "Director" shall mean a member of the Board of Directors of the Company.

ARTICLE 4 -- STOCK SUBJECT TO THE PLAN.

The stock subject to the options under the Plan shall be shares of the
Company's authorized but unissued common stock, par value $0.01 per share (the
"Common Stock"), or shares of Common Stock reacquired by the Company, including
shares purchased in the open market. The aggregate number of shares which may be
issued pursuant to the Plan is 500,000,subject to adjustment as provided in
Article 12. If any option granted under the Plan shall expire or terminate for
any reason without having been exercised in full or shall cease for any reason
to be exercisable in whole or in part, the unpurchased shares subject thereto
shall again be available under the Plan.

ARTICLE 5 -- PAYMENT PERIOD AND STOCK OPTIONS.

The first Payment Period during which payroll deductions will be
accumulated under the Plan shall commence on the later to occur of November 1,
2001 and the first day of the first calendar month following effectiveness of
the Form S-8 registration statement filed with the Securities and Exchange
Commission covering the shares to be issued pursuant to the Plan and shall end
on April 30, 2002. For the remainder of the duration of the Plan, Payment
Periods shall consist of the six-month periods commencing on May 1 and November
1, respectively, and ending on October 31 and April 30, respectively, of each
calendar year.

Twice each year, on the first business day of each Payment Period, the
Company will grant to each eligible employee an option to purchase on the last
day of such Payment Period, at the Option Price hereinafter provided for, a
maximum of 20,000 shares, on condition that such employee remains eligible to
participate in the Plan throughout the remainder of such Payment Period. The
employee shall be entitled to exercise the option so granted only to the extent
of the employee's accumulated payroll deductions on the last day of such Payment
Period. If the participant's accumulated payroll deductions on the last day of
the Payment Period would enable the participant to purchase more than 20,000
shares except for the 20,000-share limitation, the excess of the amount of the
accumulated payroll deductions over the aggregate purchase price of the 20,000
shares shall be promptly refunded to the participant by the Company, without
interest. The Option Price per share for each Payment Period shall be the lesser
of (i) 85% of the average market price of the Common Stock on the first business
day of the Payment Period and (ii) 85% of the average market price of the Common
Stock on the last business day of the Payment Period, in either event rounded up
to the nearest cent. The foregoing limitation on the number of shares subject to
option and the Option Price shall be subject to adjustment as provided in
Article 12.

For purposes of the Plan, the term "average market price" on any date means
(i) the average (on that date) of the high and low prices of the Common Stock on
the principal national securities exchange on which the Common Stock is traded,
if the Common Stock is then traded on a national securities exchange; or (ii)
the last reported sale price (on that date) of the Common Stock on the NASDAQ
National Market, if the Common Stock is not then traded on a national securities
exchange; or (iii) the average of the closing bid and asked prices last quoted
(on that date) by an established quotation service for over-the-counter
securities, if the Common Stock is not reported on the NASDAQ National Market;
or (iv) if the Common Stock is not publicly traded, the fair market value of the
Common Stock as determined by the Committee after taking into consideration all
factors which it deems appropriate, including, without limitation, recent sale
and offer prices of the Common Stock in private transactions negotiated at arm's
length.

For purposes of the Plan, the term "business day" means a day on which
there is trading on the NASDAQ National Market or the aforementioned national
securities exchange, whichever is applicable pursuant to the preceding
paragraph; and if neither is applicable, a day that is not a Saturday, Sunday or
legal holiday in the Commonwealth of Massachusetts.

A-2

No employee shall be granted an option which permits the employee's right
to purchase stock under the Plan, and under all other Section 423(b) employee
stock purchase plans of the Company and any parent or subsidiary corporations,
to accrue at a rate which exceeds $25,000 of fair market value of such stock
(determined on the date or dates that options on such stock were granted) for
each calendar year in which such option is outstanding at any time. The purpose
of the limitation in the preceding sentence is to comply with Section 423(b)(8)
of the Code. If the participant's accumulated payroll deductions on the last day
of the Payment Period would otherwise enable the participant to purchase Common
Stock in excess of the Section 423(b)(8) limitation described in this paragraph,
the excess of the amount of the accumulated payroll deductions over the
aggregate purchase price of the shares actually purchased shall be promptly
refunded to the participant by the Company, without interest.

ARTICLE 6 -- EXERCISE OF OPTION.

Each eligible employee who continues to be a participant in the Plan on the
last day of a Payment Period shall be deemed to have exercised his or her option
on such date and shall be deemed to have purchased from the Company such number
of full shares of Common Stock reserved for the purpose of the Plan as the
participant's accumulated payroll deductions on such date will pay for at the
Option Price, subject to the 20,000-share limit of the option and the Section
423(b)(8) limitation described in Article 5. If the individual is not a
participant on the last day of a Payment Period, then he or she shall not be
entitled to exercise his or her option and the amount of his or her payroll
deduction shall be refundable without interest. Only full shares of Common Stock
may be purchased under the Plan. Unused payroll deductions remaining in a
participant's account at the end of a Payment Period by reason of the inability
to purchase a fractional share shall be carried forward to the next Payment
Period.

ARTICLE 7 -- AUTHORIZATION FOR ENTERING THE PLAN.

An employee may elect to authorize payroll deductions under the Plan by
filling out, signing and delivering to the Company an authorization:

A. Stating the percentage to be deducted regularly from the employee's
pay;

B. Authorizing the purchase of stock for the employee in each Payment
Period in accordance with the terms of the Plan; and

C. Specifying the exact name or names in which stock purchased for the
employee is to be issued as provided under Article 11 hereof.

Such authorization must be received by the Company at least ten days before
the first day of the next succeeding Payment Period and shall take effect only
if the employee is an eligible employee on the first business day of such
Payment Period. Notwithstanding the foregoing, solely for purposes of the first
Payment Period under the Plan, an employee who is an eligible employee on the
first business day of such Payment Period may elect to authorize payroll
deductions under the Plan by filling out, signing, and delivering to the Company
the written authorization described above so that the Company receives such
authorization no later than November 8, 2001.

Unless a participant files a new authorization or withdraws from the Plan,
the deductions and purchases under the authorization the participant has on file
under the Plan will continue from one Payment Period to succeeding Payment
Periods as long as the Plan remains in effect.

The Company will accumulate and hold for each participant's account the
amounts deducted from his or her pay. No interest will be paid on these amounts.

ARTICLE 8 -- MAXIMUM AMOUNT OF PAYROLL DEDUCTIONS.

An employee may authorize payroll deductions in an amount (expressed as a
whole percentage) not less than one percent (1%) but not more than ten percent
(10%) of the employee's total compensation, including base pay or salary and any
overtime, bonuses or commissions.

A-3

ARTICLE 9 -- CHANGE IN PAYROLL DEDUCTIONS.

Deductions may not be increased or decreased during a Payment Period.
However, a participant may withdraw in full from the Plan in which event the
Company will promptly refund (without interest) the entire balance of the
employer's deduction not previously used to purchase stock under the Plan.

ARTICLE 10 -- WITHDRAWAL FROM THE PLAN.

A participant may withdraw from the Plan (in whole but not in part) at any
time prior to the last day of a Payment Period by delivering a withdrawal notice
to the Company.

To re-enter the Plan, an employee who has previously withdrawn must file a
new authorization at least ten days before the first day of the next Payment
Period in which he or she wishes to participate. The employee's re-entry into
the Plan becomes effective at the beginning of such Payment Period, provided
that he or she is an eligible employee on the first business day of the Payment
Period.

ARTICLE 11 -- ISSUANCE OF STOCK.

Certificates for stock issued to participants shall be delivered as soon as
practicable after each Payment Period by the Company's transfer agent.

Stock purchased under the Plan shall be issued only in the name of the
participant, or if the participant's authorization so specifies, in the name of
the participant and another person of legal age as joint tenants with rights of
survivorship.

ARTICLE 12 -- ADJUSTMENTS.

Upon the happening of any of the following described events, a
participant's rights under options granted under the Plan shall be adjusted as
hereinafter provided:

A. In the event that the shares of Common Stock shall be subdivided or
combined into a greater or smaller number of shares or if, upon a
reorganization, split-up, liquidation, recapitalization or the like of the
Company, the shares of Common Stock shall be exchanged for other securities
of the Company, each participant shall be entitled, subject to the
conditions herein stated, to purchase such number of shares of Common Stock
or amount of other securities of the Company as were exchangeable for the
number of shares of Common Stock that such participant would have been
entitled to purchase except for such action, and appropriate adjustments
shall be made in the purchase price per share to reflect such subdivision,
combination or exchange; and

B. In the event the Company shall issue any of its shares as a stock
dividend upon or with respect to the shares of stock of the class which
shall at the time be subject to option hereunder, each participant upon
exercising such an option shall be entitled to receive (for the purchase
price paid upon such exercise) the shares as to which the participant is
exercising his or her option and, in addition thereto (at no additional
cost), such number of shares of the class or classes in which such stock
dividend or dividends were declared or paid, and such amount of cash in
lieu of fractional shares, as is equal to the number of shares thereof and
the amount of cash in lieu of fractional shares, respectively, which the
participant would have received if the participant had been the holder of
the shares as to which the participant is exercising his or her option at
all times between the date of the granting of such option and the date of
its exercise.

Upon the happening of any of the foregoing events, the class and aggregate
number of shares set forth in Article 4 hereof which are subject to options
which have been or may be granted under the Plan and the limitations set forth
in the second paragraph of Article 5 shall also be appropriately adjusted to
reflect the events specified in paragraphs A and B above. Notwithstanding the
foregoing, any adjustments made pursuant to paragraphs A or B shall be made only
after the Committee, based on advice of counsel for the Company, determines
whether such adjustments would constitute a "modification" (as that term is
defined in

A-4

Section 424 of the Code). If the Committee determines that such adjustments
would constitute a modification, it may refrain from making such adjustments.

If the Company is to be consolidated with or acquired by another entity in
a merger, a sale of all or substantially all of the Company's assets or
otherwise (an "Acquisition"), the Committee or the board of directors of any
entity assuming the obligations of the Company hereunder (the "Successor Board")
shall, with respect to options then outstanding under the Plan, either (i) make
appropriate provision for the continuation of such options by arranging for the
substitution on an equitable basis for the shares then subject to such options
either (a) the consideration payable with respect to the outstanding shares of
the Common Stock in connection with the Acquisition, (b) shares of stock of the
successor corporation, or a parent or subsidiary of such corporation, or (c)
such other securities as the Successor Board deems appropriate, the fair market
value of which shall not materially exceed the fair market value of the shares
of Common Stock subject to such options immediately preceding the Acquisition;
or (ii) terminate each participant's options in exchange for a cash payment
equal to the excess of (a) the fair market value on the date of the Acquisition,
of the number of shares of Common Stock that the participant's accumulated
payroll deductions as of the date of the Acquisition could purchase, at an
option price determined with reference only to the first business day of the
applicable Payment Period and subject to the 20,000-share, Code Section
423(b)(8) and fractional-share limitations on the amount of stock a participant
would be entitled to purchase, over (b) the result of multiplying such number of
shares by such option price.

The Committee or Successor Board shall determine the adjustments to be made
under this Article 12, and its determination shall be conclusive.

ARTICLE 13 -- NO TRANSFER OR ASSIGNMENT OF EMPLOYEE'S RIGHTS.

An option granted under the Plan may not be transferred or assigned to or
availed by, any other person than by will or the laws of descent and
distribution and may be exercised only by the employee during the employee's
lifetime.

ARTICLE 14 -- TERMINATION OF EMPLOYEE'S RIGHTS.

Whenever a participant ceases to be an eligible employee because of
retirement, voluntary or involuntary termination, resignation, layoff,
discharge, death or for any other reason, his or her rights under the Plan shall
immediately terminate, and the Company shall promptly refund, without interest,
the entire balance of his or her payroll deduction account under the Plan.
Notwithstanding the foregoing, eligible employment shall be treated as
continuing intact while a participant is on military leave, sick leave or other
bona fide leave of absence, for up to 90 days, or for so long as the
participant's right to re-employment is guaranteed either by statute or by
contract, if longer than 90 days.

ARTICLE 15 -- TERMINATION AND AMENDMENTS TO PLAN.

The Plan may be terminated at any time by the Company's Board of Directors
but such termination shall not affect options then outstanding under the Plan.
It will terminate in any case when all or substantially all of the unissued
shares of stock reserved for the purposes of the Plan have been purchased. If at
any time shares of stock reserved for the purpose of the Plan remain available
for purchase but not in sufficient number to satisfy all then unfilled purchase
requirements, the available shares shall be apportioned among participants in
proportion to the amount of payroll deductions accumulated on behalf of each
participant that would otherwise be used to purchase stock, and the Plan shall
terminate. Upon such termination, all payroll deductions not used to purchase
stock will be refunded, without interest.

The Committee or the Board of Directors may from time to time adopt
amendments to the Plan provided that, without the approval of the stockholders
of the Company, no amendment may (i) increase the number of shares that may be
issued under the Plan; (ii) change the class of employees eligible to receive
options under the Plan, if such action would be treated as the adoption of a new
plan for purposes of Section 423(b) of the Code; or (iii) cause Rule 16b-3 under
the Securities Exchange Act of 1934 to become inapplicable to the Plan.
A-5

ARTICLE 16 -- LIMITS ON SALE OF STOCK PURCHASED UNDER THE PLAN.

The Plan is intended to provide shares of Common Stock for investment and
not for resale. The Company does not, however, intend to restrict or influence
any employee in the conduct of his or her own affairs. An employee may,
therefore, sell stock purchased under the Plan at any time the employee chooses,
subject to compliance with any applicable federal or state securities laws and
subject to any restrictions imposed under Article 21 to ensure that tax
withholding obligations are satisfied. THE EMPLOYEE ASSUMES THE RISK OF ANY
MARKET FLUCTUATIONS IN THE PRICE OF THE STOCK.

ARTICLE 17 -- PARTICIPATING SUBSIDIARIES.

The term "participating subsidiary" shall mean any present or future
subsidiary of the Company, as that term is defined in Section 424(f) of the
Code, which is designated from time to time by the Board of Directors to
participate in the Plan. The Board of Directors shall have the power to make
such designation before or after the Plan is approved by the stockholders.

ARTICLE 18 -- OPTIONEES NOT STOCKHOLDERS.

Neither the granting of an option to an employee nor the deductions from
his or her pay shall constitute such employee a stockholder of the shares
covered by an option until such shares have been actually purchased by the
employee.

ARTICLE 19 -- APPLICATION OF FUNDS.

The proceeds received by the Company from the sale of Common Stock pursuant
to options granted under the Plan will be used for general corporate purposes.

ARTICLE 20 -- NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.

By electing to participate in the Plan, each participant agrees to notify
the Company in writing immediately after the participant transfers Common Stock
acquired under the Plan, if such transfer occurs within two years after the
first business day of the Payment Period in which such Common Stock was
acquired. Each participant further agrees to provide any information about such
a transfer as may be requested by the Company or any subsidiary corporation in
order to assist it in complying with the tax laws. Such dispositions generally
are treated as "disqualifying dispositions" under Sections 421 and 424 of the
Code, which have certain tax consequences to participants and to the Company and
its participating subsidiaries.

ARTICLE 21 -- WITHHOLDING OF ADDITIONAL INCOME TAXES.

By electing to participate in the Plan, each participant acknowledges that
the Company and its participating subsidiaries are required to withhold taxes
with respect to the amounts deducted from the participant's compensation and
accumulated for the benefit of the participant under the Plan, and each
participant agrees that the Company and its participating subsidiaries may
deduct additional amounts from the participant's compensation, when amounts are
added to the participant's account, used to purchase Common Stock or refunded,
in order to satisfy such withholding obligations. Each participant further
acknowledges that when Common Stock is purchased under the Plan the Company and
its participating subsidiaries may be required to withhold taxes with respect to
all or a portion of the difference between the fair market value of the Common
Stock purchased and its purchase price, and each participant agrees that such
taxes may be withheld from compensation otherwise payable to such participant.
It is intended that tax withholding will be accomplished in such a manner that
the full amount of payroll deductions elected by the participant under Article 7
will be used to purchase Common Stock. However, if amounts sufficient to satisfy
applicable tax withholding obligations have not been withheld from compensation
otherwise payable to any participant, then, notwithstanding any other provision
of the Plan, the Company may withhold such taxes from the participant's
accumulated payroll deductions and apply the net amount to the purchase of
Common Stock, unless the participant pays to the Company, prior to the exercise
date, an amount sufficient to satisfy such withholding obligations. Each
participant further acknowledges that the Company and its participating
A-6

subsidiaries may be required to withhold taxes in connection with the
disposition of stock acquired under the Plan and agrees that the Company or any
participating subsidiary may take whatever action it considers appropriate to
satisfy such withholding requirements, including deducting from compensation
otherwise payable to such participant an amount sufficient to satisfy such
withholding requirements or conditioning any disposition of Common Stock by the
participant upon the payment to the Company or such subsidiary of an amount
sufficient to satisfy such withholding requirements.

ARTICLE 22 -- GOVERNMENTAL REGULATIONS.

The Company's obligation to sell and deliver shares of Common Stock under
the Plan is subject to the approval of any governmental authority required in
connection with the authorization, issuance or sale of such shares.

Government regulations may impose reporting or other obligations on the
Company with respect to the Plan. For example, the Company may be required to
identify shares of Common Stock issued under the Plan on its stock ownership
records and send tax information statements to employees and former employees
who transfer title to such shares.

ARTICLE 23 -- GOVERNING LAW.

The validity and construction of the Plan shall be governed by the laws of
Commonwealth of Massachusetts, without giving effect to the principles of
conflicts of law thereof.

ARTICLE 24 -- APPROVAL OF BOARD OF DIRECTORS AND STOCKHOLDERS OF THE COMPANY.

The Plan was adopted by the Board of Directors on October 29, 2001 and will
be considered for approval by the stockholders of the Company on or before
October 29, 2002.

A-7

APPENDIX B

CONCORD COMMUNICATIONS, INC.

1997 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
(AS AMENDED MARCH 12, 1998, MARCH 8, 2000, APRIL 25, 2001, FEBRUARY 6, 2002)

1. Purpose. This Non-Qualified Stock Option Plan, to be known as the 1997
Non-Employee Director Stock Option Plan (hereinafter, this "Plan") is intended
to promote the interests of CONCORD COMMUNICATIONS, INC. (hereinafter, the
"Company") by providing an inducement to obtain and retain the services of
qualified persons who are not employees or officers of the Company to serve as
members of its Board of Directors (the "Board").

2. Available Shares. The total number of shares of Common Stock, par value
$.01 per share, of the Company (the "Common Stock") for which options may be
granted under this Plan shall not exceed three hundred thirty thousand (330,000)
shares, subject to adjustment in accordance with Section 10 of this Plan;
provided, however, that such number of shares shall not be subject to adjustment
by reason of the stock split in the form of a stock dividend declared by the
Board of the Directors of the Company on August 7, 1997. Shares subject to this
Plan are authorized but unissued shares or shares that were once issued and
subsequently reacquired by the Company. If any options granted under this Plan
are surrendered before exercise or lapse without exercise, in whole or in part,
the shares reserved therefor shall continue to be available under this Plan.

3. Administration. This Plan shall be administered by the Board or by a
committee appointed by the Board (the "Committee"). In the event the Board fails
to appoint or refrains from appointing a Committee, the Board shall have all
power and authority to administer this Plan. In such event, the word "Committee"
wherever used herein shall be deemed to mean the Board. The Committee shall,
subject to the provisions of the Plan, have the power to construe this Plan, to
determine all questions hereunder, and to adopt and amend such rules and
regulations for the administration of this Plan as it may deem desirable. No
member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to this Plan or any option granted
under it.

4. Automatic Grant of Options. Subject to the availability of shares under
this Plan, (a) each person who becomes a member of the Board on or after October
16, 1997 and who is not an employee or officer of the Company during the term of
the Plan (a "Non-Employee Director"), shall be granted on the date such person
is first elected to the Board, without further action by the Board, an option to
purchase 20,000 shares of Common Stock, and (b) each person who is a
Non-Employee Director immediately following the final adjournment of each Annual
Meeting of Stockholders of the Company during the term of this Plan shall be
automatically granted on each such date an option to purchase 7,500 shares of
Common Stock. The options to be granted under this Section 4 shall be the only
options ever to be granted at any time to such member under this Plan. The
number of shares covered by options granted under this Section 4 shall be
subject to adjustment in accordance with the provisions of Section 10 of this
Plan.

5. Option Price. The purchase price of the stock covered by an option
granted pursuant to this Plan shall be 100% of the fair market value of such
shares on the day the option is granted. The option price will be subject to
adjustment in accordance with the provisions of Section 10 of this Plan. For
purposes of this Plan, if, at the time an option is granted under the Plan, the
Company's Common Stock is publicly traded, "fair market value" shall be
determined as of the last business day for which the prices or quotes discussed
in this sentence are available prior to the date such option is granted and
shall mean (i) the average (on that date) of the high and low prices of the
Common Stock on the principal national securities exchange on which the Common
Stock is traded, if the Common Stock is then traded on a national securities
exchange; or (ii) the last reported sale price (on that date) of the Common
Stock on the Nasdaq National Market, if the Common Stock is not then traded on a
national securities exchange; or (iii) the closing bid price (or average of bid
prices) last quoted (on that date) by an established quotation service for
over-the-counter securities, if the Common Stock is not reported on the Nasdaq
National Market List. However, if the Common Stock is not publicly traded at the
time an option is granted under the Plan, "fair market value" shall be deemed to
be the

B-1

fair value of the Common Stock as determined by the Committee after taking into
consideration all factors which it deems appropriate, including, without
limitation, recent sale and offer prices of the Common Stock in private
transactions negotiated at arm's length.

6. Period of Option. Unless sooner terminated in accordance with the
provisions of Section 8 of this Plan, an option granted hereunder shall expire
on the date which is ten (10) years after the date of grant of the option.

7. (a) Vesting of Shares and Non-Transferability of Options. Options
granted under this Plan shall not be exercisable until they become vested.
Options granted under this Plan shall vest in the optionee and thus become
exercisable, in accordance with the following schedule, provided that the
optionee has continuously served as a member of the Board through such vesting
date:

<Table>
<Caption>
PERCENTAGE OF OPTION
SHARES FOR WHICH
OPTION WILL BE EXERCISABLE DATE OF VESTING
-------------------------- ---------------

25% one year from the date of grant
6.25% per quarter on the last day of the quarter
beginning the quarter ending immediately
following the date to occur which is one year
from the date of grant
</Table>

The number of shares as to which options may be exercised shall be
cumulative, so that once the option shall become exercisable as to any shares it
shall continue to be exercisable as to said shares, until expiration or
termination of the option as provided in this Plan.

(b) Non-transferability. Any option granted pursuant to this Plan shall not
be assignable or transferable other than by will or the laws of descent and
distribution or pursuant to a domestic relations order and shall be exercisable
during the optionee's lifetime only by him or her.

8. Termination of Option Rights.

(a) In the event an optionee ceases to be a member of the Board for
any reason other than death or permanent disability, any then unexercised
portion of options granted to such optionee shall, to the extent not then
vested, immediately terminate and become void; any portion of an option
which is then vested but has not been exercised at the time the optionee so
ceases to be a member of the Board may be exercised, to the extent it is
then vested, by the optionee within 60 days of the date the optionee ceased
to be a member of the Board; and all options shall terminate after such 60
days have expired.

(b) In the event that an optionee ceases to be a member of the Board
by reason of his or her death or permanent disability, any option granted
to such optionee may be exercised, to the extent of the number of shares
with respect to which he or she could have exercised it on the date of
death or permanent disability, by the optionee (or by the optionee's
personal representative, heir or legatee, in the event of death) until the
scheduled expiration date of the option.

9. Exercise of Options and Resale Restrictions.

(a) Exercise of Option. Subject to the terms and conditions of this
Plan and the option agreements, an option granted hereunder shall, to the
extent then exercisable, be exercisable in whole or in part by giving
written notice to the Company by mail or in person addressed to the Chief
Financial Officer at 600 Nickerson Road, Marlboro, Massachusetts 01752, its
principal executive offices, stating the number of shares with respect to
which the option is being exercised, accompanied by payment in full for
such shares. Payment may be (a) in United States dollars in cash or by
check, (b) in whole or in part in shares of the Common Stock of the Company
already owned by the person or persons exercising the option or shares
subject to the option being exercised (subject to such restrictions and
guidelines as the Board may adopt from time to time), valued at fair market
value determined in accordance with the provisions of Section 5 or (c)
consistent with applicable law, through the delivery of an assignment to
the Company of a sufficient amount of the proceeds from the sale of the
Common Stock acquired upon exercise of the option and an authorization to
the broker or selling agent to pay that amount to the

B-2

Company, which sale shall be at the participant's direction at the time of
exercise; provided, however, that there shall be no such exercise at any
one time as to fewer than one hundred (100) shares or all of the remaining
shares then purchasable by the person or persons exercising the option, if
fewer than one hundred (100) shares. The Company's transfer agent shall, on
behalf of the Company, prepare a certificate or certificates representing
such shares acquired pursuant to exercise of the option, shall register the
optionee as the owner of such shares on the books of the Company and shall
cause the fully executed certificate(s) representing such shares to be
delivered to the optionee as soon as practicable after payment of the
option price in full. The holder of an option shall not have any rights of
a stockholder with respect to the shares covered by the option, except to
the extent that one or more certificates for such shares shall be delivered
to him or her upon the due exercise of the option.

(b) Resale Restrictions. Under no circumstances may shares acquired
pursuant to the exercise of options granted pursuant to this Plan be
disposed of on or prior to the date that is six months after the date such
options were granted.

10. Adjustments Upon Changes in Capitalization and Other Events. Upon the
occurrence of any of the following events, an optionee's rights with respect to
options granted to him or her hereunder shall be adjusted as hereinafter
provided:

(a) Stock Dividends and Stock Splits. If the shares of Common Stock
shall be subdivided or combined into a greater or smaller number of shares
or if the Company shall issue any shares of Common Stock as a stock
dividend on its outstanding Common Stock, the number of shares of Common
Stock deliverable upon the exercise of options shall be appropriately
increased or decreased proportionately, and appropriate adjustments shall
be made in the purchase price per share to reflect such subdivision,
combination or stock dividend.

(b) Recapitalization Adjustments. In the event of a reorganization,
recapitalization, merger, consolidation, or any other change in the
corporate structure or shares of the Company, to the extent permitted by
Rule 16b-3 under the Securities Exchange Act of 1934, adjustments in the
number and kind of shares authorized by this Plan and in the number and
kind of shares covered by, and in the option price of outstanding options
under this Plan necessary to maintain the proportionate interest of the
optionee and preserve, without exceeding, the value of such option, shall
be made. Notwithstanding the foregoing, no such adjustment shall be made
which would, within the meaning of any applicable provisions of the
Internal Revenue Code of 1986, as amended, constitute a modification,
extension or renewal of any Option or a grant of additional benefits to the
holder of an Option.

(c) Issuances of Securities. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of shares subject to options. No adjustments shall be made for
dividends paid in cash or in property other than securities of the Company.

(d) Adjustments. Upon the happening of any of the foregoing events,
the class and aggregate number of shares set forth in Sections 2 and 4 of
this Plan that are subject to options which previously have been or
subsequently may be granted under this Plan shall also be appropriately
adjusted to reflect such events. The Board shall determine the specific
adjustments to be made under this Section 10 and its determination shall be
conclusive.

(e) Consolidations or Mergers. If the Company is to be consolidated
with or acquired by another entity in a merger or other reorganization in
which the holders of the outstanding voting stock of the Company
immediately preceding the consummation of such event, shall, immediately
following such event, hold, as a group, less than a majority of the voting
securities of the surviving or successor entity, or in the event of a sale
of all or substantially all of the Company's assets or otherwise (each, an
"Acquisition"), the vesting of all outstanding options issued pursuant
hereto will be accelerated so that all outstanding options are vested and
exercisable in full prior to the consummation of any such Acquisition.

B-3

If such options are not exercised prior to the consummation of such
Acquisition, and are not assumed or replaced by the successor entity, such
options will terminate.

11. Restrictions on Issuance of Shares. Notwithstanding the provisions of
Sections 4 and 9 of this Plan, the Company shall have no obligation to deliver
any certificate or certificates upon exercise of an option until one of the
following conditions shall be satisfied:

(i) The issuance of shares with respect to which the option has been
exercised is at the time of the issue of such shares effectively registered
under applicable Federal and state securities laws as now in force or
hereafter amended; or

(ii) Counsel for the Company shall have given an opinion that the
issuance of such shares is exempt from registration under Federal and state
securities laws as now in force or hereafter amended; and the Company has
complied with all applicable laws and regulations with respect thereto,
including without limitation all regulations required by any stock exchange
upon which the Company's outstanding Common Stock is then listed.

12. Legend on Certificates. The certificates representing shares issued
pursuant to the exercise of an option granted hereunder shall carry such
appropriate legend, and such written instructions shall be given to the
Company's transfer agent, as may be deemed necessary or advisable by counsel to
the Company in order to comply with the requirements of the Securities Act of
1933 or any state securities laws.

13. Representation of Optionee. If requested by the Company, the optionee
shall deliver to the Company written representations and warranties upon
exercise of the option that are necessary to show compliance with Federal and
state securities laws, including representations and warranties to the effect
that a purchase of shares under the option is made for investment and not with a
view to their distribution (as that term is used in the Securities Act of 1933).

14. Option Agreement. Each option granted under the provisions of this
Plan shall be evidenced by an option agreement, which agreement shall be duly
executed and delivered on behalf of the Company and by the optionee to whom such
option is granted. The option agreement shall contain such terms, provisions and
conditions not inconsistent with this Plan as may be determined by the officer
executing it.

15. Termination and Amendment of Plan. Options may no longer be granted
under this Plan ten (10) years after the Approval Date, and this Plan shall
terminate when all options granted or to be granted hereunder are no longer
outstanding. The Board may at any time terminate this Plan or make such
modification or amendment thereof as it deems advisable; provided, however, that
the Board may not, without approval of the stockholders, modify or amend this
Plan if such approval is required by the Federal securities laws or applicable
regulatory authorities (at the time of any such modification or amendment).
Termination or any modification or amendment of this Plan shall not, without
consent of a participant, affect his or her rights under an option previously
granted to him or her. The Plan was adopted by the Board of Directors in July
1997 and by the stockholders of the Company on September 9, 1997. The Plan was
amended on March 12, 1998 by the Board of Directors to increase the number of
option shares granted to Directors on the date such person is first elected to
the Board from 7,500 shares to 20,000 shares and to increase the number of
option shares automatically granted to Directors immediately following the final
adjournment of each Annual Meeting of Stockholders from 1,875 shares to 5,000
shares. The Plan was further amended on March 8, 2000 by the Board of Directors
to increase the number of shares authorized for issuance under the Plan by
35,000 subject to approval of the amendment of the Plan by the stockholders of
the Company at the next meeting of stockholders. The stockholders of the Company
approved such amendment on April 25, 2000. The Plan was further amended on April
25, 2001 to increase the number of option shares automatically granted to
Directors immediately following the final adjournment of each Annual Meeting of
Stockholders from 5,000 shares to 7,500 shares. The Plan was further amended on
February 6, 2002 by the Board of Directors to increase the number of shares
authorized for issuance under the Plan by 200,000 subject to approval of the
amendment of the Plan by the stockholders of the Company at the next meeting of
stockholders.

B-4

16. Withholding of Income Taxes. Upon the exercise of an option, the
Company, in accordance with Section 3402(a) of the Internal Revenue Code, may
require the optionee to pay withholding taxes in respect of amounts considered
to be compensation includible in the optionee's gross income.

17. Compliance with Regulations. It is the Company's intent that the Plan
comply in all respects with Rule 16b-3 under the Securities Exchange Act of 1934
(or any successor or amended provision thereof) and any applicable Securities
and Exchange Commission interpretations thereof. If any provision of this Plan
is deemed not to be in compliance with Rule 16b-3, the provision shall be null
and void.

18. Governing Law. The validity and construction of this Plan and the
instruments evidencing options shall be governed by the laws of the Commonwealth
of Massachusetts, without giving effect to the principles of conflicts of law
thereof.

B-5

DETACH HERE

PROXY

CONCORD COMMUNICATIONS, INC.

PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 24, 2002

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints John A. Blaeser and Melissa H. Cruz, and each
of the them, attorneys and proxies, with full power of substitution and
resubstitution, to vote at an annual meeting of stockholders of Concord
Communications, Inc. (the "Company") to be held at the offices of the Company,
600 Nickerson Road, Marlborough, Massachusetts 01752, on April 24, 2002 at 8:00
a.m., Eastern Time, or at any adjournments or postponements thereof, revoking
all previous proxies, with all powers the undersigned would possess if present,
to act upon the following matters and upon such other business as may properly
come before the meeting or adjournments thereof.

THE PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4.
THE PROXIES ARE AUTHORIZED, IN THEIR DISCRETION, TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.

- --------------- -------------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- --------------- -------------

DETACH HERE

<Table>

[X] Please mark
votes as in
this example.

FOR AGAINST ABSTAIN
1. Election of Director. 2. To approve the adoption of the 2001
Non-Executive Employee Stock Purchase Plan. [ ] [ ] [ ]
NOMINEE: (01) Frederick W. W. Bolander
3. To approve an amendment to the Corporation's [ ] [ ] [ ]
1997 Non-Employee Director Stock Option Plan,
FOR WITHHELD as amended, to increase the aggregate number of
shares of common stock that may be issued
[ ] [ ] under the plan by 200,000 shares.

MARK HERE 4. To ratify the selection of the firm Arthur Andersen
[ ] FOR ADDRESS LLP, independent public accountants, as auditors [ ] [ ] [ ]
CHANGE AND for the fiscal year ending December 31, 2002; and
NOTE BELOW
5. To transact such other business as may properly come before the
meeting or any postponements or adjournments thereof.

PLEASE VOTE, DATE, SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.

Please sign this proxy exactly as your name appears on the books of the
Company. Joint owners should each sign personally. Trustees and other
fiduciaries should indicate the capacity in which they sign, and where more
than one name appears, a majority must sign. If a corporation, this
signature should be that of an authorized officer who should state his or
her title.

Signature: ____________________________ Date: _______________ Signature: _____________________________ Date: ______________________
</Table>