CONCORD COMMUNICATIONS INC, DEF 14A, 2000-03-22

CONCORD COMMUNICATIONS INC
DEF 14A, 2000-03-22
PREPACKAGED SOFTWARE

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<PAGE> 1

SCHEDULE 14A
(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULED 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:

<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
</TABLE>

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

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

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:

------------------------------------------------------------------------
<PAGE> 2

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

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

TO THE STOCKHOLDERS:

The Annual Meeting of Stockholders of Concord Communications, Inc., a
Massachusetts corporation (the "Corporation"), will be held on Tuesday April 25,
2000, at 8:00 A.M., at the offices of the Corporation, 600 Nickerson Road,
Marlborough, Massachusetts, for the following purposes:

1. To elect two members to the Board of Directors to serve for a
three-year term as Class III Directors;

2. To approve the Corporation's 1997 Stock Plan, as amended;

3. To approve the Corporation's 1997 Non-Employee Director Stock
Option Plan, as amended;

4. To ratify the selection of the firm of Arthur Andersen LLP as
auditors for the fiscal year ending December 31, 2000; 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 March 8, 2000, the record date fixed
by the Board of Directors for such purpose.

By Order of the Board of Directors,

GARY E. HAROIAN, Clerk

March 24, 2000
------------------------------

STOCKHOLDERS ARE REQUESTED TO SIGN THE ENCLOSED PROXY CARD AND
RETURN IT IN THE ENCLOSED STAMPED ENVELOPE BY RETURN MAIL.
<PAGE> 3

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

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

PROXY STATEMENT
MARCH 24, 2000

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
25, 2000, at 8:00 A.M., at the offices of the Corporation, 600 Nickerson Road,
Marlborough, Massachusetts.

Only stockholders of record as of the close of business on March 8, 2000,
(the "Record Date") will be entitled to vote at the Annual Meeting and any
adjournments thereof. As of the Record Date, 16,132,551 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. 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 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 Directors, 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 (i) to approve the Corporation's 1997 Stock Plan, as
amended, (ii) to approve the Corporation's 1997 Non-Employee Director Stock
Option Plan, as amended and (iii) to ratify the selection of auditors. 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.

A majority in interest of the outstanding shares represented at the meeting
in person or by proxy shall constitute a quorum for the transaction of business.
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. Directors are elected by a
plurality of the votes cast by stockholders entitled to vote at the meeting. 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 the proxies.
<PAGE> 4

An Annual Report to Stockholders, containing financial statements for the
fiscal year ended December 31, 1999, has been mailed to all stockholders
entitled to vote at the Annual Meeting. This proxy statement and the
accompanying proxy were first mailed to stockholders on or about March 24, 2000.
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, 1999, upon such person's written request to
Melissa H. Cruz, Vice President of Finance, 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 directors in
Class III expires at the Annual Meeting. The nominees for election as Class III
directors are Messrs. Blaeser and Burnes who first became directors of the
Corporation in 1985 and 1995, respectively. If re-elected, the Class III
nominees will hold office until the Annual Meeting of Stockholders to be held in
2003, and until their successors 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 one or more nominees are unable or unwilling to serve) for
the election of the Class III nominees. 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.

The following table sets forth the nominees 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 each of the
nominees and directors during the past five years, and the ages of each of the
nominees and directors.

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND YEAR CURRENT
NOMINEE'S OR DIRECTOR'S NAME AND YEAR NOMINEE OR DIRECTOR FIRST BUSINESS EXPERIENCE DURING THE TERM WILL
BECAME DIRECTOR LAST FIVE YEARS EXPIRE/CLASS
- --------------------------------------------------------------- ------------------------------- ------------
<S> <C> <C>
John A. Blaeser........................................... President, Chief Executive 2000/III
1985 Officer and Director(1)
Frederick W.W. Bolander................................... Director(2) 2002/II
1995
Richard M. Burnes, Jr..................................... Director(3) 2000/III
1995
Robert C. Hawk............................................ Director(4) 2001/I
1996
John Robert Held.......................................... Director(5) 2001/I
1996
Deepak Kamra.............................................. Director(6) 2002/II
1993
Robert M. Wadsworth....................................... Director(7) 2002/II
1993
</TABLE>

- ---------------
(1) Mr. Blaeser, 58, 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, from 1991 until 1996, Mr. Blaeser was
Managing General Partner of EG&G Venture Management, a venture capital firm.

2
<PAGE> 5

(2) Mr. Bolander, 38, 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
1999, Mr. Bolander was associated with Apex Investment Partners, as a
General Partner from April 1996 to December 1998 and in various capacities
from October 1994 to April 1996. From May 1993 to September 1993, Mr.
Bolander was a Consultant to the African Communications Group, a venture
capital and project management firm, and from September 1985 to September
1992, Mr. Bolander held the position of Manager for AT&T Corporation. Mr.
Bolander is also a Director of Exodus Communications, Inc.

(3) Mr. Burnes, 59, 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.

(4) Mr. Hawk, 60, has been a Director of the Corporation since December 1996.
Mr. Hawk has served as President of Hawk Communications since April 1997.
Prior to joining Hawk Communications, Mr. Hawk served as President and Chief
Executive Officer of US WEST Multimedia Communications, Inc. from April 1996
until April 1997, and from 1988 until April 1996 as President of the Carrier
Division of US WEST Communications, Inc. Mr. Hawk is also a director of Com
21, Inc.; PairGain Technologies; Covan Communications Company and Effec
Networks.

(5) Mr. Held, 61, has been a Director of the Corporation since December 1996.
Previously, Mr. Held had served as President and Chief Executive Officer of
Chipcom Corporation from 1988 until 1995. Mr. Held is also a Director of
Brown & Sharpe Manufacturing Company.

(6) Mr. Kamra, 43, has been a Director of the Corporation since November 1993.
Mr. Kamra has been associated with Canaan Partners, a venture capital firm,
since March 1991 and has been a General Partner of the firm since March
1995. Prior to joining Canaan Partners, Mr. Kamra was the General Manager,
National Sales Force, of Aspect Telecommunications, a telecommunications
equipment company. Mr. Kamra is also a director of SalesLogix, Inc. and
iPrint.com.

(7) Mr. Wadsworth, 39, 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 Managing Director of HarbourVest Partners, LLC since
January 1997. Mr. Wadsworth is also a Director of Banyan Systems,
Incorporated.

BOARD OF DIRECTORS' MEETINGS AND COMMITTEES

The Board of Directors of the Corporation met seven times and took action
by unanimous written consent twice during the fiscal year ended December 31,
1999. 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 auditors, met twice during 1999. Messrs. Burnes
and Kamra are currently members of the Audit Committee. The Compensation
Committee, which determines the compensation and benefits of the Corporation's
executive officers, met three times during 1999. Messrs. Bolander, Burnes, Held
and Wadsworth are currently members of the Compensation Committee. Stockholders
wishing to suggest nominees for election to the Board of Directors should direct
such suggestions to the Clerk of the Corporation at the Corporation's principal
address in accordance with the nomination procedure set forth in the
Corporation's By-Laws. All directors 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 who are not employees of the Corporation (also referred to as
"outside directors"), who currently consist of Messrs. Bolander, Burnes, Hawk,
Held, Kamra and Wadsworth, do not receive an annual

3
<PAGE> 6

retainer or any fees for attending regular meetings of the Board of Directors.
Directors are reimbursed for reasonable out-of-pocket expenses incurred in
attending such meetings. Non-employee directors are also eligible for
participation in the Corporation's 1997 Non-Employee Director Stock Option Plan.

Prior to the Corporation's initial public offering, the Corporation granted
non-qualified stock options to 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, 2000,
options to purchase 62,500 shares of Common Stock, at a weighted average
exercise price of $1.90 per share, had been granted to outside directors of the
Corporation under the 1995 Plan. Of that number, options to purchase 58,750
shares of Common Stock have been exercised and no options to purchase shares of
Common Stock have been canceled. Upon the consummation of a "change in control"
of the Corporation, each stock option agreement governing options granted under
the 1995 Plan provides for the acceleration of vesting of the option by eighteen
months. 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.

The 1997 Non-Employee Director Stock Option 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. A
total of 95,000 shares of Common Stock are reserved for issuance under the
Non-Employee Director Plan. The Non-Employee Director Plan is administered by
the Compensation Committee of the Board of Directors. 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 each eligible director will be automatically
granted an option to purchase 5,000 shares of Common Stock each year following
the final adjournment of the Corporation's Annual Meeting of Stockholders.

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 will expire on the tenth anniversary of the grant
date. If an optionee ceases to be a director of the Corporation each option will
terminate with respect to the shares as to which the option is not then
exercisable and any portion of his or her option which 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.

As of December 31, 1999, 67,500 options to purchase shares of the
Corporation's Common Stock were outstanding under the Non-Employee Director
Plan.

4
<PAGE> 7

SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of March 1, 2000 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 7, 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
- ------------------- ------------------ ----------
<S> <C> <C>
John A. Blaeser............................................. 365,919 2.2%
Kevin J. Conklin............................................ 77,571 *
Ferdinand Engel............................................. 118,077 *
Gary E. Haroian............................................. 120,126 *
Daniel D. Phillips, Jr...................................... 89,431 *
Frederick W.W. Bolander..................................... 42,514(4) *
Richard M. Burnes, Jr....................................... 53,500 *
Robert C. Hawk.............................................. 10,500(5) *
John Robert Held............................................ 16,830(6) *
Deepak Kamra................................................ 18,937(7) *
Robert M. Wadsworth......................................... 10,843(8) *
All executive officers and directors as a group (11
people)................................................... 924,248(9) 5.7%
</TABLE>

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

* less than 1%

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

(2) Unless otherwise indicated, the named person possesses 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, as follows: Mr. Blaeser, 119,788 shares; Mr.
Conklin, 64,571 shares; Mr. Engel, 48,047 shares; Mr. Haroian, 94,019
shares; Mr. Phillips, 50,719 shares; Mr. Bolander, 2,343 shares; Mr. Burnes,
7,500 shares; Mr. Kamra, 4,687 shares; and Mr. Wadsworth, 2,343 shares.

(4) Includes 3,282 shares of restricted stock that vest over a period of four
years. The Corporation has a right of repurchase with respect to these
shares upon certain events.

(5) Includes 8,750 shares of restricted stock that vest over a period of four
years. The Corporation has a right of repurchase with respect to these
shares upon certain events.

(6) Includes 8,750 shares of restricted stock that vest over a period of four
years. The Corporation has a right of repurchase with respect to these
shares upon certain events.

(7) Includes 469 shares of restricted stock that vest over a period of four
years. The Corporation has a right of repurchase with respect to these
shares upon certain events.

(8) Includes 3,282 shares of restricted stock that vest over a period of four
years. The Corporation has a right of repurchase with respect to these
shares upon certain events.

(9) The group is comprised of the individuals named in the Summary Compensation
Table on page 7, and those persons who were directors of the Corporation on
March 8, 2000. Includes 394,017 shares of Common Stock which 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.

5
<PAGE> 8

Listed below are certain persons who, to the knowledge of the Corporation
on March 1, 2000, 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
- ------------------------------------------------------------ ----------------- ----------
<S> <C> <C>

T. Rowe Price Associates, Inc............................... 1,564,500(1) 9.69%
100 E. Pratt Street
Baltimore, MD 21202

Firsthand Capital Management Inc............................ 1,003,500(2) 6.22%
101 Center Plaza, Suite 1300
San Jose CA 95113
</TABLE>

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

(1) According to a Schedule 13G/A filed as of February 10, 2000. These
securities are owned by various individual and institutional investors,
including T. Rowe Price New Horizons Fund, which owns 1,050,000 shares,
representing 6.5% of the shares outstanding, for which T. Rowe Price
Associates, Inc. (Price Associates) 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, Price
Associates 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 13F filed on February 18, 2000 by Firsthand Capital
Management, Inc.

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, 1999, the directors and executive officers complied with all applicable
Section 16 filing requirements on a timely basis except that Mr. John R. Held, a
director of the Corporation, filed a Form 4 thirty-one days late with regard to
one transaction involving 2,000 shares.

6
<PAGE> 9

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.

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/SARS(#) COMPENSATION(4)
- ---------------------------- ---- --------- -------- ---------------------- ---------------
<S> <C> <C> <C> <C> <C>
John A. Blaeser............. 1999 $270,000 $162,000 245,000 --
Chief Executive Officer 1998 240,000 216,000 65,000 --
and President 1997 200,000 160,000 50,000 --
Gary E. Haroian(5).......... 1999 185,000 111,000 103,000 --
Chief Financial Officer, 1998 170,000 153,000 25,000 --
Sr. Vice President of
Finance, 1997 133,470 124,800 198,750 --
Treasurer & Clerk
Ferdinand Engel............. 1999 205,000 123,000 149,000 --
Sr. Vice President, 1998 185,000 166,500 25,000 --
Engineering 1997 165,463 132,001 50,000 $599
Kevin J. Conklin............ 1999 155,000 93,000 78,000 --
Sr. Vice President, 1998 140,000 126,000 25,000 --
Marketing 1997 127,463 71,122 37,500 $492
Daniel D. Phillips, Jr...... 1999 185,000 108,449 149,000 --
Sr. Vice President, 1998 165,000 225,389 25,000 --
World Wide Sales 1997 145,463 148,280 50,000 --
</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. Mr. Phillips' bonus amounts represent
commissions earned in each such year based on the shipment of product.

(3) The Corporation did not make any restricted stock awards, grant any stock
appreciation rights or make any long-term incentive payments during fiscal
1999 to its executive officers.

(4) The amounts in the "All Other Compensation" column represent paid insurance
premiums for disability insurance coverage for the months of January through
June 1997.

(5) Mr. Haroian joined the Corporation in February 1997.

7
<PAGE> 10

The following table provides information with respect to stock option
grants by the Corporation to the named executive officers in 1999. The
Corporation did not grant any stock appreciation rights in 1999.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL REALIZED
VALUE AT ASSUMED
PERCENTAGE OF ANNUAL RATES OF
NUMBER OF TOTAL OPTIONS STOCK PRICE
SECURITIES GRANTED TO APPRECIATION OVER
UNDERLYING EMPLOYEES EXERCISE THE OPTION TERM(2)
OPTIONS IN FISCAL PRICE EXPIRATION ------------------------------
NAME GRANTED(1) YEAR ($/SHARE) DATE 5% 10%
- ---- ---------- ------------- --------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
John A. Blaeser......... 120,000 6.68% $52.625 1/12/07 $3,015,131.13 $ 7,221,763.34
125,000 7.11% $36.906 8/31/07 $2,202,621.33 $ 5,275,661.08
-------
Total................. 245,000 13.79% $5,217,752.46 $12,497,424.42
Gary E. Haroian......... 35,000 2% $52.625 1/12/07 $ 879,413.25 $ 2,106,347.64
68,000 3.8% $36.906 8/31/07 $1,198,226.00 $ 2,869,959.63
-------
Total................. 103,000 5.8% $2,077,639.25 $ 4,976,307.27
Ferdinand Engel......... 81,000 4.5% $52.625 1/12/07 $2,035,213.51 $ 4,874,690.25
68,000 3.8% $36.906 8/31/07 $1,198,226.00 $ 2,869,959.63
-------
Total................. 149,000 8.3% $3,233,439.51 $ 7,744,649.88
Kevin J. Conklin........ 35,000 2% $52.625 1/12/07 $ 879,413.25 $ 2,106,347.64
43,000 2.4% $36.906 8/31/07 $ 757,701.74 $ 1,814,827.42
-------
Total................. 78,000 4.4% $1,637,114.99 $ 3,921,175.06
Daniel D. Phillips,
Jr.................... 81,000 4.5% $52.625 1/12/07 $2,035,213.51 $ 4,874,690.25
68,000 3.8% $36.906 8/31/07 $1,198,226.00 $ 2,869,959.63
-------
Total................. 149,000 8.3% $3,233,439.51 $ 7,744,649.88
</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. The options have a term of eight years 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.

8
<PAGE> 11

The following table provides information on stock option exercises in
fiscal 1999 by the named executive officers and the value of such officers'
unexercised options at December 31, 1999.

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, 1999 DECEMBER 31, 1999
EXERCISE VALUE --------------------------- -----------------------------
NAME DURING 1999 REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ------------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
John A. Blaeser....... 176,577 $8,046,067.18 33,750 364,789 $ 746,718.76 $4,794,157.99
Gary E. Haroian....... 2,350 $ 84,689.30 57,301 187,768 $2,093,788.10 $3,526,224.23
Ferdinand Engel....... 59,998 $2,547,603.21 7,032 199,453 $ 179,135.41 $2,101,386.11
Kevin J. Conklin...... 10,000 $ 566,500.00 41,825 118,559 $1,457,216.40 $1,495,352.26
Daniel D. Phillips,
Jr.................. 47,348 $2,335,991.12 21,875 198,033 $ 512,890.63 $2,038,515.60
</TABLE>

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, and the 1997 Non-Employee Director Stock Option 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 comprised
entirely of 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 total compensation program that is highly competitive with
comparable talent at comparable high-growth software companies.

(2) Provide annual variable incentive awards (Cash Bonuses) that take
into account the Corporation's overall financial performance relative to
corporate objectives.

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

COMPENSATION COMPONENTS AND PROCESS

BASE SALARY

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.

9
<PAGE> 12

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 1999, the Corporation exceeded
its performance targets, and bonuses paid reflected these results.

LONG TERM STOCK-BASED INCENTIVE AWARDS

During fiscal 1999, the Committee made option grants under the 1997 Stock
Plan to Messrs. Blaeser, Haroian, Conklin, Phillips and Engel. 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.

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.

In August 1999 the Compensation Committee became aware that the options
that the Corporation had awarded in January 1999 had an exercise price that was
significantly above the August market price. The Committee was concerned that
the option awards would not have their intended effect of retaining and
motivating 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 of 2000, the corporation's usual time for
employee retention and incentive option awards, the Company would benefit from
making an immediate grant of stock option awards. Accordingly, in lieu of a
January 2000 grant, the Corporation awarded stock options to key employees and
executive officers in August 1999.

CHIEF EXECUTIVE OFFICER COMPENSATION

The annual base salary for the Corporation's Chief Executive Officer is
determined by the Committee, subject to approval of the Board of Directors. The
1999 compensation package of the Corporation's President and Chief Executive
Officer, Mr. Blaeser, consisted of the same benefits program as other executive
officers, including base salary, cash bonus, stock options and other employee
benefit programs. Specifically, a target incentive was established at the
beginning of the year using an agreed-upon formula based on the Corporation's
performance. Each year, the annual incentive plan is reevaluated with new
targets for revenue growth and profitability. The option grants made to Mr.
Blaeser during the 1999 fiscal year were based upon his individual performance
and leadership within the Corporation and were designed to place a significant
portion of his total compensation at risk, because the options will have no
value unless there is 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
10
<PAGE> 13

"qualified performance-based compensation" within the meaning of Section 162(m)
of the Code and the regulations promulgated thereunder. The Corporation has
considered the limitations on deductions imposed by Section 162(m) of the Code,
and it is the Corporation'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

Executives are eligible for Corporation-wide medical and dental benefits
and participation in a 401(k) plan under which the Corporation currently
provides no matching contributions. 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 (Chairman)
Frederick W.W. Bolander
Richard M. Burnes, Jr.
John Robert Held

11
<PAGE> 14

COMPENSATION COMMITTEE INTERLOCK AND INSIDER PARTICIPATION

Messrs. Bolander, Burnes, Held and Wadsworth comprised the Committee for
fiscal year 1999. 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 last year, 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 Committee or as a director of the Corporation. In addition, during the last
year, no executive officer of the Corporation served on the Board of another
entity, one of whose executive officers served as a member of the Committee.

EMPLOYMENT AGREEMENTS

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, Gary E. Haroian and Daniel D. Phillips, Jr. Pursuant to the
terms of the Management Agreements, each of the foregoing management members
(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 management
member is terminated by the Corporation without cause or such management member
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 management member'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
management member's remaining unvested options shall become fully vested. Each
such management member has entered into a non-competition agreement with the
Corporation pursuant to which each such management member has agreed following a
change in control of the Corporation not to compete with the Corporation for a
period of six months if such management member 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.

12
<PAGE> 15

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, 1999 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 Omitted]

<TABLE>
<CAPTION>
CORPORATION NASDAQ INDEX H&Q INDEX
----------- ------------ ---------
<S> <C> <C> <C>
10/15/97 100.00 100.00 100.00
12/31/97 148.21 91.37 94.99
12/31/98 405.36 128.75 124.10
12/31/99 316.96 232.61 262.95
</TABLE>

- ---------------
(1) This graph is not "soliciting material," 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
or the Securities Exchange Act of 1934 whether made before or after the date
hereof and irrespective of any general incorporation language in any such
filing.

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<PAGE> 16

ITEM 2

PROPOSAL TO APPROVE THE 1997 STOCK PLAN, AS AMENDED

The Corporation's stockholders are being asked to approve the Corporation's
1997 Stock Plan (the "1997 Plan"), as amended. On March 8, 2000, the Board of
Directors amended the 1997 Plan to increase the aggregate number of shares of
Common Stock reserved for issuance thereunder by 750,000 shares to 3,250,000
shares.

The Corporation's management relies on stock options as an essential part
of the compensation packages necessary for the Corporation to attract and retain
experienced officers and employees. The Board of Directors of the Corporation
believes that the increase in the number of shares available under the 1997 Plan
is essential to permit the Corporation's management to continue to provide
long-term, equity-based incentives to present and future key employees.

As of March 8, 2000, only 98,863 shares remained authorized for issuance
under the 1997 Plan. If the increase in the number of shares authorized for
issuance under the 1997 Plan is not approved, the Corporation may become unable
to provide suitable long-term equity based incentives to present and future
employees. The Corporation has not at the present time determined who will
receive the remaining shares of Common Stock that will be authorized for
issuance under the 1997 Plan, as amended.

DESCRIPTION OF THE 1997 STOCK PLAN

The 1997 Plan was adopted by the Board of Directors in July 1997 and was
approved by the stockholders of the Corporation on September 9, 1997. On March
12, 1998, the Board of Directors adopted an amendment to the 1997 Plan to
increase the number of shares of Common Stock available for issuance thereunder
by 750,000 shares to 1,500,000 shares and to make certain minor modifications.
The amendment was approved by the stockholders at the Annual Meeting held on
April 30, 1998. On March 1, 1999, the Board of Directors further amended the
1997 Plan to increase the number of shares of Common Stock available for
issuance thereunder by 1,000,000 shares to 2,500,000 shares. The amendment was
approved by the stockholders at the Annual Meeting held on April 27, 1999. On
March 8, 2000 the Board of Directors further amended the 1997 Plan as described
above. Under the terms of the 1997 Plan, the Corporation is authorized to grant
options that qualify as "incentive stock options" ("ISOs") under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code") to employees of the
Corporation and options that do not qualify as ISOs ("NQOs") (as well as awards
of stock ("Awards") and opportunities to make direct purchases of stock
("Purchases")) to directors, officers and other employees of and consultants to
the Corporation. ISOs and NQOs are referred to hereafter together as "Stock
Options." The complete text of the 1997 Stock Plan, as amended to date, is
attached hereto as Appendix A.

The 1997 Plan is administered by the Compensation Committee of the Board of
Directors. Subject to the provisions of the 1997 Plan, the Compensation
Committee has the authority to select the optionees and determine the terms of
the Stock Options, Awards and Purchases granted under the 1997 Plan, including:
(i) the time or times at which Stock Options, Awards and Purchases may be
granted; (ii) whether Stock Options granted will be ISOs or NQOs; (iii) the
number of shares subject to each Stock Option, Award or Purchase; (iv) when each
Stock Option becomes exercisable; (v) the exercise price of the Stock Option,
which in the case of an ISO cannot be less than the fair market value of the
Common Stock as of the date of grant, or not less than 110% of the fair market
value in the case of ISOs granted to an employee or officer holding 10% or more
of the voting stock of the Corporation; (vi) the duration of the Stock Option;
and (vii) the time, manner and form of payment upon exercise of a Stock Option.
An ISO shall not be

14
<PAGE> 17

transferable by the recipient except by will or by the laws of descent and
distribution. No employee of the Corporation may be granted options to acquire,
in the aggregate, more than 70% of the aggregate number of shares of Common
Stock which may be issued under the 1997 Plan, as amended, during any fiscal
year of the Corporation. Generally, no ISO may be exercised more than 60 days
following termination of employment. However, in the event that termination is
due to death or disability, ISOs are generally exercisable for a maximum of 180
days after such termination.

As of March 8, 2000, options to purchase 2,289,173 shares of Common Stock
were outstanding and options to purchase 98,863 shares of Common Stock were
available for grant under the 1997 Plan. As of March 8, 2000, the market value
of the shares of Common Stock subject to outstanding options under the 1997 Plan
was $89,025,090.

FEDERAL INCOME TAX CONSEQUENCES

The following discussion of United States federal income tax consequences
of the issuance and exercise of options granted under the 1997 Plan, as amended,
and of certain other rights granted under the 1997 Plan, as amended, is based
upon the provisions of the Code as in effect on the date of this Proxy
Statement, current regulations, and existing administrative rulings of the
Internal Revenue Service. It is not intended to be a complete discussion of all
of the federal income tax consequences of the 1997 Plan, as amended, or of the
requirements that must be met in order to qualify for the described tax
treatment.

Incentive Stock Options. The following general rules are applicable under
current federal income tax law to ISOs under the 1997 Plan, as amended:

1. In general, no taxable income results to the optionee upon the
grant of an ISO or upon the issuance of shares to him or her upon the
exercise of the ISO, and no federal income tax deduction is allowed to the
Corporation upon either the grant or the exercise of an ISO.

2. If shares acquired upon exercise of an ISO are not disposed of
within (i) two years following the date the ISO was granted or (ii) one
year following the date the shares are issued to the optionee pursuant to
the ISO exercise (the "Holding Periods"), the difference between the amount
realized on any subsequent disposition of the shares and the exercise price
will generally be treated as capital gain or loss to the Optionee.

3. If shares acquired upon exercise of an ISO are disposed of and the
optionee does not satisfy the requisite Holding Periods (a "Disqualifying
Disposition"), then in most cases the lesser of (i) any excess of the fair
market value of the shares at the time of exercise of the ISO over the
exercise price or (ii) the actual gain on disposition, will be taxed to the
optionee as ordinary income in the year of such disposition.

4. In any year that an optionee recognizes ordinary income on a
Disqualifying Disposition of stock acquired by exercising an ISO, the
Corporation generally should be entitled to a corresponding deduction for
federal income tax purposes.

5. The difference between the amount realized by the optionee as the
result of a Disqualifying Disposition and the sum of (i) the exercise price
and (ii) the amount of ordinary income recognized under the above rules
will be treated as capital gain or loss.

6. Capital gain or loss recognized by an Optionee on a disposition of
shares will be long-term capital gain or loss if the optionee's holding
period for the shares exceeds one year.

7. An optionee may be entitled to exercise an ISO by delivering shares
of the Corporation's Common Stock to the Corporation in payment of the
exercise price, if the optionee's ISO agreement so provides. If an optionee
exercises an ISO in such fashion, special rules will apply.
15
<PAGE> 18

8. In addition to the tax consequences described above, the exercise
of ISOs may result in an "alternative minimum tax" under the Code. The Code
provides that an "alternative minimum tax" (at a maximum rate of 28%) will
be applied against a taxable base which is equal to "alternative minimum
taxable income," reduced by a statutory exemption. In general, the amount
by which the value of the Common Stock received upon exercise of the ISO
exceeds the exercise price is included in the optionee's alternative
minimum taxable income. A taxpayer is required to pay the higher of his or
her regular tax liability or the alternative minimum tax. A taxpayer who
pays alternative minimum tax attributable to the exercise of an ISO may be
entitled to a tax credit against his or her regular tax liability in later
years.

9. Special rules apply if the Common Stock acquired upon exercise of
an ISO is subject to vesting, or is subject to certain restrictions on
resale under federal securities laws applicable to directors, officers or
10% shareholders.

Non-Qualified Options. The following general rules are applicable under
current federal income tax law to NQOs under the 1997 Plan, as amended:

1. The optionee generally does not recognize any taxable income upon
the grant of a NQO, and the Corporation is not entitled to a federal income
tax deduction by reason of such grant.

2. The optionee generally will recognize ordinary income at the time
of exercise of a NQO 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.
The Corporation may be required to withhold income tax on this amount.

3. When the optionee sells the shares acquired upon exercise of a NQO,
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 ordinary income). If the
optionee's holding period for the shares exceeds one year, such gain or
loss will generally be a long-term capital gain or loss.

4. The Corporation generally should be entitled to a corresponding
federal income tax deduction when ordinary income is recognized by the
optionee.

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

6. Special Rules apply if the Common Stock acquired upon exercise of
an NQO is subject to vesting, or is subject to certain restrictions on
resale under federal securities laws applicable to directors, officers or
10% shareholders.

Awards and Purchases. The following general rules are applicable under
current federal income tax law to Awards and Purchases under the 1997 Plan, as
amended:

1. Persons receiving Common Stock pursuant to an Award or Purchase
generally will recognize ordinary income equal to the fair market value of
the shares received, reduced by any purchase price paid. The Corporation
should generally be entitled to a corresponding federal income tax
deduction.

2. When such Common Stock is sold, the seller generally will recognize
capital gain or loss. Special rules apply if the stock acquired pursuant to
an Award or Purchase 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 RECOMMENDS A VOTE FOR THE APPROVAL OF THE 1997 STOCK
PLAN, AS AMENDED.

16
<PAGE> 19

ITEM 3

PROPOSAL TO APPROVE THE 1997 NON-EMPLOYEE DIRECTOR
STOCK OPTION PLAN, AS AMENDED

PROPOSAL TO APPROVE THE 1997 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN, AS AMENDED

The Corporation's stockholders are being asked to approve the Corporation's
1997 Non-Employee Director Stock Option Plan (the "Non-Employee Director Plan"),
as amended. On March 8, 2000 the Board of Directors amended the Non-Employee
Director Plan to increase the aggregate number of shares of Common Stock
reserved for issuance thereunder by 35,000 shares to 130,000 shares.

The Corporation relies on stock options as an essential part of the
compensation packages necessary for the Corporation to attract and retain
experienced persons to serve on its Board of Directors. The Board of Directors
of the Corporation 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 long-term, equity-based incentives to present and future
Directors and to align the interests of the Board of Directors with those of
shareholders.

As of March 8, 2000, only 27,500 shares remained authorized for issuance
under the Non-Employee Director Plan. The Non-Employee Director Plan provides
that each year, each eligible director will be automatically granted an option
to purchase 5,000 shares of Common Stock each year following the final
adjournment of the Corporation's Annual Meeting of Stockholders. If the increase
in the number of shares authorized for issuance under the Non-Employee Director
Plan is not approved, the Corporation will be unable to provide the grants
scheduled to be made in 2000 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 Directors.

DESCRIPTION OF THE NON-EMPLOYEE DIRECTOR PLAN

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 will expire on 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 the shares as to which the option is not then
exercisable and any portion of his or her option which 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

17
<PAGE> 20

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, 2000, options to purchase 67,500 shares of Common Stock were
outstanding and options to purchase 27,500 shares of Common Stock were available
for grant under the Non-Employee Director Plan. As of March 8, 2000, the market
value of the shares of Common Stock subject to outstanding options under the
Non-Employee Director Plan was $2,186,723.

FEDERAL INCOME TAX CONSEQUENCES

Under the Non-Employee Director Plan the Corporation grants Non-Qualified
Options to Directors. For a description of the Federal Income Tax consequences
of the issuance and exercise of options granted under the Non-Employee Director
Plan, see the discussion under Item 2; Federal Income Tax Consequences; Non-
Qualified Options above.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE
NON-EMPLOYEE DIRECTOR 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, 2000. 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 of Stockholders with the opportunity to make a
statement if so desired and will be available to respond to appropriate
questions.

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

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 2001
Annual Meeting of Stockholders pursuant to SEC Rule 14a-8 must be received at
the Company's principal executive offices not later than December 12, 2000.

Under the Corporation's By-Laws, stockholders who wish to make a proposal
at the 2001 Annual Meeting -- other than one that will be included in the
Corporation's proxy materials -- must notify the Corporation no earlier than
January 25, 2001 and no later than February 25, 2001. If a stockholder who
wishes to present a proposal fails to notify the Corporation by February 25,
2001, the stockholder would not be entitled to present the proposal at the
meeting. If, however, notwithstanding the requirements of the Corporation's
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 2001 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.

18
<PAGE> 21

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.

19
<PAGE> 22

APPENDIX A

CONCORD COMMUNICATIONS, INC.
1997 STOCK PLAN
(AS AMENDED ON MARCH 12, 1998, MARCH 1, 1999 AND MARCH 8, 2000)

1. PURPOSE; TERMINATION OF PRIOR PLAN. The purpose of the 1997 Stock Plan
(the "Plan") is to encourage key employees of Concord Communications, Inc. (the
"Company") and of any present or future parent or subsidiary of the Company
(collectively, "Related Corporations") and other individuals who render services
to the Company or a Related Corporation, by providing opportunities to
participate in the ownership of the Company and its future growth through (a)
the grant of options which qualify as "incentive stock options" ("ISOs") under
Section 422(b) of the Internal Revenue Code of 1986, as amended (the "Code");
(b) the grant of options which do not qualify as ISOs ("Non-Qualified Options");
(c) awards of stock in the Company ("Awards"); and (d) opportunities to make
direct purchases of stock in the Company ("Purchases"). Both ISOs and
Non-Qualified Options are referred to hereafter individually as an "Option" and
collectively as "Options." Options, Awards and authorizations to make Purchases
are referred to hereafter collectively as "Stock Rights." As used herein, the
terms "parent" and "subsidiary" mean "parent corporation" and "subsidiary
corporation," respectively, as those terms are defined in Section 424 of the
Code. The Company's 1995 Stock Plan (the "1995 Stock Plan") is terminated
effective as of October 16, 1997 and henceforth, the Company shall make no
grants under the 1995 Stock Plan. The 1995 Stock Plan shall, however, continue
to govern all options, awards and other grants granted and outstanding under the
1995 Stock Plan.

2. ADMINISTRATION OF THE PLAN.

A. BOARD OR COMMITTEE ADMINISTRATION. The Plan shall be administered
by the Board of Directors of the Company (the "Board") or, subject to
paragraph 2(D) (relating to compliance with Section 162(m) of the Code), by
a committee appointed by the Board of two or more of its members (the
"Committee"). Hereinafter, all references in this Plan to the "Committee"
shall mean the Board if no Committee has been appointed. Subject to
ratification of the grant or authorization of each Stock Right by the Board
(if so required by applicable state law), and subject to the terms of the
Plan, the Committee shall have the authority to (i) determine to whom (from
among the class of employees eligible under paragraph 3 to receive ISOs)
ISOs shall be granted, and to whom (from among the class of individuals and
entities eligible under paragraph 3 to receive Non-Qualified Options and
Awards and to make Purchases) Non-Qualified Options, Awards and
authorizations to make Purchases may be granted; (ii) determine the time or
times at which Options or Awards shall be granted or Purchases made; (iii)
determine the purchase price of shares subject to each Option or Purchase,
which prices shall not be less than the minimum price specified in
paragraph 6; (iv) determine whether each Option granted shall be an ISO or
a Non-Qualified Option; (v) determine (subject to paragraph 7) the time or
times when each Option shall become exercisable and the duration of the
exercise period; (vi) determine whether restrictions such as repurchase
options are to be imposed on shares subject to Options, Awards and
Purchases and the nature of such restrictions, if any; and (vii) interpret
the Plan and prescribe and rescind rules and regulations relating to it. If
the Committee determines to issue a Non-Qualified Option, it shall take
whatever actions it deems necessary, under Section 422 of the Code and the
regulations promulgated thereunder, to ensure that such Option is not
treated as an ISO. The interpretation and construction by the Committee of
any provisions of the Plan or of any Stock Right granted under it shall be
final unless otherwise determined by the Board. The Committee may from time
to time adopt such rules and regulations for carrying out the Plan as it
may deem best. No member of the Board or of the

A-1
<PAGE> 23

Committee shall be liable for any action or determination made in good
faith with respect to the Plan or any Stock Right granted under it.

B. COMMITTEE ACTIONS. The Committee may select one of its members as
its chairman, and shall hold meetings at such time and places as it may
determine. A majority of the Committee shall constitute a quorum and acts
of a majority of the members of the Committee at a meeting at which a
quorum is present, or acts reduced to or approved in writing by all the
members of the Committee (if consistent with applicable state law), shall
be the valid acts of the Committee. From time to time the Board may
increase the size of the Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in
substitution therefor, fill vacancies however caused, or remove all members
of the Committee and thereafter directly administer the Plan.

C. GRANT OF STOCK RIGHTS TO BOARD MEMBERS. Notwithstanding the
provisions of paragraph 2.A., no Stock Rights shall be granted to any
person who is, at the time of the proposed grant, a member of the Board
unless such grant is approved by a majority vote of the disinterested
members of the Board. All grants of Stock Rights to members of the Board
shall in all respects be made in accordance with the provisions of this
Plan applicable to other eligible persons. Members of the Board who either
(i) are eligible to receive grants of Stock Rights pursuant to the Plan or
(ii) have been granted Stock Rights may vote on any matters affecting the
administration of the Plan or the grant of any Stock Rights pursuant to the
Plan, except that no such member shall act upon the granting to himself or
herself of Stock Rights, but any such member may be counted in determining
the existence of a quorum at any meeting of the Board during which action
is taken with respect to the granting to such member of Stock Rights.
Notwithstanding any other provision of this paragraph 2, in the event the
Company registers any class of any equity security pursuant to Section 12
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
any grants to members of the Board of Options made at any time from the
effective date of such registration until six months after the termination
of such registration shall be made only by the Board; provided, however,
that if a majority of the Board is eligible to participate in the Plan or
in any other stock option or other stock plan of the Company or any of its
affiliates, or has been so eligible at any time within the preceding year,
any grant to directors of Options must be made by, or only in accordance
with the recommendation of, a Committee consisting of three or more
persons, who may but need not be members of the Board or employees of the
Company, appointed by the Board but having full authority to act in the
matter, none of whom is eligible to participate in this Plan or any other
stock option or other stock plan of the Company or any of its affiliates,
or has been eligible at any time within the preceding year. The
requirements imposed by the preceding sentence shall also apply with
respect to grants to officers who are not also members of the Board. Once
appointed, the Committee shall continue to serve until otherwise directed
by the Board.

D. PERFORMANCE-BASED COMPENSATION. The Board, in its discretion, may
take such action as may be necessary to ensure that Stock Rights granted
under the Plan qualify as "qualified performance-based compensation" within
the meaning of Section 162(m) of the Code and applicable regulations
promulgated thereunder ("Performance-Based Compensation"). Such action may
include, in the Board's discretion, some or all of the following (i) if the
Board determines that Stock Rights granted under the Plan generally shall
constitute Performance-Based Compensation, the Plan shall be administered,
to the extent required for such Stock Rights to constitute
Performance-Based Compensation, by a Committee consisting solely of two or
more "outside directors" (as defined in applicable regulations promulgated
under Section 162(m) of the Code), (ii) if any Non-Qualified Options with
an exercise price less than the fair market value per share of Common Stock
are granted under the Plan and the Board determines that such Options
should constitute Performance-Based Compensation, such options shall be
made exercisable only upon the attainment of a pre-established, objective
performance goal established by the

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<PAGE> 24

Committee, and such grant shall be submitted for, and shall be contingent
upon shareholder approval and (iii) Stock Rights granted under the Plan may
be subject to such other terms and conditions as are necessary for
compensation recognized in connection with the exercise or disposition of
such Stock Right or the disposition of Common Stock acquired pursuant to
such Stock Right, to constitute Performance-Based Compensation.

3. ELIGIBLE EMPLOYEES AND OTHERS. ISOs may be granted only to employees
of the Company or any Related Corporation. Non-Qualified Options, Awards and
authorizations to make Purchases may be granted to any employee, officer or
director (whether or not also an employee) or consultant of the Company or any
Related Corporation. The Committee may take into consideration a recipient's
individual circumstances in determining whether to grant a Stock Right. The
granting of any Stock Right to any individual or entity shall neither entitle
that individual or entity to, nor disqualify such individual or entity from,
participation in any other grant of Stock Rights.

4. STOCK. The stock subject to Stock Rights shall be authorized but
unissued shares of Common Stock of the Company, par value $.01 per share (the
"Common Stock"), or shares of Common Stock reacquired by the Company in any
manner. The aggregate number of shares which may be issued pursuant to the Plan
is 3,250,000, subject to adjustment as provided in paragraph 13. 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 or shall be repurchased by the Company, the unpurchased shares of
Common Stock subject to such Option shall again be available for grants of Stock
Rights under the Plan.

No employee of the Company or any Related Corporation may be granted
Options to acquire, in the aggregate, more than 70% of the aggregate number of
shares of Common Stock which may be issued pursuant to the Plan during any
fiscal year of the Company. 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 or shall be repurchased by
the Company, the shares subject to such Option shall be included in the
determination of the aggregate number of shares of Common Stock deemed to have
been granted to such employee under the Plan.

5. GRANTING OF STOCK RIGHTS. Stock Rights may be granted under the Plan
at any time on or after October 16, 1997 and prior to October 15, 2007. The date
of grant of a Stock Right under the Plan will be the date specified by the
Committee at the time it grants the Stock Right; provided, however, that such
date shall not be prior to the date on which the Committee acts to approve the
grant.

6. MINIMUM OPTION PRICE; ISO LIMITATIONS.

A. PRICE FOR NON-QUALIFIED OPTIONS, AWARDS AND PURCHASES. Subject to
paragraph 2(D) (relating to compliance with Section 162(m) of the Code),
the exercise price per share specified in the agreement relating to each
Non-Qualified Option granted, and the purchase price per share of stock
granted in any Award or authorized as a Purchase, under the Plan may be
less than the fair market value of the Common Stock of the Company on the
date of grant; provided that, in no event shall such exercise price or such
purchase price be less than the lesser of (i) the book value per share of
Common Stock as of the end of the fiscal year of the Company immediately
preceding the date of such grant, or (ii) 50 percent of the fair market
value per share of Common Stock on the date of such grant.

B. PRICE FOR ISOS. The exercise price per share specified in the
agreement relating to each ISO granted under the Plan shall not be less
than the fair market value per share of Common Stock on the date of such
grant. In the case of an ISO to be granted to an employee owning stock
possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any Related Corporation, the
price per share specified in the agreement relating to such ISO shall not
be less

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<PAGE> 25

than one hundred ten percent (110%) of the fair market value per share of
Common Stock on the date of grant. For purposes of determining stock
ownership under this paragraph, the rules of Section 424(d) of the Code
shall apply.

C. $100,000 ANNUAL LIMITATION ON ISO VESTING. Each eligible employee
may be granted Options treated as ISOs only to the extent that, in the
aggregate under this Plan and all incentive stock option plans of the
Company and any Related Corporation, ISOs do not become exercisable for the
first time by such employee during any calendar year with respect to stock
having a fair market value (determined at the time the ISOs were granted)
in excess of $100,000. The Company intends to designate any Options granted
in excess of such limitation as Non-Qualified Options, and the Company
shall issue separate certificates to the optionee with respect to Options
that are Non-Qualified Options and Options that are ISOs.

D. DETERMINATION OF FAIR MARKET VALUE. 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 date of grant or, if the
prices or quotes discussed in this sentence are unavailable for such date,
the last business day for which such prices or quotes are available prior
to the date of grant 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. If the Common Stock is not publicly traded at the
time an Option is granted under the Plan, "fair market value" shall mean
the 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.

7. OPTION DURATION. Subject to earlier termination as provided in
paragraphs 9 and 10 or in the agreement relating to such Option, each Option
shall expire on the date specified by the Committee, but not more than (i) ten
years from the date of grant in the case of Options generally and (ii) five
years from the date of grant in the case of ISOs granted to an employee owning
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any Related Corporation, as determined
under paragraph 6(B). Subject to earlier termination as provided in paragraphs 9
and 10, the term of each ISO shall be the term set forth in the original
instrument granting such ISO, except with respect to any part of such ISO that
is converted into a Non-Qualified Option pursuant to paragraph 16.

8. EXERCISE OF OPTION. Subject to the provisions of paragraphs 9 through
12, each Option granted under the Plan shall be exercisable as follows:

A. VESTING. The Option shall either be fully exercisable on the date
of grant or shall become exercisable thereafter in such installments as the
Committee may specify.

B. FULL VESTING OF INSTALLMENTS. Once an installment becomes
exercisable, it shall remain exercisable until expiration or termination of
the Option, unless otherwise specified by the Committee.

C. PARTIAL EXERCISE. Each Option or installment may be exercised at
any time or from time to time, in whole or in part, for up to the total
number of shares with respect to which it is then exercisable.

D. ACCELERATION OF VESTING. The Committee shall have the right to
accelerate the date that any installment of any Option becomes exercisable;
provided that the Committee shall not, without the consent of an optionee,
accelerate the permitted exercise date of any installment of any Option
granted to
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<PAGE> 26

any employee as an ISO (and not previously converted into a Non-Qualified
Option pursuant to paragraph 16) if such acceleration would violate the
annual vesting limitation contained in Section 422(d) of the Code, as
described in paragraph 6(C).

9. TERMINATION OF EMPLOYMENT. Unless otherwise specified in the agreement
relating to such ISO, if an ISO optionee ceases to be employed by the Company
and all Related Corporations other than by reason of death or disability as
defined in paragraph 10, no further installments of his or her ISOs shall become
exercisable, and his or her ISOs shall terminate after the passage of 60 days
from the date of termination of his or her employment, but in no event later
than on the specified expiration dates of such ISOs, except to the extent that
such ISOs (or unexercised installments thereof) have been converted into
Non-Qualified Options pursuant to paragraph 16. For purposes of this paragraph
9, a leave of absence with the written approval of the Committee shall not be
considered an interruption of employment under the Plan, provided that such
written approval contractually obligates the Company or any Related Corporation
to continue the employment of the employee after the approved period of absence.
Employment shall also be considered as continuing uninterrupted during any other
bona fide leave of absence (such as those attributable to illness, military
obligations or governmental service) provided that the period of such leave does
not exceed 90 days or, if longer, any period during which such optionee's right
to reemployment is guaranteed by statute or by contract. A bona fide leave of
absence with the written approval of the Committee shall not be considered an
interruption of employment under this paragraph 9, provided that such written
approval contractually obligates the Company or any Related Corporation to
continue the employment of the optionee after the approved period of absence.
ISOs granted under the Plan shall not be affected by any change of employment
within or among the Company and Related Corporations, so long as the optionee
continues to be an employee of the Company or any Related Corporation. Nothing
in the Plan shall be deemed to give any grantee of any Stock Right the right to
be retained in employment or other service by the Company or any Related
Corporation for any period of time.

10. DEATH; DISABILITY.

A. DEATH. If an ISO optionee ceases to be employed by the Company
and all Related Corporations by reason of his or her death, any ISO owned
by such optionee may be exercised, to the extent otherwise exercisable on
the date of death, by the estate, personal representative or beneficiary
who has acquired the ISO by will or by the laws of descent and
distribution, at any time prior to the earlier of (i) the specified
expiration date of the ISO or (ii) 180 days from the date of the optionee's
death.

B. DISABILITY. If an ISO optionee ceases to be employed by the
Company and all Related Corporations by reason of his or her disability,
such optionee shall have the right to exercise any ISO held by him or her
on the date of termination of employment, for the number of shares for
which he or she could have exercised it on that date, at any time prior to
the earlier of (i) the specified expiration date of the ISO or (ii) 180
days from the date of the termination of the optionee's employment. For the
purposes of the Plan, the term "disability" shall mean "permanent and total
disability" as defined in Section 22(e)(3) of the Code or any successor
statute.

11. ASSIGNABILITY. No ISO shall be assignable or transferable by the
optionee except by will or by the laws of descent and distribution, and during
the lifetime of the optionee shall be exercisable only by such optionee. Stock
Rights other than ISOs shall be transferable to the extent set forth in the
agreement relating to such Stock Right.

12. TERMS AND CONDITIONS OF OPTIONS. Options shall be evidenced by
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 through 11 hereof and may contain such
other provisions as the Committee deems advisable which are not inconsistent
with the Plan, including restrictions applicable to
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<PAGE> 27

shares of Common Stock issuable upon exercise of Options. The Committee may
specify that any Non-Qualified Option shall be subject to the restrictions set
forth herein with respect to ISOs, or to such other termination and cancellation
provisions as the Committee may determine. The Committee may from time to time
confer authority and responsibility on one or more of its own members and/or one
or more officers of the Company to execute and deliver such instruments. The
proper officers of the Company are authorized and directed to take any and all
action necessary or advisable from time to time to carry out the terms of such
instruments.

13. ADJUSTMENTS. Upon the occurrence of any of the following events, an
optionee's rights with respect to Options granted to such optionee hereunder
shall be adjusted as hereinafter provided, unless otherwise specifically
provided in the written agreement between the optionee and the Company relating
to such Option:

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. 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 Committee may take one or more of the following
actions: (i) provide for the acceleration and/or termination of any time
period relating to the exercise of the Options, (ii) provide for the
purchase of the Options, upon the optionee's request, for the amount in
cash that could have been received upon the exercise of the Options and
sale of the shares obtained thereby, (iii) adjust the terms of the Options
in a manner determined by the Committee, (iv) cause the Options to be
assumed, or new rights substituted therefor, by another entity or (v) make
such other provision as the Committee may consider equitable and in the
best interests of the Company.

C. RECAPITALIZATION OR REORGANIZATION. In the event of a
recapitalization or reorganization of the Company (other than a transaction
described in subparagraph B above) pursuant to which securities of the
Company or of another corporation are issued with respect to the
outstanding shares of Common Stock, an optionee upon exercising an Option
shall be entitled to receive for the purchase price paid upon such exercise
the securities he or she would have received if he or she had exercised
such Option prior to such recapitalization or reorganization.

D. MODIFICATION OF ISOS. Notwithstanding the foregoing, any
adjustments made pursuant to subparagraphs A, B or C with respect to ISOs
shall be made only after the Committee, after consulting with counsel for
the Company, determines whether such adjustments would constitute a
"modification" of such ISOs (as that term is defined in Section 424 of the
Code) or would cause any adverse tax consequences for the holders of such
ISOs. If the Committee determines that such adjustments made with respect
to ISOs would constitute a modification of such ISOs or would cause adverse
tax consequences to the holders, it may refrain from making such
adjustments.

E. RESTRICTED SECURITIES. If any person or entity owning restricted
Common Stock obtained by exercise of an Option made hereunder receives new
or additional or different shares or securities ("New Securities") in
connection with a transaction described in subparagraphs A, B or C above,
as a result of owning such restricted Common Stock, such New Securities
shall be subject to all of the conditions and
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<PAGE> 28

restrictions applicable to the restricted Common Stock with respect to
which such New Securities were issued.

F. 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.

G. FRACTIONAL SHARES. No fractional shares shall be issued under the
Plan. Any fractional shares which, but for this subparagraph G, would have
been issued to an optionee pursuant to an Option, shall be deemed to have
been issued and immediately sold to the Company for their fair market
value, and the optionee shall receive from the Company cash in lieu of such
fractional shares.

H. ADJUSTMENTS. Upon the happening of any of the events described in
subparagraphs A, B or C above, the class and aggregate number of shares set
forth in paragraph 4 hereof that are subject to Stock Rights which
previously have been or subsequently may be granted under the Plan shall
also be appropriately adjusted to reflect the events described in such
subparagraphs. The Committee shall determine the specific adjustments to be
made under this paragraph 13 and, subject to paragraph 2, its determination
shall be conclusive.

14. MEANS OF EXERCISING OPTIONS. An Option (or any part or installment
thereof) shall be exercised by giving written notice to the Company at its
principal office address, or to such transfer agent as the Company shall
designate. Such notice shall identify the Option being exercised and specify the
number of shares as to which such Option is being exercised, accompanied by full
payment of the purchase price therefor either (a) in United States dollars in
cash or by check, (b) at the discretion of the Committee, through delivery of
shares of Common Stock having a fair market value equal as of the date of the
exercise to the cash exercise price of the Option, (c) at the discretion of the
Committee, by delivery of the optionee's personal recourse note bearing interest
payable not less than annually at no less than 100% of the lowest applicable
Federal rate, as defined in Section 1274(d) of the Code, (d) at the discretion
of the Committee and 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 Company, which sale shall
be at the participant's direction at the time of exercise, or (e) at the
discretion of the Committee, by any combination of (a), (b), (c) and (d) above.
If the Committee exercises its discretion to permit payment of the exercise
price of an ISO by means of the methods set forth in clauses (b), (c), (d) or
(e) of the preceding sentence, such discretion shall be exercised in writing at
the time of the grant of the ISO in question. The holder of an Option shall not
have the rights of a shareholder with respect to the shares covered by such
Option until the date of issuance of a stock certificate to such holder for such
shares. Except as expressly provided above in paragraph 13 with respect to
changes in capitalization and stock dividends, no adjustment shall be made for
dividends or similar rights for which the record date is before the date such
stock certificate is issued.

15. TERM AND AMENDMENT OF PLAN. This Plan was adopted by the Board in
July 1997 and by the stockholders of the Company on September 9, 1997. The Plan
was amended on March 12, 1998 to increase the number of shares authorized for
issuance under the Plan by 750,000 shares to 1,500,000, and such amendment was
approved by the stockholders of the Company at the Annual Meeting held on April
30, 1998. On March 1, 1999, the Board of Directors further amended the Plan to
increase the number of shares authorized for issuance under the Plan by
1,000,000 shares to 2,500,000 shares and to make certain other minor
modifications, and such amendment was approved by the stockholders of the
Company at the Annual Meeting held on April 27, 1999. On March 8, 2000 the Board
of Directors further amended the Plan to

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<PAGE> 29

increase the number of shares authorized for issuance under the Plan by 750,000,
subject to approval of the amendment of the Plan by the stockholders of the
Company at the next Meeting of Stockholders. The Plan shall expire at the end of
the day on October 15, 2007 (except as to Options outstanding on that date).
Subject to the provisions of paragraph 5 above, Options may be granted under the
Plan prior to the date of stockholder approval of the Plan. The Board may
terminate or amend the Plan in any respect at any time, except that, without the
approval of the stockholders obtained within 12 months before or after the Board
adopts a resolution authorizing any of the following actions: (a) the total
number of shares that may be issued under the Plan may not be increased (except
by adjustment pursuant to paragraph 13); (b) the provisions of paragraph 3
regarding eligibility for grants of ISOs may not be modified; (c) the provisions
of paragraph 6(B) regarding the exercise price at which shares may be offered
pursuant to ISOs may not be modified (except by adjustment pursuant to paragraph
13); and (d) the expiration date of the Plan may not be extended. Except as
otherwise provided in this paragraph 15, in no event may action of the Board or
stockholders alter or impair the rights of a grantee, without such grantee's
consent, under any Stock Right previously granted to such grantee.

16. MODIFICATIONS OF ISOS; CONVERSION OF ISOS INTO NON-QUALIFIED
OPTIONS. Subject to paragraph 13(D), without the prior written consent of the
holder of an ISO, the Committee shall not alter the terms of such ISO (including
the means of exercising such ISO) if such alteration would constitute a
modification (within the meaning of Section 424(h)(3) of the Code). The
Committee, at the written request or with the written consent of any optionee,
may in its discretion take such actions as may be necessary to convert such
optionee's ISOs (or any installments or portions of installments thereof) that
have not been exercised on the date of conversion into Non-Qualified Options at
any time prior to the expiration of such ISOs, regardless of whether the
optionee is an employee of the Company or a Related Corporation at the time of
such conversion. Such actions may include, but shall not be limited to,
extending the exercise period of such ISOs. At the time of such conversion, the
Committee (with the consent of the optionee) may impose such conditions on the
exercise of the resulting Non-Qualified Options as the Committee in its
discretion may determine, provided that such conditions shall not be
inconsistent with this Plan. Nothing in the Plan shall be deemed to give any
optionee the right to have such optionee's ISOs converted into Non-Qualified
Options, and no such conversion shall occur until and unless the Committee takes
appropriate action. Upon the taking of such action, the Company shall issue
separate certificates to the optionee with respect to Options that are
Non-Qualified Options and Options that are ISOs. The Committee, with the consent
of the optionee, may also terminate any portion of any ISO that has not been
exercised at the time of such conversion.

17. APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of shares pursuant to Options granted and Purchases authorized under the
Plan shall be used for general corporate purposes.

18. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. By accepting an ISO
granted under the Plan, each optionee agrees to notify the Company in writing
immediately after such optionee makes a Disqualifying Disposition (as described
in Sections 421, 422 and 424 of the Code and regulations thereunder) of any
stock acquired pursuant to the exercise of ISOs granted under the Plan. A
Disqualifying Disposition is generally any disposition occurring on or before
the later of (a) the date two years following the date the ISO was granted or
(b) the date one year following the date the ISO was exercised.

19. WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the exercise of a
Non-Qualified Option, the transfer of a Non-Qualified Stock Option pursuant to
an arm's-length transaction, the grant of an Award, the making of a Purchase of
Common Stock for less than its fair market value, the making of a Disqualifying
Disposition (as defined in paragraph 18), the vesting or transfer of restricted
stock or securities acquired on the exercise of an Option hereunder, or the
making of a distribution or other payment with respect to such stock or
securities, the Company may withhold, or may require the grantee to pay,
additional withholding taxes in respect of amounts that constitute compensation
includible in gross income. The Committee in its
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<PAGE> 30

discretion may condition (i) the exercise of an Option, (ii) the transfer of a
Non-Qualified Stock Option, (iii) the grant of an Award, (iv) the making of a
Purchase of Common Stock for less than its fair market value, or (v) the vesting
or transferability of restricted stock or securities acquired by exercising an
Option, on the grantee's making satisfactory arrangement for such withholding.
Such arrangement may include payment by the grantee in cash or by check of the
amount of the withholding taxes or, at the discretion of the Committee, by the
grantee's delivery of previously held shares of Common Stock or the withholding
from the shares of Common Stock otherwise deliverable upon exercise of a Option
shares having an aggregate fair market value equal to the amount of such
withholding taxes.

20. GOVERNMENTAL REGULATION. The Company's obligation to sell and deliver
shares of the Common Stock under this 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 send tax information statements to employees and former
employees that exercise ISOs under the Plan, and the Company may be required to
file tax information returns reporting the income received by grantees of
Options in connection with the Plan.

21. GOVERNING LAW. The validity and construction of the Plan and the
instruments evidencing Stock Rights shall be governed by the laws of the
Commonwealth of Massachusetts, or the laws of any jurisdiction in which the
Company or its successors in interest may be organized.

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APPENDIX B

CONCORD COMMUNICATIONS, INC.

1997 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
(AS AMENDED MARCH 8, 2000)

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 one hundred thirty thousand
(130,000) 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 automatically 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 the Common Stock, and (b)
starting with the 1998 Annual Meeting of Stockholders of the Company, 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 5,000 shares of the 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

B-1
<PAGE> 32

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 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
- -------------------------- ---------------
<S> <C>
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.

B-2
<PAGE> 33

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 33
Boston Post Road West, 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 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
B-3
<PAGE> 34

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. 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

B-4
<PAGE> 35

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, without approval of the stockholders, 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 in July 1997 and by the stockholders
of the Company on September 9, 1997. The Plan was 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.

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
<PAGE> 36

1646-PS-00
<PAGE> 37
DETACH HERE

PROXY

CONCORD COMMUNICATIONS, INC.

PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 25, 2000

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Gary E. Haroian and Melissa H. Cruz, and each of
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 25, 2000 at 8:00 a.m., Eastern
daylight savings 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 any adjournments thereof.

THIS 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
AND AUTHORITY WILL BE DEEMED GRANTED UNDER PROPOSAL 5.

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

<PAGE> 38

CONCORD COMMUNICATIONS, INC.
c/o Equiserve
P.O. Box 9398
Boston, MA 02205-9398

DETACH HERE
<TABLE>
<S> <C>

[X] Please mark
votes as in
this example.

1. To elect two members to the Board of Directors to FOR AGAINST ABSTAIN
serve for three-year terms as Class III Directors. 2. To approve the Company's 1997
NOMINEES: (01) John A. Blaeser, Stock Plan, as amended. [ ] [ ] [ ]
(02) Richard M. Burnes, Jr.
3. To approve the Corporation's FOR AGAINST ABSTAIN
1997 Non-Employee Director Stock
FOR WITHHELD Option Plan, as amended. [ ] [ ] [ ]
ALL [ ] [ ] FROM ALL
NOMINEES NOMINEES 4. To ratify the selection of the FOR AGAINST ABSTAIN
firm Arthur Andersen LLP as
auditors for the fiscal year [ ] [ ] [ ]
[ ] ending December 31, 2000.
-----------------------------------------------
For all nominees except as noted above 5. To transact such other business as may properly come before
the meeting or any postponements or adjournments thereof.

MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]

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.

Date:
</TABLE>