WHITE PINE SOFTWARE INC, DEF 14A, 1997-08-29

WHITE PINE SOFTWARE INC
DEF 14A, 1997-08-29
PREPACKAGED SOFTWARE

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SCHEDULE 14A INFORMATION

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

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))

[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12

White Pine Software, Inc.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)

Not Applicable
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (check the appropriate box):

[X] No fee required

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:

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[_] 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:

________________________________________________________________________

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LOGO

WHITE PINE SOFTWARE, INC.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 30, 1997

Notice is hereby given that the 1997 Annual Meeting of Stockholders of White
Pine Software, Inc., a Delaware corporation (the "Company"), will be held on
Tuesday, September 30, 1997, at 10 A.M., Eastern daylight savings time, at the
offices of Foley, Hoag & Eliot LLP, One Post Office Square, Boston,
Massachusetts 02109 (the "Meeting"), for the purpose of considering and voting
upon the following:

1. the election of three directors, who shall constitute the whole
Board of Directors of the Company;

2. the amendment of the White Pine Software, Inc. 1996 Incentive and
Nonqualified Stock Option Plan in order to increase the aggregate
number of shares of Common Stock available for grant thereunder from
550,000 to 1,000,000;

3. the approval of the White Pine Software, Inc. 1997 Director Stock
Option Plan, which would permit the Company to grant stock options
covering up to an aggregate of 150,000 shares of Common Stock to
non-employee directors of the Company; and

4. such further matters or business as may properly come before the
Meeting.

As of the date of this Notice, the Board of Directors of the Company has no
knowledge of any other business to be transacted at the Meeting.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR EACH OF THE DIRECTOR
NOMINEES NAMED IN THE ACCOMPANYING PROXY STATEMENT, FOR THE APPROVAL OF THE
AMENDMENT TO THE 1996 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN AND FOR THE
APPROVAL OF THE 1997 DIRECTOR STOCK OPTION PLAN.

The Board of Directors has fixed the close of business on Wednesday, August
13, 1997, as the record date for the determination of stockholders entitled to
notice of and to vote at the Meeting, including any adjournment thereof.

By order of the Board of Directors,

/s/ Mark L. Johnson
----------------------------
Mark L. Johnson
Secretary

August 29, 1997
Boston, Massachusetts

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE PROMPTLY COMPLETE,
DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE.

IF MORE THAN ONE PROXY IS ENCLOSED, PLEASE COMPLETE AND RETURN ALL OF THE
PROXIES.
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WHITE PINE SOFTWARE, INC.
542 AMHERST STREET
NASHUA, NEW HAMPSHIRE 03063

PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 30, 1997

This Proxy Statement and the enclosed Notice of Meeting and form of proxy
are being mailed to stockholders on or about August 29, 1997 in connection
with the solicitation by the Board of Directors (the "Board") of White Pine
Software, Inc. (the "Company") of proxies for use at the 1997 Annual Meeting
of Stockholders of the Company to be held at 10 A.M., Eastern daylight savings
time, on Tuesday, September 30, 1997, and at any and all adjournments thereof
(the "Meeting"). Proxies that have been properly executed and returned by a
stockholder will be voted in accordance with the stockholder's directions. If
no choice is specified by the stockholder, then the shares covered by the
proxy will be voted as recommended by management. Stockholders are encouraged
to vote on the matters to be considered. Any stockholder may revoke the
stockholder's proxy at any time before the proxy has been exercised by
providing the Company with a later dated proxy, by notifying the Secretary of
the Company in writing or by orally notifying the Secretary of the Company in
person at the Meeting.

As of the close of business on Wednesday, August, 13, 1997, the record date
for the determination of stockholders entitled to vote at the Meeting, there
were outstanding and entitled to vote 9,165,669 shares of the Company's common
stock, $.01 par value ("Common Stock"), and 158 holders of record of Common
Stock. Each share of Common Stock entitles its record holder to one vote on
each matter considered at the Meeting.

QUORUM AND TABULATION OF VOTES

Under the Company's By-Laws, the holders of a majority of the shares of
Common Stock outstanding and entitled to vote at the Meeting shall constitute
a quorum for the transaction of business at the Meeting. Shares of Common
Stock present in person or represented by proxy (including shares that abstain
or do not vote with respect to one or more of the matters presented for
stockholder approval) will be counted for the purpose of determining whether a
quorum exists at the Meeting.

The election of each director of the Company (Proposal One) requires the
affirmative vote of the holders of a plurality in favor of a nominee. The
affirmative vote of a majority of the shares of Common Stock properly cast at
the Meeting will be necessary to approve the proposal to amend the Company's
1996 Incentive and Nonqualified Stock Option Plan (Proposal Two) and the
proposal to approve the Company's 1997 Director Stock Option Plan (Proposal
Three).

The following shares will not be counted as votes cast or votes made in
favor of a given matter: (i) shares that abstain from voting as to such
matter; and (ii) shares held in "street name" by brokers or nominees who
indicate on their proxies that they do not have discretionary authority to
vote such shares as to such matter. Each matter will be tabulated separately.

Votes will be tabulated by Boston EquiServe L.P., the transfer agent and
registrar for the Common Stock.

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PROPOSAL ONE:
ELECTION OF DIRECTORS

PROPOSAL

The Company's By-Laws provide for a board of directors consisting of a
minimum of three members with the exact number of directors constituting the
whole board to be determined by the directors from time to time. By a
resolution duly adopted by the Board on August 28, 1997, the number of members
constituting the entire Board has been fixed at three. Immediately prior to
the adoption of such resolution, the number of members constituting the entire
Board had been fixed at five. The Board currently consists of Arthur H. Bruno
(Chairman), Howard R. Berke, Killko A. Caballero, Jonathan G. Morgan and
Pierre-Gabriel Vallee. The Board has nominated Messrs. Bruno, Caballero and
Morgan for re-election as directors. Mr. Berke and Mr. Vallee have declined to
stand for re-election. Each of Mr. Berke and Mr. Vallee has informed the
Company that his decision not to stand for re-election is not the result of
his disagreement with the Company on any matter relating to the Company's
operations, policies or practices.

The nominees have agreed to serve as directors if elected, and the Company
has no reason to believe that they will be unable to serve. In the event that
any of the nominees is unable or declines to serve as director at the time of
the Meeting, the Board will designate another nominee and proxies will be
voted in favor of such nominee.

The Company's Board is not classified. Each director elected at the Meeting
will hold office until the date of the Company's Annual Meeting of
Stockholders in 1998 (or special meeting in lieu thereof) and thereafter until
a successor is elected and qualified, or until he sooner dies, resigns, is
removed, or becomes disqualified.

The following table sets forth certain information with respect to each of
the nominees for election to the Board:

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND OTHER BUSINESS EXPERIENCE
NAME AGE AND DIRECTORSHIPS DURING PAST FIVE YEARS
- ------------------- --- ----------------------------------------------------------------
<S> <C> <C>
Arthur H. Bruno(1) 62 Director of the Company since February 1994 and Chairman since
June 1997. Mr. Bruno has been the Chairman of Castelle
Corporation, a networking and telecommunications company, since
October 1993, and served as the President and Chief Executive
Officer of Castelle Corporation from October 1993 until April
1997. Since July 1991, Mr. Bruno has served as a consultant to
Hambrecht & Quist LLC, a venture capital company. From 1991 to
1993, Mr. Bruno served as the Company's Chairman and Chief
Executive Officer.
Killko A. Caballero 37 Director of the Company since November 1995. Mr. Caballero has
been President of the Company since August 1997 and served as
Acting President from June 1997 to August 1997. From November
1995 to June 1995, he was the Senior Vice President of Research
and Development and Chief Technology Officer of the Company. Mr.
Caballero was a co-founder of About Software Corporation S.A., a
software company, and served as its President, Chief Executive
Officer and Chairman of the Board from July 1991 until November
1995, when it was acquired by the Company.
Jonathan G. Mor- 42 Director of the Company since May 1996. Since June 1993, Mr.
gan(1) Morgan has been Managing Director/Group Head of Investment
Banking--Technology of Prudential Securities Incorporated, an
investment banking firm. From June 1992 to June 1993, Mr. Morgan
was Managing Director/Group Head of Corporate Finance of the San
Francisco office of Sutro & Co., Inc., an investment banking
firm. From January 1992 to June 1992, he acted as an independent
financial consultant.
</TABLE>
- ------------
(1) Member of the Audit Committee and Compensation Committee.

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BOARD AND COMMITTEE MEETINGS

During the fiscal year ended December 31, 1996, the Board met five times and
acted by unanimous written consent twice. Each director participated in at
least 75% of the meetings of the Board held while such director was a member
of the Board.

The Board has an Audit Committee, which reviews the results and scope of the
annual audit of the Company's financial statements conducted by the Company's
independent accountants, the scope of other services provided by the Company's
independent accountants, and the Company's policies and procedures with
respect to its internal accounting, auditing and financial controls. The Audit
Committee also makes recommendations to the Board on the engagement of
independent accountants, as well as other matters that may come before the
Audit Committee or at the direction of the Board. The Audit Committee did not
meet in fiscal 1996. The current Audit Committee members are Messrs. Bruno and
Morgan.

The Board has a Compensation Committee, which provides recommendations
concerning salaries and incentive compensation for directors, officers and
employees of and consultants to the Company. The Compensation Committee also
administers the Company's stock option and its employee stock purchase plan.
In fiscal 1996, the Compensation Committee met twice and took action by
unanimous written consent three times. The current Compensation Committee
members are Messrs. Bruno and Morgan, each of whom participated in all of the
meetings of the Compensation Committee during fiscal 1996.

The Board does not have a standing Nomination Committee. The Board has
appointed an ad hoc Nomination Committee to identify and solicit persons to be
considered for election to the Board. The current members of the Board believe
that the Company would benefit from the depth and experience that might be
added by the election of additional directors. The current Nomination
Committee members are Messrs. Bruno and Morgan. The Nomination Committee was
appointed subsequent to fiscal 1996.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE
THREE NOMINEES FOR DIRECTORS LISTED IN THIS PROXY STATEMENT.

PROPOSAL TWO:
AMENDMENT OF 1996 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN

PROPOSAL

The White Pine Software, Inc. 1996 Incentive and Nonqualified Stock Option
Plan (the "1996 Option Plan") currently provides that the total number of
shares of Common Stock that may be issued pursuant to options granted
thereunder shall not exceed 550,000 (subject to adjustment upon certain
changes in capitalization of the Company). The Company is proposing that the
1996 Option Plan be amended to increase the number of shares of Common Stock
that may be issued pursuant to options granted under the 1996 Option Plan from
550,000 to 1,000,000. The full text of the 1996 Option Plan as proposed to be
amended is included as Appendix A, beginning on page A-1.

All of the 550,000 shares of Common Stock originally covered by the 1996
Option Plan have been issued upon option exercises or are the subject of
currently outstanding options. In April 1997, the Board voted, subject to
stockholder approval, to amend the 1996 Option Plan to increase the number of
shares of Common Stock that may be issued pursuant to options granted
thereunder from 550,000 to 1,000,000. The Board's vote was based on its
determination that it was desirable to have additional shares available to
cover future option grants to employees and that increasing the number of
shares available under the 1996 Option Plan would further align the interests
of the Company's stockholders and management and would assist the Company in
attracting and retaining executives and other employees. Since April 1997, the
Company has granted options to new and existing employees of the Company to
acquire a total of 222,450 of the 450,000 additional shares. In the event

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that Proposal Two is not approved, the Company anticipates that the options
purported to be issued under the 1996 Option Plan since April 1997 would be
exchanged for options that (i) would constitute "Nonqualified Options" (as
defined below), (ii) would be issued under a new stock option plan, and (iii)
would otherwise have terms, including exercise prices, identical to the
options for which they are being exchanged.

The Board has authorized the amendment of the 1996 Option Plan to increase
the number of shares available for issuance thereunder, but the amendment will
be effective only if Proposal Two is approved by the stockholders of the
Company. See "1996 Option Plan" below for a description of the material
features of the 1996 Option Plan, the classes of persons eligible to
participate therein, the approximate number of persons in each such class and
the basis of such participation. Under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), stockholder approval of this amendment
is necessary for stock options issuable under the 1996 Option Plan to qualify
as incentive stock options. Stockholder approval is also required to qualify
compensation received under the 1996 Option Plan as "performance-based
compensation" for purposes of Section 162(m) of the Code. Stockholder approval
of the amendment is also required under the terms of the 1996 Option Plan.

If Proposal Two is approved at the Meeting, the Company intends to file, as
soon as practicable after the Meeting, a registration statement on Form S-8
under the Securities Act of 1933, as amended (the "Securities Act"), covering
the 450,000 additional shares of Common Stock issuable pursuant to stock
options granted under the 1996 Option Plan, as amended.

1996 OPTION PLAN

The 1996 Option Plan, as adopted by the Company's Board in July 1996 and
subsequently approved by the Company's stockholders, provides that the total
number of shares of Common Stock that may be issued pursuant to options
granted thereunder shall not exceed 550,000 (subject to adjustment upon
certain changes in capitalization of the Company). In April 1997, the Board
adopted an amendment to the 1996 Option Plan to increase the number of shares
of Common Stock that may be issued pursuant to options granted thereunder from
550,000 to 1,000,000.

The 1996 Option Plan authorizes (i) the grant of options to purchase Common
Stock intended to qualify as incentive stock options ("Incentive Options"), as
defined in Section 422 of the Code, and (ii) the grant of options that do not
so qualify ("Nonqualified Options"). The exercise price of Incentive Options
granted under the 1996 Option Plan must be at least equal to the fair market
value of the Common Stock on the date of grant. The exercise price of
Incentive Options granted to an optionee who owns stock possessing more than
10% of the voting power of the Company's outstanding capital stock must equal
at least 110% of the fair market value of the Common Stock on the date of
grant. The exercise price of Nonqualified Options granted under the 1996
Option Plan must not be less than 85% of the fair market value of the Common
Stock on the grant date.

The 1996 Option Plan is administered by the Compensation Committee of the
Board. The Compensation Committee selects the individuals to whom options are
granted and determines the option exercise price and other terms of each
award, subject to the provisions of the 1996 Option Plan. Incentive Options
may be granted under the 1996 Option Plan to employees, including officers and
directors who are also employees. As of August 13, 1997, approximately 113
employees were eligible to participate in the 1996 Option Plan. Nonqualified
Options may be granted under the 1996 Option Plan to employees, officers,
individuals providing services to the Company, and directors, whether or not
they are employees of the Company.

No option may extend for more than ten years from the date of grant, and any
option granted to an optionee who owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or any
parent or subsidiary (a "greater-than-ten-percent-stockholder") may not extend
for more than five years from the date of grant. The aggregate fair market
value (determined at the time of grant) of shares issuable pursuant to
Incentive Options which first become exercisable by an employee or officer in
any calendar year may not exceed $100,000.

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Options are non-transferable except by will or by the laws of descent or
distribution and are exercisable, during the optionee's lifetime, only by the
optionee. Options generally may not be exercised after (i) thirty days after
termination of the optionee's employment with the Company (other than as a
result of death or permanent or total disability), including upon the
optionee's retirement, and (ii) twelve months after termination of the
optionee's employment with the Company as a result of the death of the
optionee or the permanent and total disability of the optionee under the then-
established rules of the Company.

Payment of the exercise price of the shares of Common Stock subject to the
option may be made with (a) cash, check, bank draft or money order for an
amount equal to the option price for such shares, (b) if permitted by the
instrument evidencing the option (or, in the case of a Nonqualified Option,
with the consent of the Compensation Committee), shares of Common Stock having
a fair market value equal to the option price of such shares, (c) delivery of
an unconditional and irrevocable undertaking by a broker to deliver promptly
to the Company sufficient funds to pay the option price, (d) if permitted by
the instrument evidencing the option (or, in the case of a Nonqualified
Option, with the consent of the Compensation Committee), delivery of a
promissory note of the optionee to the Company, payable on such terms as are
specified by the Compensation Committee, or (e) with the consent of the
Compensation Committee, a combination of the foregoing; provided that so much
of the exercise price as represents the par value of the shares must be paid
other than by the optionee's promissory note or personal check.

At August 13, 1997, 12,750 shares were vested and issuable upon exercise of
outstanding options granted under the 1996 Option Plan and no shares had been
purchased upon exercises of options granted thereunder. In February 1997, the
Company filed a registration statement on Form S-8 under the Securities Act to
register the original 550,000 shares of the Company's Common Stock that may be
issued pursuant to options granted under the 1996 Option Plan. If Proposal Two
is approved at the Meeting, the Company intends to file, as soon as
practicable after the Meeting, a registration statement covering the
additional 450,000 shares of Common Stock that would be issuable under the
1996 Option Plan.

The Board may modify, revise or terminate the 1996 Option Plan at any time
and from time to time, except that the class of persons eligible to receive
options and the aggregate number of shares issuable pursuant to the 1996
Option Plan may not be changed or increased (other than pursuant to certain
changes in the Company's capital structure) without the consent of the
stockholders of the Company.

The proposed amendment to the 1996 Option Plan will not affect the manner in
which the number of options to be received by or allocated to participants in
the 1996 Option Plan are determined nor would the proposed amendment, if it
had been effective during fiscal 1996, have affected the determination of such
amounts in fiscal 1996. The Company is unable to determine the dollar value
and number of options which will be received by or allocated to (i) any of the
Company's executive officers, (ii) the Company's current executive officers,
as a group, (iii) the Company's current directors who are not executive
officers, as a group, or (iv) the Company's employees who are not executive
officers, as a group, as a result of the proposed amendment because options
are granted by the Compensation Committee of the Board on a discretionary
basis.

FEDERAL INCOME TAX INFORMATION WITH RESPECT TO THE 1996 OPTION PLAN

The grantee of a Nonqualified Option recognizes no income for federal income
tax purposes on the grant thereof. On the exercise of a Nonqualified Option,
the difference between the fair market value of the underlying shares of
Common Stock on the exercise date and the option exercise price is treated as
compensation to the holder of the option taxable as ordinary income in the
year of exercise, and such fair market value becomes the basis for the
underlying shares which will be used in computing any capital gain or loss
upon disposition of such shares. Subject to certain limitations, the Company
may deduct for the year of exercise an amount equal to the amount recognized
by the option holder as ordinary income upon exercise of a Nonqualified
Option.

The grantee of an Incentive Option recognizes no income for federal income
tax purposes on the grant thereof. Except as provided below with respect to
the alternative minimum tax, there is no tax upon exercise of

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an Incentive Option. If no disposition of shares acquired upon exercise of the
Incentive Option is made by the option holder within two years from the date
of the grant of the Incentive Option or within one year after exercise of the
Incentive Option, any gain realized by the option holder on the subsequent
sale of such shares is treated as a long-term capital gain for federal income
tax purposes. If the shares are sold prior to the expiration of such periods,
the difference between the lesser of the value of the shares at the date of
exercise or at the date of sale and the exercise price of the Incentive Option
is treated as compensation to the employee taxable as ordinary income and the
excess gain, if any, is treated as capital gain (which will be long-term
capital gain if the shares are held for more than one year).

The excess of the fair market value of the underlying shares over the option
price at the time of exercise of an Incentive Option will constitute an item
of tax preference for purposes of the alternative minimum tax. Taxpayers who
incur the alternative minimum tax are allowed a credit which may be carried
forward indefinitely to be used as a credit against the regular tax liability
in a later year; however, the minimum tax credit can not reduce the regular
tax below the alternative minimum tax for that carryover year.

In connection with the sale of the shares covered by Incentive Options, the
Company is allowed a deduction for tax purposes only to the extent, and at the
time, the option holder receives ordinary income (for example, by reason of
the sale of shares by the holder of an Incentive Option within two years of
the date of the granting of the Incentive Option or one year after the
exercise of the Incentive Option), subject to certain limitations on the
deductibility of compensation paid to executives.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE
AMENDMENT TO THE WHITE PINE SOFTWARE, INC. 1996 INCENTIVE AND NONQUALIFIED
STOCK OPTION PLAN.

PROPOSAL THREE:
APPROVAL OF 1997 DIRECTOR STOCK OPTION PLAN

PROPOSAL

The Company is proposing that the White Pine Software, Inc. 1997 Director
Stock Option Plan (the "Director Option Plan") be approved in order to permit
the Company to grant stock options covering up to an aggregate of 150,000
shares of Common Stock to members of the Company's Board who are not employees
of the Company or any parent or subsidiary of the Company ("Outside
Directors"). The full text of the Director Option Plan is included as Appendix
B, beginning on page B-1.

The purpose of the Director Option Plan is to encourage ownership of capital
stock of the Company by Outside Directors in order to help the Company attract
and retain persons of exceptional competence to the Company's Board and to
furnish an added incentive for Outside Directors to increase their efforts on
behalf of the Company. The Company does not pay fees to members of the Board.
See "Remuneration of Executive Officers and Directors--Directors'
Compensation" below.

The two nominees who would constitute Outside Directors are Arthur H. Bruno
and Jonathan G. Morgan. Mr. Bruno currently holds stock options to purchase
85,000 shares of Common Stock at an exercise price of $0.50 per share, which
options were granted in February 1992 while Mr. Bruno was serving as the
Chairman and Chief Executive Officer of the Company. Mr. Morgan currently
holds stock options to purchase 5,000 shares of Common Stock at an exercise
price of $6.00 per share, which options were granted under the 1996 Option
Plan when he joined the Board in July 1996.

The Board has authorized the adoption of the Director Option Plan, but the
Director Option Plan will be effective only if Proposal Three is approved by
the stockholders of the Company.

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The Director Option Plan authorizes automatic formula stock option grants to
Outside Directors as follows:

(1) Each person who is re-elected or initially elected as an Outside
Director on the date of the annual meeting of stockholders (or special
meeting in lieu thereof) at which the Director Option Plan is adopted by
the stockholders of the Company (the "Adoption Date") shall be granted
on the Adoption Date an option to purchase 15,000 shares of Common Stock
(subject to adjustment as provided in the Director Option Plan) (the
"Initial Option").

(2) Each person initially elected (whether by the stockholders or by the
board of directors) as an Outside Director at any time after the
Adoption Date shall be granted, as of the date of his or her initial
election to the Board, an option to purchase 15,000 shares of Common
Stock (subject to adjustment as provided in the Director Option Plan).

(3) Each person who is re-elected as an Outside Director by the
stockholders of the Company at any time after the Adoption Date shall be
granted, on the date of the meeting or written consent of the
stockholders at or by which he or she is re-elected as an Outside
Director, an option to purchase 10,000 shares of Common Stock (subject
to adjustment as provided in the Director Option Plan), provided that he
or she has served as an Outside Director of the Company for at least the
three months immediately preceding that meeting.

Each option granted under the Director Option Plan shall become vested and
exercisable in full immediately prior to the first annual meeting of
stockholders (or special meeting in lieu thereof) at which Board members are
elected following the meeting of the stockholders or the board of directors at
which the option was granted, provided that the Outside Director holding such
option has served without interruption since the grant date and continues to
be a member of the Board at the time of vesting. Notwithstanding the
foregoing, if an Outside Director received an Initial Option within three
months of the next annual meeting (or special meeting in lieu thereof) at
which Board members are elected, his or her Initial Option shall vest not at
that meeting, but at the subsequent annual meeting of stockholders (or special
meeting in lieu thereof) at which Board members are elected. Each option
granted under the Director Option Plan would expire upon the earlier of (i)
the date which is the ten-year anniversary of the date on which the option was
granted, and (b) the date which is the one-year anniversary of the date on
which the option holder ceased serving as an Outside Director of the Company.

If Proposal Three is approved at the Meeting, the Company intends to file,
as soon as practicable after the Meeting, a registration statement on Form S-8
under the Securities Act covering the 150,000 shares of Common Stock issuable
pursuant to stock options granted under the Director Option Plan.

DIRECTOR OPTION PLAN

The Director Option Plan provides that the total number of shares of Common
Stock that may be issued pursuant to options granted thereunder shall not
exceed 150,000 (subject to adjustment upon certain changes in capitalization
of the Company). The Board initially adopted the Director Option Plan on April
30, 1997 and adopted certain amendments to the Director Option Plan on August
5, 1997. The Director Option Plan cannot become effective unless it is
approved by the stockholders of the Company.

The Director Option Plan authorizes the automatic formula grant of
Nonqualified Options to Outside Directors. The terms of the automatic stock
option grants that shall be made to Outside Directors under the Director
Option Plan at and after the Meeting if Proposal Three is adopted are
described in the "Proposal" section above.

The exercise price of Nonqualified Options granted under the Director Option
Plan must equal the fair market value of the Common Stock on the grant date.
No such Nonqualified Option may extend for more than ten years from the date
of grant. Nonqualified Options granted under the Director Option Plan are non-
transferable except by will or by the laws of descent or distribution and are
exercisable, during the optionee's lifetime, only by the optionee.

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Payment of the exercise price of the shares of Common Stock subject to a
Nonqualified Option granted under the Director Option Plan may be made with
(a) cash, check, bank draft or money order for an amount equal to the option
price for such shares, (b) if permitted by the instrument evidencing the
option (or with the consent of the Compensation Committee), shares of Common
Stock having a fair market value equal to the option price of such shares, (c)
delivery of an unconditional and irrevocable undertaking by a broker to
deliver promptly to the Company sufficient funds to pay the option price, (d)
if permitted by the instrument evidencing the option (or with the consent of
the Compensation Committee), delivery of a promissory note of the optionee to
the Company, payable on such terms as are specified by the Compensation
Committee, or (e) with the consent of the Compensation Committee, a
combination of the foregoing; provided that so much of the exercise price as
represents the par value of the shares must be paid other than by the
optionee's promissory note or personal check.

If Proposal Three is approved by the stockholders of the Company, the
Company intends to file, as soon as practicable after the Meeting, a
registration statement covering the 150,000 shares of Common Stock that would
be issuable under the Director Option Plan.

The Board may modify, revise or terminate the Director Option Plan at any
time and from time to time, except that the class of persons eligible to
receive options, the terms of the automatic grant provisions and the aggregate
number of shares issuable pursuant to the Director Option Plan may not be
changed or increased (other than pursuant to certain changes in the Company's
capital structure) without the consent of the stockholders of the Company.

Except as set forth below, the Company is unable to determine the dollar
value and number of options which will be received by or allocated to the
Company's director nominees or executive officers as a result of the adoption
of the Director Option Plan. The following table sets forth information
concerning the benefits that will be received by or allocated to the persons
specified, assuming that Proposals One and Three are approved:

<TABLE>
<CAPTION>
NUMBER OF
DOLLAR SECURITIES UNDERLYING
NAME AND POSITION VALUE($) OPTIONS GRANTED
----------------- ------- ---------------------
<S> <C> <C>
Arthur H. Bruno, Director....................... (1) 15,000(2)
David O. Bundy.................................. -- --
Killko A. Caballero............................. -- --
Jonathan G. Morgan, Director.................... (1) 15,000(2)
Executive officers (as a group)................. -- --
Directors who are not executive officers (as a
group).......................................... (1) 30,000(2)
All employees who are not executive officers (as
a group)........................................ -- --
</TABLE>
- --------
(1) The dollar value of the options to be granted is not determinable at this
time. Each such option will be granted at an exercise price equal to the
fair market value of Common Stock (determined in accordance with the terms
of the Director Option Plan) on the date of grant.
(2) Represents shares of Common Stock issuable pursuant to Nonqualified
Options to be granted to Messrs. Bruno and Morgan pursuant to automatic
formula stock option grants under the Director Option Plan on the date of
the Meeting. Does not include shares of Common Stock issuable pursuant to
Nonqualified Options that would automatically be granted to Outside
Directors under the Director Option Plan after the date of the Meeting.

FEDERAL INCOME TAX INFORMATION WITH RESPECT TO THE DIRECTOR OPTION PLAN

8
<PAGE>

basis for the underlying shares which will be used in computing any capital
gain or loss upon disposition of such shares. Subject to certain limitations,
the Company may deduct for the year of exercise an amount equal to the amount
recognized by the option holder as ordinary income upon exercise of a
Nonqualified Option.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE
WHITE PINE SOFTWARE, INC. 1997 DIRECTOR STOCK OPTION PLAN.

INTERESTS OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON

None of the director nominees or executive officers of the Company has any
interest in the adoption of Proposal Two except that, in the future, the
Company's directors and executive officers might, in the discretion of the
Compensation Committee, be granted options under the 1996 Option Plan that are
exercisable for some portion of the additional shares proposed to be made
available for grants of options under Proposal Two.

None of the director nominees or executive officers of the Company has any
interest in the adoption of Proposal Three except that if Proposals One and
Three are approved:

(1) Each of Arthur H. Bruno and Jonathan G. Morgan would be automatically
granted a Nonqualified Option to purchase 15,000 shares of Common Stock as
described under "Proposal Three: Approval of 1997 Director Stock Option
Plan" above.

(3) In the future, the Company's Outside Directors may, pursuant to automatic
formula stock option grants, be granted additional Nonqualified Options
under the Director Option Plan.

See also the discussion in the final paragraph under "Proposal Three:
Approval of 1997 Director Stock Option Plan--Director Option Plan."

9
<PAGE>

REMUNERATION OF EXECUTIVE OFFICERS AND DIRECTORS

DIRECTORS' COMPENSATION

The Company reimburses members of the Board for out-of-pocket expenses
incurred in connection with attendance at meetings of the Board and committees
thereof. The Company does not pay fees to members of the Board and presently
has no plans to pay directors' fees.

On July 18, 1996, the Company granted Mr. Morgan a nonqualified option to
purchase 5,000 shares of Common Stock at an exercise price of $6.00 per share.
If Proposal Three is approved by the stockholders of the Company, Outside
Directors will be eligible for automatic formula stock option grants and other
option grants under the Director Option Plan. See "Proposal Three: Approval of
1997 Director Stock Option Plan."

EXECUTIVE COMPENSATION

Summary Compensation Table. The following table provides certain summary
information for the fiscal year ended December 31, 1996 concerning
compensation paid to the Company's Chief Executive Officer and the other three
executive officers whose compensation for services rendered in all capacities
to the Company was in excess of $100,000.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
---------------------- -------------
SECURITIES ALL OTHER
UNDERLYING COMPEN-
NAME AND PRINCIPAL POSITION(S) YEAR SALARY($) BONUS($) OPTIONS(#)(1) SATION($)
- ------------------------------ ---- --------- -------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Howard R. Berke(2) 1996 $165,600 -- (3) -- --
President and Chief Exec- 1995 $148,433 $50,000 -- --
utive Officer 1994(4) $ 91,750 $37,000 $209,067(5) $79,812(6)

Killko A. Caballero(7) 1996 $ 90,420 $10,000(8) -- --
Senior Vice President of 1995 $ 15,070 -- -- --
Research and Development 1994(4) -- -- -- --
and Chief Technology Of-
ficer
David O. Bundy 1996 $110,000 $15,000 $ 10,000(9) --
Vice President of 1995 $ 89,661 $20,000 -- --
Engineering 1994(4) $ 76,750 $ 3,500 $ 15,000(10) --

Jack A. Dutzy(11) 1996 $103,000(12) $13,557 $ 25,000(13) --
Vice President of Sales, 1995 $ 22,917 $ 2,500 -- --
Americas 1994(4) -- -- -- --

</TABLE>
- --------
(1) All of the options have a maximum term of 10 years, subject to earlier
termination in the event of the optionee's cessation of service with the
Company. The options are exercisable during the optionee's lifetime only
by the optionee; they are exercisable by the optionee only while the
optionee is an employee or advisor of the Company and for certain limited
periods of time thereafter in the event of termination of employment.
(2) Mr. Berke's employment with the Company ended on June 4, 1997.
(3) Mr. Berke's bonus for 1996 consisted of (a) options which were granted on
January 10, 1997 and, upon vesting, will be exercisable to acquire an
aggregate of 150,000 shares of Common Stock at a price of $6.00 per share
and (b) a cash payment of $40,000 awarded and paid in 1997.
(4) Fiscal year 1994 consisted of the nine months ended December 31, 1994.
(5) Options were granted on February 22, 1994 under the Stock Option Plan
(1993). One thirty-sixth of the options vest on a monthly basis
commencing on February 22, 1994.
(6) Represents relocation expenses.
(7) Mr. Caballero served as Acting President of the Company from June 4, 1997
to August 5, 1997, at which time he became the President of the Company.
(8) Mr. Caballero's bonus for 1996 included a cash payment of $5,000 awarded
and paid in 1997.
(9) Options were granted on February 29, 1996 and May 6, 1996 under the Stock
Option Plan (1995) and the Stock Option Plan (1993), respectively. One
thirty-sixth of the options granted vest on a monthly basis commencing on
February 22, 1994.
(10) Options were granted on June 2, 1994 under the Stock Option Plan (1994).
One thirty-sixth of the options vest on a monthly basis commencing on
June 2, 1994.

10
<PAGE>

(11) Mr. Dutzy's employment with the Company ended on April 4, 1997.
(12) Includes $14,252 earned as commissions.
(13) Options were granted on February 29, 1996. Five thirty-sixths of the
options vested on March 1, 1996, and one thirty-sixth of the options vest
on a monthly basis thereafter.

Option Grants in Last Fiscal Year. The following table summarizes (i) option
grants to the Named Executive Officers during the year ended December 31, 1996
and (ii) the value of the options held by the Named Executive Officers at
December 31, 1996. No options were granted to Mr. Berke or Mr. Caballero
during the year ended December 31, 1996.

OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------ VALUE AT ASSUMED
NUMBER OF ANNUAL RATE OF STOCK
SECURITIES PERCENT OF TOTAL PRICE APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OPTION TERM(1)
OPTIONS TO EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME GRANTED(#) FISCAL YEAR(1) ($/SH) DATE 5%($) 10%($)
---- ---------- ---------------- -------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
David O. Bundy.......... 5,000(2) 1.8% $2.50 2-29-06 $ 7,861 $ 19,922
5,000(3) 1.8% 5.00 5-6-01 15,722 39,844
Jack A. Dutzy........... 25,000(4) 8.7% 2.50 2-29-06 39,306 99,609
</TABLE>
- --------
(1) The amounts shown represent hypothetical gains that could be achieved for
the respective options if exercised at the end of their option terms.
These gains are based on assumed rates of stock appreciation of five
percent and ten percent, compounded annually from the date the respective
options were granted to the date of their expiration. The gains shown are
net of the option price, but do not include deductions for taxes or other
expenses that may be associated with the exercise. Actual gains, if any,
on stock option exercises will depend on future performance of the Common
Stock, the optionholders' continued employment through the option term and
the date on which the options are exercised.
(2) Options were granted on February 29, 1996 under the Stock Option Plan
(1995). One thirty-sixth of the options granted vest on a monthly basis
commencing on February 29, 1996.
(3) Options were granted on May 6, 1996 under the Stock Option Plan (1993).
One thirty-sixth of the options granted vest on a monthly basis commencing
on May 6, 1996 .
(4) Options were granted on February 29, 1996. Five thirty-sixths of the
options vested on March 1, 1996, and one-thirty sixth of the options vest
on a monthly basis thereafter.

Option Exercises and Fiscal Year-End Values. The following table sets forth
information concerning stock options exercised during the year ended December
31, 1996 and unexercised stock options held on December 31, 1996 by the Named
Executive Officers.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED VALUE OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END($)(1)
ON REALIZED ------------------------------ ------------------------------
NAME EXERCISE(#) ($) EXERCISABLE(#) UNEXERCISABLE(#) EXERCISABLE($) UNEXERCISABLE($)
- ---- ---------- -------- ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Howard R. Berke......... 20,000 100,000 183,260 5,807 $1,145,375 $36,294
Killko A. Caballero..... -- -- -- -- -- --
David O. Bundy.......... -- -- 35,556 9,444 225,489 38,261
Jack A. Dutzy........... -- -- 7,079 17,921 37,165 94,085
</TABLE>
- --------
(1) The closing sale price for the Company's Common Stock as reported on the
Nasdaq National Market on December 31, 1996 was $7.25. Value is calculated
on the basis of the difference between the option exercise price and
$7.25, multiplied by the number of shares of Common Stock underlying the
options.

11
<PAGE>

CERTAIN TRANSACTIONS

FINANCING AND STOCKHOLDER AGREEMENTS

In December 1995, in connection with the Company's purchase of all of the
outstanding shares of ASC, the Company agreed to issue 403,324 shares of its
Common Stock to Killko A. Caballero, a Director and the Senior Vice President
of Research and Development and Chief Technology Officer of the Company, in
exchange for 7,904 shares of ASC. In the same transaction, the Company agreed
to issue an aggregate of 766,286 shares of Common Stock to Sofinnova S.A.,
Sofinnova Capital FCPR, and CV Sofinnova Ventures Partners II (together, the
"Sofinnova Entities"), which own beneficially more than 5% of the outstanding
shares of Common Stock of the Company, in exchange for an aggregate of 15,017
shares of ASC.

In March 1996, all of the Company's stockholders who then owned beneficially
more than five percent of the outstanding shares of Common Stock, Arthur H.
Bruno, a Director of the Company, and all of the then-current executive
officers of the Company entered into an agreement with the Company and certain
other stockholders of the Company (the "Shareholders' Agreement") pursuant to
which the parties to the agreement were granted a right of participation in
and a right of first refusal with respect to certain sales of shares by
certain management stockholders. The parties to the Shareholders' Agreement
were also granted a preemptive right to purchase all or part of their pro rata
shares of New Securities (as defined in the Shareholders' Agreement) issued by
the Company. The Shareholders' Agreement was amended in July 1996 such that it
terminated immediately prior to the consummation of the Company's initial
public offering on October 17, 1996.

Pursuant to the Shareholders' Agreement, the parties to the Shareholders'
Agreement entered into a Designation and Election of Directors agreement
whereby the parties agreed to vote all the shares of the Company's stock held
by them so as to fix the number of the Directors of the Company at five and to
elect to the Board individuals designated by specified stockholders and
affiliates of the Company. The Directors initially designated pursuant to this
agreement were Arthur H. Bruno, Howard R. Berke, Pierre-Gabriel Vallee and
Killko A. Caballero. A representative of the Sofinnova Entities served as the
fifth director until Jonathan G. Morgan was elected in May 1996. In addition,
the Sofinnova Entities were granted the right to have a representative attend
all meetings of the Company's Board in a non-voting capacity as long as they
hold at least 50% of the shares owned by them as of December 15, 1995. This
agreement terminated upon termination of the Shareholders' Agreement,
immediately prior to the consummation of the Company's initial public offering
on October 17, 1996.

EMPLOYMENT AND SEVERANCE AGREEMENTS

On January 3, 1994, the Company entered into an agreement with Howard R.
Berke, whereby Mr. Berke agreed to serve as the President and Chief Executive
Officer of the Company. The initial term of the agreement ended on January 3,
1996, but the agreement automatically renewed for the period beginning on
January 3, 1996 and ending on June 4, 1997, the date Mr. Berke terminated his
employment with the Company. Pursuant to the agreement, during fiscal 1996,
Mr. Berke received a base salary of approximately $165,000, which was
increased to $175,000 as of January 1, 1997. Pursuant to the agreement, Mr.
Berke was entitled to receive an incentive bonus of up to 50 percent of his
base compensation, based upon goals established by the Board and other
performance measures determined in the discretion of the Board. In addition,
pursuant to the agreement, Mr. Berke was granted a stock option to purchase
209,067 shares of Common Stock at an exercise price of $1.00 per share. The
employment agreement with Mr. Berke provided, in the event Mr. Berke's
employment is terminated without cause, Mr. Berke will be entitled to a pro
rata portion of (i) his incentive bonus earned through the termination date
and (ii) his salary for six months or until he becomes employed elsewhere,
whichever occurs first; if his new salary is lower than his base salary at the
Company, however, the Company will pay the difference for the balance of this
six-month period. If his employment is terminated with cause, he is entitled
to receive 15 days' salary. Pursuant to an amendment to the agreement, the
Company reimbursed Mr. Berke for $79,812 in moving and temporary accommodation
expenses in December 1994. Mr. Berke is entitled to participate in all
employee benefits, including health, vision, dental and retirement plans, that
the Company

12
<PAGE>

provides to its employees generally. The agreement provides that Mr. Berke
will not directly or indirectly compete with the Company or solicit its
employees, customers or prospective customers on behalf of himself or any
entity that engages in any business involving the sale, distribution,
development or research concerning computer software in breach of the
agreement during the term of the agreement and for a period of one year
following the date of the termination of his employment.

On June 4, 1997, Mr. Berke resigned from his employment with the Company. In
connection with the resignation, the Company entered into a separation
agreement with Mr. Berke, effective as of June 4, 1997 (the "Separation
Agreement"). Pursuant to the terms of the Separation Agreement, Mr. Berke is
entitled to receive salary payments for a period of six months beginning on
June 5, 1997 and ending on December 4, 1997. The salary payments will be made
at the annual rate of $175,000 per year. In addition, Mr. Berke is entitled to
receive reduced salary payments, based on a formula, beginning on December 5,
1997 and at two-week intervals thereafter if he is not employed in any
capacity by any employer. The Separation Agreement also permits Mr. Berke to
exercise his stock options, regardless of their original terms, at any time
through the date occurring fifteen months after the date of the Meeting. Mr.
Berke's stock options will continue to vest in accordance with the terms of
the related stock option agreements through the date which is the earlier of
(a) the date occurring fifteen months after the Meeting and (b) the date on
which Mr. Berke is reemployed in any capacity by any employer.

The Company entered into a nondisclosure and noncompetition agreement with
David O. Bundy dated February 15, 1996. Pursuant to the agreement, Mr. Bundy
agreed that while employed by the Company and for a period of 18 months
following the termination of his employment with the Company for any reason,
he will not, directly or indirectly, compete with the Company or solicit any
of the Company's employees, contractors, suppliers, existing customers or
prospective customers on behalf of himself or any other entity that engages in
the sale, distribution or development of or research concerning computer
software and technology in breach of the agreement. Either party may terminate
the agreement by giving the other party 30 days' prior written notice. If Mr.
Bundy's employment is terminated without cause during the term of the
agreement, he will be entitled to his base salary for six months or until he
becomes employed elsewhere, whichever occurs first; provided, however, that if
his new salary is lower than his base salary at the Company, the Company will
pay the difference for the balance of this six-month period. Pursuant to the
agreement, Mr. Bundy was granted a stock option to purchase 5,000 shares of
Common Stock at an exercise price of $2.50 per share.

On October 10, 1995, the Company entered into a two-year employment
agreement with Killko A. Caballero, whereby Mr. Caballero agreed to serve as
Senior Vice President of Product Development and Chief Technical Officer of
the Company. Pursuant to the agreement, Mr. Caballero receives a base salary
of $100,000, which is reviewed annually, and is eligible to receive an annual
fiscal year incentive bonus with a maximum annual amount of $20,000. During
the first year of the agreement, Mr. Caballero was guaranteed to receive one-
half of the incentive bonus. He is entitled to participate in all employee
benefits, including health, vision, dental and retirement plans, that the
Company provides to its employees generally. If Mr. Caballero's employment is
terminated without cause during the first two years of the term of the
agreement, Mr. Caballero will be entitled to (i) a pro rata portion of his
incentive bonus earned through the termination date and (ii) his salary for
six months or until he becomes employed elsewhere, whichever occurs first;
provided, however, that if his new salary is lower than his base salary at the
Company, the Company will pay the difference for the balance of this six-month
period. During the second year of the agreement, if Mr. Caballero's employment
is terminated without cause and (i) he is entitled to some payment of base
salary and incentive bonus and (ii) he is unable to secure employment in the
United States within ninety days and this results in his deportation, the
Company shall pay him $10,000 in relocation fees. The agreement provides that
Mr. Caballero will not directly or indirectly compete with the Company or
solicit its employees, customers or prospective customers on behalf of himself
or any entity that engages in any business involving the sale, distribution,
development or research concerning computer software in breach of the
agreement during the term of the agreement and for a period of one year
following the date of his termination. Mr. Caballero served as the Company's
Acting President from June 4, 1997 through August 5, 1997, when he became the
Company's President.

13
<PAGE>

On April 4, 1997, Jack A. Dutzy, Vice President of Sales, Americas
terminated his employment with the Company. In connection with the
termination, the Company entered into a separation agreement with Mr. Dutzy,
effective as of April 4, 1997. Pursuant to the terms of the agreement, Mr.
Dutzy received salary payments for a sixteen-week period beginning on April 5,
1997 and ending on July 25, 1997 at the rate of $3,076.93, payable at the end
of every other week during the sixteen-week payment period. In addition, Mr.
Dutzy is permitted to exercise any of his stock options which were vested as
of April 4, 1997, regardless of their original terms, at any time through the
earlier of (a) December 31, 1997 and (b) the date on which Mr. Dutzy is
reemployed in any capacity by any employer. On April 4, 1997, Mr. Dutzy's
vested stock options could be exercised for a maximum of 12,494 shares of
Common Stock.

REGISTRATION RIGHTS

In connection with prior issuances of shares of Common Stock and the
Company's previously outstanding Common Stock, $5.83 par value per share
("$5.83 Stock"), the Company granted certain rights with respect to the
registration under the Securities Act of the shares of outstanding Common
Stock and the shares of Common Stock issuable upon the conversion or exercise
of any other securities owned by certain stockholders of the Company. Based on
securities outstanding as of August 13, 1997, it is estimated that such
stockholders hold an aggregate of 5,576,103 shares of Common Stock, including
394,511 shares of Common Stock (the "Registrable Converted Shares") previously
issued upon conversion of outstanding shares of $5.83 Stock, and options to
purchase an aggregate of 317,555 shares of Common Stock (collectively, the
"Registrable Shares").

The holders of more than 50% of the then-outstanding Registrable Converted
Shares are entitled, at any time, to request that the Company file a
registration statement under the Securities Act covering the sale of some or
all of the Registrable Converted Shares then held by such holders, provided
that (i) the Company is not required to effect more than one such demand
registration, (ii) the effective date of such registration statement could not
occur prior to April 10, 1997 and (iii) the aggregate market value of the
Registrable Converted Shares registered pursuant to such request shall not
exceed $2,300,000. The holders of more than 50% of the then-outstanding
Registrable Shares are entitled, at any time after April 9, 1997, to request
that the Company file a registration statement under the Securities Act
covering the sale of some or all of the Registrable Shares then held by such
holders, provided that the Company is not required to effect more than one
such demand registration. Within 75 days of receipt of any such request, the
Company must file a Registration Statement with respect to such Registrable
Converted Shares of Registrable Shares, as the case may be, and must use its
best efforts to cause the offering of such shares to be registered under the
Securities Act. The underwriters (if any) of any offering of such shares have
the right, subject to certain conditions, to limit the number of Registrable
Shares included in the registration. Moreover, the Company must use its best
efforts to qualify for registration on Form S-3 (or any comparable or
successor form). Once the Company has qualified to use Form S-3 to register
securities under the Securities Act, the holders of Registrable Converted
Shares shall have the right to request an unlimited number of registrations on
Form S-3, provided that the Company is not required to register Registrable
Shares having an aggregate market value less than $1,000,000. The Company is
not required to register any Registrable Shares if in the opinion of its
counsel such shares may be sold without registration under the Securities Act
in the manner and in the quantity in which such shares were proposed to be
sold.

Each holder of Registrable Shares has agreed that, upon the request of the
Company and the managing underwriter of an offering by the Company of Common
Stock or other securities of the Company pursuant to a registration statement,
such holder shall agree not to sell publicly or otherwise transfer or dispose
of any Registrable Shares or other securities of the Company for up to 80 days
following the effective date of such registration statement, provided that all
holders of Registrable Shares holding not less than the number of shares of
Common Stock held by such holder (including shares of Common Stock issuable
upon exercise or conversion of other securities) and all officers and
directors of the Company shall enter into similar agreements.

In general, all fees, costs and expenses of such registrations (other than
underwriting discounts, selling commissions, and certain fees and expenses of
counsel to the selling stockholders) will be borne by the Company. The Company
and the holders of Registrable Shares have agreed to indemnify each other from
certain

14
<PAGE>

liabilities relating to any registration in which any Registrable Shares are
included, including liabilities arising under the Securities Act. The Company
has also undertaken that, upon the request of the underwriter of any offering
of Registrable Shares, the Company shall agree to customary contribution
provisions on the part of the Company.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of August 13, 1997 by:
(i) each person or group known to the Company to be the beneficial owner of
more than five percent of the outstanding Common Stock; (ii) each of the
Company's directors and director nominees; (iii) each of the Named Executive
Officers; and (iv) all directors and executive officers of the Company as a
group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED(2)
----------------------------
NAMES AND ADDRESSES OF BENEFICIAL HOLDERS(1) NUMBER PERCENT
-------------------------------------------- ---------------- --------------
<S> <C> <C>
Arthur H. Bruno(3)........................... 1,465,624 15.8%
Hambrecht & Quist Group(4)
One Bush Street
San Francisco, California 94104............. 1,330,500 14.5
Austin W. Marxe and David Greenhouse(5)
153 East 53 Street 51st Floor
New York, New York 10022.................... 1,080,000 11.8
Sofinnova Entities(6)
51 Rue Saint Georges
Paris, France 75009......................... 766,286 8.4
Charles Lingel
c/o Infoconix Inc.
704 228th Avenue, N.E. Suite 414
Redmond, Washington 98053................... 495,840 5.4
Killko A. Caballero.......................... 403,324 4.4
Howard R. Berke(7)........................... 242,399 2.6
David O. Bundy(7)............................ 47,817 *
Jack A. Dutzy(7)............................. 12,494 *
Jonathan G. Morgan(7)........................ 2,084 *
All directors, director nominees and
executive
officers as a group (6 persons)(7).......... 2,173,742 22.8
</TABLE>
- --------
*Less than one percent.
(1) The address of all persons who are executive officers or directors of the
Company is in care of the Company, 542 Amherst Street, Nashua, New
Hampshire 03063.
(2) Unless otherwise noted, each person or group identified possesses sole
voting and investment power with respect to such shares, subject to
community property laws where applicable. Shares not outstanding but
deemed beneficially owned by virtue of the right of a person or group to
acquire them within sixty days of August 13, 1997 are treated as
outstanding only for purposes of determining the amount and percent owned
by such person or group.
(3) Includes 1,330,500 shares held by the Hambrecht & Quist Group as described
in Note 4 and 85,000 shares subject to stock options exercisable within 60
days of August 13, 1997. Mr. Bruno is a consultant to Hambrecht & Quist
LLC. Mr. Bruno disclaims beneficial ownership of the shares held by the
Hambrecht & Quist Group.
(4) Consists of 623,167 shares held by H&Q London Ventures, 7,271 shares held
by Hambrecht & Quist Group, 206,917 shares held by H & Q Ventures IV, 444
shares held by H&Q Venture Partners, 285,768 shares held by William R.
Hambrecht, 4,882 shares held by Venture Associates (BVI) Limited, 202,035
shares held by Hambrecht & Quist Venture Partners and 16 shares held by
Hamquist.
(5) The Company has received a copy of a report on Schedule 13D, with
signatures dated July 31, 1997, filed by Austin W. Marxe, David
Greenhouse, Special Situations Fund III, L.P. ("SSF III"), MGP Advisers
Limited Partnership ("MGP"), Special Situations

15
<PAGE>

Technology Fund (the "Technology Fund"), SST Advisers, L.L.C. ("SST"),
Special Situations Cayman Fund, L.P. (the "Cayman Fund") and AWM Investment
Company, Inc. ("AWM"). The report stated that: SSF III, the Technology Fund
and the Cayman Fund are investment limited partnerships; the principal
business of MGP is to act as the general partner of and the investment
adviser to SSF III; the principal business of SST is to act as general
partner of and the investment adviser to the Technology Fund; the principal
business of AWM is to act as a general partner of MGP and to act as general
partner of and investment adviser to the Cayman Fund; and the principal
occupation of each of Messrs. Marxe and Greenhouse is to serve as an
officer, director and member or principal shareholder of MGP, SST and AWM.
The report also stated that on July 30, 1997, SSF III and MGP jointly held
714,600 shares of Common Stock, the Cayman Fund and AWM jointly held 240,300
shares of Common Stock and the Technology Fund held 125,100 shares of Common
Stock.
(6) Consists of approximately 221,767 shares held by Sofinnova S.A., 337,499
shares held by Sofinnova Capital FCPR and 207,020 shares held by C.V.
Sofinnova Ventures Partners II. Sofinnova S.A., a management and direct
investment company, manages the funds of Sofinnova Capital FCPR, and its
wholly owned subsidiary manages the funds of C.V. Sofinnova Venture
Partners II.
(7) Includes shares subject to stock options exercisable within sixty days of
August 13, 1997.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers and persons who own more than
ten percent of the outstanding Common Stock to file with the Securities and
Exchange Commission reports of ownership on Form 3 and reports of changes in
ownership on Forms 4 and 5. Securities and Exchange Commission regulations
require directors, executive officers and greater-than-ten-percent stockholders
to furnish the Company with copies of all Section 16(a) reports filed with the
Securities and Exchange Commission.

Based solely upon a review of Forms 3, 4 and 5 that were furnished to the
Company during fiscal 1996 and 1997 and on written representations from certain
reporting persons that no reports on Form 5 were required by the Company for
such persons, the Company believes that all Section 16(a) reports applicable to
its officers, directors and ten-percent stockholders with respect to the fiscal
year ended December 31, 1996 were filed on a timely basis, with the exception
of reports on Form 4 for David O. Bundy, Jack A. Dutzy and Carl A. Koppel
reporting purchases of Common Stock on October 17, 1996, all of which reports
on Form 4 were filed in January 1997.

SOLICITATION

The Company will bear the cost of soliciting proxies. Brokers, banks and
other nominees will be reimbursed for their out-of-pocket expenses and other
reasonable clerical expenses incurred in obtaining instructions from beneficial
owners of the Common Stock. In addition to the solicitation by mail, the
directors, officers and certain employees of the Company may solicit proxies,
without additional remuneration, by telephone, facsimile, telegraph and in
person. It is expected that the expense of any such special solicitation will
be nominal.

STOCKHOLDER PROPOSALS

Any stockholder intending to present a proposal at the 1998 Annual Meeting of
Stockholders must submit such proposal to the Company at its offices no later
than June 3, 1998 in order to be considered for inclusion in the proxy
statement relating to that meeting. If the date of the next annual meeting is
subsequently changed by more than thirty calendar days from the date of this
year's Annual Meeting, the Company will, in a timely manner, inform its
stockholders of such change and the date by which proposals of stockholders
must be received.

MISCELLANEOUS

The Board does not know of any other business that will be presented for
consideration at the Meeting other than that described in this Proxy Statement.
However, if any other business should come before the Meeting, the persons
named in the enclosed form of proxy will vote, or otherwise act, in accordance
with their best judgment.

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INFORMATION CONCERNING AUDITORS

The accounting firm of Ernst & Young LLP, which has served as the Company's
principal independent accountants continuously since February 4, 1994, was
selected by the Board to continue in that capacity for fiscal 1998. A
representative of Ernst & Young LLP is expected to be at the Meeting. This
representative will have the opportunity to make a statement if he or she
desires to do so and will be available to respond to appropriate questions
presented at the Meeting.

AVAILABLE INFORMATION

Stockholders of record at the close of business on August 13, 1997 will
receive a Proxy Statement, together with a copy of the Company's 1996 Annual
Report to Stockholders, which contains a copy of Annual Report on Form 10-KSB
of the Company for the fiscal year ended December 31, 1996 (including
financial statements but excluding exhibits thereto).

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APPENDIX A

WHITE PINE SOFTWARE, INC.

STOCK OPTION PLAN (1996)

1. Purpose of the Plan.

The White Pine Software, Inc. Stock Option Plan (1996) ("Stock Option Plan
(1996)") is intended to promote the growth of the Company by attracting and
motivating directors, officers, employees, consultants, independent
contractors, vendors, suppliers and other persons whose efforts are deemed
worthy of encouragement through the incentive effects of stock options.

2. Definitions.

As used herein, the following definitions shall apply:

(a) "Board" shall mean the Board of Directors of the Company.

(b) "Code" shall mean the Internal Revenue Code of 1986, as amended, the
rules and regulations promulgated thereunder and the interpretations
thereof, all as from time to time in effect.

(c) "Committee" shall mean the Committee appointed by the Board in
accordance with Section 3(a) below, if one is appointed.

(d) "Common Stock" shall mean the Common Stock of the Company.

(e) "Company" shall mean White Pine Software, Inc., a Delaware
corporation.

(f) "Consultant" shall mean any person who is engaged by the Company or
any Parent or Subsidiary of the Company to render consulting or advisory
services, whether or not compensation is paid to such individual.

(g) "Continuous Status" shall mean the absence of any interruption or
termination of service as an Employee, Consultant or other person providing
services on a regular basis to the Company or its Parent or any Subsidiary.
Continuous Status shall not be considered interrupted in the case of sick
leave, military leave, or any other leave of absence approved by the Board,
provided that either such leave is for a period of not more than ninety
(90) days or reemployment upon the expiration of such leave is provided or
guaranteed by contract or statute.

(h) "Director" shall mean any person serving on the Board.

(i) "Employee" shall mean any person, including Officers and Directors,
employed by the Company or its Parent or any Subsidiary of the Company.

(j) "Fair Market Value" shall mean the value of a share of Common Stock
on the date of the grant of the Option as determined, in good faith, by the
Board or the Committee and such determination shall be conclusive for all
purposes. The Board or the Committee shall take into account such factors
affecting value as it, in its sole and absolute discretion, may deem
relevant.

(k) "Officer" shall mean any person, which may include Directors,
employed by the Company or its Parent or any Subsidiary who has been
elected an officer by the respective Board of Directors.

(l) "Options" shall mean stock options issued pursuant to the Plan.
Options may be either "Incentive Options," which are defined as options
intended to meet the requirements of Section 422 of the Code, or
"Nonqualified Options", which are defined as Options not intended to meet
such requirements of the Code.

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(m) "Option Agreement" shall mean the written agreement setting forth the
terms and conditions of an Option.

(n) "Optioned Stock" shall mean the Common Stock subject to an Option.

(o) "Parent" shall mean a "Parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.

(p) "Participant" shall mean a person to whom an Option has been granted.

(q) "Plan" shall mean the White Pine Software, Inc. Stock Option Plan
(1996).

(r) "Share" shall mean a share of Common Stock of the Company, as may be
adjusted in accordance with Section 6 hereof.

(s) "Subsidiary" shall mean a "subsidiary corporation" of the Company,
whether now or hereafter existing, as defined in Section 424(f) of the
Code,

3. Administration of the Plan.

(a) By the Board or by the Committee. The Plan shall be administered by the
Board or, if appointed by the Board, by a Committee; provided, however, if the
Company shall have registered a class of equity securities pursuant to Section
12 of the Securities Exchange Act of 1934, then the Plan shall be administered
by the Board or, if appointed, by a Committee of two or more directors, all of
which shall be "disinterested" as defined in Rule 16b-3 under the Securities
Exchange Act of 1934. The Board and the Committee shall have full authority to
administer the Plan, including authority to interpret and construe any
provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary in order to comply with the
requirements of the Plan, or in order that any Option that is intended to be
an Incentive Option will be classified as an incentive stock option under the
Code, or in order to conform to any regulation or to any change in any law or
regulation applicable thereto. The Board may reserve to itself any of the
authority granted to the Committee as set forth herein, and it may perform and
discharge all of the functions and responsibilities of the Committee at any
time that a duly constituted Committee is not appointed and serving.

(b) Actions of the Board and the Committee. All actions taken and all
interpretations and determinations made by the Board or by the Committee in
good faith (including determinations of Fair Market Value) shall be final and
binding upon all Participants, the Company and all other interested persons.
No member of the Board or the Committee shall be personally liable for any
action, determination or interpretation made in good faith with respect to the
Plan, and all members of the Board or the Committee shall in addition to their
rights as Directors, be fully protected by the Company with respect to any
such action, determination or interpretation.

(c) Powers of the Board and the Committee. Subject to the provisions of the
Plan, the Board and, if appointed, the Committee shall have the authority, in
their sole discretion:

(i) to determine upon review of the relevant information, the Fair Market
Value of the Common Stock; (ii) to determine the persons to whom Options
shall be granted, the time or times at which Options shall be granted, the
number of shares to be represented by each Option and the exercise price
per share; (iii) to interpret the Plan; (iv) to prescribe, amend and
rescind rules and regulations relating to the Plan; (v) to determine
whether an Option granted shall be an Incentive Option or a Nonqualified
Option and to determine the terms and provisions of each Option granted
(which need not be identical) and, with the consent of the holder thereof,
to modify or amend each Option, including reductions in the exercise price
thereof; (vi) to accelerate or defer (with the consent of the Participant)
the exercise date of any Option; (vii) to authorize any person to execute
on behalf of the Company any instrument required to effectuate the grant of
an Option previously granted by the Board or the Committee; and (viii) to
make all other determinations deemed necessary or advisable for the
administration of the Plan.

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4. Eligibility and Participation.

(a) Eligibility. Grants of Options may be made to any Employee or Consultant
(which may include Officers and Directors) of the Company or of its Parent or
Subsidiary, or any independent contractor, vendor, supplier or any other
person providing services to the Company or a Parent or Subsidiary whose
efforts are deemed worthy of encouragement by the Board or the Committee;
provided, however, that either (i) such Participant shall have maintained
Continuous Status for a period of at least six (6) months immediately prior to
the grant of such Option or (ii) such Option shall not begin to become
exercisable as provided in Section 7(a) hereof until such Participant shall
have maintained Continuous Status for a period of six (6) months immediately
after the grant of such Option; and further provided; that an Incentive Option
may only be granted to an Employee.

(b) Participation by Director. Members of the Board or the committee who are
either eligible for Options or have been granted Options may vote on any
matters affecting the administration of the Plan or the grant of any Options
pursuant to the Plan, except that no such member shall act upon the granting
of an Option to himself or herself, but any such member may be counted in
determining the existence of a quorum at any meeting of the Board or the
Committee and may be counted as part of an action by unanimous written consent
during or with respect to which action is taken to grant Options to him or
her.

5. Exercise Price; Consideration; and Form of Option Agreement.

(a) Exercise Price. The exercise price of any Incentive Option shall be not
less than one hundred percent (100%) of the Fair Market Value of a Share on
the date of the grant of the Option. The exercise price of a Nonqualified
Option shall be determined in the sole discretion of the Board or the
Committee and may be at less than the Fair Market Value on the date of the
grant of the Option. If an Incentive Option is granted to a Participant who
then owns stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or its Parent or any
Subsidiary, then the exercise price of such Incentive Option shall be at least
one hundred ten percent (110%) of the Fair Market Value of a Share on the date
of the grant of such Option.

(b) Consideration. The exercise price shall be paid in full, at the time of
exercise of the Option, by personal or bank cashier's check or in such other
form of lawful consideration as the Board or the Committee may approve from
time to time including, without limitation. the transfer of outstanding Shares
as provided in Section 7(c) hereof or the Participant's promissory note in
form satisfactory to the Company and bearing interest at a rate of not less
than six percent (6%) per annum.

(c) Form of Option Agreement. Each Option shall be evidenced by an Option
Agreement specifying the number of Shares which may be purchased upon exercise
of the Option and containing such terms and provisions as the Board or the
Committee may determine, subject to the provisions of the Plan.

6. Shares of Common Stock Subject to the Plan.

(a) Number. The aggregate number of Shares of Common Stock subject to
Options which may be granted under the Plan shall be One Million (1,000,000),
subject to adjustment as hereinbelow provided. To the extent that any Option
granted under the Plan shall expire or terminate unexercised or for any reason
become unexercisable, the Shares subject to such Option shall thereafter be
available for future grants under the Plan.

(b) Capital Changes. Except as hereinafter provided, no adjustment shall be
made in the number of Shares of Common Stock issued to a Participant, or in
any other rights of the Participant upon exercise of an Option, by reason of
any dividend, distribution or other right granted to stockholders for which
the record date is prior to the date of exercise of the Participant's Option.
In the event any change is made to the Shares (whether by reason of a merger,
consolidation, reorganization, recapitalization, stock dividend, stock split,
combination of Shares, exchange of Shares, change in corporate structure or
otherwise), appropriate adjustments shall be made in: (i) the number of Shares
theretofore made subject to Options, and in the exercise price of such Shares;
and

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(ii) the aggregate number of Shares which may be made subject to Options. If
any of the foregoing adjustments shall result in a fractional Share, the
fraction shall be disregarded, and the Company shall have no obligation to
make any cash or other payment with respect to such a fractional Share.

7. Exercise of Stock Options.

(a) Time of Exercise. Subject to the provisions of the Plan, including
without limitation Section 7(d) and Section 8 hereof, the Board or the
Committee, in its sole discretion, shall determine the time when an Option, or
a portion of an Option, shall become exercisable, and the time when an Option,
or a portion of an Option, shall expire; provided, however, that (i) Options
shall become exercisable no earlier than at a rate of 1/36th the total number
of Optioned Stock, on a monthly basis commencing no earlier than the date on
which such Option is authorized to be issued by the Board or the Committee,
(ii) an Incentive Option shall expire, to the extent not exercised, no later
than the tenth (10th) anniversary of the date on which it was granted; (iii)
any Incentive Option granted to any person who owns Shares possessing more
than ten percent (10%) of the total combined voting power or value of all
classes of stock of the Company or of its Parent or a Subsidiary shall have a
term not to exceed five (5) years, and (iv) Options granted to a Participant
prior to the Participant maintaining six (6) months Continuous Status shall
not begin to become exercisable pursuant to clause (i) above until such
Participant has maintained Continuous Status for a six (6) month period.
Notwithstanding the foregoing, the Board shall have the authority to provide
for Options to become exercisable at such time and at such rate as they deem
appropriate in their sole and absolute discretion. Such time or times shall be
set forth in the Option Agreement evidencing such Option.

(b) Notice of Exercise. A Participant electing to exercise an Option shall
give written notice to the Company, as specified by the Option Agreement, of
his or her election to purchase a specified number of Shares, such notice
shall be accompanied by the instrument evidencing such Option and any other
documents required by the Company, and shall tender the exercise price of the
Shares he or she has elected to purchase. If the notice of election to
exercise is given by the executor or administrator of a deceased Participant,
or by the person or persons to whom the Option has been transferred by the
Participant's will or the applicable laws of descent and distribution, then
the Company will be under no obligation to deliver Shares pursuant to such
exercise unless and until the Company is satisfied that the person or persons
giving such notice is or are entitled to exercise the Option.

(c) Exchange of Outstanding Stock. The Board or the Committee, in its sole
discretion, may permit a Participant to surrender to the Company Shares of
Common Stock previously acquired by the Participant at least six (6) months
prior to such surrender as part or full payment for the exercise of an Option.
Such surrendered shares shall be valued at their Fair Market Value on the date
of exercise of the Option.

(d) Termination of Continuous Status Before Exercise. If a Participant's
Continuous Status with the Company or its Parent or any Subsidiary shall cease
for any reason (other than the Participant's death, retirement or disability
as provided below), any Option then held by the Participant or his or her
estate, to the extent then exercisable, shall remain exercisable after such
cessation of the Continuous Status for a period of thirty (30) days commencing
upon the date of such cessation (or such longer period as the Board or the
Committee may allow, either in the form of Option Agreement or by Board or
Committee action). If the Option is not exercised during this period, then it
shall be deemed to have been forfeited and be of no further force or effect.
Notwithstanding the exercise period hereinabove described, if the holder of an
option (i) is terminated for "cause" (as hereinafter defined), (ii) is
terminated due to his or her expropriation of, or after termination is
believed to have wrongfully taken or expropriated, Company property (including
trade secrets or other proprietary rights), the Board or the Committee shall
have the authority, by notice to the holder of an Option, to immediately
terminate such Option, effective on the date of termination, and such Option
shall no longer be exercisable to any extent whatsoever. As used herein,
"cause" shall mean that the holder of an Option has willfully and
intentionally engaged in material misconduct, gross neglect of duties or
grossly negligent failure to act which materially and adversely affects the
business or affairs of the Company, or has committed any act of fraud or any
act not approved by the Board

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involving any material conflict of interest or self-dealing adverse to the
Company, or has been convicted of a felony, or has unreasonably failed to
comply with any reasonable direction from the Board or its Chairman with
respect to a major policy decision affecting the Company, issued pursuant to
its authority under the By-Laws of the Company.

(e) Death. If a Participant dies at a time when he or she is entitled to
exercise an Option, then at any time or times within twelve (12) months after
his or her death (or such further period as the Board may allow) such Option
may be exercised, as to all or any of the shares which the Participant was
entitled to purchase immediately prior to his or her death (i) by his or her
executor or administrator or the person(s) to whom the Option is transferred
by will or the applicable laws of descent and distribution or (ii) his or her
designated beneficiary, and except as so exercised, such Option will expire at
the end of such period. In no event, however, may any Option be exercised
after the expiration of its term.

(f) Retirement and Disability. If a Participant retires from service at age
65 or older or retires at less than age 65 with the consent of the Board or
the Committee or becomes "disabled" (as hereinafter defined) at a time when he
is entitled to exercise an Option, then, at any time or times within thirty
(30) days of the date of such retirement or within twelve (12) months of the
date of such disability, he or she may exercise such Option as to all or any
of the shares which he was entitled to purchase under such Option immediately
prior to such retirement or disability. Except as so exercised, such Option
shall expire at the end of such period. In no event, however, may any Option
be exercised after the expiration of its term. As used herein, "disabled"
shall mean that the Participant is permanently and totally disabled so as to
be unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a
continuous period of not less than twelve (12) months.

(g) Disposition of Terminated Stock Options. Any Shares of Common Stock
subject to Options which have been terminated as provided above shall not
thereafter be eligible for purchase by the Participant but shall again be
available for grant by the Board or the Committee to other Participants.

8. Special Provisions Relating to Incentive Options.

The Company shall not grant Incentive Options under the Plan to any
Participant to the extent that the aggregate Fair Market Value (determined as
of the date the Option is granted) of the Common Stock covered by such
Incentive Options which are exercisable for the first time during any calendar
year, when combined with the aggregate Fair Market Value of all stock covered
by all other Incentive Options granted to such Participant after December 31,
1986 by the Company, its Parent or a Subsidiary thereof which are exercisable
for the first time during the same calendar year, exceeds One Hundred Thousand
Dollars ($100,000). Incentive Options shall be granted only to persons who, on
the date of grant, are Employees of the Company or its Parent or a Subsidiary.

9. No Contract of Employment.

Unless otherwise expressed in a writing signed by an authorized Officer of
the Company, all Employees of the Company are hired for an unspecified period
of time and are considered to be "at-will employees." Nothing in this Plan
shall confer upon any Participant the right to continue in the employ of the
Company, its Parent or any Subsidiary, nor shall it limit or restrict in any
way the right of the Company, its Parent or any such Subsidiary to discharge
the Participant at any time for any reason whatsoever, with or without cause.

10. No Rights as a Stockholder.

A Participant shall have no rights as a stockholder with respect to any
Optioned Stock.

11. Nontransferability of Options; Death of Participant

No Option acquired by a Participant under the Plan shall be assignable or
transferable by a Participant, other than by will or the laws of descent and
distribution, and such Options are exercisable, during his or her lifetime,

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only by Participant; provided, however, that (i) a transfer may be made
pursuant to a qualified domestic relations order (as defined in the Code or as
permitted by Title I of the Employee Retirement Income Security Act ("ERISA")
or the rules thereunder) and (ii) any Option Agreement issued under the Plan
may provide for the designation of a beneficiary of the Participant (which may
be an individual or trustee) who may exercise the Option after the
Participant's death and enjoy the economic benefits thereof, subject to the
consent of Participant's spouse where required by law. Subject to Section
7(e), in the event of Participant's death, the Option may be exercised by the
personal representative of the Participant's estate or, if no personal
representative has been appointed, by the successor(s) in interest determined
under the Participant's will or under the applicable laws of descent and
distribution.

12. Liquidation or Merger of the Company.

(a) Liquidation. In the event of a proposed dissolution or liquidation of
the Company, the Option shall terminate immediately prior to the consummation
of such proposed action, unless otherwise provided by the Board or the
Committee. The Board or the Committee may, in the exercise of its sole
discretion in such instances, declare that any Option shall terminate as of a
date fixed by the Board or the Committee and give each Participant the right
to exercise his or her Option as to all or any part of the Shares covered by
an Option, including Shares as to which the Option would not otherwise be
exercisable.

(b) Sale of Assets, Merger or Consolidation or Change of Control. The Board
or the Committee may provide for immediate vesting of any or all Options, and
allow such Options to be fully exercised without regard to the normal vesting
schedule of such Options, in the event of a proposed sale of all or
substantially all of the assets of the Company, or a merger or consolidation
of the Company with or into another corporation, a liquidation or a "change in
control" (as defined hereinafter); provided, however, that if the Board or the
Committee determines that such immediate vesting is not appropriate, then the
Options, if the event is a merger or consolidation, shall be assumed or an
equivalent option shall be substituted by such successor corporation (or a
parent or subsidiary of such successor corporation) as a condition to the
completion of such transaction. Notwithstanding anything contained herein to
the contrary, in the event of a merger, consolidation or a change of control,
in which the Options do not become immediately fully exercisable, the
following shall apply: If within twelve (12) months after such triggering
event, the Participant is terminated as a result of an actual or constructive
discharge (as defined below) by the Company or the successor corporation for
any reason or no reason (other than for "Cause", as defined below), such
Participant's Option shall vest immediately and may be fully exercised without
regard to the normal vesting schedule for a period of two (2) years commencing
upon the date of such actual or constructive discharge or for the balance of
the original remaining term of the Option, whichever period is shorter in
duration; provided, however, that if such Option is an Incentive Option, then
such Option shall only vest to the extent provided in Section 8 hereof and
shall only be exercisable for a period of ninety (90) days commencing with
such actual or constructive discharge. For purposes of this Plan, the Company
or its successor shall be deemed to have constructively discharged a
Participant if such Participant resigns employment after a reduction in
compensation, a meaningful reduction of employment benefits, a demotion, a
material reduction or change in the duties, responsibilities, titles or status
of the Participant as an employee with the Company as in effect on the date of
the triggering event, or a material change in the location (for example, more
than 35 miles) where Participant's employment responsibilities are currently
performed. Participant's termination of employment as a result of death or
disability shall not be deemed to be an actual or constructive discharge by
the Company or its successor. The term "Cause" shall be limited to the
occurrence of any of the following events: (a) Participant has misappropriated
any funds or property of the Company or its successor; (b) Participant has
been convicted of a misdemeanor or a felony which impairs his or her ability
to perform services for the Company or would cause the Company or its
successor adverse publicity; (c) Participant fails to perform his or her
normal duties and obligations after a prior written warning by the Company or
its successor; or (d) Participant has disclosed or personally utilized for his
or her or others' benefit the Company's or the successor's trade secrets or
other confidential information. The term "change in control" shall be deemed
to have occurred if (1) any "person" or "group" (as defined in or as pursuant
to section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), becomes a "beneficial owner" (as defined in Rule

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13d-3 promulgated under the Exchange Act)), directly or indirectly, of
securities of the Company representing thirty percent (30%) or more of the
combined voting power of the Common and Preferred Stock outstanding which
votes generally for the election of Directors; or (2) the Company or any of
its Subsidiaries sell, in one or more transactions, other than in the ordinary
course of business, assets constituting in the aggregate all or substantially
all of the assets of the Company and its Subsidiaries on a consolidated basis.

13. Amendments; Discontinuation of Plan.

The Board or the Committee may from time to time alter, amend, suspend or
discontinue the Plan, including, where applicable, any modifications or
amendments as it shall deem advisable for any reason, including satisfying the
requirements of any law or regulation or any change thereof; provided,
however, that no such action shall adversely affect the rights and obligations
with respect to Options at any time outstanding under the Plan; and provided
further, that no such action shall, without the approval of the stockholders
of the Company, (a) materially increase the maximum number of Shares of Common
Stock that may be made subject to Options (unless necessary to effect the
adjustments required by Section 6(b) hereof), (b) materially increase the
benefits accrued to Participants under the Plan, or (c) materially lessen the
requirements as to eligibility for participation in the Plan. No such
amendment shall materially adversely affect the rights of any Participant
under any Option previously granted without such Participant's prior consent.

14. Registration of Optioned Shares.

The Options shall not be exercisable unless the purchase of such Optioned
Shares is pursuant to an applicable effective registration statement under the
Securities Act of 1933, as amended, or unless, in the opinion of counsel to
the Company, the proposed purchase of such Optioned Shares would be exempt
from the registration requirements of the Securities Act of 1933, as amended.

15. Withholding Taxes; Satisfied by Withholding Optioned Shares.

(a) General. The Company, its Parent or any Subsidiary may take such steps
as it may deem necessary or appropriate for the withholding of any taxes which
the Company, its Parent or any Subsidiary is required by law or regulation of
any governmental authority, whether federal, state or local, domestic or
foreign, to withhold in connection with any Option including, but not limited
to, requiring the Participant to pay such tax at the time of exercise or the
withholding of issuance of Shares of Common Stock to be issued upon the
exercise of any Option until the Participant reimburses the Company for the
amount the Company is required to withhold with respect to such taxes, or, at
the Company's sole discretion, canceling any portion of such issuance of
Common Stock in any amount sufficient to reimburse itself for the amount it is
required to so withhold.

(b) Satisfying Taxes by Withholding Optioned Shares. Option Agreements under
the Plan may, at the discretion of the Board or the Committee, contain a
provision to the effect that all federal and state taxes required to be
withheld or collected from a Participant upon exercise of an Option may be
satisfied by the withholding of a sufficient number of exercised Optioned
Stock which, valued at Fair Market Value on the date of exercise, would be
equal to the total withholding obligation of the Participant for the exercise
of such Option, provided, however, that if the Company is a public reporting
corporation, no person who is an "officer" of the Company as such term is
defined in Rule 3b-2 under the Securities Exchange Act of 1934 may elect to
satisfy the withholding of federal and state taxes upon the exercise of an
option by the withholding of Optioned Stock unless such election is made
either (i) at least six (6) months prior to the date that the exercise of the
Option becomes a taxable event or (ii) during any of the periods beginning on
the third (3rd) business day following the date on which the Company issues a
news release containing the operating results of a fiscal quarter or fiscal
year and ending on the twelfth (12th) business day following such date. Such
election shall be deemed made upon receipt of notice thereof by an Officer of
the Company, by mail, personal delivery or by facsimile message, and shall
(unless notice to the contrary is provided to the Company) be operative for
all Option exercises which occur during the twelve (12) month period following
election.

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<PAGE>

16. Effective Date and Term of Plan.

The Plan is effective as of the date of adoption by the Board and Options
may be granted at any time on or after such date; provided, however, that the
Plan shall terminate if the stockholders of the Company do not approve and
adopt it within twelve (12) months of such date. No Options shall be granted
subsequent to ten (10) years after the effective date of the Plan; however,
Options outstanding subsequent to ten (10) years after the effective date of
the Plan shall continue to be governed by the Provisions of the Plan until
exercised or terminated in accordance with the Plan or the respective Option
Agreements.

* * * * *

A-8
<PAGE>

APPENDIX B

WHITE PINE SOFTWARE, INC.

1997 DIRECTOR STOCK OPTION PLAN

SECTION 1. PURPOSE

This 1997 Director Stock Option Plan (the "Plan") is intended to encourage
ownership of capital stock of the Company by directors who are not employees
of the Company or any parent or subsidiary of the Company ("Outside Director")
in order to help the Company attract and retain persons of exceptional
competence to the Company's Board of Directors and to furnish an added
incentive for such Outside Directors to whom options are granted (an
"Optionee") to increase their efforts on behalf of the Company. The Company
intends that this purpose will be effected by the granting of stock options
under the Plan.

SECTION 2. OPTIONS TO BE GRANTED AND ADMINISTRATION

2.1. Options to be Granted. Options granted under the Plan will not
constitute incentive stock options as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").

2.2. Administration.

This Plan shall be administered by the Compensation Committee or any other
committee of the Board of Directors of the Company (the "Board"), consisting
of two or more "Independent Directors" (such committee may hereinafter be
referred to as the "Plan Administrator"). As used herein, the term
"Independent Director" means any director who: (i) is not an employee of the
Company or of any "affiliated group" (as such term is defined in Section
1504(a) of the Code) which includes the Company (an "Affiliate"); (ii) is not
a former employee of the Company or any Affiliate who is receiving
compensation for prior services (other than benefits under a tax-qualified
retirement plan) during the Company's or any Affiliate's taxable year; (iii)
has not been an officer of the Company or any Affiliate; and (iv) does not
receive remuneration from the Company or any Affiliate, either directly or
indirectly, in any capacity other than as a director.

Grants of options under the Plan and the amount of the awards to be granted
shall be automatic and non-discretionary in accordance with Section 4. Except
as so provided, the Plan Administrator shall have full and final authority to
operate, manage and administer the Plan on behalf of the Company. This
authority includes, but is not limited to: (i) the power to prescribe the form
or forms of the instruments evidencing options granted under this Plan; (ii)
the power to interpret the Plan; (iii) the power to prescribe regulations for
interpretation, management and administration of the Plan; (iv) the power to
delegate to other persons the responsibility for performing ministerial acts
in furtherance of the Plan's purpose; and (v) the power to engage the services
of persons or organizations in furtherance of the Plan's purpose, including
but not limited to banks, insurance companies, brokerage firms and
consultants.

No member of the committee serving as Plan Administrator shall be liable for
any action or determination made in good faith with respect to the Plan or any
option granted thereunder.

2.3. Appointment and Proceedings of Committee. The Board may, from time to
time, appoint members of the committee serving as Plan Administrator in
substitution for, or in addition to, members previously appointed and may fill
vacancies, however caused, in such committee; provided, however, that each

B-1
<PAGE>

such appointee will be an Independent Director, as described in Section 2.2.
The committee serving as Plan Administrator shall hold its meetings at such
times and places as it shall deem advisable. A majority of its members shall
constitute a quorum, and all actions of such committee shall require the
affirmative vote of a majority of its members. Any action may be taken by a
written instrument signed by all of the members, and any action so taken shall
be as fully effective as if it had been taken by a vote of a majority of the
members at a meeting duly called and held.

SECTION 3. STOCK

3.1. Shares Subject to Plan. The stock subject to the options granted under
the Plan shall be shares of the Company's authorized but unissued common
stock, par value $.01 per share ("Common Stock"), or shares of the Company's
Common Stock held in treasury. The total number of shares that may be issued
pursuant to options granted under the Plan shall not exceed an aggregate of
150,000 shares of Common Stock. Such numbers of shares shall be subject to
adjustment as provided in Section 7.

3.2. Lapsed or Unexercised Options. Whenever any outstanding option under
the Plan expires, is canceled or is otherwise terminated (other than by
exercise), the shares of Common Stock allocable to the unexercised portion of
such option shall be restored to the Plan and shall again become available for
the grant of other options under the Plan.

3.3. Limitation on Grants. In no event may any Plan participant be granted
options under the Plan with respect to more than 25,000 shares (subject to
adjustment as provided in Section 7) of Common Stock in any fiscal year. The
number of shares of Common Stock issuable pursuant to an option granted to a
Plan participant in a fiscal year that is subsequently forfeited, canceled or
otherwise terminated shall continue to count toward the foregoing limitation
in such fiscal year.

SECTION 4. ELIGIBILITY; AUTOMATIC GRANTS

4.1. Eligible Optionees. Options may be granted under the Plan only to
Outside Directors of the Company, as described in Section 1.

4.2 Option Grant Dates. Options shall be granted automatically to all
eligible directors as follows: (i) each person who is re-elected or initially
elected as an Outside Director on the date of the annual meeting of
stockholders (or special meeting in lieu thereof) at which the Plan is adopted
by the stockholders of the Company (the "Adoption Date") shall be granted on
the Adoption Date an option to purchase 15,000 shares of Common Stock (subject
to adjustment as provided in Section 7); (ii) each person initially elected
(whether by the stockholders or by the board of directors) as an Outside
Director at any time after the Adoption Date shall be granted, as of the date
of his or her initial election to the board of directors, an option to
purchase 15,000 shares of Common Stock (subject to adjustment as provided in
Section 7); and (iii) each person who is re-elected as an Outside Director by
the stockholders of the Company at any time after the Adoption Date shall be
granted, on the date of the meeting or written consent of the stockholders at
or by which he or she is re-elected, an option to purchase 10,000 shares of
Common Stock (subject to adjustment as provided in Section 7), provided that
he or she has served as a director of the Company for at least the three
months immediately preceding that meeting.

4.3 Option Vesting Dates. An option granted under the Plan shall vest in
full immediately prior to the first annual meeting of stockholders (or special
meeting in lieu thereof) at which Board members are elected following the
meeting of the stockholders or the board of directors at which such options
were granted, provided that the Optionee has served without interruption since
the grant date and continues to be a member of the Board at the time of
vesting. Notwithstanding the foregoing, if a director received an Initial
Option within three months of the next annual meeting (or special meeting in
lieu thereof) at which Board members are elected, his or her Initial Option
shall vest not at that meeting, but at the subsequent annual meeting of
stockholders (or special meeting in lieu thereof) at which Board members are
elected.

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<PAGE>

SECTION 5. TERMS OF THE OPTION AGREEMENTS

5.1. Mandatory Terms. Each option agreement shall contain such provisions as
the Plan Administrator shall from time to time deem appropriate. Option
agreements need not be identical, but each option agreement by appropriate
language shall include the substance of all of the following provisions:

(a) Expiration. Notwithstanding any other provision of the Plan or of any
option agreement, each option shall expire on the tenth anniversary of the
date on which the option was granted.

(b) Exercise. Each option shall be exercisable in full or in installments
(which need not be equal) and at such times as designated by the Plan
Administrator. To the extent not exercised, installments shall accumulate
and be exercisable, in whole or in part, at any time after becoming
exercisable, but not later than the date the option expires.

(c) Purchase Price. The purchase price per share of the Common Stock
under each option shall be equal to the fair market value of the Common
Stock on the date the option is granted. For the purpose of the Plan, the
fair market value of the Common Stock shall be the closing price per share
on the date of grant of the option as reported by a nationally recognized
stock exchange, or, if the Common Stock is not listed on such an exchange,
as reported by the Nasdaq Stock Market, Inc. ("Nasdaq"), or, if the Common
Stock is not quoted on Nasdaq, the fair market value as determined by the
Plan Administrator.

(d) Transferability of Options. Options granted under the Plan and the
rights and privileges conferred thereby may not be transferred, assigned,
pledged or hypothecated in any manner (whether by operation of law or
otherwise) other than by will or by applicable laws of descent and
distribution, and shall not be subject to execution, attachment or similar
process. Upon any attempt so to transfer, assign, pledge, hypothecate or
otherwise dispose of any option under the Plan or any right or privilege
conferred hereby, contrary to the provisions of the Plan, or upon the sale
or levy or any attachment or similar process upon the rights and privileges
conferred hereby, such option shall thereupon terminate and become null and
void.

(e) Termination of Directorship or Disability or Death of
Optionee. Except as may be otherwise expressly provided in the terms and
conditions of the option granted to an Optionee, options granted hereunder
shall terminate on the earliest to occur of (i) the date of expiration
thereof and (ii) the first anniversary of the initial day on which the
Optionee no longer serves as a director of the Company for any reason.

(f) Rights of Optionees.

(i) No Stockholder Rights for Option No Optionee shall be deemed for
any purpose to be the owner of any shares of Common Stock subject to any
option unless and until (A) the option shall have been exercised with
respect to such shares pursuant to the terms thereof, and (B) the Company
shall have issued and delivered a certificate representing such shares.
Thereupon, the Optionee shall have full voting, dividend and other
ownership rights with respect to such shares of Common Stock.

(ii) No Right to Continue as a Director. Neither the Plan, nor the
granting of an option, no any other action taken pursuant to the Plan,
shall constitute or be evidence of any agreement or understanding,
express or implied, that the Company will retain an Optionee as a
director for any period of time.

5.2. Certain Optional Terms. The Plan Administrator may in its discretion
provide, upon the grant of any option hereunder, that the Company shall have
an option to repurchase all or any number of shares purchased upon exercise of
such option. The repurchase price per share payable by the Company shall be
such amount or be determined by such formula as is fixed by the Plan
Administrator at the time the option for the shares subject to repurchase was
granted. The Plan Administrator may also provide that the Company shall have a
right of first refusal with respect to the transfer or proposed transfer of
any shares purchased upon exercise of an option granted hereunder. In the
event the Plan Administrator shall grant options subject to the Company's
repurchase rights or rights of first refusal, the certificate or certificates
representing the shares purchased pursuant to the exercise of such option
shall carry a legend satisfactory to counsel for the Company referring to such
rights.

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<PAGE>

SECTION 6. METHOD OF EXERCISE; PAYMENT OF PURCHASE PRICE

6.1. Notice of Exercise. Any option granted under the Plan may be exercised
by the Optionee by delivering to the Company on any business day a written
notice specifying the number of shares of Common Stock the Optionee then
desires to purchase and specifying the address to which the certificates for
such shares are to be mailed, accompanied by payment for such shares.

6.2. Means of Payment and Delivery. Common Stock purchased on exercise of an
option must be paid for as follows: (a) in cash or by check (acceptable to the
Company in accordance with guidelines established for this purpose), bank
draft or money order payable to the order of the Company, (b) if so permitted
by the instrument evidencing the option by the Plan Administrator on or after
grant of the option, through the delivery of shares of Common Stock (which in
the case of shares acquired from the Company upon exercise of an option, have
been outstanding for at least six months) having a fair market value on the
last business day preceding the date of exercise equal to the purchase price,
(c) by delivery of an unconditional and irrevocable undertaking by a broker to
deliver promptly to the Company sufficient funds to pay the exercise price,
(d) if so permitted by the instrument evidencing the option or by the Plan
Administrator on or after grant of the option, by delivery of a promissory
note of the Optionee to the Company, payable on such terms as are specified by
the Plan Administrator, or (e) by any combination of the permissible forms of
payment; provided that if the Common Stock delivered upon exercise of the
option is an original issue of authorized Common Stock, at least so much of
the exercise price as represents the par value of such Common Stock must be
paid other than by the Optionee's promissory note or personal check. In the
event that payment of the option price is made as contemplated by (b) above,
the fair market value of the shares of Common Stock so delivered to the
Company shall be determined in the manner specified in Section 5.1(c). As
promptly as practicable after receipt of such written notification and
payment, the Company shall deliver to the Optionee certificates for the number
of shares with respect to which such Option has been so exercised, issued in
the Optionee's name; provided, however, that such delivery shall be deemed
effected for all purposes when the Company or a stock transfer agent of the
Company shall have deposited such certificates in the United States mail,
addressed to the Optionee, at the address specified pursuant to Section 6.1.

SECTION 7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION

7.1 No Effect of Options upon Certain Corporate Transactions. The existence
of outstanding options shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or
any issue of Common Stock, or any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock or the rights
thereof, or the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.

7.2 Stock Dividends, Recapitalizations, Etc. If at any time after the
effective date of the Plan the Company shall effect a subdivision or
consolidation of shares or other capital readjustment, the payment of a stock
dividend, or other increase or reduction of the number of shares of the Common
Stock outstanding, without receiving compensation therefor in money, services
or property, then: (1) the number, class and per share price of shares of
stock subject to outstanding options hereunder shall be appropriately adjusted
in such a manner as to entitle an Optionee to receive upon exercise of an
option, for the same aggregate cash consideration, the same total number and
class of shares that the owner of an equal number of outstanding shares of
Common Stock would own as a result of the event requiring the adjustment; and
(ii) the number and class of shares with respect to which options may be
granted under the Plan shall be adjusted by substituting for the total number
of shares of Common Stock then reserved for issuance under the Plan that
number and class of shares of stock that the owner of an equal number of
outstanding shares of Common Stock would own as the result of the event
requiring the adjustment.

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<PAGE>

7.3 Determination of Adjustments. Adjustments under this Section shall be
determined by the Plan Administrator and such determinations shall be
conclusive. The Plan Administrator shall have the discretion and power in any
such event to determine and to make effective provision for acceleration of
the time or times at which any option or portion thereof shall become
exercisable. No fractional shares of Common Stock shall be issued under the
Plan on account of any adjustment specified above.

7.4 No Adjustment in Certain Cases. Except as hereinbefore expressly
provided, the issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property
or for labor or services, either upon direct sale or upon the exercise of
rights or warrants to subscribe therefor, or upon conversion of shares or
obligations of the Company convertible into such shares or other securities,
shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock then subject to
outstanding options.

SECTION 8. EFFECT OF CERTAIN TRANSACTIONS

If the Company is a party to a reorganization or merger with one or more
other corporations, whether or not the Company is the surviving or resulting
corporation, or if the Company consolidates with or into one or more other
corporations, or if the Company is liquidated or sells or otherwise disposes
of substantially all of its assets to another corporation (each hereinafter
referred to as a "Transaction"), in any such event while unexercised options
remain outstanding under the Plan, then: (i) subject to the provisions of
clause (iii) below, after the effective date of such Transaction unexercised
options shall remain outstanding and shall be exercisable in shares of Common
Stock, or, if applicable, shares of such stock or other securities, cash or
property as the holders of shares of Common Stock received pursuant to the
terms of such Transaction; (ii) the Plan Administrator may accelerate the time
for exercise of all unexercised and unexpired options to and after a date
prior to the effective date of such Transaction; or (iii) any outstanding
options may be canceled by the Plan Administrator as of the effective date of
such Transaction, provided that: (x) notice of such cancellation shall be
given to each holder of an option; (y) the Plan Administrator shall have
accelerated the time for exercise of all unexercised and unexpired options
that it proposes to cancel; and (z) each holder of an option shall have the
right to exercise such option in full.

SECTION 9. AMENDMENT OR TERMINATION OF THE PLAN

The Board may terminate the Plan at any time, and may amend the Plan at any
time and from time to time, subject to the limitation that, except as provided
in Sections 7 and 8, no amendment shall be effective unless approved by the
stockholders of the Company in accordance with applicable law and regulations,
at an annual or special meeting held within twelve months before or after the
date of adoption of such amendment, in any instance in which such amendment
would: (i) increase the number of shares of Common Stock as to which options
may be granted under the Plan; or (ii) change in substance the provisions of
Section relating to eligibility to participate in the Plan or to the automatic
grant of options.

Except as provided in Sections 7 and 8, rights and obligations under any
option granted before termination or amendment of the Plan shall not be
altered or impaired by such termination or amendment except with the consent
of the Optionee.

SECTION 10. NON-EXCLUSIVITY OF THE PLAN; NON-UNIFORM DETERMINATIONS

Neither the adoption of the Plan by the Board nor the approval of the Plan
by the stockholders of the Company shall be construed as creating any
limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including without limitation the
granting of stock options otherwise than under the Plan, and such arrangements
may be either applicable generally or only in specific cases.

The Plan Administrator's determinations under the Plan need not be uniform
and may be made by it selectively among persons who receive or are eligible to
receive options under the Plan (whether or not such

B-5
<PAGE>

persons are similarly situated). Without limiting the generality of the
foregoing, the Plan Administrator shall be entitled, among other things, to
make non-uniform and selective determinations, and to enter into non-uniform
and selective option agreements, as to (i) the non-mandatory terms and
provisions of options and (ii) the exercise by the Plan Administrator of its
discretion in respect of the exercise of options pursuant to the terms of the
Plan.

SECTION 11. GOVERNMENT AND OTHER REGULATIONS; GOVERNING LAW; WITHHOLDING TAXES

The obligation of the Company to sell and deliver shares of Common Stock
with respect to options granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by government
agencies as may be deemed necessary or appropriate by the Plan Administrator.
All shares sold under the Plan shall bear appropriate legends. The Company
may, but shall in no event be obligated to, register or qualify any shares
covered by options under applicable federal and state securities laws; and in
the event that any shares are so registered or qualified the Company may
remove any legend on certificates representing such shares. The Company shall
not be obligated to take any other affirmative action in order to cause the
exercise of an option or the issuance of shares pursuant thereto to comply
with any law or regulation of any governmental authority. The Plan shall be
governed by and construed in accordance with the laws of the State of New
Hampshire.

Whenever under the Plan shares are to be delivered upon exercise of an
option, the Company shall be entitled to require as a condition of delivery
that the Optionee remit an amount sufficient to satisfy all federal, state and
other governmental withholding tax requirements related thereto. An employee
may elect to have such tax withholding obligation satisfied, in whole or in
part, by: (i) authorizing the Company to withhold from shares of Common Stock
to be issued pursuant to the exercise of an option a number of shares with an
aggregate fair market value (as defined in Section 5.1(c), determined as of
the date the withholding is effected) that would satisfy the withholding
amount due with respect to such exercise; or (ii) transferring to the Company
shares of Common Stock owned by the employee with an aggregate fair market
value (as defined in Section 5.1(c) determined as of the date the withholding
is effected) that would satisfy the withholding amount due.

SECTION 12. "LOCKUP" AGREEMENT

The Plan Administrator may in its discretion specify upon granting an option
that the Optionee shall agree, for a period of time (not to exceed 180 days)
from the effective date of any registration of securities of the Company, upon
request of the Company or the underwriter or underwriters managing any
underwritten offering of the Company's securities, not to sell, make any short
sale of, loan, grant any option for the purchase of, or otherwise dispose of
any shares issued pursuant to the exercise of such option, without the prior
written consent of the Company and/or such underwriter or underwriters, as the
case may be.

SECTION 13. EFFECTIVE DATE AND DURATION OF PLAN

The Plan shall become effective upon approval by the stockholders of the
Company. No option may be granted under the Plan after the tenth anniversary
of the effective date. The Plan shall terminate (i) when the total amount of
Common Stock with respect to which options may be granted shall have been
issued upon the exercise of options (ii) or by action of the Board pursuant to
Section 9, whichever shall first occur.

* * * * *

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<PAGE>

WHITE PINE SOFTWARE, INC.

PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, SEPTEMBER 30, 1997

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Arthur H. Bruno, Killko A. Caballero
and Christine J. Cox, and each of them with full power of substitution to
vote all shares of stock of WHITE PINE SOFTWARE, INC. (the "Corporation")
which the undersigned is entitled to vote at the Annual Meeting of
Stockholders of the Corporation to be held on Tuesday, September 30, 1997,
P at 10:00 a.m. local time and at any adjournment or postponement thereof,
upon matters set forth in the Notice of Annual Meeting and Proxy Statement
R dated August 29, 1997, a copy of which has been received by the
undersigned.
O
THIS PROXY WHICH PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED. IF NO
X CHOICE IS SPECIFIED, THEN THIS PROXY WILL BE VOTED IN FAVOR OF ELECTING THE
NOMINEES, OR ANY NOMINEE FOR WHICH APPROVAL HAS NOT BEEN WITHHELD, IN FAVOR
Y OF AN INCRESE IN THE AGGREGATE NUMBER OF SHARES OF COMMON STOCK AVAILABLE
FOR GRANT UNDER THE CORPORATION'S 1996 INCENTIVE AND NONQUALIFIED STOCK
OPTION PLAN FROM 550,000 TO 1,000,000 AND IN FAVOR OF THE APPROVAL OF THE
CORPORATION'S 1997 DIRECTOR STOCK OPTION PLAN. IN THEIR DISCRETION, THE
PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING.
--------------
SEE REVERSE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
--------------

<PAGE>

[X] PLEASE MARK VOTES AS IN THIS SAMPLE.

The Board of Directors recommends a vote for the following purposes:

1. To elect three (3) directors to serve for a one-year term except as marked to
the contrary below:

NOMINEES: Arthur H. Bruno, Killko A. Caballero,
Jonathan G. Morgan

[_] FOR ALL NOMINEES [_] WITHHELD FROM ALL NOMINEES

[_]______________________________________
For all nominees except as noted above

2. To amend the Corporation's 1996 Incentive and Nonqualified Stock Option Plan
in order to increase the aggregate number of shares of Common Stock available
for grant thereunder from 550,000 to 1,000,000.

FOR AGAINST ABSTAIN
[_] [_] [_]

3. To approve the Corporation's 1997 Director Stock Option Plan.

FOR AGAINST ABSTAIN
[_] [_] [_]

MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [_]

Please mark, sign, date and return the proxy card promptly using the enclosed
envelope.

Please sign your name exactly as it appears on your stock certificate(s), write
in the date and return this proxy as soon as possible in the enclosed envelope.
If the stock is registered in more than one name, each joint owner should sign.
If signing as attorney, executor, trustee, administrator or guardian, please
give full title as such. Only authorized officers should sign for corporations.

Signature:____________________________________ Date:_______________