FTP SOFTWARE INC, DEFS14A, 1996-07-29

FTP SOFTWARE INC
DEFS14A, 1996-07-29
PREPACKAGED SOFTWARE

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<PAGE>

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934

(AMENDMENT NO. 2)

Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_]Preliminary Proxy Statement

[X]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12

FTP SOFTWARE, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

FTP SOFTWARE, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT)

Payment of Filing Fee (check the appropriate box):

[_]$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_]$500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_]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:*

4) Proposed maximum aggregate value of transaction:

* Set forth the amount on which the filing is calculated and state how it
was determined.

[_]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:

Notes:
<PAGE>

FTP SOFTWARE, INC.

100 BRICKSTONE SQUARE, FIFTH FLOOR
ANDOVER, MASSACHUSETTS 01810

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

NOTICE OF SPECIAL MEETING IN LIEU OF ANNUAL MEETING OF STOCKHOLDERS

AUGUST 22, 1996

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

A Special Meeting in Lieu of the 1996 Annual Meeting of Stockholders of FTP
Software, Inc. (the "Meeting") will be held at the McLean Hilton at Tysons
Corner, 7920 Jones Branch Drive, McLean, Virginia at 10:00 a.m., local time,
on Thursday, August 22, 1996, for the following purposes:

1. To elect three Class III directors;

2. To approve an amendment to the FTP Software, Inc. Restated Articles
of Organization, as amended, to increase the number of authorized
shares of FTP Software, Inc. Common Stock from 50,000,000 to
100,000,000 shares;

3. To approve the FTP Software, Inc. 1996 Executive Equity Incentive
Plan; and

4. To transact any other business that may properly come before the
Meeting or any postponement or adjournment thereof.

Stockholders of record at the close of business on July 25, 1996 are
entitled to notice of, and to vote at, the Meeting.

WHETHER OR NOT YOU PLAN TO BE PERSONALLY PRESENT AT THE MEETING, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE. IF YOU LATER DESIRE TO REVOKE YOUR PROXY, YOU MAY DO SO AT
ANY TIME BEFORE IT IS EXERCISED.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ Douglas F. Flood
----------------------------------
Douglas F. Flood
Clerk

Andover, Massachusetts

July 29, 1996
<PAGE>

SPECIAL MEETING IN LIEU OF ANNUAL MEETING OF STOCKHOLDERS

AUGUST 22, 1996

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

PROXY STATEMENT

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

The enclosed proxy is solicited on behalf of the Board of Directors of FTP
Software, Inc. ("FTP Software" or the "Company") to be voted at the Special
Meeting in Lieu of the 1996 Annual Meeting of Stockholders of the Company to
be held at the McLean Hilton at Tysons Corner, 7920 Jones Branch Drive,
McLean, Virginia on Thursday, August 22, 1996, at 10:00 a.m., local time, and
at any postponement or adjournment thereof (the "Meeting").

Shares of the Company's common stock, par value $.01 per share ("Common
Stock"), represented by proxies in the form enclosed, if properly executed and
returned and not revoked, will be voted as specified, but where no
specification is made, the shares will be voted for the election as Directors
of the nominees named below, in favor of the proposal to approve the amendment
to the Company's Restated Articles of Organization, as amended (the
"Charter"), described below (the "Charter Amendment Proposal") and in favor of
the proposal to approve the FTP Software, Inc. 1996 Executive Equity Incentive
Plan (the "Executive Incentive Plan") described below (the "Executive
Incentive Plan Proposal"). To be voted, proxies must be filed with the Clerk
of the Company prior to voting. Each stockholder who has given a proxy may
revoke it any time before it is exercised at the Meeting, by (i) delivering to
the Clerk of the Company a written notice, bearing a date later than the date
of the proxy, stating that the proxy is revoked, (ii) signing and so
delivering a proxy relating to the same shares and bearing a later date prior
to the vote at the Meeting or (iii) attending the Meeting and voting in person
(although attendance at the Meeting will not, by itself, revoke a proxy).

The Annual Report to Stockholders for FTP Software's fiscal year ended
December 31, 1995 accompanies this Proxy Statement. This Proxy Statement and
the enclosed proxy are first being mailed to stockholders on or about July 29,
1996. The principal executive offices of FTP Software are located at 100
Brickstone Square, Fifth Floor, Andover, Massachusetts 01810.

The cost of solicitation of proxies, which will primarily be by mail, will
be borne by FTP Software. Directors, officers and employees of FTP Software
may also solicit proxies by telephone or telecopy, or in person. Such
Directors, officers and employees will not receive additional compensation for
such solicitation but may be reimbursed for out-of-pocket expenses incurred in
connection therewith. The Company has retained Morrow & Company, Inc. to
assist in the solicitation of proxies for the Meeting, at a cost to the
Company of approximately $6,000, plus reimbursement of reasonable expenses.
FTP Software will reimburse banks, brokerage firms and other custodians,
nominees and fiduciaries holding shares of Common Stock for reasonable
expenses incurred by them in sending proxy materials to the beneficial owners
of such shares.

Only holders of record of the Common Stock at the close of business on July
25, 1996 (the "Record Date") are entitled to notice of and to vote at the
Meeting. There were approximately 33,419,027 shares of Common Stock
outstanding on that date, held of record by 399 stockholders (although the
Company has been informed that there were approximately 21,360 beneficial
owners of the Common Stock as of that date). Each such record holder is
entitled to one vote for each share of Common Stock held as of the Record Date
on each matter to come before the Meeting.
<PAGE>

ELECTION OF DIRECTORS

Unless otherwise instructed, the persons named in the enclosed proxy intend
to vote each share of Common Stock as to which a proxy has been properly
executed and returned and not revoked, in favor of the election as Directors
of the three nominees named below (the "Nominees"), each of whom is now a
Director of FTP Software.

The Charter and the Company's Amended and Restated By-laws (the "Bylaws")
provide for the classification of the Company's Board of Directors (the "Board
of Directors" or the "Board") into three classes, as nearly equal in number as
possible, with the terms of such classes staggered so that only one class is
elected each year, in each case for a three-year term or until a successor to
each Director in such class is duly elected and qualified. The Board of
Directors presently consists of eight persons. Of such persons, three are
serving as Class III Directors. The term of each of the current Class III
Directors will expire at the Meeting, and three Class III Directors are to be
elected at the Meeting to serve for a term of three years expiring at the 1999
Annual Meeting of Stockholders or until their respective successors are duly
elected and qualified.

It is expected that each of the Nominees will be able to serve, but if any
Nominee is unable to serve, all proxies will be voted either for a substitute
nominee designated by the Board of Directors or to reduce the number of
directors constituting the whole Board of Directors, as determined by the
persons named in the enclosed proxy in their discretion, unless instructions
are given to the contrary. The name, age and other information relating to the
Nominees and to the other Directors of the Company are as follows:

NOMINEES FOR ELECTION AS
CLASS III DIRECTORS--
TERMS EXPIRE 1999

<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION DIRECTOR SINCE(1)
- ---- --- -------------------- -----------------
<S> <C> <C> <C>
Vinton G. Cerf 53 Senior Vice President of Data Architecture of 1994
the Engineering Division of MCI
Telecommunications, Inc. since February 1994;
President of the Internet Society from 1992 to
1995; Vice President of the Corporation for
National Research Initiatives from 1986 through
February 1994.
Glenn C. Hazard(2) 42 President and Chief Operating Officer since 1996
April 1996; Senior Vice President of Business
Transformation of Legent Corporation, a systems
management software company, from March to
December 1995; various management positions with
AT&T Corp. and its subsidiaries from 1983 to
1995, including Senior Vice President of
Business Transformation of AT&T Corp. from June
1994 to March 1995, Vice President of Business
Process Reengineering of AT&T Global Information
Systems from September 1993 to June 1994, Vice
President of Process Reengineering of AT&T
Global Business Communications Systems from
August 1992 to September 1993 and Director of
Process Reengineering of AT&T Global Business
Communications Systems from 1990 to August 1992.
Louise A. Mathews(3) 51 Partner, Shaw, Pittman, Potts & Trowbridge, a 1995
Washington, D.C. law firm, since 1984;
associate, Steptoe & Johnson, from 1974 to 1984.
</TABLE>

2
<PAGE>

INCUMBENT CLASS I DIRECTORS--
TERMS EXPIRE 1997

<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION DIRECTOR SINCE(1)
- ---- --- -------------------- -----------------
<S> <C> <C> <C>
David D. Clark(3) 52 Senior Research Scientist at the Massachusetts 1995
Institute of Technology Laboratory for Computer
Science since 1973; since the mid-1970's,
involved in the development of the Internet
protocol suite; Chairman of the Internet
Activities Board from 1981 to 1989; Director,
Proteon, Inc.
F. David Fowler 62 Dean of the School of Business and Public 1994
Management at The George Washington University
since July 1992; partner in the firm of KPMG
Peat Marwick from 1969 to 1992; member of the
Board of Directors of KPMG Peat Marwick from
1987 to 1992; managing partner of KPMG Peat
Marwick's Washington Office from 1987 to 1991.
</TABLE>

INCUMBENT CLASS II DIRECTORS--
TERMS EXPIRE 1998

<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION DIRECTOR SINCE(1)
- ---- --- -------------------- -----------------
<S> <C> <C> <C>
John H. Keller 44 Senior Vice President of Global Engineering and 1995
Development since July 1996; Senior Vice
President of Business Operations from August
1995 to July 1996; Vice President of Engineering
from May 1994 to August 1995; Vice President of
Technical Services from November 1993 to May
1994; from 1992 to 1993, Vice President of
Operations for the Spartacus Division of
Fibronics International, Inc.; from 1991 to
1992, Director of Operations for the Spartacus
Division of Fibronics International, Inc.; from
1989 to 1991, Director of Customer Service for
the Spartacus Division of Fibronics
International, Inc.; from 1986 to 1989, Customer
Service Manager for the Spartacus Division of
Fibronics International, Inc.
John A. Kimberley(4) 48 Vice Chairman of the Company and Executive Vice 1996
President of Firefox Communications Inc.
("Firefox"), a subsidiary of the Company, since
July 22, 1996; Chairman of the Board, President
and Chief Executive Officer of Firefox from
January 1990 through July 22, 1996; Managing
Director of the UNIX distribution subsidiary of
TIS Limited, a UNIX hardware and software
distributor, from 1986 to 1990.
David H. Zirkle 60 Chief Executive Officer and Chairman of the 1993
Board since January 1993; President from January
1993 to April 1996; consultant to the Company
from February 1992 through December 1992;
executive in the U.S. operations of Racal
Electronics, PLC, a data communications company,
from October 1982 to November 1991; President
and Chief Executive Officer of The Racal
Corporation, a wholly-owned subsidiary of Racal
Electronics, PLC, from 1986 through November
1991.
</TABLE>

3
<PAGE>

- --------
(1) Dates shown indicate the year in which the individual began serving as a
Director of the Company.
(2) Glenn C. Hazard was elected as a Director by the Board of Directors in
April 1996, filling the vacancy created by the resignation of Robert W.
Goodnow, Jr. in October 1995.
(3) In July 1995, the Board of Directors elected David D. Clark and Louise A.
Mathews as members of the Board to replace David A. Bridgham and Stephen
E. Knowles, respectively, who resigned as a Director and as a Director and
officer of the Company, respectively, during such month.

(4) John A. Kimberley was elected as a Director by the Board of Directors
effective July 22, 1996, pursuant to the Amended and Restated Agreement
and Plan of Merger dated as of May 21, 1996 (as amended and restated, the
"Firefox Merger Agreement"), among the Company, Firefox Acquisition Corp.,
a wholly-owned subsidiary of the Company, and Firefox, whereby Firefox
became a wholly-owned subsidiary of FTP.

BOARD OF DIRECTORS AND COMMITTEES

The Board of Directors held seven meetings during the year ended December
31, 1995. Each incumbent Director attended at least 75% of the Board meetings
and the meetings held by committees of the Board on which he or she served
during such fiscal year. The Board of Directors currently has three standing
committees, the Audit Committee, the Compensation Committee and the Stock
Option Committee. The Company does not have a standing Nominating Committee.

The Audit Committee, composed of Mr. Fowler and Ms. Mathews, who was
appointed by the Board to such Committee in August 1995, reviews with the
Company's independent accountants and management the scope and results of the
annual audit, the scope of other services provided by the Company's
independent accountants, proposed changes in the Company's financial and
accounting standards and principles, and the Company's policies and procedures
with respect to its internal accounting, auditing and financial controls and
makes recommendations to the Board of Directors on the engagement of the
independent accountants, as well as other matters which may come before it or
as directed by the Board of Directors. David A. Bridgham, a former member of
the Audit Committee, resigned as a Director of the Company in July 1995. Dr.
Cerf, also a former member of the Audit Committee, stepped down from that
Committee upon the appointment of Ms. Mathews in August 1995. The Audit
Committee held two meetings in 1995.

The Compensation Committee, composed of Dr. Cerf, Mr. Fowler and Ms.
Mathews, who was appointed by the Board to such Committee in August 1995,
administers the Company's compensation programs and performs such other duties
as may from time to time be determined by the Board of Directors. Mr.
Bridgham, a former member of the Compensation Committee, resigned as a
Director of the Company in July 1995. The Compensation Committee held four
meetings in 1995.

The Stock Option Committee was formed in December 1995 to administer the
grant of options under the Company's stock option plans to employees other
than executive officers, as authorized from time to time by the Compensation
Committee. The Stock Option Committee, composed of Mr. Zirkle, held no
meetings in 1995.

4
<PAGE>

SECURITY OWNERSHIP

The following table and footnotes set forth certain information regarding
the beneficial ownership of the Common Stock as of July 25, 1996 by (i) each
of the Company's chief executive officer, the other four most highly
compensated executive officers of the Company for the year ended December 31,
1995 and one other individual who would have been included among the most
highly compensated executive officers of the Company for 1995 but for the fact
he was not employed as an executive officer of the Company at the end of 1995
(the "Named Executive Officers"), (ii) each of the Directors of the Company
and (iii) all Directors, Named Executive Officers and other executive officers
of the Company as a group. Except as otherwise indicated, each of the persons
named below has sole voting power and investment power with respect to the
shares of Common Stock beneficially owned by such person. The Company does not
know of any person (including any "group" as that term is used in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) that is a beneficial owner of more than 5% of the outstanding shares of
Common Stock, the only outstanding class of voting securities of the Company.

<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK BENEFICIALLY OWNED
-------------------------------
NUMBER OF PERCENT OF
DIRECTORS AND NAMED EXECUTIVE OFFICERS (1) SHARES CLASS
- ------------------------------------------ -------------- ------------
<S> <C> <C>
David H. Zirkle 426,426(2) 1.26%
Glenn C. Hazard -- *
Dean L. Carmeris 40,000(3) *
Douglas F. Flood 43,125(4) *
Robert W. Goodnow, Jr.. 782,577 2.34%
John H. Keller 129,210(5) *
John A. Kimberley 1,400,288 4.19%
Penny C. Leavy 72,474(6) *
Vinton G. Cerf 25,000(7) *
David D. Clark 8,768(8) *
F. David Fowler 15,167(9) *
Louise A. Mathews 8,768(10) *
All Directors, Named Executive Officers and
other executive officers as a group (16 per-
sons) 4,222,635(11) 12.36%
</TABLE>
- --------
* Less than 1%.
. Mr. Goodnow resigned as a Director and officer of FTP Software in October
1995.
(1) The address of all Named Executive Officers and Directors is care of FTP
Software, 100 Brickstone Square, Fifth Floor, Andover, Massachusetts
01810. Only the Named Executive Officers are listed individually.
(2) Includes 423,426 shares issuable pursuant to outstanding options
exercisable within 60 days.
(3) Consists of 40,000 shares issuable pursuant to outstanding options
exercisable within 60 days.

(4) Includes 41,450 shares issuable pursuant to outstanding options
exercisable within 60 days.
(5) Consists of 129,210 shares issuable pursuant to outstanding options
exercisable within 60 days.
(6) Includes 62,036 shares issuable pursuant to outstanding options
exercisable within 60 days.
(7) Consists of 25,000 shares issuable pursuant to outstanding options
exercisable within 60 days.
(8) Consists of 8,768 shares issuable pursuant to outstanding options
exercisable within 60 days.
(9) Includes 14,167 shares issuable pursuant to outstanding options
exercisable within 60 days.
(10) Consists of 8,768 shares issuable pursuant to outstanding options
exercisable within 60 days.
(11) Includes 752,825 shares issuable pursuant to outstanding options
exercisable within 60 days.

5
<PAGE>

EXECUTIVE COMPENSATION

The following table and footnotes set forth certain summary information
concerning compensation paid or accrued by the Company on behalf of the Named
Executive Officers for the Company's fiscal years ended December 31, 1995,
December 31, 1994 and December 31, 1993.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
----------------------------- ------------------
AWARDS PAYOUTS
---------- -------
OTHER SECURITIES
ANNUAL UNDERLYING LTIP ALL OTHER
NAME AND SALARY BONUS COMPENSATION OPTIONS PAYOUTS COMPENSATION(1)
PRINCIPAL POSITIONS YEAR ($) ($) ($) (#) ($) ($)
- ------------------- ---- -------- ------- ------------ ---------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
David H. Zirkle 1995 $300,000 $ -- $31,160(2) 500,000 -- $4,620
Chief Executive 1994 240,192 103,282 17,319(2) -- -- 4,620
Officer 1993 215,827 107,500 -- 560,000 -- 4,031
Dean L. Carmeris 1995 142,500 25,000 1,012(2) 160,000 -- --
Vice President of
Customer Services
Douglas F. Flood 1995 179,673 -- 11,542(2) 50,000 -- 4,620
Senior Vice President
of 1994 131,312 18,135 8,888(2) 77,000 -- 3,383
Business Development 1993 64,209 4,000 1,041(2) 56,000 -- --
and Planning and Gen-
eral Counsel
Robert W. Goodnow, Jr. 1995 135,173 -- 13,050(2) -- -- 4,620
Former Vice President
of 1994 165,000 70,950 1,983(2) -- -- 4,620
Finance and Treasur-
er(3) 1993 165,106 82,500 1,825(2) 160,000 -- 4,497
John H. Keller 1995 201,776 -- 5,844(2) 100,000 -- 4,620
Senior Vice President
of 1994 150,154 64,567 -- 100,000 -- 4,620
Business Operations(4) 1993 18,462 -- -- 160,000 -- --
Penny C. Leavy 1995 140,000 -- 77,840(6) -- -- 4,620
Vice President of Sales 1994 110,000 -- 81,778(6) 52,000 -- 4,620
and Marketing(5) 1993 99,731 -- 101,456(6) 8,000 -- 4,497
</TABLE>
- --------
(1) Amounts shown represent contributions made by FTP Software to its 401(k)
savings plan for the accounts of the Named Executive Officers.
(2) Amounts shown represent vacation payouts accrued for such years.
(3) Mr. Goodnow resigned as a Director and officer of FTP Software in October
1995.

(4) Mr. Keller now serves as Senior Vice President of Global Engineering and
Development.

(5) Ms. Leavy now serves as Vice President of Business Development/Alliances.

(6) Primarily represents commissions paid under FTP Software's sales incentive
programs and includes $11,240, $10,278 and $6,956 in 1995, 1994 and 1993,
respectively, for vacation payouts accrued for such years.

6
<PAGE>

STOCK OPTIONS

The following table contains information concerning the grant of stock
options under the Company's Stock Option Plan to the Named Executive Officers
during the year ended December 31, 1995.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
SECURITIES % OF TOTAL RATES OF STOCK PRICE
UNDERLYING OPTIONS APPRECIATION
OPTIONS GRANTED TO EXERCISE FOR OPTION TERM
GRANTED EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME (#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ---- ---------- ------------ -------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
David H. Zirkle......... 500,000(1) 28.58% $31.75 3/31/05 $9,983,702 $25,300,662
Dean L. Carmeris........ 160,000(1) 9.15% 31.75 3/31/05 3,194,785 8,096,212
Douglas F. Flood........ 50,000(2) 2.86% 24.75 8/18/05 778,257 1,972,356
Robert W. Goodnow,
Jr.(3)................. -- -- -- -- -- --
John H. Keller.......... 100,000(2) 5.72% 24.75 8/18/05 1,556,514 3,944,513
Penny C. Leavy.......... -- -- -- -- -- --
</TABLE>
- --------
(1) Options become exercisable in four equal annual installments beginning one
year after March 31, 1995, the date of grant.
(2) Options become exercisable in four equal annual installments beginning one
year after August 18, 1995, the date of grant.
(3) Mr. Goodnow resigned as a Director and officer of FTP Software in October
1995.

OPTION EXERCISES AND YEAR-END INTERESTS

The following table provides information with respect to the Named Executive
Officers concerning the exercise of options during the fiscal year ended
December 31, 1995 and unexercised options held as of the end of such year.

AGGREGATE OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS AT IN-THE-MONEY
FISCAL YEAR- OPTIONS AT
SHARES END (#) FISCAL YEAR-END ($)
ACQUIRED --------------- ---------------------
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ---- ------------ ----------- --------------- ---------------------
<S> <C> <C> <C> <C>
David H. Zirkle......... 160,000 $3,139,940 240,000/620,000 $5,460,000/$2,730,000
Dean L. Carmeris........ -- -- -- --
Douglas F. Flood........ 11,600 195,750 19,250/140,550 875/871,326
Robert W. Goodnow,
Jr.(1)................. 353,175 8,683,981 324,325/-- 9,026,954/--
John H. Keller.......... -- -- 104,210/255,790 200,000/625,000
Penny C. Leavy.......... 29,200 746,400 45,136/89,664 896,575/1,342,200
</TABLE>
- --------
(1) Mr. Goodnow resigned as a Director and officer of FTP Software in October
1995.

7
<PAGE>

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Mr. F. David Fowler, a Director of the Company, filed late the Form 4
required to be filed pursuant to Section 16(a) of the Exchange Act with
respect to one transaction during the year ended December 31, 1995 that was
reportable on such form. Mr. Robert W. Goodnow, Jr., who resigned as a
Director and officer of the Company in October 1995, reported late, on his
Form 5 for the year ended December 31, 1995, 13 transactions during December
1995 that were reportable on a Form 4.

COMPENSATION OF DIRECTORS

Directors who are not full-time employees of the Company ("Non-employee
Directors") receive an annual fee of $10,000 for their services, plus $1,000
for each Board of Directors meeting attended and $500 for each Board of
Directors committee meeting attended.

Additionally, Non-employee Directors receive automatic, non-discretionary
grants of options to purchase shares of Common Stock under the Company's 1993
Non-employee Directors' Stock Option Plan. Such Plan provides generally for an
automatic grant to a Non-employee Director on the date such Director is
elected, or re-elected, as a Director, of options to purchase 30,000 shares of
Common Stock at the fair market value of the Common Stock at the time of the
grant. One-third of such options become exercisable at the end of each year of
such Director's three-year term. Non-employee Directors who are elected for
less than a full three-year term receive a proportionately smaller initial
grant. Dr. David D. Clark, who was elected as a Director in June 1995 for a
term expiring at the 1997 Annual Meeting, was automatically granted, on such
date, options to purchase 18,768 shares of Common Stock at an exercise price
of $30.875 per share pursuant to this Plan. Ms. Louise A. Mathews, who was
elected as a Director in July 1995 for a term expiring at the 1996 Annual
Meeting, was automatically granted, on such date, options to purchase 8,768
shares of Common Stock at an exercise price of $30.875 per share pursuant to
this Plan. Each of Ms. Mathews and Dr. Vinton G. Cerf is a Nominee for
election as a Class III Director at the Meeting. If elected, each such person
will automatically be granted an option to purchase 30,000 shares of Common
Stock, at the fair market value of the Common Stock on the date of the
Meeting, pursuant to this Plan.

EMPLOYMENT CONTRACTS

During the year ended December 31, 1995, David H. Zirkle and the Company
were parties to an employment agreement which, as amended, provided that Mr.
Zirkle would serve as FTP Software's President and Chief Executive Officer for
a period commencing on March 1, 1993 and ending on March 1, 1997. This
agreement was terminated when the Company and Mr. Zirkle entered into the new
employment agreement described later in this section. Pursuant to the former
agreement, Mr. Zirkle was entitled to a base annual salary of $300,000
commencing January 1, 1995, subject to increase by the Board of Directors, and
to other benefits to the same extent as all other executive officers.

Such employment agreement also provided that in the event any person, firm,
entity or group (as defined in the Exchange Act) acquired more than 50% of the
issued and outstanding shares of the Common Stock in a transaction that did
not receive the prior approval of the Board of Directors, (i) the term of Mr.
Zirkle's employment agreement would be extended automatically for a period of
two years from the date of such acquisition and (ii) all stock options
previously issued to Mr. Zirkle that were not yet exercisable would become
exercisable and all stock options previously issued to Mr. Zirkle would remain
exercisable for the remainder of the term of the options without regard to the
continuation of his employment with FTP Software. At the time the employment
agreement was entered into, Mr. Zirkle was granted options to purchase 320,000
shares of Common Stock at an exercise price of $6.25 per share, which options
became exercisable on November 16, 1993 (the effective date of the Company's
registration statement in connection with the initial public offering of the
Common Stock).

8
<PAGE>

In addition, such agreement provided that in the event of the breach by the
Company of any material term of Mr. Zirkle's employment agreement or if Mr.
Zirkle were removed as President, Chief Executive Officer or a Director of FTP
Software prior to the end of the term of such agreement, the Company would be
required to pay Mr. Zirkle an amount equal to the greater of (i) all amounts
which would otherwise be due and payable under such agreement and (ii) 25% of
Mr. Zirkle's base salary as such base salary may have been increased pursuant
to such agreement.

Mr. Zirkle resigned as President of the Company in connection with the
election of Glenn C. Hazard as President and Chief Operating Officer of the
Company in April 1996. His resignation as President had no effect on his
employment agreement.

In late July 1996, the Company entered into an employment agreement (each,
an "Employment Agreement") with each of Messrs. Zirkle, Hazard, Flood and
Keller (each, an "Employee"), among others, pursuant to which the Company has
agreed to employ each such person in their current positions for a period of
one year at an annual salary of $300,000, $275,000, $200,000 and $225,000,
respectively. Mr. Zirkle's agreement provides that his annual salary will
decrease to $80,000 on March 1, 1997. In addition, if a cash incentive or
bonus compensation plan is made available to executive officers of the Company
generally, and the Employee is not then covered by any other cash incentive or
bonus compensation plan, the Employee will be entitled to participate in such
plan in accordance with the plan terms.

The Employment Agreements contain the following termination provisions,
among others:

(a) the Company has the right to terminate the Employee's employment at
any time "for cause" (as such term is defined in the Employment
Agreements), in which event the Company shall have no further obligation to
the Employee, other than for base salary earned and unpaid at the date of
termination;

(b) the Company has the right to terminate the Employee's employment
other than for cause at any time, in which event, if such termination
occurs either before or after a Change of Control Period (as defined
below), the Company shall pay the Employee, in one lump sum, an amount
equal to 12 months of the Employee's base salary;

(c) the Employee has the right to terminate his employment at any time
for "good reason" (as such term is defined in the Employment Agreements,
including matters such as a change in position or material diminution in
the nature or scope of the Employee's responsibilities, duties or
authority, work site relocation and the material failure of the Company to
provide the Employee the benefits specified in his Employment Agreement),
in which event the Company will be required to pay the Employee the amount
specified in the preceding paragraph; and

(d) if on the date of, or within one year following, a change of control
(as such term is defined in the Employment Agreements) (a "Change of
Control Period"), the Company terminates the Employee's employment other
than for cause or the Employee terminates his employment for good reason,
then the Company will be required (such to certain tax adjustments) to (i)
pay the Employee a lump sum payment equal to two times (one time, in the
case of Mr. Zirkle) the greater of (A) the sum of his base salary and the
amount of any bonus paid or payable to him during the remainder of the term
of the Employment Agreement (which will automatically be extended to be not
less than 12 months from the date the change of control occurs) or (B) the
sum of his base salary and the amount of any bonus paid or payable to him
during the 12 months preceding the month during which such termination
occurs, and (ii) pay the full cost of the Employee's continued
participation in the Company's group health and dental insurance plans for
so long as the Employee remains entitled to continue such participation
under COBRA and the applicable plan terms. In addition, upon a change of
control, all options to purchase the Company's Common Stock then held by
the Employee will automatically accelerate and become exercisable in full.

Also, each Employment Agreement prohibits the Employee from competing with
the Company and its affiliates for a period of six months following
termination of the Employee's employment.

9
<PAGE>

CERTAIN TRANSACTIONS

During the fourth quarter of 1995, the Company and David D. Clark, a
Director of FTP Software, entered into an oral consulting agreement pursuant
to which the Company has retained Dr. Clark as a consultant in the areas of
technology, strategy, product development and technology diligence related to
corporate transactions, among other things, at a fee of $3,000 per day. No
services were performed by Dr. Clark under this agreement during 1995.

In April 1996, in connection with the relocation of John J. Warnock, Jr.,
the Company's new Senior Vice President, Chief Financial Officer and
Treasurer, from Pennsylvania to the Company's executive offices in
Massachusetts, the Company provided to Mr. Warnock a non-interest bearing
bridge loan in the principal amount of $95,000 for the purchase of Mr.
Warnock's new residence in Massachusetts and agreed to pay certain related
closing costs and to reimburse Mr. Warnock for all mortgage payments payable
under the mortgage on Mr. Warnock's former Pennsylvania residence for the
period commencing upon the purchase of Mr. Warnock's Massachusetts residence
and continuing until the sale of Mr. Warnock's Pennsylvania residence or
October 31, 1996, whichever is earlier. The bridge loan is repayable in full
on the 15th day following the sale of Mr. Warnock's Pennsylvania residence or,
if Mr. Warnock should cease to be an employee of the Company before that date,
on the date he ceases to be an employee, and is secured by a second mortgage
on Mr. Warnock's Pennsylvania residence.

REPORT OF THE COMPENSATION COMMITTEE

The Compensation Committee is composed of three independent non-employee
Directors. Ms. Mathews joined the Committee in August 1995 and accordingly did
not participate in many of the deliberations regarding 1995 compensation.

The Company's executive compensation program is designed to reward and
retain executives who are capable of leading the Company in achieving its
strategic and financial objectives in the competitive and rapidly changing
networking software industry.

Compensation for the Company's executive officers consists of an annual
salary, incentive cash bonuses and stock-based incentive compensation. Each of
the Company's executive officers has an annual base salary at a level that the
Company believes is competitive for technology companies of comparable size
(measured by revenue and anticipated growth) and that allows the Company to
attract experienced executives capable of managing its growth. The
Compensation Committee relies in part on annual industry salary surveys and
has occasionally in the past commissioned independent surveys. In addition to
base salary, each of the Company's executive officers may receive an incentive
cash bonus at the end of each fiscal year based upon corporate performance.
For eligible executive officers, corporate performance is measured by the
Company's financial performance in that fiscal year, namely, total revenues
and net income from operations for the year and cash balances at the end of
the year. Because not all of the Company's 1995 performance targets were met,
the Company determined not to pay any incentive cash bonuses to any of the
Company's officers for 1995. Sales executives have been eligible for
commissions based on the Company's total sales revenue.

The Compensation Committee believes that the Company's achievement of its
strategic goals and objectives will be reflected in long-term stock price
appreciation. Accordingly, the Company seeks to create long-term performance
incentives for its employees by aligning their economic interests with the
interests of the Company's long-term shareholders through the Company's stock-
based incentive compensation program. Stock options are granted at a price
equal to the fair market value of the Company's Common Stock on the date of
grant, and, as a result, receipt of value by the employee is dependent upon an
increase in the price of the Company's Common Stock. Initial stock option
grants are made to executive officers by reference to the number of stock
options held by employees in comparable positions. Further awards are based on
the previous and anticipated contributions by such employees in helping the
Company achieve its strategic goals and objectives.

10
<PAGE>

In adopting and administering executive compensation plans and arrangements,
the Compensation Committee will consider whether the deductibility of such
compensation will be limited under Section 162(m) of the Internal Revenue Code
of 1986, as amended, and, in appropriate cases, may strive to structure such
compensation so that any such limitation will not apply.

At the beginning of 1994, Mr. Zirkle's base annual salary was $215,000. The
Compensation Committee became concerned that this salary was low in comparison
to those of other chief executive officers at technology companies of
comparable size (measured by revenue and anticipated growth), particularly in
light of the Company's financial performance. In 1994, after a review of
various surveys of chief executive officer salaries, the Compensation
Committee recommended, and the Board of Directors approved, an increase in Mr.
Zirkle's base salary in two stages: to an annual rate of $265,000 effective
July 1, 1994 and to an annual rate of $300,000 effective January 1, 1995. As
indicated above, Mr. Zirkle did not receive a bonus for 1995 because the
Company did not meet all of its performance targets. To provide further long
term incentive to Mr. Zirkle and to bring his option position more in line
with that of chief executive officers of other comparable companies, in the
first quarter of 1995, the Compensation Committee granted Mr. Zirkle
additional options to purchase 500,000 shares of the Company's Common Stock,
on the terms described elsewhere in this Proxy Statement. Based upon studies
commissioned by the Compensation Committee and information provided by its
advisors, the Compensation Committee determined that chief executive officers
of businesses comparable to the Company generally had option positions equal
to approximately 3.5% to 5% of the outstanding common stock. This grant of
options brought Mr. Zirkle's option position to approximately 3.5% of the
Company's outstanding Common Stock. Also in the first quarter of 1995, the
Company extended Mr. Zirkle's employment agreement with the Company, as
described elsewhere in this Proxy Statement, until March 1, 1997.

With respect to the above matters, the Compensation Committee submits this
report.

Compensation Committee

Vinton G. Cerf
F. David Fowler
Louise A. Mathews

11
<PAGE>

PERFORMANCE GRAPH

COMPARISON OF CUMULATIVE TOTAL RETURN AMONG FTP SOFTWARE COMMON STOCK,
S&P 500 COMPOSITE INDEX AND S&P COMPUTER SOFTWARE & SERVICES INDEX*

[PERFORMANCE GRAPH APPEARS HERE]

<TABLE>
<CAPTION>
BASE
PERIOD
COMPANY/INDEX 16-NOV-93 DEC-93 DEC-94 DEC-95
<S> <C> <C> <C> <C>
FTP SOFTWARE, INC. 100 139.47 166.44 152.63
S&P 500 INDEX 100 100.60 101.93 140.23
S&P COMPUTER SOFTWARE
& SERVICES 100 95.64 113.05 158.88

</TABLE>
- --------
* Assumes $100 invested in the Company's Common Stock, S&P 500 Composite Index
and S&P Software and Services Index on November 16, 1993, the date of the
Company's initial public offering. Assumes reinvestment of dividends.

The stock prices on the foregoing Performance Graph are not necessarily
indicative of future stock price performance. Each of the Report of the
Compensation Committee of the Board of Directors set forth above under "Report
of the Compensation Committee" and the Performance Graph shall not be deemed
incorporated by reference by any general statement incorporating this Proxy
Statement into any filing under the Securities Act of 1933, as amended, or
under the Exchange Act, except to the extent that the Company specifically
incorporates such information by reference, and shall not otherwise be deemed
filed under such Acts.

THE CHARTER AMENDMENT PROPOSAL

Under the Charter, the Company's authorized capital stock consists of
50,000,000 shares of Common Stock and 5,000,000 shares of preferred stock,
$.01 par value per share, of which the Board of Directors has designated
500,000 shares as Junior Preferred Stock. At the Meeting, stockholders will be
asked to consider and vote upon a proposal to approve and adopt an amendment
to the Charter to increase the number of authorized shares of Common Stock to
100,000,000. As of the Record Date, there were approximately 33,419,027 shares
of Common Stock outstanding and 9,109,114 shares of Common Stock reserved for
future issuance as described below.

The increase in the number of authorized shares of Common Stock is being
sought to provide the Company with the flexibility to take advantage of
certain opportunities that may arise, including future business acquisitions,
which may be made utilizing shares of Common Stock in some instances. Such
increase is also being sought to

12
<PAGE>

ensure that the Company has a sufficient number of shares of Common Stock
available for issuance under the Rights Agreement described under "Description
of Capital Stock--Rights"; such shares would also be available for issuance
under the Executive Incentive Plan and any other equity incentive plan that
may be adopted by the Company (see "The Executive Incentive Plan Proposal").
The Company may also consider the issuance of additional shares of Common
Stock through stock splits and stock dividends or to raise additional equity
capital. The Company has no present plans, understandings, agreements or
arrangements concerning the issuance of additional shares of Common Stock,
except for the 9,109,114 shares reserved, as of the Record Date, for issuance
by the Company under its existing director and employee stock option plans,
employee stock purchase plans and certain stock options held by current and
former Firefox employees and directors which were converted into options to
purchase the Company's Common Stock pursuant to the Firefox Merger Agreement.
If any plans, understandings, arrangements or agreements are made concerning
the issuance of any such shares, holders of the then outstanding shares of the
Company's capital stock may or may not be given the opportunity to vote
thereon, depending upon the nature of any such transaction, the law applicable
thereto, the policy of any stock exchange upon which the Company's capital
stock may be listed at such time and the judgment of the Board of Directors of
the Company regarding the submission thereof to the vote of its stockholders.

Under the Massachusetts Business Corporation Law, the Charter and the
Bylaws, approval of the Charter Amendment Proposal will require the
affirmative vote of the holders of a majority of the outstanding shares of
Common Stock entitled to vote thereon.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE TO
APPROVE THE CHARTER AMENDMENT PROPOSAL.

THE EXECUTIVE INCENTIVE PLAN PROPOSAL

In July 1996, the Board of Directors unanimously adopted the Executive
Incentive Plan subject to and effective upon the approval of such plan by the
stockholders of the Company. The Executive Incentive Plan provides for the
grant of stock options and other stock awards to executive officers of the
Company only, as more particularly described below. The Company is adopting
the Executive Incentive Plan at this time to partially replace the Company's
existing Stock Option Plan, which expires in January 1997 and which provides
for the grant of stock options and other stock awards to all employees of the
Company. The Company intends to adopt a new equity incentive plan for
employees of the Company and its subsidiaries other than executive officers of
the Company, at the end of 1996; the Company does not intend to seek
stockholder approval of such new employee stock option plan.

As of July 25, 1996, of the 26,400,000 shares of Common Stock issuable under
the Company's existing Stock Option Plan, there were options outstanding with
respect to 5,649,635 shares under such Plan, held by approximately 810
persons, and 1,620,217 shares remained available for grant. In addition, on
July 22, 1996, pursuant to the Firefox Merger Agreement, options to purchase
shares of the common stock of Firefox that were outstanding under certain
Firefox director and employee stock option plans were converted into options
to purchase approximately 359,216 shares of Common Stock. Of the options
outstanding under the existing Stock Option Plan as of July 25, 1996, options
to purchase 2,678,000 shares were held by executive officers of the Company
(none of the converted Firefox options are held by executive officers of the
Company). As of the date of this Proxy Statement, the following persons
constitute executive officers of the Company and will therefore be eligible to
receive stock awards under the Executive Incentive Plan: David H. Zirkle,
Chief Executive Officer; Glenn C. Hazard, President and Chief Operating
Officer; Susan L. Bostrom, Senior Vice President of Global Marketing and
Strategic Planning; Douglas F. Flood, Senior Vice President of Business
Development and Planning and General Counsel; John H. Keller, Senior Vice
President of Global Engineering and Development; John A. Kimberley, Vice
Chairman; Peter R. Simkin, Chief Technology Officer; and John J. Warnock, Jr.,
Senior Vice President, Chief Financial Officer and Treasurer.

13
<PAGE>

If the Executive Incentive Plan is approved by the Company's stockholders,
the Company will not grant additional options to executive officers under its
existing Stock Option Plan after the receipt of such approval. The Company
does intend to grant options under its existing Stock Option Plan to employees
of the Company and its subsidiaries who do not constitute executive officers
until such time as the Company adopts a new equity incentive plan for such
employees.

SUMMARY OF THE EXECUTIVE INCENTIVE PLAN

The full text of the Executive Incentive Plan is set forth in Appendix A to
this Proxy Statement, and the following summary description of certain
features of the Executive Incentive Plan is qualified in its entirety by such
reference.

The Executive Incentive Plan is designed to advance the Company's interests
by enhancing its ability to attract and retain executive officers through
ownership of shares of Common Stock. A total of 1,500,000 shares of Common
Stock are available for issuance under the Executive Incentive Plan, subject
to adjustment for stock dividends and similar events. The Executive Incentive
Plan provides for the grant of stock options, stock appreciation rights
("SARs"), restricted stock, unrestricted stock and combinations of the above.
Stock options granted under the Executive Incentive Plan may be either options
intended to qualify as "incentive stock options" under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), or
"nonstatutory stock options" that are not intended to so qualify.

The Executive Incentive Plan will be administered by the Compensation
Committee of the Board of Directors (the "Committee"). Only employees of the
Company and any of its subsidiaries who are identified from time to time by
the Board of Directors as executive officers of the Company will be eligible
to participate in the Executive Incentive Plan. The maximum number of shares
as to which options may be granted to any participant under the Executive
Incentive Plan during any calendar year is 1,000,000. The maximum number of
shares as to which SARs may be granted to any participant under the Executive
Incentive Plan during any calendar year is 1,000,000. For purposes of these
limits, except as otherwise provided in regulations or guidelines issued under
Section 162(m) of the Internal Revenue Code, any repricing of an option or SAR
shall be treated as a new grant and applied against the foregoing limits. The
maximum number of shares as to which restricted stock awards may be granted
under the Executive Incentive Plan is 100,000.

The exercise price of an incentive stock option granted under the Executive
Incentive Plan may not be less than 100% (110% in the case of 10%
shareholders) of the fair market value of the Common Stock at the date of
grant. On July 25, 1996, the closing sales price of the Common Stock on the
Nasdaq National Market was $ per share. The exercise price of a nonstatutory
option granted under the Executive Incentive Plan is determined by the
Committee. In no case may the exercise price paid for Common Stock which is
part of an original issue of Common Stock be less than the par value of the
Common Stock. The term of each option may be set by the Committee but cannot
exceed 10 years from the date of grant (five years from grant in the case of
an incentive stock option granted to a 10% shareholder). Each option will be
exercisable at such time or times as the Committee specifies; provided,
however, that if the Committee does not so specify, 25% of the shares subject
to the options may be purchased commencing one year after the date of grant,
and an additional 25% of such shares may be purchased commencing on the
second, third and fourth anniversaries of the date of grant. The option price
may be paid in cash or by check acceptable to the Company or, if permitted by
the Committee and subject to certain additional limitations, by tendering
shares of Common Stock held for at least six months, by using a promissory
note, by delivering to the Company an undertaking by a broker to promptly
deliver sufficient funds to pay the exercise price, or by a combination of any
of the foregoing.

SARs may be granted only in tandem with stock option grants. Each SAR
entitles the participant, in general, to receive upon exercise the excess of a
share's fair market value at the date of exercise over the share's fair market
value on the date the SAR was granted. An SAR will be exercisable only to the
extent the option granted in tandem with the SAR is exercisable. To the extent
the option is exercised, the accompanying SAR will cease to be exercisable,
and vice versa.

14
<PAGE>

The Executive Incentive Plan provides for awards of nontransferable
restricted shares of Common Stock subject to forfeiture as well as of
unrestricted shares of Common Stock. The purchase price for restricted and
unrestricted shares of Common Stock is specified by the Committee, but may not
be less than the par value of the Common Stock. Restricted shares of Common
Stock are subject to repurchase by the Company at the original purchase price
if the participant ceases to be an employee of the Company before the
restrictions lapse. Other awards under the Executive Incentive Plan may also
be settled with restricted shares of Common Stock.

Except as otherwise provided by the Committee, if a participant dies,
options and SARs exercisable immediately prior to death may be exercised by
the participant's executor, administrator or transferee during a period of one
year following such death (or for the remainder of their original term, if
less). Except as otherwise determined by the Committee, options and SARs not
exercisable at a participant's death terminate upon such death. Outstanding
awards of restricted shares of Common Stock must be transferred to the Company
upon a participant's death, unless the Committee determines otherwise.

In the case of termination of a participant's employment with the Company
for reasons other than death, except as otherwise provided by the Committee,
(i) options and SARs remain exercisable, to the extent they were exercisable
immediately prior to such termination, for three months following such
termination, or such longer period as the Committee at the time may determine
(or for the remainder of their original term, if less), (ii) all options and
SARs terminate to the extent not exercisable immediately prior to such
termination of the participant's employment with the Company and (iii)
restricted shares of Common Stock must be resold to the Company. If any such
termination of employment is due to the participant's discharge for cause,
such participant's options and SARs may be terminated immediately.

Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company as a result of which
the outstanding securities of the class then subject to options granted under
the Executive Incentive Plan are changed into or exchanged for cash or
property or securities not of the Company's issue, or upon a sale of
substantially all the property of the Company to, or the acquisition of stock
representing more than 80% of the voting power of the stock of the Company
then outstanding by, another corporation or person (each, a "Plan Termination
Event"), the Executive Incentive Plan will terminate, and all options
previously granted under the Executive Incentive Plan will terminate, unless
provision is made in writing in connection with the transaction for the
continuance of the Executive Incentive Plan and/or for the assumption of
options previously granted under the Executive Incentive Plan, or the
substitution for such options of options covering the stock of a successor
employer corporation, with appropriate adjustments as to the number and kind
of shares and prices, in which event the Executive Incentive Plan and options
previously granted under the Executive Incentive Plan will continue in the
manner and under the terms so provided. If the Executive Incentive Plan and
unexercised options terminate in connection with a Plan Termination Event, all
persons entitled to exercise options then outstanding will have the right, at
a time prior to the consummation of the transaction causing such termination
designated by the Company, to exercise the unexercised portions of their
options, including the portions which would not otherwise yet be exercisable.

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

The following discussion, which is based on the law as in effect on July 1,
1996, summarizes certain U.S. federal income tax consequences associated with
the grant and exercise of stock options under the Executive Incentive Plan.
The summary does not purport to cover the tax consequences associated with
other forms of awards nor does it cover federal employment tax or other
federal tax consequences or state, local or non-U.S. tax consequences.

Tax Consequences to Optionees. In general, an optionee realizes no taxable
income upon the grant or exercise of an incentive stock option. However, the
exercise of incentive stock options may result in an alternative minimum tax
liability to the optionee. With certain exceptions, a disposition by the
optionee of shares purchased under an

15
<PAGE>

incentive stock option within two years from the date of grant or within one
year after exercise produces ordinary income to the optionee equal to the
value of the shares at the time of exercise less the exercise price. Any
additional gain recognized in the disposition is treated as a capital gain. If
the optionee does not dispose of the shares until after the expiration of
these one- and two-year holding periods, any gain or loss recognized upon a
subsequent sale is treated as a long-term capital gain or loss.

In general, in the case of a nonstatutory option the optionee has no taxable
income at the time of grant but realizes income in connection with exercise of
the option in an amount equal to the excess (at the time of exercise) of the
fair market value of the shares acquired upon exercise over the exercise
price; and any gain or loss recognized upon a subsequent sale or exchange of
the shares will be treated as capital gain or loss.

In general, an incentive stock option that is exercised more than three
months after termination of employment (other than termination by reason of
death) is treated as a nonstatutory option. Incentive stock options awarded
under the Executive Incentive Plan will be treated as nonstatutory options to
the extent the fair market value (determined as of the date of the grant) of
the Common Stock with respect to which options first become exercisable in any
calendar year exceeds $100,000.

Tax Consequences to the Company. The Company may claim a deduction for the
ordinary income realized by a participant upon exercise of a nonstatutory
option or upon the disqualifying disposition of shares purchased under an
incentive stock option. The Company's ability to claim a deduction may in some
cases depend on its satisfaction of applicable reporting requirements. In
addition, Section 162(m) of the Internal Revenue Code limits to $1,000,000 the
deduction the Company may claim for annual compensation to its Chief Executive
Officer and its four highest compensated officers (other than its Chief
Executive Officer) (as determined in accordance with Section 162(m)), subject
to a number of exceptions. The Executive Incentive Plan provision limiting to
1,000,000 the number of shares as to which options may be granted in any
calendar year to any participant under the Executive Incentive Plan is
intended to meet one of the criteria necessary to enable otherwise deductible
compensation attributable to the exercise of stock options, or to the
disposition of stock acquired under an incentive stock option, to be exempt
from application of this $1,000,000 limit. Under Section 162(m), the Company
would be unable in certain circumstances to claim a deduction upon the
exercise of options granted to its Chief Executive Officer and its four
highest compensated officers (other than its Chief Executive Officer) under
the Executive Incentive Plan unless shareholder approval of the Executive
Incentive Plan is obtained.

Miscellaneous. The grant of a stock option or the acceleration of
exercisability of a stock option in connection with a change in ownership or
effective control of the Company or in connection with a change in ownership
of a substantial portion of the Company's assets may be treated as giving rise
to a "payment in the nature of compensation" required to be taken into account
in determining whether the option holder has received so-called "excess
parachute payments" under the Internal Revenue Code's golden-parachute rules.
Where applicable, those rules impose a 20% tax on excess parachute payments
and deny a deduction to the Company for such payments.

REQUIRED VOTE

Under the rules of the National Association of Securities Dealers, Inc., the
affirmative vote of the holders of a majority of the outstanding shares of
Common Stock entitled to vote and present, in person or by proxy, at the
Meeting is required to approve the Executive Incentive Plan.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE TO
APPROVE THE EXECUTIVE INCENTIVE PLAN PROPOSAL.

DESCRIPTION OF CAPITAL STOCK

The following description of the capital stock of the Company, certain
provisions of the Charter and the Bylaws and certain provisions of the Rights
Agreement (as defined below) is a summary and is qualified in its entirety by

16
<PAGE>

the provisions of the Charter, the Bylaws and the Rights Agreement, copies of
which previously have been filed with the Securities and Exchange Commission.

The Company's authorized capital stock consists of 50,000,000 shares of
Common Stock and 5,000,000 shares of preferred stock, $.01 par value per share
("Preferred Stock"), of which the Board of Directors has designated 500,000
shares as Junior Preferred Stock, $.01 par value per share ("Junior Preferred
Stock"). As of the Record Date, there were approximately 399 record holders of
the Common Stock. As of such date, there were no shares of Preferred Stock or
Junior Preferred Stock outstanding.

COMMON STOCK

Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and have no preemptive, conversion
or other rights to subscribe for additional shares or other securities of the
Company. There are no cumulative voting rights, with the result that, subject
to the rights of the holders of outstanding shares of any series of Preferred
Stock issued in the future, holders of an aggregate of more than 50% of the
outstanding shares of Common Stock are able to elect the Company's directors
whose term expires at the next annual meeting. See "--Junior Preferred Stock"
below for a description of the voting rights of such stock. Holders of Common
Stock are entitled to such dividends as may be declared by the Board of
Directors out of funds legally available therefor. On liquidation, dissolution
or winding up of the Company, the holders of Common Stock are entitled to
receive pro rata the net assets of the Company remaining after the payment of
all creditors and all liquidation preferences, if any, of holders of Preferred
Stock. See "--Junior Preferred Stock" below for a description of certain
preferential dividend and liquidation rights of such stock. All of the
outstanding shares of Common Stock are fully paid and nonassessable.

PREFERRED STOCK

The Board of Directors is authorized, subject to any limitations prescribed
by law, from time to time to issue up to an aggregate of 5,000,000 shares of
Preferred Stock with such powers, designations, preferences and relative,
participating, optional or other special rights and such qualifications,
limitations or restrictions thereof, as shall be determined by the Board of
Directors in a resolution or resolutions providing for the issue of such
Preferred Stock. Thus, any series may, if so determined by the Board of
Directors, have full voting rights with the Common Stock or superior or
limited voting rights, be convertible into Common Stock or another security of
the Company, and have such other preferences, relative rights and limitations
as the Board of Directors shall determine. As a result, any series of
Preferred Stock could have rights which would adversely affect the voting
power of the Common Stock. See "--Junior Preferred Stock" below for a
description of the voting rights of such stock. The shares of any class or
series of Preferred Stock need not be identical. The issuance of Preferred
Stock could have the effect of delaying or preventing a change in control of
the Company without any further action by shareholders. See "--Junior
Preferred Stock" and "--Rights" below. The Company has no present plans,
understandings, agreements or arrangements to issue any shares of Preferred
Stock other than shares of Junior Preferred Stock issuable upon exercise of
the Rights described under "--Rights" below.

JUNIOR PREFERRED STOCK

The Board of Directors has designated 500,000 shares of the Preferred Stock
as Junior Preferred Stock, which may be purchased by the holders of the Rights
described under "--Rights" below. The rights of the holders of Junior
Preferred Stock are set forth in a Certificate of Designation, Preferences and
Rights of Junior Preferred Stock filed with the Secretary of The Commonwealth
of Massachusetts on December 11, 1995. The number of shares of Junior
Preferred Stock may be increased or decreased by the Board of Directors, but
may not be decreased below the number of shares of Junior Preferred Stock then
outstanding plus the number of shares reserved for issuance upon the exercise
of outstanding options, rights or warrants or upon conversion of any
outstanding securities convertible into Junior Preferred Stock.

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Subject to the prior and superior rights of the holders of any shares of any
series of Preferred Stock ranking prior and superior to the shares of Junior
Preferred Stock with respect to dividends, the holders of shares of Junior
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the last day of March, June, September and
December in each year (each, a "Quarterly Dividend Payment Date"), in an
amount equal to the greater of (i) $1.00 or (ii) subject to adjustment in
certain events, 100 times the aggregate per share amount of all cash
dividends, and 100 times the aggregate per share amount (payable in kind) of
all non-cash dividends or other distributions (other than a dividend payable
in shares of Common Stock or a subdivision of the outstanding shares of Common
Stock) declared on the Common Stock since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of Junior
Preferred Stock. The rights of the holders of Junior Preferred Stock to
receive dividends are cumulative.

The terms of the Junior Preferred Stock provide that the Company shall
declare a dividend or distribution on the Junior Preferred Stock immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of, or a subdivision with respect to, the Common
Stock). However, if no dividend or distribution shall have been declared on
the Common Stock during the period between any Quarterly Dividend Payment
Date, a dividend of $1.00 per share on the Junior Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

Holders of shares of Junior Preferred Stock are entitled to one hundred
votes, subject to adjustment in certain events, for each share of Junior
Preferred Stock held, on all matters submitted to a vote of stockholders. On
liquidation, dissolution or winding up of the Company, the holders of shares
of Junior Preferred Stock are entitled to receive $100.00 per share plus an
amount equal to all accrued and unpaid dividends and distributions thereon,
prior to any distribution to the holders of shares of Common Stock or any
other stock of the Company ranking junior to the Junior Preferred Stock. If
the Company shall enter into any consolidation, merger, combination or other
transaction in which the outstanding shares of Common Stock are exchanged for
or changed into other stock or securities, cash and/or any other property,
then the outstanding shares of Junior Preferred Stock shall be similarly
exchanged or changed in an amount per share (subject to adjustment in certain
events) equal to 100 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be, into which or
for which each share of Common Stock is changed or exchanged. Shares of Junior
Preferred Stock may be purchased by the Company at such times and on such
terms as may be agreed to between the Company and the holder of such shares,
subject to any limitation which may be imposed by law or by the Charter. The
terms of the Junior Preferred Stock further provide that the Charter shall not
be amended in any manner which would materially alter or change the powers,
preferences or special rights of the Junior Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of at least two-
thirds of the outstanding shares of Junior Preferred Stock, voting together as
a single class.

RIGHTS

On December 1, 1995, the Board of Directors declared a dividend of one
purchase right (a "Right") for every outstanding share of Common Stock. The
Rights were distributed to holders of record of the Common Stock as of the
close of business on December 8, 1995 (the "Dividend Record Date"). The terms
of the Rights are set forth in a Rights Agreement dated as of December 1, 1995
(the "Rights Agreement") between the Company and State Street Bank and Trust
Company (the "Rights Agent"). The Rights Agreement provides for the issuance
of one Right for every share of Common Stock issued and outstanding on the
Dividend Record Date and for each share of Common Stock which is issued or
sold after that date and prior to the "Distribution Date" (as defined below).

Each Right entitles the holder to purchase from the Company one one-
hundredth of a share of Junior Preferred Stock at an exercise price of $150,
subject to adjustment in certain events. The Rights will expire on December 1,
2005 (the "Expiration Date"), or upon the earlier redemption of the Rights,
and are not exercisable until the Distribution Date.

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No separate Rights certificates have been issued as of the date of this
Proxy Statement. Until the Distribution Date (or earlier redemption or
expiration of the Rights), (i) the Rights will be evidenced by the Common
Stock certificates and will be transferred with and only with the Common Stock
certificates, (ii) new Common Stock certificates issued after the Dividend
Record Date upon transfer or new issuance of shares of Common Stock will
contain a notation incorporating the Rights Agreement by reference and (iii)
the surrender for transfer of any Common Stock certificate will also
constitute the transfer of the Rights associated with the shares of Common
Stock represented by such certificate.

The Rights will separate from the Common Stock on the Distribution Date.
Unless otherwise determined by a majority of the Board of Directors then in
office, the Distribution Date (the "Distribution Date") will occur on the
earlier of (i) the 10th business day following the later of (A) the date of a
public announcement that a person, together with its affiliates and
associates, except as described below, has acquired or obtained the right to
acquire beneficial ownership of 15% or more of the outstanding shares of
Common Stock (collectively, an "Acquiring Person") or (B) the date on which an
executive officer of the Company has actual knowledge that an Acquiring Person
has become such (the "Stock Acquisition Date"), or (ii) the 10th business day
following commencement of a tender offer or exchange offer that would result
in any person, together with its affiliates and associates, owning 15% or more
of the outstanding Common Stock. After the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date and thereafter such separate Rights Certificates alone will
evidence the Rights. The Board may delay the distribution of the Rights
Certificates.

If, at any time after December 1, 1995, any person or group of affiliated or
associated persons (other than the Company and its affiliates) shall become an
Acquiring Person, each holder of a Right will have the right to receive, upon
payment of the then current exercise price of the Right, shares of Common
Stock (or, in certain circumstances, cash, property or other securities of the
Company) having a market value of two times the then current exercise price of
the Right. Following the occurrence of any of such event, any Rights that are,
or (under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person shall immediately become null and
void.

The Board of Directors may, at its option, at any time after any person
becomes an Acquiring Person, exchange all or part of the then outstanding and
exercisable Rights for shares of Common Stock at an exchange ratio of one
share of Common Stock per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after December 1, 1995
(as the same may be adjusted, the "Rights Exchange Ratio"). The Board,
however, may not effect any exchange at any time after any person (other than
(i) the Company, (ii) any subsidiary of the Company, (iii) any employee
benefit plan of the Company or of any subsidiary of the Company or (iv) any
entity holding Common Stock for or pursuant to the terms of any such plan),
together with all affiliates of such person, becomes the beneficial owner of
50% or more of the Common Stock then outstanding. Immediately upon the action
of the Board ordering the exchange of any Rights and without any further
action and without any notice, the right to exercise such Rights will
terminate and the only right thereafter of a holder of such Rights will be to
receive that number of shares of Common Stock equal to the number of such
Rights held by the holder multiplied by the Rights Exchange Ratio.

The exercise price of the Rights, and the number of one one-hundredths of a
share of Junior Preferred Stock or other securities or property issuable upon
exercise of the Rights, are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Junior Preferred Stock, (ii) upon the
grant to holders of the Junior Preferred Stock of certain rights or warrants
to subscribe for shares of the Junior Preferred Stock or certain convertible
securities at less than the current market price of the Junior Preferred
Stock, or (iii) upon the distribution to holders of the Junior Preferred Stock
of evidences of indebtedness or assets (excluding cash dividends paid out of
the earnings or retained earnings of the Company and certain other
distributions) or of subscription rights or warrants (other than those
referred to above).

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At any time prior to the close of business on the Expiration Date, the
Company, by a majority vote of the Board of Directors, may redeem the Rights
at a redemption price of $.01 per Right, subject to adjustment in certain
events (as the same may be adjusted, the "Redemption Price"). Immediately upon
the action of the Board electing to redeem the Rights, the right to exercise
the Rights will terminate, and the only right of the holders of Rights will be
to receive the Redemption Price.

Until a Right is exercised, the holder thereof, as such, will have no rights
as a stockholder of the Company, including, without limitation, the right to
vote or to receive dividends.

The separation of the Rights on the Distribution Date will not be a taxable
event for the Company or its stockholders. Holders of Rights may, depending
upon the circumstances, recognize taxable income upon the occurrence of
certain Rights triggering events including a tender offer for 15% or more of
the outstanding Common Stock or a person or group attaining beneficial
ownership of 15% or more of the outstanding Common Stock (collectively,
"Common Stock Events"). In addition, holders of Rights may have taxable income
as a result of (i) an exchange by the Company of shares of Common Stock for
Rights as described above or (ii) certain anti-dilution adjustments made to
the terms of the Rights after the Distribution Date. A redemption of the
Rights would be a taxable event to holders.

The Rights Agreement may be amended by the Board at any time prior to the
Distribution Date without the approval of the holders of the Rights. From and
after the Distribution Date, the Rights Agreement may be amended by the Board
without the approval of the holders of the Rights in order to cure any
ambiguity, to correct any defective or inconsistent provisions, to change any
time period for redemption or any other time period under the Rights Agreement
or to make any other changes that do not adversely affect the interests of the
holders of the Rights (other than any Acquiring Person or its affiliates and
associates or their transferees).

CERTAIN CHARTER AND BYLAW PROVISIONS

The Charter and Bylaws contain certain provisions that are intended to
enhance the likelihood of continuity and stability in the composition of the
Board of Directors and in the policies formulated by the Board and to delay or
prevent a change in control of the Company if the Board determines that such a
change in control is not in the best interests of the Company and its
stockholders. The Board, in determining whether a change of control is in the
best interests of the Company and its stockholders, may consider a variety of
factors, depending on the circumstances, including, without limitation, the
long-term and short-term interests of the Company and its stockholders,
whether the proposed transaction might violate federal or state laws, the
consideration being offered in a proposed transaction in relation to current
and historical market prices, economic, market and other factors bearing on
securities prices, the Company's financial condition and future prospects, the
interests of the Company's employees, suppliers, creditors and customers, the
economy and community and societal considerations. These provisions could have
the effect of discouraging attempts to acquire control of the Company even if
some or a majority of the Company's stockholders deem such an attempt to be in
its best interest. The Company is not able to predict at this time the nature
of any attempts to acquire control of the Company and therefore cannot
determine whether any particular attempt would be discouraged by these
provisions.

Pursuant to the Charter and Bylaws, the Board of Directors has been divided
into three classes serving staggered three-year terms. See "Election of
Directors." Directors can be removed from office only for cause and only by
the affirmative vote of the holders of two-thirds of the voting power of the
then outstanding shares of capital stock of the Company entitled to vote
generally in the election of directors, voting together as a single class.

The Bylaws provide that stockholders may not take action by written consent.

The Charter authorizes, and the Bylaws establish, procedures, including
advance notice procedures, with regard to the nomination, other than by or at
the direction of the Board of Directors, of candidates for election as
directors and with regard to certain matters to be brought before meetings of
stockholders of the Company. In general, notice

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must be received by the Company not less than 60 days nor more than 90 days
prior to the stockholder meeting and must contain certain specified
information concerning the persons to be nominated or the matters to be
brought before the meeting and concerning the stockholder submitting the
proposal. In addition, the Bylaws require that any such nomination of a
candidate for election as a director be accompanied by a petition signed by at
least 100 record holders of the capital stock entitled to vote in the election
of directors, representing in the aggregate at least 1% of the outstanding
capital stock entitled to vote thereon. Such procedures also authorize
regulation of the order of business and conduct of stockholder meetings, the
authority of the presiding officer and attendance at such meetings.

The Board of Directors is permitted pursuant to the Charter to consider
special factors, such as employee welfare and the future prospects of the
Company, in determining what the Board reasonably believes to be in the best
interests of the Company when evaluating proposed tender or exchange offers or
business combinations.

The affirmative vote of 80% of the total number of votes of the then
outstanding shares of capital stock entitled to vote generally in the election
of directors, voting together as a single class, is required to amend certain
provisions of the Charter, including the provisions referred to above relating
to the classification of the Board, interested transaction provisions,
director exculpation provisions, evaluation of certain transactions and
regulation of nominations of directors and of business to be conducted at
meetings of stockholders. The requirement of a supermajority vote to approve
certain amendments to the Charter could enable a minority of the Company's
stockholders to exercise veto powers over such transactions and amendments.

The Charter provides that no director of the Company shall be liable to the
Company or its stockholders for monetary damages for any breach of fiduciary
duty, except to the extent such exculpation from liability is not permitted
under the Massachusetts Business Corporation Law. This provision does not
prevent stockholders from obtaining injunctive or other equitable relief
against directors nor does it shield directors from liability under federal or
state securities laws.

MASSACHUSETTS "ANTI-TAKEOVER" LAWS

The Company is covered by the provisions of Chapter 110F of the
Massachusetts General Laws, known as the Business Combination Statute. Under
Chapter 110F, a Massachusetts corporation with more than 200 stockholders may
not engage in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
becomes an interested stockholder, unless (i) the interested stockholder
obtains the approval of the board of directors prior to becoming an interested
stockholder, (ii) the interested stockholder acquires 90% of the outstanding
voting stock of the corporation (excluding shares held by certain affiliates
of the corporation) at the time it becomes an interested stockholder or (iii)
the business combination is approved by both the board of directors and the
holders of two-thirds of the outstanding voting stock of the corporation
(excluding shares held by the interested stockholder). An "interested
stockholder" is a person who, together with its affiliates and associates,
owns (or at any time within the prior three years did own) 5% or more of the
outstanding voting stock of the corporation. A "business combination" includes
a merger, a stock or asset sale, and other transactions resulting in a
financial benefit to the interested stockholder.

The Bylaws provide that the provisions of Chapter 110D of the Massachusetts
Business Corporation Law, known as the Control Share Statute, shall not apply
to the Company. However, the Company may in the future become subject to the
statute if its Board of Directors votes to amend the Bylaws so as to make the
statute applicable to the Company. In general, if the Control Share Statute
were applicable, it would provide that any person or entity that acquired 20%
or more of the Company's outstanding voting stock could not vote such stock
unless the other stockholders of the Company were to so authorize.

The Company is not subject to the provisions of Chapter 156B, Section 50A of
the Massachusetts Business Corporation Law providing for an automatic
classified board of directors for any corporation which has a class of voting
stock registered under the Exchange Act. However, the Charter and Bylaws
provide for a classified board of directors as described above under "--
Certain Charter and Bylaw Provisions" and "Election of Directors."

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TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is Boston EquiServe
L.P.

AUDIT MATTERS

Coopers & Lybrand L.L.P. has been selected to audit the financial statements
of FTP Software for the fiscal year ending December 31, 1996, and to report
the results of their audit.

A representative of Coopers & Lybrand L.L.P. is expected to be present at
the Meeting and will be afforded the opportunity to make a statement if he or
she desires to do so and to respond to appropriate questions.

ADJOURNMENT OF MEETING

In the event that sufficient votes in favor of the election of the Nominees,
the Charter Amendment Proposal or the Executive Incentive Plan Proposal are
not received by the date of the Meeting, the persons named as proxies in the
enclosed proxy may propose one or more adjournments of the Meeting to permit
further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of the shares of Common Stock present in person
or by proxy at the session of the Meeting to be adjourned. The persons named
as proxies in the enclosed proxy will vote in favor of or against such
adjournment in their discretion. The Company will pay the costs of any
additional solicitation and of any adjournment session.

QUORUM, REQUIRED VOTES AND METHOD OF TABULATION

Under Massachusetts law, the Charter and the Bylaws, a majority of the
shares of Common Stock issued and outstanding on the Record Date and present
at the Meeting, in person or by proxy, will constitute a quorum as to such
matters. Votes cast by proxy or in person at the Meeting will be counted by a
person appointed by the Company to act as election inspector for the Meeting.

The three nominees for election as Directors at the Meeting who receive the
greatest number of votes properly cast for the election of Directors shall be
elected Directors. The affirmative vote of the holders of a majority of the
outstanding shares of Common Stock entitled to vote is necessary to approve
the Charter Amendment Proposal. The affirmative vote of the holders of a
majority of the outstanding shares of Common Stock entitled to vote and
present, in person or by proxy, at the Meeting is necessary to approve the
Executive Incentive Plan Proposal.

With respect to each matter to be voted on at the Meeting, the election
inspector will count shares represented by proxies that reflect abstentions
and "broker non-votes" (i.e., shares represented at the Meeting held by
brokers or nominees as to which (i) instructions have not been received from
the beneficial owners or persons entitled to vote and (ii) the broker or
nominee does not have discretionary voting power on such matter) only as
shares that are present and entitled to vote on such matter for purposes of
determining the presence of a quorum, but neither abstentions nor broker non-
votes will have any effect on the outcome of the vote on the election of
Directors or the Executive Incentive Plan Proposal. Abstentions and broker
non-votes will have the same effect as votes against the Charter Amendment
Proposal.

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STOCKHOLDER PROPOSALS

Proposals of stockholders intended to be considered at the 1997 Annual
Meeting of Stockholders must be received by the Company no later than March
31, 1997 to be considered for inclusion in the Company's proxy statement and
form of proxy relating to that annual meeting.

OTHER BUSINESS

The Board of Directors knows of no business that will come before the
Meeting for action except as described in the accompanying Notice of Special
Meeting in Lieu of Annual Meeting of Stockholders. However, as to any such
business, the persons designated as proxies in the enclosed proxy will have
discretionary authority to act in their best judgment.

FORM 10-K

A COPY OF FTP SOFTWARE'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1995 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
AVAILABLE WITHOUT CHARGE BY WRITING TO: FTP SOFTWARE, INC., ATTN: KAREN A.
WHARTON, VICE PRESIDENT OF INVESTOR RELATIONS, 100 BRICKSTONE SQUARE, FIFTH
FLOOR, ANDOVER, MASSACHUSETTS 01810.

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APPENDIX A

FTP SOFTWARE, INC.

1996 EXECUTIVE EQUITY INCENTIVE PLAN

1. PURPOSE

The purpose of this Executive Equity Incentive Plan (the "Plan") is to
advance the interests of FTP Software, Inc. (the "Company") by enhancing its
ability to attract and retain executive officers and encourage them to make
significant contributions to the success of the Company and its subsidiaries
through ownership of shares of the Company's common stock ("Stock").

The Plan is intended to accomplish these goals by enabling the Company to
grant awards hereunder ("Awards") in the form of Options, Stock Appreciation
Rights, Restricted Stock and Unrestricted Stock Awards, or combinations
thereof, all as defined and more fully described below.

2. ADMINISTRATION

The Plan will be administered by a committee (the "Committee") of the Board
of Directors (the "Board of Directors" or the "Board") of the Company. The
Committee shall consist of at least two directors, each of whom shall be a
"Non-Employee Director" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). A majority of the
members of the Committee shall constitute a quorum, and all determinations of
the Committee shall be made by a majority of its members. Any determination of
the Committee under the Plan may be made without notice or meeting of the
Committee by a writing signed by a majority of the Committee members.

The Committee will have authority, not inconsistent with the express
provisions of the Plan and in addition to other authority granted under the
Plan, to: (a) grant Awards at such time or times as it may choose; (b)
determine the size of each Award, including the number of shares of Stock
subject to the Award; (c) determine the type or types of each Award; (d)
determine the terms and conditions of each Award; (e) waive compliance by the
holder of an Award with any obligations to be performed by such holder under
the Award and waive any term or condition of an Award; (f) amend or cancel an
existing Award in whole or in part (and if an Award is canceled, grant another
Award in its place on such terms as the Committee shall specify), except that
the Committee may not, without the consent of the holder of an Award, take any
action under this clause with respect to such Award if such action would
adversely affect the rights of such holder; (g) prescribe the form or forms of
instruments that are required or deemed appropriate under the Plan, including
any written notices and elections required of Participants (as defined below),
and change such forms from time to time; (h) adopt, amend and rescind rules
and regulations for the administration of the Plan; and (i) interpret the Plan
and decide any questions and settle all controversies and disputes that may
arise in connection with the Plan. Such determinations and actions of the
Committee, and all other determinations and actions of the Committee made or
taken under authority granted by any provision of the Plan, shall be
conclusive and shall bind all parties. Nothing in this paragraph shall be
construed as limiting the power of the Committee to make adjustments under
Section 7.3 or Section 8.6.

3. EFFECTIVE DATE AND TERM OF PLAN

The Plan shall become effective on the date on which it is approved by the
stockholders of the Company.

No Award may be granted under the Plan after the tenth anniversary of the
approval of the Plan by the stockholders of the Company, but Awards previously
granted may extend beyond that date.

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4. SHARES SUBJECT TO THE PLAN

Subject to adjustment as provided in Section 8.6 below, the maximum
aggregate number of shares of Stock that may be delivered under the Plan is
1,500,000. If any Award requiring exercise by the Participant for delivery of
Stock terminates without having been exercised in full, or if any Award
payable in Stock or cash is satisfied in cash rather than Stock, the number of
shares of Stock as to which such Award was not exercised or for which cash was
substituted shall be available for future grants.

Stock delivered under the Plan may be either authorized but unissued Stock
or previously issued Stock acquired by the Company and held in treasury. No
fractional shares of Stock may be delivered under the Plan.

Subject to Section's 7.3 and 8.6(a): (i) the maximum aggregate number of
shares of Stock as to which Options may be granted under the Plan to any
Participant during any calendar year is 1,000,000; (ii) the maximum aggregate
number of shares of Stock as to which Stock Appreciation Rights may be granted
under the Plan to any Participant during any calendar year is 1,000,000; and
(iii) the maximum aggregate number of shares of Stock as to which Restricted
Stock Awards may be granted under the Plan is 100,000. For purposes of this
paragraph, except as otherwise provided in regulations or other guidelines
issued under Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), any repricing of an Option or Stock Appreciation Right shall be
treated as a new grant and shall count against the applicable limit set forth
in this paragraph.

5. ELIGIBILITY AND PARTICIPATION

Those eligible to receive Awards under the Plan ("Participants") are
employees of the Company or any of its subsidiaries who are identified from
time to time by the Board of Directors as executive officers of the Company. A
"subsidiary" for purposes of the Plan shall be a corporation in which the
Company owns, directly or indirectly, stock possessing 50% or more of the
total combined voting power of all classes of stock. A "parent" of another
corporation for purposes of the Plan shall be any corporation which owns,
directly or indirectly, stock possessing 50% or more of the total combined
voting power of all classes of stock of such other corporation.

6. TYPES OF AWARDS

6.1. OPTIONS.

(A) NATURE OF OPTIONS. An Option is an Award entitling the holder on
exercise thereof to purchase Stock at a specified exercise price.

Both "incentive stock options," as defined in Section 422 of the Code (any
Option intended to qualify as an incentive stock option being hereinafter
referred to as an "ISO"), and Options that are not incentive stock options,
may be granted under the Plan.

(B) EXERCISE PRICE. The exercise price of an Option shall be determined by
the Committee subject to the following:

(1) The exercise price of an ISO shall not be less than 100% (110% in the
case of an ISO granted to a ten-percent shareholder) of the fair market
value of the Stock subject to the Option, determined as of the time the
Option is granted. A "ten-percent shareholder" is any person who at the
time of grant owns, directly or indirectly, or is deemed to own by reason
of the attribution rules of Section 424(d) of the Code, stock possessing
more than 10% of the total combined voting power of all classes of stock of
the Company or of any of its subsidiaries.

(2) In no case may the exercise price paid for Stock which is part of an
original issue of authorized Stock be less than the par value per share of
the Stock.

(3) The Committee may reduce the exercise price of an Option at any time
after the time of grant, but in the case of an Option originally awarded as
an ISO, only with the consent of the Participant.

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(C) DURATION OF OPTIONS. The latest date on which an Option may be exercised
shall be the tenth anniversary (fifth anniversary, in the case of an ISO
granted to a ten-percent shareholder) of the date on which the Option was
granted, or such earlier date as may have been specified by the Committee at
the time the Option was granted.

(D) EXERCISE OF OPTIONS. Options granted under any single Award shall become
exercisable at such time or times, and on such conditions, as the Committee
may specify; provided, however, that if the Committee does not so specify, 25%
of the shares subject to the Award may be purchased commencing one year after
the date of grant, and an additional 25% of such shares may be purchased
commencing on the second, third and fourth anniversaries of the date of grant.
The Committee may at any time and from time to time (i) accelerate the time at
which all or any part of an Option may be exercised, (ii) provide for the
acceleration of the exercisability of an Option upon the occurrence of certain
events, and (iii) extend the time by which an Option must be exercised (e.g.,
following death or termination) up to the latest date by which such Option
could have been exercised without regard to Section 7; provided, that an
extension of an ISO under (iii) shall not be effective without the consent of
the holder of the ISO.

Any exercise of an Option must be in writing, signed by the proper person
and delivered or mailed to the Company, accompanied by (i) any documents
required by the Committee and (ii) payment in full in accordance with
paragraph (e) below for the number of shares for which the Option is
exercised.

(E) PAYMENT FOR STOCK. Stock purchased on exercise of an Option must be paid
for as follows: (i) 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 or (ii) if so permitted by the
instrument evidencing the Option (or in the case of an Option which is not an
ISO, by the Committee at or after grant of the Option), (A) through the
delivery of shares of Stock which have been outstanding for at least six
months (unless the Committee expressly approves a shorter period) and which
have a fair market value on the last business day preceding the date of
exercise equal to the exercise price, or (B) by delivery of a promissory note
of the Option holder to the Company, payable on such terms as are specified by
the Committee, or (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, or (D) by any combination of the foregoing permissible
forms of payment; provided, that if the Stock delivered upon exercise of the
Option is an original issue of authorized Stock, at least so much of the
exercise price as represents the par value of such Stock must be paid other
than by the Option holder's promissory note or personal check.

(F) FAIR MARKET VALUE. For all purposes under this Plan, "fair market value"
shall mean with respect to the Common Stock and at any date, (i) the reported
closing price of such stock on the Nasdaq National Market or New York Stock
Exchange or other established stock exchange on such date, or if no sale of
such stock shall have been made on the Nasdaq National Market or such an
exchange on that date, on the preceding date on which there was such a sale,
(ii) if such stock is not then quoted on the Nasdaq National Market and is not
then listed on such an exchange, the average of the closing bid and asked
prices per share for such stock in the over-the-counter market as quoted on
the National Association of Securities Dealers, Inc. Automated Quotation
System ("NASDAQ") on such date, or (iii) if such stock is not then listed on
such an exchange or quoted on NASDAQ or the Nasdaq National Market, an amount
determined in good faith by the Committee in its sole discretion.

6.2. STOCK APPRECIATION RIGHTS.

(A) NATURE OF STOCK APPRECIATION RIGHTS. A Stock Appreciation Right ("SAR")
is an Award entitling the holder on exercise of the Right to receive an
amount, in cash or Stock or a combination thereof (such form to be determined
by the Committee), determined in whole or in part by reference to appreciation
in Stock value.

In general, a Stock Appreciation Right entitles the Participant to receive,
with respect to each share of Stock as to which the Right is exercised, the
excess of the share's fair market value on the date of exercise over its fair
market value on the date the Right was granted.

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(B) GRANT OF STOCK APPRECIATION RIGHTS. Stock Appreciation Rights may be
granted only in tandem with Options granted under the Plan. A Stock
Appreciation Right granted in tandem with an Option which is not an ISO may be
granted either at or after the time the Option is granted. A Stock
Appreciation Right granted in tandem with an ISO may be granted only at the
time the Option is granted.

(1) The Stock Appreciation Right shall be exercisable only at such time
or times, and to the extent, that the related Option is exercisable and
shall be exercisable in accordance with the procedure required for exercise
of the related Option.

(2) The Stock Appreciation Right shall terminate and no longer be
exercisable upon the termination or exercise of the related Option, except
that a Stock Appreciation Right granted with respect to less than the full
number of shares covered by an Option will not be reduced until the number
of shares as to which the related Option has been exercised or has
terminated exceeds the number of shares not covered by the Stock
Appreciation Right.

(3) The Option shall terminate and no longer be exercisable upon the
exercise of the related Stock Appreciation Right.

(4) The Stock Appreciation Right shall be transferable only with the
related Option.

(5) A Stock Appreciation Right granted in tandem with an ISO may be
exercised only when the fair market value of the Stock subject to the
Option exceeds the exercise price of such Option.

6.3. RESTRICTED AND UNRESTRICTED STOCK.

(A) NATURE OF RESTRICTED STOCK AWARD. A Restricted Stock Award entitles the
holder to acquire, for a purchase price specified by the Committee (but in no
event less than par value), shares of Stock subject to the restrictions
described in paragraph (d) below ("Restricted Stock").

(B) ACCEPTANCE OF AWARD. A Participant who is granted a Restricted Stock
Award will have no rights with respect to such Award unless the Participant
accepts the Award by written instrument delivered or mailed to the Company
accompanied by payment in full of the specified purchase price of the shares
covered by the Award. Payment may be by certified or bank check or other
instrument acceptable to the Committee.

(C) RIGHTS AS A STOCKHOLDER. A Participant who receives Restricted Stock
shall have all the rights of a stockholder with respect to the Stock,
including voting and dividend rights, subject to the restrictions described in
paragraph (d) below and any other conditions imposed by the Committee at the
time of grant. Unless the Committee otherwise determines, certificates
evidencing shares of Restricted Stock shall remain in the possession of the
Company until such shares are free of all restrictions under the Plan.

(D) RESTRICTIONS. Except as otherwise specifically provided by the Plan,
Restricted Stock may not be sold, assigned, transferred, pledged or otherwise
encumbered or disposed of, and if the Participant dies or otherwise suffers a
Status Change (as defined in Section 7.2 below) for any reason, must be
offered to the Company for purchase at the price originally paid for the
Stock. These restrictions shall lapse at such time or times, and on such
conditions, as the Committee may specify. The Committee may at any time
accelerate the time at which the restrictions on all or any part of the shares
of Restricted Stock shall lapse. Upon lapse of all restrictions, Stock shall
cease to be restricted for purposes of the Plan.

(E) NOTICE OF ELECTION. Any Participant making an election under Section
83(b) of the Code with respect to Restricted Stock must provide a copy thereof
to the Company within 10 days of the filing of such election with the Internal
Revenue Service.

(F) OTHER AWARDS SETTLED WITH RESTRICTED STOCK. The Committee may, at the
time any Award described in this Section 6 is granted, provide that any or all
the Stock delivered pursuant to the Award will be Restricted Stock.

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(G) UNRESTRICTED STOCK. The Committee may, in its sole discretion, approve
the sale to any Participant of shares of Stock free of restrictions under the
Plan for a price which is not less than the par value of the Stock.

7. EVENTS AFFECTING OUTSTANDING AWARDS

7.1. DEATH.

If a Participant dies, the following shall apply:

(a) All Options and Stock Appreciation Rights held by the Participant
immediately prior to death, to the extent then exercisable, may be
exercised by the Participant's executor or administrator or the person or
persons to whom the Option or Right is transferred by will or the
applicable laws of descent and distribution, at any time within the one-
year period ending with the first anniversary of the Participant's death
(or such shorter or longer period as the Committee may determine at any
time), and shall terminate on the last day of such period. In no event,
however, shall an Option or Stock Appreciation Right remain exercisable
beyond the latest date on which it could have been exercised without regard
to this Section 7.1. Except as otherwise determined by the Committee, all
Options and Stock Appreciation Rights held by a Participant immediately
prior to death that are not then exercisable shall terminate at death.

(b) Except as otherwise determined by the Committee, all Restricted Stock
held by the Participant must be transferred to the Company upon the
Participant's death (and, in the event the certificates representing such
Restricted Stock are held by the Company, such Restricted Stock shall be
deemed to be so transferred at such time without any further action by the
Participant) in accordance with Section 6.3(d) above.

7.2. TERMINATION OF SERVICE (OTHER THAN BY DEATH).

If a Participant ceases to be an Employee for any reason other than death
(such termination of the employment relationship being hereinafter referred to
as a "Status Change"), the following shall apply:

(a) Except as otherwise determined by the Committee, all Options and
Stock Appreciation Rights held by the Participant that were not exercisable
immediately prior to the Status Change shall terminate at the time of the
Status Change. Any Options or SARs that were exercisable immediately prior
to the Status Change shall continue to be exercisable for a period of three
months following the date of such Status Change (or such longer period as
the Committee may determine at any time), and shall terminate on the last
day of such period, unless the Award provides by its terms for immediate
termination in the event of a Status Change or unless the Status Change
results from a termination for cause as determined by the Committee in its
sole discretion, provided, however, if such Status Change results from the
Participant's permanent and total disability, such three-month period shall
be increased to a one-year period. In no event, however, shall an Option or
Stock Appreciation Right remain exercisable beyond the latest date on which
it could have been exercised without regard to this Section 7.2. For
purposes of this paragraph, a Status Change shall not be deemed to have
resulted by reason of (i) a bona fide leave of absence approved for
purposes of the Plan by the Committee, or (ii) a transfer of employment
between the Company and a subsidiary or between subsidiaries, or to the
employment of a corporation (or a parent or subsidiary corporation of such
corporation) issuing or assuming an option in a transaction to which
Section 424(a) of the Code applies.

(b) Except as otherwise determined by the Committee, all Restricted Stock
held by the Participant at the time of the Status Change must be
transferred to the Company (and, in the event the certificates representing
such Restricted Stock are held by the Company, such Restricted Stock shall
be deemed to be so transferred at such time without any further action by
the Participant) in accordance with Section 6.3 above.

7.3. CERTAIN CORPORATE TRANSACTIONS.

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the property of the Company to, or the acquisition of stock representing more
than eighty percent (80%) of the voting power of the stock of the Company then
outstanding by, another corporation or person, the Plan shall terminate, and
all options theretofore granted hereunder shall terminate, unless provision be
made in writing in connection with such transaction for the continuance of the
Plan and/or for the assumption of options theretofore granted, or the
substitution for such options of options covering the stock of a successor
employer corporation, or a parent or a subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices, in which event the
Plan and options theretofore granted shall continue in the manner and under
the terms so provided. If the Plan and unexercised options shall terminate
pursuant to the foregoing sentence, all persons entitled to exercise any
unexercised portions of options then outstanding shall have the right, at such
time prior to the consummation of the transaction causing such termination as
the Company shall designate, to exercise the unexercised portions of their
options, including the portions thereof which would, but for this Section 7.3,
not yet be exercisable.

8. GENERAL PROVISIONS

8.1. DOCUMENTATION OF AWARDS.

Awards will be evidenced by such written instruments, if any, as may be
prescribed by the Committee from time to time. Such instruments may be in the
form of agreements to be executed by both the Participant and the Company, or
certificates, letters or similar instruments, which need not be executed by
the Participant but acceptance of which shall evidence agreement by the
Participant to the terms thereof.

8.2. RIGHTS AS A STOCKHOLDER, DIVIDEND EQUIVALENTS.

Except as specifically provided by the Plan, the receipt of an Award shall
not give a Participant any rights as a stockholder; the Participant will
obtain such rights, subject to any limitations imposed by the Plan or the
instrument evidencing the Award, upon actual receipt of the Stock issued under
the Award. However, the Committee may, on such conditions as it deems
appropriate, provide that a Participant will receive a benefit in lieu of cash
dividends that would have been payable on any or all Stock subject to the
Participant's Award had such Stock been outstanding from the date of grant of
the Award. Without limitation, the Committee may provide for payment to the
Participant of amounts representing such dividends, either currently or in the
future, or for investment of such amounts on behalf of the Participant.

8.3. CONDITIONS ON DELIVERY OF STOCK.

The Company will not be obligated to deliver any shares of Stock pursuant to
the Plan or to remove restrictions from shares previously delivered under the
Plan (i) until all conditions of the applicable Award have been satisfied or
removed, (ii) until, in the opinion of the Company's counsel, all applicable
federal and state laws and regulations have been complied with, (iii) if the
outstanding Stock is at the time listed on any stock exchange or the Nasdaq
National Market, until the shares to be delivered have been listed or
authorized to be listed on such exchange or such Market upon official notice
of issuance, and (iv) until all other legal matters in connection with the
issuance and delivery of such shares have been approved by the Company's
counsel. If the sale of Stock issuable under the Plan has not been registered
under the Securities Act of 1933, as amended, the Company may require, as a
condition to exercise of the Award, such representations or agreements as
counsel for the Company may consider appropriate to avoid violation of such
Act and may require that the certificates evidencing such Stock bear an
appropriate legend restricting transfer.

If an Award is exercised by the Participant's legal representative, the
Company shall be under no obligation to deliver Stock pursuant to such
exercise until the Company is satisfied as to the authority of such
representative.

8.4. TAX WITHHOLDING.

The Company shall withhold from any cash payment made pursuant to an Award
an amount sufficient to satisfy all federal, state and local withholding tax
requirements (the "withholding requirements").

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<PAGE>

In the case of an Award pursuant to which Stock may be delivered, the
Committee shall have the right to require that the Participant or other
appropriate person remit to the Company an amount sufficient to satisfy the
withholding requirements, or make other arrangements satisfactory to the
Committee with regard to such requirements, prior to the delivery of any
Stock. If and to the extent that such withholding is required, the Committee
may permit the Participant or such other person to elect at such time and in
such manner as the Committee provides to have the Company hold back from the
shares to be delivered, or to deliver to the Company, shares of Stock having a
value calculated to satisfy the withholding requirement.

If at the time an ISO is exercised, the Committee determines that the
Company could be liable for withholding requirements with respect to a
disposition of any of the shares of Stock received upon exercise, the
Committee may require as a condition of exercise that the person exercising
the ISO agree (i) to inform the Company promptly of any disposition (within
the meaning of Section 424(c) of the Code) of Stock received upon exercise,
and (ii) to give such security as the Committee deems adequate to meet the
potential liability of the Company for the withholding requirements and to
augment such security from time to time in any amount reasonably deemed
necessary by the Committee to preserve the adequacy of such security.

8.5. NONTRANSFERABILITY OF AWARDS.

No Award (other than an Award in the form of an outright transfer of cash or
Unrestricted Stock) may be transferred other than by will or by the laws of
descent and distribution, and during a Participant's lifetime an Award
requiring exercise may be exercised only by him or her (or in the event of the
Participant's incapacity, the person or persons legally appointed to act on
the Participant's behalf).

8.6. ADJUSTMENTS IN THE EVENT OF CERTAIN TRANSACTIONS.

(a) In the event of a stock dividend, stock split or combination of shares,
recapitalization or other change in the Company's capitalization, or other
distribution to common stockholders other than normal cash dividends, after
the effective date of the Plan, the Committee shall make any appropriate
adjustments to the maximum number of shares that may be delivered under the
Plan and, subject to paragraph (c) of this Section 8.6, the other limitations
set forth in Section 4 above.

(b) In any event referred to in paragraph (a) of this Section 8.6, the
Committee shall also make any appropriate adjustments to the number and kind
of shares of stock or securities with respect to which Awards are then
outstanding or subsequently granted, any exercise prices relating to Awards
and any other provision of Awards affected by such change. The Committee may
also make such adjustments to take into account material changes in law or in
accounting practices or principles, mergers, consolidations, acquisitions,
dispositions or similar corporate transactions, or any other event, if it is
determined by the Committee that adjustments are appropriate to avoid
distortion in the operation of the Plan.

(c) In the case of ISOs, or for purposes of making adjustments to the per-
Participant limits set forth in the third paragraph of Section 4, the
adjustments described above in this Section 8.6 shall be made only to the
extent consistent with continued qualification of the option under Section 422
of the Code (in the case of an ISO) or the rules under Section 162(m) of the
Code (in the case of the limitations set forth in the third paragraph of
Section 4).

8.7. EMPLOYMENT RIGHTS, ETC.

Neither the adoption of the Plan nor the grant of Awards shall confer upon
any person any right to continued retention by the Company or any subsidiary
as an Employee or otherwise, or affect in any way the right of the Company or
any subsidiary to terminate an employment relationship. Except as specifically
provided by the Committee in any particular case, the loss of existing or
potential profit in Awards granted under the Plan will not constitute an
element of damages in the event of termination of an employment relationship
even if the termination is in violation of an obligation of the Company to the
Participant.

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<PAGE>

8.8. DEFERRAL OF PAYMENTS.

The Committee may agree at any time, upon request of the Participant, to
defer the date on which any payment under an Award will be made.

8.9. PAST SERVICES AS CONSIDERATION.

Where a Participant purchases Stock under an Award for a price equal to the
par value of the Stock, the Committee may determine that such price has been
satisfied by past services rendered by the Participant.

9. EFFECT, AMENDMENT, SUSPENSION AND TERMINATION

Neither adoption of the Plan nor the grant of Awards to a Participant shall
affect the Company's right to grant to such Participant awards that are not
subject to the Plan, to issue to such Participant Stock as a bonus or
otherwise, or to adopt other plans or arrangements under which Stock may be
issued to Employees.

The Company may at any time or times amend the Plan or any outstanding Award
for any purpose which may at the time be permitted by law, or may at any time
terminate or suspend the Plan as to any further grants of any or all types of
Awards, provided that (except to the extent expressly required or permitted by
the Plan) no such amendment will, without the approval of the stockholders of
the Company, effectuate a change for which stockholder approval is required by
the rules of the National Association of Securities Dealers, Inc. applicable
to the Company.

A-8
<PAGE>
[FTP SOFTWARE,
INC. LOGO
FTP SOFTWARE, INC. APPEARS HERE]
SPECIAL MEETING IN LIEU OF ANNUAL MEETING OF
STOCKHOLDERS OF FTP SOFTWARE, INC.
AUGUST 22, 1996

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby constitutes and appoints Douglas F. Flood, John J.
Warnock, Jr. and Karen A. Wharton, and each of them singly, with full power of
substitution, as proxies to vote and act at the FTP Software, Inc. Special
Meeting in Lieu of the 1996 Annual Meeting of Stockholders to be held on August
22, 1996 at 10:00 a.m., and at any and all postponements and adjournments there
of (the "Meeting"), upon and with respect to the number of shares of common
stock of FTP Software, Inc., $.01 par value per share, as to which the under-
signed may be entitled to vote or act. The undersigned instructs such proxies,
or their substitutes, to vote in such manner as they may determine on any
matters which may come before the Meeting, all as indicated in the accompanying
Notice of Special Meeting in Lieu of Annual Meeting and Proxy Statement, and to
vote on the proposals listed on the reverse side hereof as specified by the
undersigned on the reverse side. All proxies heretofore given by the undersigned
in respect of the Meeting are hereby revoked.

Unless otherwise specified in the boxes provided on the reverse side hereof,
this proxy will be voted IN FAVOR of all nominees for directors, IN FAVOR of the
proposal to increase the number of authorized shares of Common Stock to 100
million, IN FAVOR of the proposal to approve the FTP Software, Inc. 1996
Executive Equity Incentive Plan, and in the discretion of the named proxies as
to any other matter that may come before the Meeting or any postponement or
adjournment thereof.

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

Please sign exactly as name(s) appears hereon. Joint owners should each sign.
If a corporation, sign in full corporate name by president or authorized
officer. If a partnership, sign in partnership name by authorized person. When
signing as attorney, executor, administrator, trustee, or guardian, please give
your full title as such.

HAS YOUR ADDRESS CHANGED?

______________________________________________________________________________

<PAGE>

/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE

The Board of Directors
recommends votes FOR.
---

The shares represented by this proxy, if properly executed, will be voted in
accordance with the instructions appearing herein. IN THE ABSENCE OF SPECIFIC
INSTRUCTIONS, THE SHARES REPRESENTED BY THIS PROXY, IF PROPERLY EXECUTED, WILL
BE VOTED FOR PROPOSALS 1, 2 AND 3 AND IN ACCORDANCE WITH THE DISCRETION OF THE
---
PERSON VOTING THE PROXY WITH RESPECT TO ANY OTHER BUSINESS PROPERLY BEFORE THE
MEETING.

Receipt of the Notice of Special Meeting in Lieu of Annual Meeting of
Stockholders and the Proxy Statement dated July 29, 1996 relating to the Meeting
is hereby acknowledged.

RECORD DATE SHARES:

1. Election of the following nominees as Class III Directors:

For All
For Withhold Except
/ / / / / /
Vinton G. Cerf
Glenn C. Hazard
Louise A. Mathews

If you wish to withhold your vote
for any individual nominee, mark
the "For All Except" box and
strike a line through that
nominee's name.

2. Proposal to increase the number of authorized shares of Common Stock to
100 million.
For Against Abstain
/ / / / / /

3. Proposal to approve the FTP Software, Inc. 1996 Executive Equity Incentive
Plan.

For Against Abstain
/ / / / / /

Please be sure to sign and date this Proxy Date _________________________

____________________________________________________________________________
Stockholder sign here Co-owner sign here

Mark box at right if address change / /
has been noted on the reverse side
of this card.

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

DETACH CARD DETACH CARD

Dear Stockholder:

Please take note of the important information enclosed with this proxy card.

Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.

Please mark the boxes on this proxy card to indicate how your shares shall be
voted. Then sign the card, detach it and return it in the enclosed postage paid
envelope.

Your vote must be received prior to the Special Meeting in Lieu of the 1996
Annual Meeting of Stockholders, August 22, 1996. Whether or not you plan to be
personally present at the meeting, please complete, date and sign the enclosed
proxy and return it promptly in the enclosed envelope. If you later desire to
revoke your proxy, you may do so at any time before it is exercised.

Thank you in advance for your prompt consideration.

Sincerely,

FTP Software, Inc.