INSILICON CORP, S-1/A, 2000-03-20

INSILICON CORP
S-1/A, 2000-03-20
SEMICONDUCTORS & RELATED DEVICES

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 20, 2000

REGISTRATION NO. 333-94573
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 3 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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INSILICON CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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<S> <C> <C>
DELAWARE 3674 77-0526155
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>

411 EAST PLUMERIA DRIVE
SAN JOSE, CA 95134
(408) 894-1900
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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WAYNE C. CANTWELL
PRESIDENT AND CHIEF EXECUTIVE OFFICER
411 EAST PLUMERIA DRIVE
SAN JOSE, CA 95134
(408) 894-1900
(NAME, ADDRESS INCLUDING ZIP CODE, AND TELEPHONE NUMBER
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
--------------------------

COPIES TO:

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<S> <C>
ALAN TALKINGTON, ESQ. PETER T. HEALY, ESQ.
BARBARA M. LANGE, ESQ. C. BROPHY CHRISTENSEN, JR., ESQ.
PAUL L. RUBIN, ESQ. O'MELVENY & MYERS LLP
ORRICK, HERRINGTON & SUTCLIFFE LLP 275 BATTERY STREET
400 SANSOME STREET SAN FRANCISCO, CA 94111
SAN FRANCISCO, CA 94111
</TABLE>

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ____________
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ____________
If this form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / / ____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / / ____________
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CALCULATION OF REGISTRATION FEE

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<CAPTION>
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED SHARE(1) PRICE(1) REGISTRATION FEE(2)
<S> <C> <C> <C> <C>
COMMON STOCK, PAR VALUE $.001...... 4,025,000 SHARES $11.00 $44,275,000 $11,688
</TABLE>

(1) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(a) under the Securities Act.

(2) Paid at initial filing.
--------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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EXPLANATORY NOTE

This registration statement contains two forms of prospectus front cover
pages: (a) one to be used in connection with an offering in the United States
and Canada and (b) one to be used in connection with a concurrent offering
outside of the United States and Canada. The U.S. prospectus and the
international prospectus are otherwise identical in all respects. The
international version of the front cover page is included immediately before
Part II of this registration statement.
<PAGE>
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS DECLARED EFFECTIVE. THIS
PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND WE ARE NOT
SOLICITING OFFERS TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE
IS NOT PERMITTED.
<PAGE>

SUBJECT TO COMPLETION, DATED MARCH 20, 2000

[LOGO]

3,500,000 SHARES
COMMON STOCK

inSilicon is offering 3,500,000 shares of its common stock. This is our
initial public offering and no public market currently exists for our shares. We
have applied to have our shares approved for quotation on the Nasdaq National
Market under the symbol "INSN." We anticipate that the initial public offering
price will be between $9.00 and $11.00 per share.

Phoenix Technologies Ltd. currently owns substantially all of inSilicon's
common stock. After this offering, Phoenix will own approximately 74.0% of
inSilicon's common stock (approximately 71.3% if the underwriters exercise their
overallotment option in full). Phoenix is not selling any of its inSilicon
common stock in this offering.

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INVESTING IN OUR COMMON STOCK INVOLVES RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 7.

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<CAPTION>
PER SHARE TOTAL
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<S> <C> <C>
Public Offering Price....................................... $ $
Underwriting Discounts and Commissions...................... $ $
Proceeds to inSilicon....................................... $ $
</TABLE>

THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE
NOT APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS
IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

inSilicon has granted the underwriters a 30-day option to purchase up to an
additional 525,000 shares of its common stock to cover over-allotments.
FleetBoston Robertson Stephens Inc. expects to deliver the shares of common
stock to purchasers on , 2000.

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ROBERTSON STEPHENS

PRUDENTIAL VOLPE TECHNOLOGY

A UNIT OF PRUDENTIAL SECURITIES

NEEDHAM & COMPANY, INC.

THE DATE OF THIS PROSPECTUS IS , 2000
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[INSIDE FRONT COVER]

Title: "PROVEN COMMUNICATIONS TECHNOLOGY FOR TOMORROW'S PRODUCTS"

Two separate blocks of text underneath title:

"CONNECTING THE FUTURE. inSilicon brings semiconductor and systems companies a
wide selection of communications technology for a broad array of digital
devices."

"PROVEN SOLUTIONS. More than 400 companies have implemented inSilicon technology
in hundreds of different devices from network routers to digital cameras."

Color Artwork: Representation of the evolution of advanced system-on-a-chip
semiconductor devices. Images of inSilicon intellectual property "virtual
components" labeled "Ethernet," "USB," "1394," "PCI" and "IrDA" sweeping left to
right to a semiconductor device in a package that sweeps into a semiconductor
wafer. inSilicon logo.

[INSIDE GATEFOLD]

Right column: Title: "CONNECTING THE FUTURE -- INSILICON"

Text underneath title: "inSilicon -- providing semiconductor and systems
companies the communications technology they need to design complex
"systems-on-a-chip"

Under the text, vertically, from top to bottom, in separate colored boxes, the
words: "Our Markets," "Communications," "Consumer," "Computers" and "Office
Automation." inSilicon logo.

Color Artwork: Picture of a system board sweeping left to right via a
directional arrow to a semiconductor package sweeping to a semiconductor
system-on-chip die. The arrow then continues to sweep right to the inSilicon
logo. A second directional arrow sweeps left to right from a "cloud-like"
representation of the internet labeled "INTERNET" to the inSilicon logo.
Surrounding the cloud are 10 representative photographs of end-markets,
accompanied by the following titles (counter-clockwise) "Digital Cameras,"
"Set-Top Boxes," "Smart Phones," "Peripherals," "Internet Appliances," "Laptop
Computers," "Central Office Switching," "Routers," "DSL Modems" and "Satellite
Receivers."

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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS. WE ARE OFFERING TO SELL, AND SEEKING OFFERS TO
BUY, SHARES OF OUR COMMON STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE
PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF
THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS
PROSPECTUS OR OF ANY SALE OF OUR COMMON STOCK. IN THIS PROSPECTUS, REFERENCES TO
"INSILICON," "WE," "OUR" AND "US" REFER TO THE HISTORICAL OPERATING RESULTS AND
ACTIVITIES OF AND THE ASSETS AND LIABILITIES ASSIGNED TO THE BUSINESS AND
OPERATIONS OF INSILICON BY PHOENIX, AND NOT THE UNDERWRITERS OR PHOENIX.

UNTIL , 2000 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS THAT BUY, SELL OR TRADE IN OUR SECURITIES, WHETHER OR NOT PARTICIPATING
IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS REQUIREMENT IS
IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

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TABLE OF CONTENTS

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PAGE
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Prospectus Summary.......................................... 4
Risk Factors................................................ 7
Forward-Looking Statements.................................. 16
Use of Proceeds............................................. 16
Dividend Policy............................................. 16
Capitalization.............................................. 17
Dilution.................................................... 18
Selected Consolidated Financial Data........................ 20
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 22
Business.................................................... 32
Management.................................................. 41
Arrangements Between inSilicon Corporation and Phoenix
Technologies Ltd.......................................... 50
Related Party Transactions.................................. 57
Principal Stockholder....................................... 59
Description of Capital Stock................................ 60
Shares Eligible for Future Sale............................. 63
Underwriting................................................ 64
Legal Matters............................................... 66
Experts..................................................... 67
Where You Can Find Additional Information................... 68
Index to Financial Statements............................... F-1
</TABLE>

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USBAccess-Registered Trademark- is a registered trademark of inSilicon.
TymeWare-TM-, SmartBridge-TM- and Rapidscript-TM- are trademarks of inSilicon.
We have filed for registration in the U.S. Patent and Trademark Office for
inSilicon-TM-, TymeWare-TM- and SmartBridge-TM-. All other brand names or
trademarks appearing in this prospectus are the property of their respective
holders.

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PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROSPECTUS
AND DOES NOT CONTAIN ALL OF THE INFORMATION THAT YOU SHOULD CONSIDER BEFORE
BUYING OUR SHARES. YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE MORE
DETAILED INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS, AND THE NOTES TO
THOSE CONSOLIDATED FINANCIAL STATEMENTS, APPEARING ELSEWHERE IN THIS PROSPECTUS.
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THE RESULTS
ANTICIPATED IN THOSE FORWARD-LOOKING STATEMENTS AS A RESULT OF THE FACTORS
DESCRIBED UNDER THE HEADING "RISK FACTORS" AND ELSEWHERE IN THIS PROSPECTUS.

OUR BUSINESS

inSilicon is a leading provider of communications technology that is used by
semiconductor and systems companies to design complex semiconductors called
systems-on-a-chip that are critical components of digital devices. Over 400
customers use our communications technology in hundreds of different digital
devices ranging from network routers to cellular phones. Our modular approach
emphasizes customer-proven reusable semiconductor intellectual property that
focuses on communications and connectivity, and are compatible with a wide range
of microprocessor designs. Semiconductor and systems companies integrate our
communications technology into their overall semiconductor designs, saving time
and money and allowing them to focus on their core competencies that
differentiate their products. By integrating our communications technology into
their complex designs, our customers are better able to solve the widening
"design gap" caused by the difficulty of designing complex systems-on-a-chip in
the time necessary to get to market with their products.

The internet is creating the demand for all digital devices to be connected.
This demand is generating a proliferation of communications standards. These
standards include Ethernet, which is a widely used local area networking
standard; USB, which is a standard designed to simplify personal computer
connections to peripheral devices; and IrDA, which is a standard that allows a
wireless signal to be sent between appliances across short distances. The
proliferation of these standards and products based on them is driving the
demand for complex semiconductors. Improvements in semiconductor design and
manufacturing processes have enabled the integration of entire systems on a
single chip, thus creating a system-on-a-chip solution. Due to the complexity of
designing systems-on-a-chip, the multiplicity of communications standards and
time-to-market requirements, the design capabilities of semiconductor and
systems companies have not kept pace with the increase in the number of
transistors that can be placed on single chip. Consequently, a significant
"design gap" has developed. To address this gap, semiconductor and systems
companies are increasingly licensing proven and reusable intellectual property
from merchant semiconductor intellectual property suppliers, such as inSilicon.
Integrated Circuit Engineering, an independent research firm, estimates that the
merchant semiconductor intellectual property market will grow from approximately
$732 million in 2000 to approximately $1.9 billion in 2003, which represents a
compounded annual growth rate of approximately 37%.

- proven solutions;

- a broad portfolio of communications technology for a wide range of
standards;

- integrated systems that combine our communications technology and related
software;

- extensive test and verification tools;

- portability and flexibility; and

- standards leadership.

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Our goal is to be a leading provider of semiconductor intellectual property
for communications and connectivity. Key elements of our strategy include:

- targeting high growth communications applications;

- expanding our portfolio of communications technology and related software;

- expanding distribution channels and brand awareness; and

- developing e-commerce channels.

CORPORATE INFORMATION

inSilicon was incorporated in Delaware on November 1, 1999 as a wholly owned
subsidiary of Phoenix. Before November 1999, we were operated as a division of
Phoenix. Our principal executive offices are located at 411 East Plumeria Drive,
San Jose, CA 95134 and our telephone number is (408) 894-1900. We expect to move
to new executive offices in the Silicon Valley area. Our web site address is
http://www.in-silicon.com. Information on our web site and on web sites linked
to it is not part of this prospectus.

OUR RELATIONSHIP WITH PHOENIX

So long as Phoenix owns a substantial amount of our common stock, Phoenix
can exercise a controlling influence over our business. Phoenix has advised us
that it intends to hold its inSilicon shares after this offering. However,
Phoenix has no contractual or other obligation to hold any or all of our shares
of common stock, except that it has agreed that it will not dispose of any
inSilicon shares for 365 days after the date of this prospectus without the
prior written consent of FleetBoston Robertson Stephens Inc. See
"Underwriting--Future Sales." Therefore, you cannot be sure how long Phoenix
will continue to own our common stock after this offering. Phoenix may dispose
of our common stock in one or more transactions, in one or more ways, including
a public offering, a distribution to Phoenix stockholders, an exchange offer
involving Phoenix common stock or other transactions. We granted Phoenix
registration rights for our common stock that it will own after this offering,
which will make it easier for Phoenix to dispose of its inSilicon common stock.

inSilicon and Phoenix have executed agreements addressing interim and
ongoing relationships between them. See "Arrangements between inSilicon
Corporation and Phoenix Technologies Ltd."

THE OFFERING

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<S> <C>
Common stock offered......................... 3,500,000 shares
Common stock to be outstanding after the
offering................................... 14,051,330 shares
Use of proceeds.............................. General corporate purposes, including working
capital, sales and marketing, and research
and development.
Proposed Nasdaq National Market symbol....... INSN
</TABLE>

The above information assumes the automatic conversion of our Series A
Preferred Stock into common stock and that the underwriters do not exercise
their option to purchase additional shares in the offering. The information
excludes the following:

- 2,546,567 shares of common stock issuable as of March 15, 2000, upon
exercise of options under our 1999 stock option plan;

- 50,000 shares of common stock issuable upon exercise of a warrant held by
Phoenix;

- 1,302,113 shares of common stock available for future issuance, upon
exercise of options not yet granted as of March 15, 2000 under our 1999
stock option plan and 2000 stock plan; and

- 250,000 shares of common stock available for future issuance under our
2000 employee stock purchase plan.

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SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The historical financial information may not be indicative of our future
performance and does not reflect what our financial position and results of
operations would have been had we operated as a separate, stand-alone entity
during the periods presented.

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<CAPTION>
DECEMBER 31, 1999
-----------------------
ACTUAL AS ADJUSTED
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<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents................................... $ -- $31,150
Working capital (deficit)................................... (1,995) 29,155
Total assets................................................ 22,023 53,173
Long-term obligations, less current portion................. -- --
Total stockholder's equity.................................. 13,784 44,934
</TABLE>

See Note 2 of Notes to Consolidated Financial Statements of inSilicon for an
explanation of the determination of the number of shares used in computing per
share data.

"As adjusted" amounts reflect the application of the net proceeds from the
sale of 3,500,000 shares of common stock by inSilicon at an assumed initial
public offering price of $10.00 per share, after deducting the underwriting
discounts, commissions and the estimated offering expenses. See "Use of
Proceeds" and "Capitalization."

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RISK FACTORS

INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. IN ADDITION TO
THE OTHER INFORMATION IN THIS PROSPECTUS, YOU SHOULD CAREFULLY CONSIDER THE
RISKS DESCRIBED BELOW BEFORE PURCHASING OUR COMMON STOCK. IF ANY OF THE
FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS COULD BE MATERIALLY HARMED, AND OUR
FINANCIAL CONDITION AND RESULTS OF OPERATIONS COULD BE MATERIALLY AND ADVERSELY
AFFECTED. AS A RESULT, THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE, AND
YOU MIGHT LOSE ALL OR PART OF YOUR INVESTMENT.

RISKS RELATED TO OUR BUSINESS

THE UNPREDICTABILITY OF OUR QUARTERLY OPERATING RESULTS MAY CAUSE THE PRICE OF
OUR COMMON STOCK TO DECLINE.

We expect our quarterly operating results to fluctuate significantly due to
a variety of factors, many of which are outside of our control. Our revenue is
difficult to predict and may fluctuate significantly from period to period.
Because our expenses are largely independent of our revenue in any particular
period, it is difficult to accurately forecast our operating results. Our
operating expenses are based, in part, on anticipated future revenue and a high
percentage of our expenses are fixed in the short term. As a result, if our
revenue is below expectations in any quarter, the negative effect may be
magnified by our inability to adjust spending in a timely manner to compensate
for the revenue shortfall.

Factors that could cause our revenue and operating results to vary from
quarter to quarter include:

- shifts in demand for and average selling prices of semiconductors that
incorporate our technology;

- large orders or regional spending patterns unevenly spaced over time;

- the financial terms of our contractual arrangements with our licensees and
partners that may provide for significant up-front payments or payments
based on the achievement of certain milestones;

- the relative mix of license revenues, royalties and services;

- the impact of competition on license revenue or royalty rates;

- establishment or loss of strategic relationships with semiconductor or
systems companies;

- timing of new technologies and technology enhancements by us and our
competitors;

- seasonality of demand; and

- changes in development schedules, research and development expenditure
levels and product support by us and semiconductor and systems companies.

As a result, we believe that period-to-period comparisons of our results of
operations are not necessarily meaningful and, accordingly, that these
comparisons should not be relied upon as indications of future performance. Due
to these and other factors, it is likely that our operating results will be
below market analysts' expectations in some future quarters, which would cause
the market price of our stock to decline.

WE HAVE INCURRED NET LOSSES SINCE OUR INCEPTION, AND WE MAY NOT ACHIEVE OR
SUSTAIN ANNUAL PROFITABILITY.

We incurred net losses of $2.0 million for fiscal year 1997, $7.1 million
for fiscal year 1998, $12.1 million for fiscal year 1999 and $1.0 million for
the three months ended December 31, 1999, and had an accumulated deficit of
$23.8 million as of December 31, 1999. We expect to continue to incur additional
operating losses for at least the next 12 months. Although we have experienced
revenue

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growth in recent periods, our net losses have also increased. In addition, we
cannot assure you that we will be able to sustain the growth in our revenue. If
we do achieve profitability, we cannot be certain that we can sustain or
increase profitability on a quarterly or annual basis in the future or at all.
This may in turn cause our stock price to decline. In addition, if we do not
achieve or sustain profitability in the future, we may be unable to continue our
operations.

IF SEMICONDUCTOR AND SYSTEMS COMPANIES DO NOT ADOPT OUR SEMICONDUCTOR
INTELLECTUAL PROPERTY AND USE IT IN THE PRODUCTS THEY SELL, OUR REVENUES WILL
NOT GROW.

The adoption and continued use of our semiconductor intellectual property by
semiconductor and systems companies and an increasing demand for products
requiring complex semiconductors, such as portable computing devices and
cellular phones, is important to our continued success. The market for merchant
semiconductor intellectual property has only recently begun to emerge. Our
ability to achieve sustained revenue growth and profitability in the future will
depend on the continued development of this market and, to a large extent, on
the demand for complex semiconductors. There can be no assurance that the
merchant semiconductor intellectual property and complex semiconductor markets
will continue to develop or grow at a rate sufficient to support our business.
If either of these markets fails to grow or develops slower than expected, our
business, operating results and financial condition would be seriously harmed.

We face numerous risks in obtaining agreements with semiconductor and
systems companies on terms beneficial to our business, including:

- the lengthy and expensive process of building a relationship with a
potential licensee or prospective partner;

- the fact that we may compete with the internal development groups of
semiconductor and systems companies;

- the fact that we may be unable to persuade semiconductor and systems
companies to rely on us for critical technology;

- the fact that we may be unable to persuade potential licensees and
partners to bear development costs associated with our communications
technology;

- the risk that even after our customers select our communications
technology, they may not produce semiconductors using our communications
technology; and

- the risk that even if a particular semiconductor or systems company adopts
our communications technology, that the customer may fail due to
competition or lack of market acceptance of its products that use our
communications technology.

We cannot assure you that we will be able to maintain our current
relationships or establish new relationships with additional licensees or
partners, and any failure by us to do so could seriously harm our business. None
of our current licensees or partners is obligated to license new or future
generations of our communications technology.

IF WE ARE NOT ABLE TO PROTECT OUR INTELLECTUAL PROPERTY ADEQUATELY, WE WILL HAVE
LESS PROPRIETARY TECHNOLOGY TO LICENSE, WHICH WILL REDUCE OUR REVENUES AND
PROFITS.

Our patents, copyrights, trademarks, trade secrets and similar intellectual
property are critical to our success. We rely on a combination of patent,
trademark, copyright, mask work and trade secret laws to protect our proprietary
rights. After this offering, inSilicon will own three U.S. patents on various
aspects of its technology and have six pending U.S. patent applications. We
cannot be sure that patents will be issued from any patent applications
submitted, that any patents we hold will not be challenged, invalidated or
circumvented or that any claims allowed from our patents will be of

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sufficient scope or strength to provide meaningful protection or any commercial
advantage to us. In addition, the laws of foreign countries may not adequately
protect our intellectual property as well as the laws of the United States.

We use licensing agreements and employee and third-party nondisclosure and
assignment agreements to limit access to and distribution of our proprietary
information and to obtain ownership of technology prepared on a work-for-hire
basis. Even though we have taken all customary industry precautions, we cannot
be sure that the steps we take to protect our intellectual property rights will
be adequate to deter misappropriation of the rights or that we will be able to
detect unauthorized uses and take immediate or effective steps to enforce our
rights. We also cannot be sure that the steps we may take to obtain ownership of
any contributed intellectual property will be sufficient to assure our ownership
of all proprietary rights. We also rely on unpatented trade secrets to protect
our proprietary technology, however, we cannot be certain that others will not
independently develop or otherwise acquire the same or substantially equivalent
technologies or otherwise gain access to our proprietary technology or disclose
that technology. We also cannot be sure that we can ultimately protect our
rights to our unpatented proprietary technology. In addition, third parties
might obtain patent rights to such unpatented trade secrets, which could be used
to assert infringement claims against us.

THIRD PARTIES MAY CLAIM WE ARE INFRINGING THEIR INTELLECTUAL PROPERTY RIGHTS,
AND WE COULD SUFFER SIGNIFICANT LITIGATION OR LICENSING EXPENSES OR BE PREVENTED
FROM LICENSING OUR TECHNOLOGY.

Third parties may claim that we are infringing their intellectual property
rights, and we may be found to infringe those intellectual property rights.
While we do not believe that any of our technologies infringe the valid
intellectual property rights of third parties, we may be unaware of intellectual
property rights of others that may cover some of our technology and services.

Any litigation regarding patents or other intellectual property could be
costly and time-consuming, and divert our management and key personnel from our
business operations. The complexity of the technology involved and the
uncertainty of the outcome of intellectual property litigation increase these
risks. Claims of intellectual property infringement also might require us to
enter into costly royalty or license agreements. However, we may not be able to
obtain royalty or license agreements on terms acceptable to us, or at all. We
also may be subject to significant damages or injunctions against development
and licensing of certain of our technologies.

THE SEMICONDUCTOR INTELLECTUAL PROPERTY MARKET IS HIGHLY COMPETITIVE, AND WE MAY
LOSE MARKET SHARE TO LARGER COMPETITORS WITH GREATER RESOURCES AND TO COMPANIES
THAT DEVELOP THEIR OWN SEMICONDUCTOR INTELLECTUAL PROPERTY USING INTERNAL DESIGN
TEAMS.

We will face competition from both existing and new suppliers of
semiconductor intellectual property that we anticipate will enter the market. We
also compete with the internal development groups of large, vertically
integrated semiconductor and systems companies. We also may face competition
from suppliers of technologies based on new or emerging technology standards.

We must also differentiate our communications technology from those
available or under development by other suppliers or the internal development
groups of semiconductor and systems companies, including some of our current and
prospective licensees. Many of these internal development groups have
substantial programming and design resources and are part of larger
organizations with substantial financial and marketing resources. These internal
development groups may develop technologies that compete directly with ours or
may actively seek to license their own technologies to third parties.

Many of our existing competitors, as well as a number of potential new
competitors, have longer operating histories, greater brand recognition and
larger customer bases, as well as greater financial and marketing resources,
than we do. This may allow them to respond more quickly than we can to

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new or emerging technologies and changes in customer requirements. It may also
allow them to devote greater resources than we can to the development and
promotion of their technologies.

IF WE ARE UNABLE TO DEVELOP ENHANCEMENTS AND NEW GENERATIONS OF OUR INTELLECTUAL
PROPERTY, WE MAY BE UNABLE TO ATTRACT OR RETAIN CUSTOMERS.

Our future success will depend on our ability to develop enhancements and
new generations of our communications technology that satisfy the requirements
of new and evolving standards and introduce these new technologies to the
marketplace in a timely manner. If our development efforts are not successful or
are significantly delayed, or if the characteristics of our communications
technology are not compatible with the requirements of specific product
applications, we may be unable to attract or retain customers.

Technical innovations of the type critical to our success are inherently
complex and involve several risks, including:

- our ability to anticipate and respond in a timely manner to changes in the
requirements of semiconductor and systems companies;

- the emergence of new standards by semiconductor and systems companies;

- the significant research and development investment that is often required
before market acceptance, if any, of a particular standard;

- the possibility that even after a significant investment of our resources,
the standard will not become accepted by the industry; and

- the introduction of products by our competitors embodying new technologies
or features.

Our failure to adequately address these risks could render our existing or
future communications technology obsolete and could seriously harm our business.
In addition, we cannot assure you that we will have the financial and other
resources necessary to develop communications technology in the future, or that
any enhancements or new generations of the technology that we develop or procure
will generate revenue in excess of the costs of development or procurement.

RAPID PRODUCT TRANSITIONS OR INTRODUCTIONS OF NEW STANDARDS MAY CAUSE OUR
TECHNOLOGIES TO BECOME OBSOLETE.

From time to time, we or our competitors may announce new technologies or
capabilities that may replace or shorten the life cycles of our existing
technologies. Announcements of currently planned or other new technologies may
cause customers to defer or stop licensing our technologies until those new
technologies become available. In addition, announcements of a new standard may
cause customers to defer or stop licensing our technologies until that standard
becomes available or accepted.

IF WE DO NOT COMPETE EFFECTIVELY WITH OTHERS TO ATTRACT AND RETAIN KEY
PERSONNEL, WE MAY BE UNABLE TO DEVELOP THE NEW COMMUNICATIONS TECHNOLOGY
NECESSARY TO EXPAND OUR BUSINESS.

Our ability to continue to grow successfully requires an effective planning
and management process. Since October 31, 1998, we have increased our headcount
substantially, from 51 employees at that date to 78 employees at December 31,
1999.

Our growth has placed, and the recruitment and integration of additional
employees will continue to place, a strain on our resources. Semiconductor and
systems company licensees typically require significant engineering support in
the design, testing and manufacture of products incorporating our technology.
Accordingly, increases in the adoption of our technology can be expected to
increase the strain on our personnel, particularly our engineers.

10
<PAGE>
We believe our future success will depend upon our ability to successfully
manage our growth, including attracting and retaining engineers, other highly
skilled personnel and senior managers. Our employees are "at will" and are not
hired for a specified term. Hiring qualified sales and technical personnel will
be difficult due to the limited number of qualified professionals. Competition
for these types of employees is intense. We have in the past experienced
difficulty in recruiting and retaining qualified sales and technical personnel.
Our employees are recruited aggressively by our competitors and by start-up
companies. We believe our salaries are competitive, but under certain
circumstances, start-up companies can offer more attractive stock option
packages. As a result, we have experienced, and may continue to experience,
significant employee turnover. Failure to attract and retain personnel,
particularly sales and technical personnel, would materially harm our business.

As we seek to expand our operations, we may also significantly strain our
financial and management systems and other resources. We cannot be certain that
our systems, procedures, controls and facilities will be adequate to support our
operations.

CHANGES TO ACCOUNTING STANDARDS AND RULES COULD EITHER DELAY OUR RECOGNITION OF
REVENUES OR REDUCE THE AMOUNT OF REVENUES THAT WE MAY RECOGNIZE AT A SPECIFIC
TIME DEFERRING OR REDUCING OUR PROFITABILITY. THESE EFFECTS ON OUR REPORTED
RESULTS COULD CAUSE OUR STOCK PRICE TO BE LOWER THAT IT OTHERWISE MIGHT HAVE
BEEN.

We adopted the American Institute of Certified Public Accountants' Statement
of Position, or SOP, 97-2, "Software Revenue Recognition," and SOP 98-4,
"Deferral of the Effective Date of a Provision of SOP 97-2, Software Revenue
Recognition," as of October 1, 1998. In December 1998, the American Institute of
Certified Public Accountants issued SOP 98-9, "Modification of SOP 97-2,
Software Revenue Recognition, with Respect to Certain Transactions." SOP 98-9
amends SOP 98-4 to extend the deferral of the application of certain passages of
SOP 97-2 with respect to the fair value of elements in multiple-element
arrangements. We implemented these provisions as of October 1, 1999. Although
the adoption of SOP 97-2, SOP 98-4 and SOP 98-9 has not had and is not expected
to have a material impact on our consolidated financial statements or results of
operations, full implementation guidelines for SOP 97-2, SOP 98-4 and SOP 98-9
have not been issued. Once these guidelines are issued, our current revenue
recognition accounting practices may need to change and such changes could
affect the timing of our future revenue recognition.

RISKS RELATED TO THE SEMICONDUCTOR INDUSTRY

A DOWNTURN IN THE SEMICONDUCTOR OR ELECTRONICS BUSINESSES WOULD REDUCE OUR
SALES.

Our business has benefited from the rapid worldwide growth of the
semiconductor industry, which in turn has been fueled by growth in
telecommunications, computers and consumer electronics. Continued licenses of
our technologies are largely dependent upon the commencement of new design
projects by semiconductor and systems companies. However, the semiconductor
industry is highly cyclical and subject to rapid technological change. It also
has been subject to significant economic downturns at various times,
characterized by diminished demand, accelerated erosion of average selling
prices and production overcapacity. In addition, the semiconductor industry also
periodically experiences increased demand and production capacity constraints.
As a result, we may experience substantial period-to-period fluctuations in
future operating results due to general semiconductor industry conditions,
overall economic conditions or other factors. A number of semiconductor and
systems companies have announced layoffs of their employees or the suspension of
investment plans, and although we have not seen a significant drop-off in demand
from these customers, their budgets could be reduced, alone or as part of
overall expense control efforts. In addition, there have been a number of
mergers in the electronics industry, which may reduce the aggregate level of
licenses of our technologies and purchases of our services by the merged
companies. Potential slower growth in the

11
<PAGE>
electronics industry, a reduced number of design starts, tightening of
customers' operating budgets or continued consolidation among our customers may
seriously harm our business.

RISKS RELATED TO OUR RECENT SEPARATION FROM PHOENIX TECHNOLOGIES LTD.

OUR EXPENSES MAY BE HIGHER AS A SEPARATE STAND-ALONE ENTITY THAN THEY WERE WHEN
WE WERE PART OF PHOENIX.

The historical financial information included in this prospectus does not
reflect the many significant changes in our cost structure that will occur as a
result of our separation from Phoenix or changes in our funding and operations
that will result from our transition to a separate, stand-alone entity. For
example, before our separation from Phoenix, we were able to take advantage of
Phoenix's size and purchasing power in procuring goods, services and technology,
such as computer software licenses and employee benefits, and in negotiating
relatively favorable leases for facilities and other agreements. As a separate,
stand-alone entity, we may be unable to obtain goods, services, technology,
facilities and other items at prices and on terms as favorable as those we
obtained before the separation. In addition, our general and administrative
expenses and a portion of our research and development and sales and marketing
expenses represent allocations of Phoenix's total expenses. Once Phoenix no
longer provides these services for us, our expenses may be greater than these
allocations.

WE WILL DEPEND ON AGREEMENTS WITH PHOENIX FOR MANY IMPORTANT SERVICES THAT MAY
BE HARD TO REPLACE ON A COST-EFFECTIVE BASIS IF PHOENIX TERMINATES THE
AGREEMENTS.

We have entered into agreements with Phoenix that will define our
relationship after this offering. These agreements include a Services and
Cost-Sharing Agreement, under which Phoenix will provide various, primarily
administrative, services to us, including accounting, treasury, tax and
information services, and we will share with Phoenix certain costs, including
facilities and insurance. The Services and Cost-Sharing Agreement has an initial
term that extends to June 30, 2000 for all services other than accounting and an
initial term that extends to September 30, 2000 with respect to accounting
services, although we can terminate any one or more of the services at any time
on 30 days' written notice. The Services and Cost-Sharing Agreement will be
renewed on a month-to-month basis. Phoenix can terminate after those dates on 30
days' written notice. Consequently, we cannot be sure how long Phoenix will
continue to provide us services under the Services and Cost-Sharing Agreement
and, if it does not, whether, or on what terms we could obtain these services.
If we cannot perform these services ourselves or obtain them on acceptable
terms, this could materially harm our business. In addition, we have entered
into a distribution agreement under which Phoenix will act as a sales
representative for inSilicon in certain Asian countries and this service will be
difficult to replace if Phoenix terminates this agreement.

SINCE PHOENIX CAN ELECT ALL OUR DIRECTORS AND INFLUENCE OUR BUSINESS FOR ITS
BENEFIT FOR AT LEAST AS LONG AS IT OWNS 50% OR MORE OF OUR SHARES, PHOENIX CAN
TAKE ACTIONS BENEFICIAL TO IT AT OUR EXPENSE.

For at least as long as Phoenix continues to own more than 50% of our common
stock, Phoenix can direct the election of all our directors and exercise a
controlling influence over our business, including any mergers or other business
combinations, acquisitions or dispositions of assets, future issuances of our
common stock or other equity securities, the incurrence of debt and the payment
of dividends. Phoenix also can determine matters submitted to a vote of our
stockholders without the consent of our other stockholders, prevent or cause a
change in who controls us and take other actions that might be favorable to
Phoenix.

12
<PAGE>
WE MAY HAVE CONFLICTS OF INTEREST WITH PHOENIX THAT ARE NOT RESOLVED IN OUR
FAVOR.

We may have conflicts of interest with Phoenix in areas relating to our past
and ongoing relationships, including potential competitive business activities,
indemnity arrangements, tax and intellectual property matters, registration
rights, potential acquisitions or financing transactions, sales or other
dispositions by Phoenix of the shares of inSilicon common stock it will hold
after this offering and the exercise by Phoenix of its ability to control our
management and affairs. We also cannot be sure that any conflicts that may arise
between us and Phoenix will be resolved in a manner that does not seriously harm
us, even if Phoenix does not intend that result.

In addition, the ownership interests of our directors or officers in Phoenix
common stock or service as both a director of inSilicon and an officer or
director of Phoenix could create or appear to create potential conflicts of
interest when directors and officers are faced with decisions that could have
different implications for us and Phoenix. One of our current directors is a
director and officer of Phoenix.

LOSS OF THE PHOENIX AFFILIATION AS A RESULT OF OUR SEPARATION FROM PHOENIX MAY
DAMAGE OUR RELATIONSHIPS WITH EXISTING LICENSEES OR PARTNERS OR THEIR
PERCEPTIONS OF US, WHICH COULD REDUCE OUR REVENUES.

Licensees of our communications technology or our strategic partners may
have chosen our technologies because of the positive reputation of Phoenix or
their economic ties to Phoenix. For example, Phoenix may also be a customer for
their products. As a separate, stand-alone entity, we may not enjoy these
advantages with those customers and partners and it may be harder for us to
compete for their continued business. For example, our new name is not yet
recognized as a brand in the marketplace, and as a result our technology
licensing could suffer. The loss of the "Phoenix" brand name may hinder our
ability to establish new relationships with potential customers and partners,
particularly in Asia. In addition, our current customers, suppliers and partners
may react negatively to the separation. Although we believe we have all
necessary rights to use the brand name "inSilicon," our rights to use it may be
challenged by others.

WITHOUT FINANCIAL BACKING FROM PHOENIX, WE MAY HAVE INSUFFICIENT FUNDS TO EXPAND
OUR BUSINESS.

Phoenix has satisfied our capital requirements in the past, but it will not
be obligated to do so, nor do we expect it to do so, after this offering. As a
result, we must depend on the proceeds of this offering, cash flows from
operations and future financings, if any, to expand our business.

RISKS RELATED TO THE OFFERING

THE MARKET PRICE OF OUR COMMON STOCK MAY DROP IF PHOENIX SELLS ITS SHARES.

Phoenix, which owned substantially all of our stock before this offering,
will derive certain benefits as a result of this offering, including the
creation of a public market for our common stock. After this offering, Phoenix
may sell any and all of its inSilicon common stock or distribute any or all of
our common stock to its stockholders. Phoenix has advised us that it intends to
continue to hold our common stock after this offering, but it is not obligated
to do so (although it cannot sell or otherwise dispose of any shares for 365
days after the date of this prospectus without the prior written consent of
FleetBoston Robertson Stephens Inc.). The market price of our common stock may
decline if Phoenix sells or distributes large amounts of our common stock in the
public market or to its stockholders, or if investors think that Phoenix might
do so. If Phoenix transfers controlling interest in inSilicon, the other holders
of our common stock may not participate in the transaction or realize any
premium on their common stock. Phoenix has registration rights for its inSilicon
common stock that will make future dispositions easier for it.

13
<PAGE>
OUR RESTATED CERTIFICATE OF INCORPORATION AND BY-LAWS WILL CONTAIN PROVISIONS
THAT COULD DISCOURAGE A TAKEOVER AND THEREFORE LIMIT THE MARKET PRICE OF OUR
COMMON STOCK.

Our Restated Certificate of Incorporation and by-laws will contain
provisions that could delay or prevent a change of control. These provisions
could limit the price that investors might be willing to pay in the future for
shares of our common stock. Some of these provisions:

- divide our board of directors into three classes;

- authorize the issuance of preferred stock which can be created and issued
by the board of directors without prior stockholder approval, commonly
referred to as "blank check" preferred stock, with rights senior to those
of common stock;

- prohibit stockholder action by written consent; and

- establish advance notice requirements for submitting nominations for
election to the board of directors and for proposing matters that can be
acted upon by stockholders at a meeting.

However, for at least as long as Phoenix continues to own more than 50% of our
common stock, these provisions should not have any practical significance to
investors.

OUR ABILITY TO RAISE CAPITAL IN THE FUTURE MAY BE LIMITED AND OUR FAILURE TO
RAISE CAPITAL WHEN NEEDED COULD PREVENT US FROM GROWING.

We believe that the net proceeds from this offering, together with cash
generated by our operations, will be sufficient to meet our operating and
capital requirements for at least the next twelve months. However, we may in the
future be required to raise additional funds through public or private
financing, strategic relationships or other arrangements. We cannot be certain
that any such financing will be available on acceptable terms, or at all, and
our failure to raise capital when needed could seriously harm our business.
Additional equity financing may be dilutive to the holders of our common stock,
and debt financing, if available, may involve restrictive covenants. In
addition, pursuant to the Registration Rights Agreement, a substantial portion
of the proceeds raised in any subsequent offerings of our common stock may be
payable to Phoenix for the sale of any of its shares of inSilicon common stock.
Moreover, strategic relationships, if necessary to raise additional funds, may
require us to relinquish some technology rights or modify our allocation of
resources.

OUR COMMON STOCK PRICE MAY BE VOLATILE, WHICH COULD RESULT IN SUBSTANTIAL LOSSES
FOR INVESTORS PURCHASING SHARES IN THIS OFFERING.

Our common stock has not been publicly traded, and an active trading market
may not develop or be sustained after this offering. We and the representatives
of the underwriters will determine the initial public offering price. The price
at which our common stock will trade after this offering is likely to be highly
volatile and may fluctuate substantially due to factors such as:

- changes in or failure by us to meet securities analysts' expectations;

- announcements of technological innovations;

- competitive trends, including timely adoption and market acceptance of,
competing standards;

- introduction of new services by us or our competitors;

- developments with respect to intellectual property rights;

- conditions and trends in the semiconductor industry; and

- market perception of our growth prospects.

14
<PAGE>
In addition, the stock market has from time to time experienced significant
price and volume fluctuations that have affected the market prices for the
common stock of technology companies. These broad market fluctuations may result
in a material decline in the market price of our common stock. In the past,
following periods of volatility in the market price of a particular company's
securities, securities class action litigation has often been brought against
that company. We may become involved in this type of litigation in the future.
Litigation is often expensive and diverts management's attention and resources
that are needed to successfully run our business.

OUR MANAGEMENT WILL RETAIN BROAD DISCRETION IN THE USE OF PROCEEDS FROM THIS
OFFERING AND MAY FAIL TO USE SUCH FUNDS EFFECTIVELY TO ACHIEVE OUR BUSINESS
GOALS.

We currently have no specific plans for using the net proceeds of this
offering. As a consequence, our management will have broad discretion to
allocate a large percentage of the net proceeds to uses which the stockholders
may not deem desirable or to uses that fail to achieve our business goals
effectively.

15
<PAGE>
FORWARD-LOOKING STATEMENTS

This prospectus includes forward-looking statements based largely on our
current expectations and projections about future events and financial trends
affecting the financial condition or financial results of our business. The
words "believe," "may," "will," "estimate," "continue," "anticipate," "intend,"
"expect" and similar expressions identify these forward-looking statements.
These forward-looking statements are subject to a number of risks, uncertainties
and assumptions, including those described above under the caption "Risk
Factors" that may cause our or our industry's actual results, levels of
activity, performance or achievements to be materially different from any future
results, levels of activity, performance or achievements expressed or implied by
these forward-looking statements. We undertake no obligation to publicly update
or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.

USE OF PROCEEDS

The principal purposes of this offering are to increase our equity capital,
to create a public market for our common stock, to facilitate our future access
to public equity markets, to improve the effectiveness of our stock option plan
in attracting and retaining key employees, to provide liquidity to Phoenix and
to provide increased visibility of inSilicon in the marketplace.

Except to the extent that any portion of the net proceeds is used to repay a
working capital bridge loan from Phoenix under the Contribution Agreement (which
amount is not expected to exceed $2 million), no portion of the net proceeds of
this offering has been earmarked for any specific purpose. We expect that the
net proceeds from this offering will be approximately $31.1 million, based on an
assumed initial public offering price of $10.00 per share, after paying
underwriting discounts, commissions and offering expenses. We expect to use the
net proceeds for general corporate purposes, including working capital, sales
and marketing, and research and development. In addition, we may use a portion
of the net proceeds to acquire complementary products, technologies or
companies. From time to time, we may acquire complementary products,
technologies or companies. We currently have no commitments or agreements and
are not involved in any negotiations for the acquisition of companies. Our
management will have broad discretion in the allocation of net proceeds. Pending
use, the net proceeds will be invested in short-term securities. We are not
under any contractual or other obligation, nor do we expect, to pay any
dividends or distribute any of the net proceeds from this offering to Phoenix
other than for the provision of administrative services included in the Services
and Cost-Sharing Agreement.

DIVIDEND POLICY

We have never paid any dividends. We currently intend to retain any earnings
to fund the development and growth of our business and do not anticipate
declaring or paying any cash dividends. In addition, our secured bank line of
credit, which will become effective upon the closing of this offering, generally
prohibits us from paying dividends.

16
<PAGE>
CAPITALIZATION

The following table sets forth our capitalization as of December 31, 1999:

- on an actual basis; and

- as adjusted to give effect to the conversion of all shares of Series A
Preferred Stock into shares of common stock and our sale of 3,500,000
shares of common stock at an assumed initial public offering price of
$10.00 per share, less underwriting discounts, commissions and estimated
offering expenses payable by us.

<TABLE>
<CAPTION>
DECEMBER 31, 1999
-------------------------
ACTUAL AS ADJUSTED
---------- ------------
(IN THOUSANDS, EXCEPT
SHARE AND PER SHARE DATA)
<S> <C> <C>
Long-term obligations, less current portion................. $ -- $ --

Stockholder's equity........................................
Preferred stock, par value $0.001; 15,000,000 shares
authorized; 10,400,000 Series A shares issued and
outstanding actual; no shares issued and outstanding as
adjusted................................................ 10 --
Common stock, par value $0.001; 100,000,000 shares
authorized; 10 shares issued and outstanding actual;
13,900,010 shares issued and outstanding
as adjusted............................................. -- 14
Additional paid-in capital................................ 38,953 70,099
Deferred stock-based compensation......................... (1,360) (1,360)
Accumulated deficit....................................... (23,819) (23,819)
-------- --------
Total stockholder's equity................................ 13,784 44,934
-------- --------

Total capitalization.................................... $ 13,784 $ 44,934
======== ========
</TABLE>

You should read this capitalization table together with the sections of this
prospectus entitled "Selected Consolidated Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the consolidated financial statements and related notes included in this
prospectus.

This table excludes the following shares:

- 2,348,844 shares of common stock issuable as of December 31, 1999, upon
exercise of options under our 1999 employee stock option plan;

- 50,000 shares of common stock issuable upon exercise of a warrant held by
Phoenix;

- 1,651,156 shares of common stock available for future issuance, upon
exercise of options not yet granted as of December 31, 1999 under our 1999
stock option plan and 2000 stock plan; and

- 250,000 shares of common stock available for future issuance under our
2000 employee stock purchase plan.

17
<PAGE>
DILUTION

If you invest in our common stock, your interest will be diluted to the
extent of the difference between the public offering price per share of our
common stock and the pro forma net tangible book value per share of our common
stock after this offering. The net tangible book value of our common stock as of
December 31, 1999 was a deficit of $2,853,000, or $0.27 per share. Pro forma net
tangible book value per share represents the amount of our total tangible assets
reduced by the amount of our total liabilities and divided by the total pro
forma number of shares of common stock outstanding assuming the automatic
conversion of our Series A Preferred Stock into common stock. Dilution in net
tangible book value per share represents the difference between the amount per
share paid by purchasers of shares of our common stock in this offering and the
pro forma net tangible book value per share of our common stock immediately
afterwards. After giving effect to our sale of 3,500,000 shares of common stock
offered by this prospectus at an assumed public offering price of $10.00 per
share and after deducting the underwriting discounts, commissions and estimated
offering expenses payable by us, our pro forma net tangible book value as of
December 31, 1999 would have been $28,297,000, or approximately $2.04 per share.
This represents an immediate increase in net tangible book value of $2.31 per
share to Phoenix, our sole stockholder as of December 31, 1999, and an immediate
and substantial dilution in net tangible book value of $7.96 per share to new
investors.

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $10.00
Net tangible book value deficit per share as of
December 31, 1999......................................... $(0.27)
Increase in net tangible book value per share attributable
to new investors.......................................... 2.31
------

Pro forma net tangible book value per share after the
offering.................................................. 2.04
------
Dilution per share to new investors......................... $ 7.96
======
</TABLE>

The table below sets forth, as of December 31, 1999, the following
information about Phoenix and the new investors:

- the total number of shares of common stock purchased from us;

- the total price paid; and

- the average price paid per share.

The dollar amounts in the table were calculated before deducting the
estimated underwriting discounts, commissions and estimated offering expenses
payable, assuming an initial public offering price of $10.00 per share.

<TABLE>
<CAPTION>
SHARES PURCHASED
ASSUMING NO
EXERCISE OF
UNDERWRITERS' TOTAL
OVERALLOTMENT OPTION CONSIDERATION
--------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- -------- ----------- -------- -----------------------
<S> <C> <C> <C> <C> <C>
Phoenix.................................. 10,400,010 74.8% $38,963,000 52.7% $ 3.75
New investors............................ 3,500,000 25.2 35,000,000 47.3 10.00
---------- ----- ----------- -----
Total.................................... 13,900,010 100.0% $73,963,000 100.0%
========== ===== =========== =====
</TABLE>

18
<PAGE>

If the underwriters' over-allotment option were exercised in full:

- the percentage of the total number of shares of common stock held by
Phoenix would have decreased to 72.1%; and

- the number of shares held by new public investors would have increased to
4,025,000, or approximately 27.9% of the total number of shares of common
stock.

As of December 31, 1999, there were options outstanding to purchase a total
of 2,348,844 shares of our common stock at a weighted average exercise price of
$6.14 per share, of which 364,360 shares were exercisable as of that date. In
addition, Phoenix holds a warrant to purchase 50,000 shares of common stock at
$0.01 per share.

19
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data set forth below should be read in
conjunction with the consolidated financial statements, the notes thereto and
the other information contained in this prospectus. The selected consolidated
balance sheet data as of September 30, 1998 and 1999 and the selected
consolidated statement of operations data for the years ended September 30,
1997, 1998 and 1999 have been derived from the audited consolidated financial
statements of inSilicon appearing elsewhere in this prospectus. The selected
consolidated balance sheet data as of September 30, 1995, 1996 and 1997, the
selected consolidated statement of operations data for the years ended
September 30, 1995 and 1996, and the pro forma net loss and pro forma net loss
per share data for the year ended September 30, 1999, have been derived from
unaudited consolidated financial statements of inSilicon not included in this
prospectus. The statement of operations data for the three months ended
December 31, 1998 and 1999, the balance sheet data as of December 31, 1999 and
the pro forma net loss and pro forma net loss per share data for the three
months ended December 31, 1999 have been derived from our unaudited financial
statements included elsewhere in this prospectus. In the opinion of management,
these unaudited statements have been prepared on the same basis as the audited
financial statements and include all adjustments, consisting only of normal
recurring accruals, that we consider necessary for a fair presentation of our
financial position and results of operations for these periods.

The historical financial information includes the operations of Sand
Microelectronics from September 1998, the date of acquisition. For further
discussion on the comparability of the financial information, see "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
Furthermore, the historical financial information may not be indicative of our
future performance and does not necessarily reflect what our financial position
and results of operations would have been had we been a separate, stand-alone
entity during the periods covered. The historical financial information does not
reflect many significant changes that will occur in our operations and capital
structure as a result of our separation from Phoenix.

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED SEPTEMBER 30, DECEMBER 31,
---------------------------------------------------- -------------------
1995 1996 1997 1998 1999 1998 1999
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
Revenue:
License fees....................................... $ 2,106 $ 2,832 $ 4,272 $ 7,304 $ 14,973 $ 3,677 $ 3,857
Services........................................... -- 498 839 1,488 3,982 1,189 1,400
------- ------- ------- ------- -------- ------- -------
Total revenue.................................... 2,106 3,330 5,111 8,792 18,955 4,866 5,257
Cost of revenue:
License fees....................................... 404 567 972 1,223 1,003 158 553
Services........................................... -- 97 638 734 826 27 208
Amortization of purchased technology............... -- -- -- -- 2,132 533 314
------- ------- ------- ------- -------- ------- -------
Total cost of revenue............................ 404 664 1,610 1,957 3,961 718 1,075
------- ------- ------- ------- -------- ------- -------
Gross margin......................................... 1,702 2,666 3,501 6,835 14,994 4,148 4,182
Operating expenses:
Research and development........................... 798 1,808 2,310 2,947 9,092 2,348 2,007
Sales and marketing................................ 575 1,223 2,128 3,843 6,350 1,622 1,712
General and administrative......................... 281 549 1,049 1,368 3,364 852 731
Amortization of intangible assets.................. -- -- -- -- 2,220 555 555
Stock-based compensation........................... -- -- -- -- -- -- 236
Merger and restructuring charges................... -- 318 -- 5,778 6,050 86 --
------- ------- ------- ------- -------- ------- -------
Total operating expenses......................... 1,654 3,898 5,487 13,936 27,076 5,463 5,241
------- ------- ------- ------- -------- ------- -------
Income (loss) from operations........................ 48 (1,232) (1,986) (7,101) (12,082) (1,315) (1,059)
Income tax benefit................................... -- -- -- -- -- -- (68)
------- ------- ------- ------- -------- ------- -------
Net income (loss).................................... $ 48 $(1,232) $(1,986) $(7,101) $(12,082) $(1,315) $ (991)
======= ======= ======= ======= ======== ======= =======
Pro forma net loss (1)............................... $ (8,566) $ (817)
======== =======
Pro forma net loss per share (2)(3).................. $ (0.82) $ (0.08)
======== =======
Shares used in computing pro forma net loss per share
(2)(3)............................................. 10,400 10,400
======== =======
</TABLE>

20
<PAGE>

<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------------------------------------------- DECEMBER 31,
1995 1996 1997 1998 1999 1999
-------- -------- -------- -------- -------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents........................ $ -- $ -- $ -- $ -- $ -- $ --
Working capital (deficit)........................ (103) (405) 974 (3,340) (393) (1,995)
Total assets..................................... 1,767 1,807 4,505 31,331 24,481 22,023
Long-term obligations, less current portion...... 610 35 15 16 45 --
Total stockholder's net investment/stockholder's
equity......................................... 13 491 3,554 25,412 18,804 13,784
</TABLE>

- ------------
(1) Pro forma net loss gives effect to pro forma income tax credits related to
the reversal of deferred income tax liabilities in connection with the
acquisition of Sand. See Note 8 of Notes to Consolidated Financial
Statements of inSilicon.

(2) See Note 2 of Notes to Consolidated Financial Statements of inSilicon for an
explanation of the method used to determine the number of shares used to
compute pro forma net loss per share.

(3) Assumes the conversion of all shares of Series A Preferred Stock and
excludes a warrant to purchase 50,000 shares of common stock and all
outstanding stock options.

21
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

YOU SHOULD READ THE FOLLOWING DISCUSSION OF OUR FINANCIAL CONDITION AND
RESULTS OF OPERATIONS TOGETHER WITH THE CONSOLIDATED FINANCIAL STATEMENTS AND
THE NOTES THERETO INCLUDED ELSEWHERE IN THIS PROSPECTUS. THIS DISCUSSION
CONTAINS FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISKS AND UNCERTAINTIES. OUR
ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE
FORWARD-LOOKING STATEMENTS FOR MANY REASONS, INCLUDING THE RISKS DESCRIBED IN
THE "RISK FACTORS" AND ELSEWHERE IN THIS PROSPECTUS. SEE "FORWARD-LOOKING
STATEMENTS."

OVERVIEW

We provide communications and connectivity solutions that allow
semiconductor and systems companies to focus their development resources on
their core competencies that differentiate their products. This reduces
development costs and improves time to market in complex system-on-a-chip
designs. By integrating our communications technology into their complex
designs, our customers are better able to narrow the design gap caused by the
difficulty of designing complex semiconductors in the time necessary to get to
market with their products.

We were incorporated in November 1999 as a wholly owned subsidiary of
Phoenix. Before November 1999, we were operated as a division of Phoenix.
Phoenix decided to separate inSilicon's operations into a separate company
because it believed that this would allow inSilicon's management to focus more
sharply on the semiconductor intellectual property business and to make
decisions and to deploy resources more rapidly and operate more efficiently than
we could as part of Phoenix. As a separate company, we also can better attract
and retain employees and management through stock option and other programs tied
to our common stock. In addition, creation of a public market for our common
stock, among other things, increases our equity capital and gives us future
access to public equity markets.

We have incurred operating and net losses for nearly all historical periods.
These losses have primarily resulted from two factors: research and development
and marketing costs incurred in order to generate market share and revenue
growth; and charges for restructurings, merger costs, and amortization of
acquired intangible assets. See further discussion included in "Risk Factors."
The discussion below refers to the historical operating results and activities
and the assets and liabilities assigned to inSilicon by Phoenix included in our
consolidated financial statements.

Phoenix has provided a number of administrative services to us on which we
continue to rely. Our consolidated financial statements were derived from the
historical books and records of Phoenix. The consolidated balance sheets include
all assets and liabilities directly attributable to us. The consolidated
statements of operations include all revenues and expenses attributable to us,
including direct charges and allocated costs for shared facilities, functions
and services used by us and provided by Phoenix. A significant amount of
expenses have been allocated to us based on Phoenix management's estimate of the
proportional benefit of services provided by it. These allocations were
generally based on pro rata personnel, revenue generated or costs incurred. See
Note 5 of Notes to Consolidated Financial Statements of inSilicon. You should
not consider our historical financial statements to be representative of our
operating results, financial position or cash flows to be expected in future
periods or what our results of operations, financial position or cash flows
would have been had inSilicon been a separate, stand-alone entity during the
periods presented.

We have entered into a Services and Cost-Sharing Agreement with Phoenix
effective as of November 30, 1999. This agreement covers various services that
Phoenix provides us and the method by which we and Phoenix share certain costs.
The services include data processing, telecommunications, information technology
support, accounting, financial management, tax preparation, payroll, stockholder
and public relations, legal, human resources administration, procurement, real
estate management and

22
<PAGE>
other administrative functions. The shared costs include the costs of the office
space we occupy at Phoenix's headquarters and insurance premiums. The amount we
will pay will be equal to the aggregate cost to Phoenix and inSilicon of the
services and costs multiplied by a percentage representing the number of our
employees to the total number of Phoenix and inSilicon employees. The Services
and Cost-Sharing Agreement has an initial term that extends to June 30, 2000 for
all services other than accounting and an initial term that extends to
September 30, 2000 with respect to accounting services, although we can
terminate any one or more of the services at any time on 30 days' written
notice. The Services and Cost-Sharing Agreement will be renewed on a
month-to-month basis. Phoenix can terminate after those dates on 30 days'
written notice.

Many Phoenix employees who were seconded to inSilicon in December 1999
exchanged their options to purchase Phoenix common stock for new options to
acquire 1,358,779 shares of inSilicon common stock. On the date of the exchange,
the inSilicon options had the same intrinsic value and ratio of exercise price
to market value of the underlying shares as the Phoenix options exchanged. They
also have equivalent vesting schedules to the Phoenix options exchanged. Also in
December 1999, we granted options to purchase 990,065 additional shares of our
common stock at a weighted average exercise price of $7.33 per share. Because we
granted these options at an exercise price less than the fair market value of
our common stock on the grant date, we recorded deferred stock compensation of
approximately $1.4 million. In addition, we recorded deferred compensation of
$219,000 related to certain performance-based options held by an officer of
inSilicon to acquire 65,170 shares of inSilicon common stock issued in exchange
for similar options granted by Phoenix. This stock compensation will be
amortized by charges to operations over the vesting period of the options,
generally straight-line over four years.

In September 1998, Phoenix acquired Sand Microelectronics, Inc., a leading
supplier of standards-based semiconductor intellectual property. The purchase
price consisted of approximately $18.6 million in cash, 464,000 shares of
Phoenix common stock with a fair value of $2.7 million, approximately 264,000
stock options to purchase Phoenix common stock with a fair value of
$1.6 million issued in exchange for Sand stock options, and up to $3.7 million
in performance incentives through fiscal year 2001 that inSilicon may be
required to pay. This transaction was accounted for using the purchase method of
accounting and therefore Sand's results of operations are not included within
ours before the date of acquisition. Our consolidated balance sheets include the
financial position of Sand as of September 30, 1998, and our consolidated
operating results include the operating results of Sand after the date of
acquisition.

In connection with the acquisition of Sand, we recorded $12.8 million of
capitalized software development costs, $9.6 million of goodwill and $2.8
million of other intangible assets. Amortization of these assets is being
recognized on a straight-line basis over three- to six-year periods. See Note 6
of Notes to Consolidated Financial Statements of inSilicon.

Also in September 1998, Phoenix completed a merger with Award Software
International, Inc. In connection with the Award merger, we acquired the
operations of Award associated with the development and marketing of
standards-based firmware. The Award transaction was accounted for as a
pooling-of-interests, and the firmware operations of Award are therefore
included in our results of operations for all periods presented. These
operations accounted for less than 10% of our revenue and operating costs for
all periods prior to the merger.

23
<PAGE>
RESULTS OF OPERATIONS

The following table sets forth operating data as a percentage of total
revenue:

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
SEPTEMBER 30, DECEMBER 31,
------------------------------------ ----------------------
1997 1998 1999 1998 1999
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenue:
License fees........................................ 83.6% 83.1% 79.0% 75.6% 73.4%
Services............................................ 16.4 16.9 21.0 24.4 26.6
----- ----- ----- ----- -----
Total revenue..................................... 100.0 100.0 100.0 100.0 100.0

Cost of revenue:
License fees........................................ 19.0 13.9 5.3 3.2 10.5
Services............................................ 12.5 8.4 4.4 0.6 4.0
Amortization of purchased technology................ -- -- 11.2 11.0 6.0
----- ----- ----- ----- -----
Total cost of revenue............................. 31.5 22.3 20.9 14.8 20.5
----- ----- ----- ----- -----
Gross margin.......................................... 68.5 77.7 79.1 85.2 79.5

Operating expenses:
Research and development............................ 45.2 33.5 48.0 48.2 38.2
Sales and marketing................................. 41.7 43.7 33.5 33.3 32.6
General and administrative.......................... 20.5 15.6 17.7 17.5 13.8
Amortization of intangible assets................... -- -- 11.7 11.4 10.6
Stock-based compensation............................ -- -- -- -- 4.5
Merger and restructuring charges.................... -- 65.7 31.9 1.8 --
----- ----- ----- ----- -----
Total operating expenses.......................... 107.4 158.5 142.8 112.2 99.7
----- ----- ----- ----- -----
Loss from operations.................................. (38.9) (80.8) (63.7) (27.0) (20.2)
Income tax benefit.................................... -- -- -- -- (1.3)
----- ----- ----- ----- -----
Net loss.............................................. (38.9)% (80.8)% (63.7)% (27.0)% (18.9)%
===== ===== ===== ===== =====
</TABLE>

THREE MONTHS ENDED DECEMBER 31, 1998 AND 1999

REVENUE. We license software under non-cancelable license agreements and
provide related services, including training, non-recurring engineering and
product maintenance. License fee revenues are generally recognized when a
non-cancelable license agreement has been signed, the software has been shipped,
there are no uncertainties surrounding acceptance, the fees are fixed and
determinable, and collection is considered probable. For customer license
agreements which meet these recognition criteria, the portion of the fees
related to software licenses are generally recognized in the current period,
while the portion of the fees related to services is recognized as the services
are performed. When we enter into a license agreement with a customer requiring
significant customization of the software, we recognize revenue related to the
license agreement using contract accounting. Revenue from engineering services
is generally recognized on a time-and-materials basis or when contractual
milestones are met. Maintenance consists of support services and periodic
updates. Revenue from maintenance agreements is recognized ratably over the
maintenance period, which is typically one year.

24
<PAGE>
operations. In December 1998, the American Institute of Certified Public
Accountants issued SOP 98-9, "Modification of SOP 97-2, Software Revenue
Recognition, with Respect to Certain Transactions." SOP 98-9 amends SOP 98-4 to
extend the deferral of the application of certain passages of SOP 97-2 with
respect to the fair value of elements in multiple element arrangements. The
adoption of SOP 98-9 as of October 1, 1999, did not have a material impact on
our consolidated financial statements and results of operations for the three
months ended December 31, 1999, and such adoption is not expected to
significantly impact future periods. However, full implementation guidelines for
SOP 97-2, SOP 98-4 and SOP 98-9 have not been issued. Once available, the
current revenue recognition accounting practices may need to change and such
changes could affect the timing of our future revenue recognition.

Revenue for the three months ended December 31, 1999 was $5.3 million, an
increase of 8.0% from $4.9 million for the comparable period of the prior year.
This increase consists of increases in license fees revenue ($180,000) and
services revenue ($211,000) due to the growing market acceptance of
semiconductor intellectual property.

GROSS MARGIN. Gross margin is revenue less cost of revenue. License fee
cost of revenue consists primarily of amortization of capitalized software
development costs and costs of licensing certain technologies from third-party
developers and publishers. Services cost of revenue includes internal payroll
costs and third-party consulting costs associated with providing non-recurring
engineering services to customers.

Gross margin for the three months ended December 31, 1999 was $4.2 million,
an increase of 0.8% from $4.1 million for the comparable period of the prior
year. This increase was due to increased revenue ($391,000) and decreased
amortization of purchased technology ($219,000), partially offset by increased
license fees cost of revenue ($395,000). The increased license fees cost of
revenue was primarily due to a non-recurring license fee payment related to
third-party developed technology.

RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
consist principally of payroll and related costs associated with the development
of our semiconductor intellectual property and related software, net of amounts
capitalized.

Research and development expenses for the three months ended December 31,
1999 were $2.0 million, a decrease of 14.5% from $2.3 million for the comparable
period of the prior year. This decrease was due to the completion of a
significant outsourced design contract.

SALES AND MARKETING EXPENSES. Sales and marketing expenses consist of costs
related to advertising, public relations, and other marketing, selling and
distribution activities. These costs include direct out-of-pocket and payroll
expenses, and an allocation from Phoenix of costs associated with corporate
marketing programs and field selling activities.

Sales and marketing expenses for the three months ended December 31, 1999
were $1.7 million, an increase of 5.5% from $1.6 million for the comparable
period of the prior year. This increase was due to higher commissions and other
variable compensation costs from the increase in revenue.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
consist of expenditures for executive, accounting, legal, personnel, recruiting
and other administrative functions. These costs were incurred and allocated by
Phoenix for all historical periods.

General and administrative expenses for the three months ended December 31,
1999 were $731,000, a decrease of 14.2% from $852,000 for the comparable period
of the prior year. This decrease was due to lower allocations of administrative
costs from Phoenix as a result of reductions in bad debt expense and other
allocated costs. We anticipate that general and administrative expenses will
increase in future quarters as we begin to incur additional direct
administrative costs.

25
<PAGE>
STOCK-BASED COMPENSATION. Stock-based compensation charges of $236,000 were
recorded in the three months ended December 31, 1999. These charges were due to
stock options granted in December 1999 at an exercise price less than the fair
market value of our common stock on the grant date. The total deferred
stock-based compensation recorded was approximately $1.6 million, and the
remaining compensation will be amortized by charges to operations over the
vesting periods of the options, generally straight-line over four years.

INCOME TAX BENEFIT. A benefit for income taxes of $68,000 was recorded in
the three months ended December 31, 1999. This amount represents the benefit to
be realized from Phoenix for the income tax effect of our losses from November
30, 1999, the date of our capitalization, through December 31, 1999. Prior to
capitalization, we operated as a division of Phoenix, and the net losses we
incurred were included in income tax returns filed or to be filed by Phoenix.
Therefore, no tax benefit prior to November 30, 1999, was recognized.

YEARS ENDED SEPTEMBER 30, 1997, 1998 AND 1999

REVENUE. Our revenue for fiscal years 1997, 1998 and 1999 was $5.1 million,
$8.8 million and $19.0 million, respectively, increases of 72.0% from fiscal
year 1997 to fiscal year 1998 and 115.6% from fiscal year 1998 to fiscal year
1999. These increases consist of increases in license fees revenue
($3.0 million in fiscal year 1998 and $7.7 million in fiscal year 1999) and
services revenue ($649,000 in fiscal year 1998 and $2.5 million in fiscal year
1999). The license fees revenue increases reflects the growing market acceptance
of semiconductor intellectual property, while service revenue increases reflect
the higher maintenance fees generated from our growing installed base of
customers. The increase from fiscal year 1998 to fiscal year 1999 also relates
to the fact that fiscal year 1998 revenue generated by Sand of $6.3 million is
not included in our fiscal year 1998 historical operating results. Fiscal year
1999 results reflect a full year of combined operations following the
acquisition of Sand.

GROSS MARGIN. Gross margin was $3.5 million, $6.8 million and $15.0 million
in fiscal years 1997, 1998 and 1999, respectively, increases of 95.2% from
fiscal year 1997 to fiscal year 1998 and 119.4% from fiscal year 1998 to fiscal
year 1999. The increases in both years were primarily the result of higher
revenue ($3.7 million in fiscal year 1998 and $10.2 million in fiscal year
1999). Partially offsetting the fiscal year 1999 increase was $2.1 million of
amortization of purchased technology from the acquisition of Sand. The increase
from fiscal year 1998 to fiscal year 1999 also relates to the fact that fiscal
year 1998 gross margin of $6.1 million generated by Sand is not included in our
fiscal year 1998 historical operating results.

RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses were
$2.3 million, $2.9 million and $9.1 million in fiscal years 1997, 1998 and 1999,
respectively, increases of 27.6% from fiscal year 1997 to fiscal year 1998 and
208.5% from fiscal year 1998 to fiscal year 1999. The fiscal year 1998 increase
primarily reflects increases in compensation and related benefits ($236,000),
allocations from Phoenix ($260,000), consulting services ($309,000),
firmware-related research and development costs ($274,000) and depreciation
($302,000), partially offset by an increase in research and development cost
capitalized under Statement of Financial Accounting Standards, or SFAS, 86
($818,000). These increases were due to increases in semiconductor intellectual
property development activities. The fiscal year 1999 increase primarily
reflects increases in compensation and related benefits ($2.7 million),
allocations from Phoenix ($464,000), consulting services ($530,000),
depreciation ($553,000) and a reduction of research and development cost
capitalized under SFAS 86 ($1.6 million). The increase from fiscal year 1998 to
fiscal year 1999 also relates to the fact that fiscal year 1998 Sand research
and development expenses of $2.2 million are not included in our fiscal year
1998 historical operating results.

As a percentage of revenue, research and development expenses were 45.2% in
fiscal year 1997, 33.5% in fiscal year 1998 and 48.0% in fiscal year 1999. The
reduced relative research and development

26
<PAGE>
expenses in fiscal year 1998 were due to the higher revenues that year. Because
we completed a significant outsourced design contract and have also reduced the
use of software consultants, we expect that overall research and development
expenditures will decrease in fiscal year 2000. We believe that they will
increase thereafter.

SALES AND MARKETING EXPENSES. Sales and marketing expenses were $2.1
million, $3.8 million and $6.4 million in fiscal years 1997, 1998 and 1999,
respectively, increases of 80.6% from fiscal year 1997 to fiscal year 1998 and
65.2% from fiscal year 1998 to fiscal year 1999. The fiscal year 1998 increase
primarily reflects increases in compensation and related benefits ($353,000),
marketing costs ($317,000), allocations from Phoenix ($484,000) and
firmware-related sales and marketing ($469,000). The fiscal year 1999 increase
primarily reflects increases in compensation and related benefits
($1.5 million) and allocations from Phoenix ($1.9 million), partially offset by
a decrease in marketing costs ($239,000) and firmware-related sales and
marketing costs ($626,000). The increase from fiscal year 1998 to fiscal year
1999 also relates to the fact that fiscal year 1998 Sand sales and marketing
expenses of $1.4 million are not included in our fiscal year 1998 historical
operating results.

As a percentage of revenue, sales and marketing expenses amounted to 41.6%
in fiscal year 1997, 43.7% in fiscal year 1998 and 33.5% in fiscal year 1999.
The decrease in sales and marketing expenses as a percentage of revenue in
fiscal year 1999 is attributable to revenue growth that exceeded spending
growth, as certain sales and marketing costs are fixed.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
were $1.0 million, $1.4 million and $3.4 million in fiscal years 1997, 1998 and
1999, respectively, increases of 30.5% from fiscal year 1997 to fiscal year 1998
and 145.9% from fiscal year 1998 to fiscal year 1999. The increases in both
years included increases in the headcount-based allocations from Phoenix. The
increase from fiscal year 1998 to fiscal year 1999 also relates to the fact that
$793,000 of fiscal year 1998 Sand general and administrative expenses are not
included in our fiscal year 1998 historical operating results.

As a percentage of revenue, general and administrative expenses amounted to
20.5% in fiscal year 1997, 15.6% in fiscal year 1998 and 17.7% in fiscal year
1999.

AMORTIZATION OF INTANGIBLE ASSETS. Amortization of intangible assets
represents the straight-line amortization of goodwill and other intangible
assets associated with the purchase of Sand in September 1998. Goodwill is being
amortized over a six-year period, while other intangible assets are being
amortized over three- to six-year periods.

MERGER AND RESTRUCTURING CHARGES. Merger and restructuring charges
represent out-of-pocket costs and asset write-offs related to merger or
restructuring activities.

In fiscal year 1998, we recorded merger and restructuring charges of $5.8
million related to the acquisition of Sand and the associated integration and
restructuring. In fiscal year 1999, we recorded restructuring charges of
$6.1 million.

Included in these restructuring charges were $1.5 million in fiscal year
1998 and $4.9 million in fiscal year 1999 related to the write-off of
capitalized semiconductor intellectual property development costs that became
redundant as a result of merger or restructuring activities. These development
cost write-offs were calculated for each development project based upon the
excess of carrying value over the difference between the gross expected future
revenue to be generated and the projected future costs of such revenue. The
charges related primarily to projects that were redundant between inSilicon and
Sand, and to reduced revenue expectations due to changing market conditions.

In fiscal year 1998, we recorded an in-process research and development
charge based upon an allocation of a portion of the Sand purchase price to
development projects that were not yet capitalizable under the provisions of
SFAS 86. The determination of the value of the in-process charge associated with
each project, which is the responsibility of inSilicon management, was made by
estimating the future net cash flows from the project, and discounting the net
cash flows to calculate the present value.

27
<PAGE>
The Sand projects under development at the date of acquisition related to
semiconductor intellectual property designed for various communications
standards. The value associated with each project as of the date of acquisition
was almost entirely attributable to the project's discrete development efforts.
The projects are listed below, along with the fair value assigned, anticipated
costs to complete at acquisition and the risk-adjusted discount rate. Each of
the projects was scheduled for completion and release in late fiscal year 1999
or early fiscal year 2000.

<TABLE>
<CAPTION>
COMMUNICATIONS FAIR VALUE COSTS TO DISCOUNT
STANDARD ASSIGNED COMPLETE RATE
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
10/100 Ethernet(1)....................................... $1,223 $ 230 25%
IEEE-1394(1)............................................. 437 1,400 45%
USB(1)................................................... 835 380 30%
VSI/SIP (TymeWare-TM-)(2)................................ 1,025 720 40%
Gigabit Ethernet(3)...................................... 370 480 50%
Cable Modem(4)........................................... 360 690 45%
---------------------
$4,250 $3,900
=====================
</TABLE>

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

(1) These projects were completed in fiscal year 1999.

(2) This project was completed in the first quarter of fiscal year 2000.

(3) This project is under development and currently scheduled for release in
the three months ending June 30, 2000.

(4) This project was cancelled in fiscal year 1999.

If these projects are not successfully developed and/or marketed, future
revenue and profitability of inSilicon may be adversely affected. Additionally,
the value of other intangible assets acquired may become impaired.

Also included in fiscal year 1999 was $1.2 million of severance costs
allocated from Phoenix related to the elimination of nine Phoenix corporate
management positions ($1.1 million) and three inSilicon positions ($90,000). The
severance costs incurred for the Phoenix positions were allocated to inSilicon
based upon relative headcount, consistent with the allocation of other inSilicon
costs incurred by Phoenix.

INCOME TAXES. The net losses we incurred through November 30, 1999 are
attributable to our operations as a division of Phoenix and were or will be
included in income tax returns filed by Phoenix. Because we will not receive any
benefit for our historical operating losses incurred through November 30, 1999,
no income tax benefit has been reflected for the periods presented through
September 30, 1999, and because our operating losses for tax purposes have been
used by Phoenix, we have no net operating loss carryforwards as of November 30,
1999 to apply against future taxable income, if any. We do not believe that the
tax treatment of these historical losses will have a material adverse effect on
our future results of operations or financial condition.

In conjunction with our capitalization as of November 30, 1999, a net
deferred tax liability of $2.7 million was transferred by Phoenix to us,
representing the future tax effect of historical temporary book/tax differences.
Further, we have entered into a tax-sharing agreement with Phoenix under which
we are responsible for federal and state income taxes for the periods subsequent
to November 30, 1999.

QUARTERLY RESULTS OF OPERATIONS

The following tables set forth inSilicon's consolidated statement of
operations data for each of the quarters during the fiscal years ended
September 30, 1998 and 1999, and the three months ended December 31, 1999,
expressed in dollars and as a percentage of total revenue. This unaudited
quarterly information has been prepared on the same basis as inSilicon's audited
consolidated financial statements and, in the opinion of management, reflects
all adjustments (consisting only of normal recurring adjustments) necessary for
a fair presentation of the information for the periods presented. The operating
results for any quarter are not necessarily indicative of results to be
anticipated for any

future period.

28
<PAGE>

<TABLE>
<CAPTION>
QUARTER ENDED
--------------------------------------------------------------------------------------------------
DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31,
1997 1998 1998 1998 1998 1999 1999 1999 1999
-------- -------- -------- --------- -------- -------- -------- --------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenue:
License fees............. $1,544 $2,049 $1,511 $ 2,200 $ 3,677 $ 4,003 $ 3,270 $ 4,023 $ 3,857
Services................. 238 407 432 411 1,189 922 882 989 1,400
------ ------ ------ ------- ------- ------- ------- ------- -------
Total revenue.......... 1,782 2,456 1,943 2,611 4,866 4,925 4,152 5,012 5,257
Cost of revenue:
License fees............. 305 194 372 352 158 274 61 510 553
Services................. 125 252 162 195 27 311 267 221 208
Amortization of purchased
technology............. -- -- -- -- 533 533 533 533 314
------ ------ ------ ------- ------- ------- ------- ------- -------
Total cost of
revenue.............. 430 446 534 547 718 1,118 861 1,264 1,075
------ ------ ------ ------- ------- ------- ------- ------- -------
Gross margin............... 1,352 2,010 1,409 2,064 4,148 3,807 3,291 3,748 4,182

Operating expenses:........
Research and
development............ 545 771 750 881 2,348 2,191 2,335 2,218 2,007
Sales and marketing...... 835 1,027 1,040 942 1,622 1,710 1,475 1,543 1,712
General and
administrative......... 297 338 349 384 852 725 809 978 731
Amortization of
intangible assets...... -- -- -- -- 555 555 555 555 555
Stock-based
compensation........... -- -- -- -- -- -- -- -- 236
Merger and restructuring
charges................ -- -- 50 5,728 86 -- 188 5,776 --
------ ------ ------ ------- ------- ------- ------- ------- -------
Total operating
expenses............. 1,677 2,136 2,189 7,935 5,463 5,181 5,362 11,070 5,241
------ ------ ------ ------- ------- ------- ------- ------- -------
Loss from operations....... (325) (126) (780) (5,871) (1,315) (1,374) (2,071) (7,322) (1,059)
Income tax benefit......... -- -- -- -- -- -- -- -- (68)
------ ------ ------ ------- ------- ------- ------- ------- -------
Net loss................... $ (325) $ (126) $ (780) $(5,871) $(1,315) $(1,374) $(2,071) $(7,322) $ (991)
====== ====== ====== ======= ======= ======= ======= ======= =======
</TABLE>

<TABLE>
<CAPTION>
QUARTER ENDED
--------------------------------------------------------------------------------------------------
DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31,
1997 1998 1998 1998 1998 1999 1999 1999 1999
-------- -------- -------- --------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF TOTAL REVENUE:
Revenue:
License fees............. 86.6% 83.4% 77.8% 84.3% 75.6% 81.3% 78.8% 80.3% 73.4%
Services................. 13.4 16.6 22.2 15.7 24.4 18.7 21.2 19.7 26.6
------ ------ ------ ------- ------- ------- ------- ------- -------
Total revenue.......... 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Cost of revenue:
License fees............. 17.1 7.9 19.1 13.5 3.2 5.6 1.5 10.2 10.5
Services................. 7.0 10.3 8.4 7.4 0.6 6.3 6.4 4.4 4.0
Amortization of purchased
technology............. -- -- -- -- 11.0 10.8 12.8 10.6 6.0
------ ------ ------ ------- ------- ------- ------- ------- -------
Total cost of
revenue.............. 24.1 18.2 27.5 20.9 14.8 22.7 20.7 25.2 20.5
------ ------ ------ ------- ------- ------- ------- ------- -------
Gross margin............... 75.9 81.8 72.5 79.1 85.2 77.3 79.3 74.8 79.5

Operating expenses:
Research and
development............ 30.6 31.3 38.5 33.7 48.2 44.5 56.3 44.3 38.2
Sales and marketing...... 46.9 41.8 53.5 36.1 33.3 34.7 35.5 30.8 32.6
General and
administrative......... 16.6 13.8 18.0 14.7 17.5 14.7 19.5 19.5 13.8
Amortization of
intangible assets...... -- -- -- -- 11.4 11.3 13.4 11.1 10.6
Stock-based
compensation........... -- -- -- -- -- -- -- -- 4.5
Merger and restructuring
charges................ -- -- 2.6 219.4 1.8 -- 4.5 115.2 --
------ ------ ------ ------- ------- ------- ------- ------- -------
Total operating
expenses............. 94.1 86.9 112.6 303.9 112.2 105.2 129.2 220.9 99.7
------ ------ ------ ------- ------- ------- ------- ------- -------
Loss from operations....... (18.2) (5.1) (40.1) (224.8) (27.0) (27.9) (49.9) (146.1) (20.2)
Income tax benefit......... -- -- -- -- -- -- -- -- (1.3)
------ ------ ------ ------- ------- ------- ------- ------- -------
Net loss................... (18.2)% (5.1)% (40.1)% (224.8)% (27.0)% (27.9)% (49.9)% (146.1)% (18.9)%
====== ====== ====== ======= ======= ======= ======= ======= =======
</TABLE>

29
<PAGE>
Our revenue in each of the quarters of fiscal years 1999 and the first
quarter of fiscal year 2000 has increased over the comparable quarter of the
prior year. Revenue substantially increased between the fourth quarter of fiscal
year 1998 and first quarter of fiscal year 1999, primarily due to the inclusion
of Sand's results of operations. Typically, in the second quarter of each fiscal
year, we experience higher than normal revenue due to a number of factors,
including seasonal buying patterns and an increase in the number of design
starts typically associated with the beginning of the year. Over the nine fiscal
quarters, gross margins have also fluctuated due to the timing of
customer-specific development projects and capitalized software development cost
amortization.

Research and development costs increased in the first quarter of fiscal
1999, reflecting the research and development personnel added through the
acquisition of Sand and the initial outsourcing of a significant design
contract. General and administrative expenses have generally shown quarterly
increases, due to increased headcount-based allocations by Phoenix.

Quarterly results in fiscal years 1999 and 2000 also have been affected by
the amortization of goodwill associated with the acquisition of Sand, which has
amounted to $555,000 on a quarterly basis. In addition, in the third and fourth
quarters of fiscal year 1998 and the first, third and fourth quarters in fiscal
year 1999, we have taken one-time charges for employee severance costs and asset
write-offs related to merger and restructuring activities. These charges
amounted to $5.8 million in fiscal year 1998 and $6.1 million in fiscal year
1999.

LIQUIDITY AND CAPITAL RESOURCES

Our principal capital requirements are to fund working capital needs and
capital expenditures to support our revenue growth. Since Phoenix acquired or
introduced the various aspects of our business, Phoenix has performed cash
management services for us and provided the funds necessary to satisfy our
capital requirements. After this offering, Phoenix will no longer be obligated,
and does not intend, to provide us additional funds to finance our operations.

Cash used in operating activities was $2.2 million, $4.3 million and
$2.7 million for fiscal years 1997 and 1999 and the three months ended
December 31, 1998, respectively. Cash provided by operating activities was $3.6
million for fiscal year 1998 and $1.6 million for the three months ended
December 31, 1999. Cash used in operating activities during fiscal year 1997 was
primarily attributable to a net loss and an increase in accounts receivable due
to increased revenue, offset in part by depreciation and amortization. Cash
provided by operating activities during fiscal year 1998 was due to a net loss
and an increase in liabilities due to merger and restructuring activities, net
of charges for in-process research and development, depreciation and
amortization, and write-offs of capitalized software. Cash used in operating
activities during fiscal year 1999 was primarily due to a net loss and an
increase in accounts receivable due to increased revenue, offset in part by
depreciation and amortization and a write-off of capitalized software costs.
Cash used in operating activities in the three months ended December 31, 1998,
was due to an increase in accounts receivable due to increased revenue and
decreases in accounts payable and other accrued liabilities due to a transition
of direct to allocated costs and a payment of restructuring costs. Cash provided
by operating activities in the three months ended December 31, 1999 was due to a
decrease in accounts receivable generated from increased collection efforts.

Cash used in investing activities was $2.8 million, $18.9 million,
$1.1 million, $325,000 and $64,000 for fiscal years 1997, 1998, 1999, and the
three months ended December 31, 1998 and 1999, respectively. Cash used in fiscal
year 1997 and 1999 was primarily attributable to additions to computer software
costs. Cash used in fiscal year 1998 was primarily attributable to additions to
computer software costs, purchases of property and equipment and a
$15.6 million investment in Sand.

Net cash provided by financing activities was $5.0 million for fiscal year
1997, $15.3 million for fiscal year 1998, $5.5 million for fiscal year 1999 and
$3.0 million for the three months ended

30
<PAGE>

December 31, 1998. Net cash used in financing activities was $1.5 million for
the three months ended December 31, 1999. Cash provided by financing activities
in all annual periods and the three months ended December 31, 1998 related
primarily to capital contributions from Phoenix. Net cash used in the three
months ended December 31, 1999 was due to a reduction in Phoenix's net
investment based upon net cash generated by inSilicon operations through
November 30, 1999 as a division of Phoenix.

As a portion of the consideration for the acquisition of Sand, we entered
into an earn-out agreement with the selling stockholders. Under the terms of the
agreement, the selling stockholders may earn additional purchase price
consideration for each of the three years ending September 30, 2002, contingent
upon the financial performance of inSilicon. The maximum contingent
consideration is $3.7 million, of which approximately $1.6 million represents
minimum anticipated payments that were recorded as accrued merger costs. Future
payments are due subsequent to the end of each of the three fiscal years ending
September 2001, and payments in excess of amounts accrued, if any, will be
recorded as additional goodwill and amortized over the remaining life of the
original goodwill recorded. Approximately $867,000 was earned in fiscal year
1999 and will be paid in the second quarter of fiscal year 2000.

We expect our future liquidity and capital requirements to vary greatly from
quarter to quarter, depending on numerous factors, including the cost, timing
and success of product development efforts, the cost and timing of sales and
marketing activities, the extent to which our existing and new technologies gain
market acceptance, the number and complexity of communications standards, the
level and timing of revenues, competing technological and market developments
and the costs of maintaining and enforcing patent claims and other intellectual
property rights. We believe that the net proceeds from this offering, together
with cash generated by our operations, if any, will be sufficient to meet our
operating and capital requirements for at least the next 12 months. Thereafter,
we believe we will be able to raise any additional funds required through public
or private financings, strategic relationships or other arrangements. However,
we cannot be certain that any such financing will be available on acceptable
terms, or at all, and our failure to raise capital when needed could seriously
harm our business. Additional equity financing may be dilutive to the holders of
our common stock, and debt financing, if available, may involve restrictive
covenants. Moreover, strategic relationships, if necessary to raise additional
funds, may require that we relinquish our rights to certain technology.

Effective upon the closing of this offering, we have a secured bank line of
credit with Silicon Valley Bank, which will provide up to $5.0 million in
working capital. Borrowings, if any, will bear interest at prime plus 0.25%.
This line of credit expires in January 2001 and requires us to comply with
various financial covenants, including a minimum quick ratio and a maximum on
aggregate annual losses.

QUANTITATIVE AND QUALITATIVE DISCUSSION OF MARKET INTEREST RATE RISK

INTEREST RATE RISK. As a division of Phoenix, we have not maintained our
own cash investments and have not been subject to significant interest rate
risk. In addition, we do not believe that we will be subject to significant
interest rate risk in future periods.

FOREIGN CURRENCY. Substantially all of our revenues are earned in U.S.
dollars. Operating expenses incurred by our foreign subsidiaries are denominated
in local currencies. Accordingly, we are subject to exposure from movements in
foreign currency exchange rates. To date, the effect of changes in foreign
currency exchange rates on our financial position and operating results have not
been material. We currently do not use financial instruments to hedge foreign
currency risks. We intend to assess the use of financial instruments to hedge
currency exposures on an ongoing basis.

31
<PAGE>
BUSINESS

OVERVIEW

INDUSTRY BACKGROUND

The internet is creating the demand for all digital devices to be connected.
This demand is generating a proliferation of communications standards and
connectivity requirements. Examples of current and emerging standards include
Ethernet, USB, IEEE 1394, PCI, HPNA, DSL and Bluetooth. Products that use these
standards include corporate networks which use Ethernet; printers and scanners
which use USB; digital video cameras which use IEEE 1394; routers, personal
computers and notebooks which use PCI; home networks which use HPNA; high speed
internet modems which use DSL; and next-generation cellular phones which use
Bluetooth.

The proliferation of these products and their many communications standards
is driving the demand for complex semiconductors. Improvements in semiconductor
design and manufacturing processes have enabled the integration of entire
systems, including microprocessor, communications, logic and memory elements, on
a single chip, and creating a system-on-a-chip solution. The following diagram
illustrates a sample system-on-a chip and its major technologies. Each block in
the diagram is a necessary technology used to create the complex
system-on-a-chip. In the diagram below, the upper left block represents the
video processing technology that distinguishes this chip from others and makes
it a set-top box. The upper right block represent the microprocessor and memory
technologies needed for this chip. The four blocks at the bottom represent
communications standards that enable the chip to communicate within the set-top
box and externally with other devices such as a digital video camera or a remote
control.

[DIAGRAM]

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<PAGE>
A designer of a complex system-on-a-chip, such as the one above, needs to
design each technology separately and then must ensure that each communicates
with each other as well as externally with other devices. Due to the complexity
of designing such systems-on-a-chip, the multiplicity of communications
standards and time-to-market requirements, the design capabilities of
semiconductor and systems companies have not kept pace with the increase in the
number of transistors that can be placed on a single chip. Consequently, a
significant "design gap" has developed.

To address the design gap, semiconductor and systems companies are
increasingly licensing proven and reusable intellectual property such as
microprocessor, communications, logic and memory blocks from merchant
semiconductor intellectual property, or SIP, suppliers. The emergence of a
merchant SIP market allows semiconductor and systems companies to create
differentiated products, reduce development costs, increase functionality and
improve time to market. For example, Integrated Circuit Engineering, an
independent research firm, estimates that the merchant SIP market as a whole
will grow from approximately $732 million in 2000 to approximately $1.9 billion
in 2003, which represents a compounded annual growth rate of approximately 37%.

This developing merchant SIP market has three primary segments, as follows:

[DIAGRAM]

Microprocessors act as the central processing unit for the system-on-a-chip.
Communications and connectivity technologies are the primary vehicles that
translate and transport external data streams to and from the microprocessor.
Foundation SIP consists of the underlying logic that is designed to operate in a
specific semiconductor supplier's manufacturing process.

Leaders have emerged in both the microprocessor and foundation market
segments. However, no clear leader has emerged in the communication and
connectivity market segment. Semiconductor and systems companies divert
significant time and resources from their core competencies to address these
needs. Moreover, the wide variety of communications standards that have emerged
due to the specific requirements of various devices makes it increasingly
difficult for these companies to successfully design these crucial
communications technologies for their systems-on-a-chip. Consequently, they are
unable to develop new products in a cost- and time-effective manner.

THE inSILICON SOLUTION

We provide communications and connectivity technologies that allow
semiconductor and systems companies to focus their development resources on
their core competencies that differentiate their

33
<PAGE>
products. This improves time to market and reduces risk and development costs in
the design of complex systems-on-a-chip, thus narrowing the design gap. We
offer:

- PROVEN SOLUTIONS. More than 400 companies have implemented our technology
in more than 500 integrated circuit designs. Millions of individual
products include inSilicon technology. Our technologies have been
implemented in over 25 semiconductor fabrication facilities using some of
the most advanced semiconductor processing technology, including 0.18
micron process technology. The customer- and systems-proven nature of our
technologies makes less likely the substantial interoperability issues and
costly development delays that our customers might experience from
in-house or other third-party designs, thereby reducing risk.

- A BROAD PORTFOLIO OF COMMUNICATIONS TECHNOLOGY FOR A WIDE RANGE OF
STANDARDS. We provide semiconductor and systems companies with a broad
portfolio of communications and connectivity technology. We believe our
semiconductor intellectual property fulfills many of the communications
technology needs of those companies.

- INTEGRATED SILICON SUBSYSTEMS. We recently introduced a modular Virtual
Component Interface, or VCI, architecture known as TymeWare-TM-. This
product integrates a number of our popular communications technologies
into a single communication subsystem. TymeWare can also integrate
customer and third-party VCI-compliant semiconductor intellectual
property. Additionally, we have designed TymeWare so that it interfaces
successfully with the most popular microprocessors using our proprietary
SmartBridge-TM- technology.

- INTEGRATED SOFTWARE SOLUTION. For the USB and IEEE 1394 communications
standards, we have the essential software that allow operating systems to
communicate with our USB and IEEE 1394 technology. By using our software,
semiconductor and systems companies may integrate our technology into
their designs in a cost-effective and timely manner.

- EXTENSIVE TEST AND VERIFICATION TOOLS. We provide our customers with
extensive verification and test modules to ensure the functionality of our
technology within their designs. This allows our customers to implement
our communications technology into their designs with a higher degree of
first time success.

- PORTABILITY AND FLEXIBILITY. We design our semiconductor intellectual
property to be foundry independent and easy to use. We use popular
hardware languages that fit readily into our customers' design flows,
which provides our customers significant manufacturing flexibility. Our
Rapidscript-TM- configuration tool and our adoption of VCI facilitate
customer integration of our semiconductor intellectual property into their
system-on-a-chip designs.

- STANDARDS LEADERSHIP. We were the first to market with merchant
semiconductor intellectual property solutions for many communications
standards including PCI, AGP, USB, IrDA, IEEE 1394 and VCI. We are members
of numerous industry standards bodies, including the IEEE 1394 trade
association, USB Implementator Forum, Infrared Data Association and PCI
SIG Steering Committee. Our involvement with these bodies helps us stay on
the leading edge of evolving standards.

THE INSILICON STRATEGY

Our objective is to be a leading provider of communications and connectivity
technologies that allow semiconductor and systems companies to create
differentiated products, reduce risk and development costs, increase
functionality and improve time to market. Key elements of our strategy include:

- TARGET HIGH GROWTH COMMUNICATIONS APPLICATIONS. We target selected high
growth communications and connectivity protocols. Building upon our
established portfolio of

34
<PAGE>
technology, we plan to develop semiconductor intellectual property for
evolving wireless and wireline communications standards.

- EXPAND OUR PORTFOLIO OF COMMUNICATIONS TECHNOLOGY AND RELATED SOFTWARE. We
intend to continue strengthening and broadening our semiconductor
intellectual property to provide a wide range of new communications
technology together with related analog technology. We expect to expand by
developing products ourselves, acquiring technologies, and partnering with
and licensing from third parties. We also plan to expand our firmware
offerings.

- EXPAND DISTRIBUTION CHANNELS AND BRAND AWARENESS. We intend to expand our
traditional channels of distribution by increasing our direct sales force.
We also intend to increase the number of third-party partner programs with
design houses, application specific integrated circuit, or ASIC,
manufacturers and semiconductor-related tool makers, among others. We
intend to advertise both in print and online to our target audiences
worldwide.

- DEVELOP E-COMMERCE CHANNELS. We allow semiconductor designers to download,
via the internet, encrypted versions of our technology before committing
to a commercial license. Using this method, semiconductor designers can
immediately begin developing their designs using our communications
technology.

MARKETS AND APPLICATIONS

We target high growth markets requiring high performance, quick time to
market, design flexibility and compliance with industry standards. Examples of
the markets and applications using our products include:

- TELECOMMUNICATIONS AND DATA COMMUNICATIONS. Telecommunications and data
communications equipment companies design and manufacture equipment that
must comply with many industry standards. For example, communications
technologies such as Ethernet, PCI and USB are used in network switches
and routers, network adapters, concentrators, public switched telephone
network central office equipment, cable set-top boxes and modems.

- CONSUMER ELECTRONICS. Consumer electronics devices are rapidly converting
to digital methods of signal transmission, processing and storage, and
they require standard connectivity interfaces such as IEEE 1394, IrDA,
USB, and PCI. For example, digital still cameras, digital video cameras,
video games, digital video cassette recorders and DVD players all use such
digital transmission technology. New application of this technology is
anticipated in digital audio equipment and emerging video devices such as
personal video recorders.

- COMPUTERS. Computation equipment such as personal computers, workstations
and servers require implementation of standard interfaces such as PCI,
USB, AGP, IrDA and Ethernet. Our communications technology can be found in
standard products and application specific implementations for these types
of platforms.

- OFFICE AUTOMATION. Computer peripherals require a means of connection to
both their host computer and to larger networks. These connections are
generally made with standard interfaces, including USB, IEEE 1394 and
IrDA. These interface technologies are used in such devices as printers,
scanners, keyboards, display terminals, pointing devices, and mass storage
devices such as hard, floppy and removable media disk drives; and tape and
optical drives.

PRODUCTS

Our communications technology includes semiconductor intellectual property
and related software. Our semiconductor intellectual property includes a wide
variety of standards-based communications technology. Our semiconductor
intellectual property subsystems vertically combine many of these technologies
into functional blocks tailored for ease of use and faster integration into the
customer's

35
<PAGE>
complex designs. Our firmware and drivers provide protocol translation
technologies that allow the operating system to communicate with the hardware.
We provide simulation models, test environments, documentation and training for
many of these technologies.

We supply our technology as Verilog, VHDL or C source code, which are the
primary design languages in use today. Semiconductor and systems companies then
integrate our communications technology into their overall semiconductor designs
using electronic design automation tools, such as those provided by Synopsys and
Cadence. We use a modular approach that emphasizes silicon-proven reusable,
licensable technology and software that are compatible with a wide range of
processor designs.

inSilicon's technologies are outlined in the following chart. Each family
consists of our technologies that relate to a specific industry standard.

<TABLE>
<C> <S> <C>
COMMUNICATIONS
STANDARDS TECHNOLOGY FAMILIES TECHNOLOGY APPLICATION
AGP AGP Master, AGP Host and AGP Accelerated Graphics Port is an interconnect
Simulation Models standard used in high performance graphic cards
for personal computers.
Ethernet 10/100 Ethernet Media Access Ethernet is a widely used local area networking
Controller and Ethernet Simulation communications standard, used in such devices
Model as modems, cable modems, home networking,
routers and switches.
IEEE 1394 1394 Device Controller Link, 1394 IEEE 1394 is a high-speed digital interface
Analog Phy, 1394 Cable Phy and standard used in digital cameras, audio-visual
1394 Simulation Model. disk drives and scanners.
IrDA IrDA and IrDA Simulation Model IrDA is a wireless standard that enables
communication between appliances across short
distances. It is used in mobile phones,
handheld and laptop computers and electronic
games.
PCI PCI Suite and PCI Simulation Model Peripheral Component Interconnect is an
internal communications standard that connects
various elements of computer systems to each
other. It is used in many computers as well as
in embedded systems.
PCI-X PCI-X and PCI-X Simulation Model PCI-X is the latest revision of the PCI
standard. It is used in many high performance
computing applications, including
multiprocessor servers, communications switches
and routers and storage area networks.
USB USB OHCI Host Controller, USB Hub, Universal Serial Bus is a standard designed to
USB Device Controller and simplify connections between personal computers
USBAccess-Registered Trademark- and peripheral devices, such as printers,
System Software digital cameras and scanners. Our
USBAccess-Registered Trademark- software adds
USB capability to computer operating systems,
such as Microsoft's NT.
VCI TymeWare-TM- VCI Virtual Component Interface is a standard
interface that simplifies the mix-and-match of
semiconductor intellectual property. Our
TymeWare-TM- VCI enables integration of
multiple communications standards and includes
interfaces to popular microprocessors.
</TABLE>

36
<PAGE>
RESEARCH AND DEVELOPMENT

We believe that our future success will depend in large part on our ability
to continue developing and acquiring new and enhanced communications technology
and related software in a timely and cost-effective manner. To this end, we have
assembled a team of highly skilled engineers with significant experience in the
design and development of communications technology, simulation and verification
environments and firmware. We participate in the development of new and existing
industry standards.

Our research and development costs were $2.3 million in fiscal year 1997,
$2.9 million in fiscal year 1998, $9.1 million in fiscal year 1999 and
$2.0 million in the three months ended December 31, 1999. In order to maintain a
leading position as a merchant semiconductor intellectual property provider in
emerging communications and connectivity standards, we expect that these costs
will increase in the future. However, because of the conclusion of a significant
outsource design contract and the reduced use of software consultants, we expect
that overall research and development expenditures will decrease in fiscal year
2000. As of December 31, 1999, we had 45 employees engaged in research and
development. We expect to identify and hire additional highly-skilled technical
personnel in fiscal year 2000 to staff our anticipated research and development
activities.

SALES AND MARKETING

We focus our sales efforts in the following areas: direct sales; indirect
sales through application specific integrated circuit, or ASIC, manufacturers,
software resellers and design house programs; and internet distribution.

DIRECT SALES. We maintain a direct worldwide sales network consisting of
our own employees and a limited number of sales representatives and field
applications engineers. The sales force's primary responsibility is to secure
and maintain direct account relationships with the semiconductor and systems
companies of the world. We have over 400 customers for which the sales force
maintains the relationship. We document these relationships with a technology
license agreement for the first purchase. For subsequent purchases from existing
customers, we generally obtain a customer purchase order for the desired
technology under the terms of the license agreement or an amendment to the
license agreement. The sales force is distributed in key geographic areas around
the world with employees in the following locations: Austin; Boston; Irvine; San
Jose; Geneva, Switzerland; London, England; Munich, Germany; and Tokyo, Japan.
In addition, we have a distribution agreement with Phoenix Technologies Ltd.
covering Hong Kong, Japan, Korea, Singapore and Taiwan.

INDIRECT SALES. In addition to the direct sales force, we also use the
following indirect sales channels:

- ASIC MANUFACTURERS. Application specific integrated circuit, or ASIC,
manufacturers provide customized build-to-order chips to their customers.
Several ASIC manufacturers have access to our technology and are able to
license our products directly to their customers and include our
communications technology in their complex semiconductors. We receive
revenues from the ASIC vendors for each of our technologies that is used
in a customer chip.

- SOFTWARE RESELLERS. We also have a group of software resellers whose
primary function is the development and resale of firmware and drivers.
These companies perform both licensing and servicing of firmware customers
for us. We receive revenues from our software resellers for our
technologies that they provide to their customers.

- DESIGN HOUSE PARTNERS. Our design house program provides access to our
communications technologies to enable design houses to develop expertise
with our semiconductor intellectual property. This encourages design
houses to incorporate our semiconductor intellectual property when they
design custom semiconductors for their customers. We receive revenues from
customers who are referred to us by our design center partners.

INTERNET DISTRIBUTION. In addition, we allow semiconductor designers to
download and test, via the internet, encrypted versions of our technology before
committing to any economic arrangement.

37
<PAGE>
CUSTOMERS

We have developed a strong customer base among semiconductor and systems
companies that use our communications technology to design complex
semiconductors. The following chart provides a representative list of our major
customers and some of the applications in each industry in which customers use
our technology. The listed customers are considered representative as they
include our top ten customers for fiscal year 1999, based on revenue, together
with a sample of other customers using our technology in a variety of
applications. The ten customers that generated the highest level of revenues for
us in fiscal year 1999 are indicated in the following chart with an asterisk.

<TABLE>
INDUSTRY EXAMPLE APPLICATION SELECTED CUSTOMERS
<S> <C> <C>
Communications ATM Traffic Processor, Backbone Alcatel
Router, Cable Modem, DSL Modem, Cisco
Encryption Processor, Gigabit hi/fn
Servicer Adapter, Gigabit Maker Communications
Switch, Multilayer NEC*
Communications Switch, Network Telocity*
Adapter, Satellite Receiver and
Terabit Router
Consumer AutoPC, Cell Phone, Digital WebTV (Microsoft)*
Still Camera, Digital Video Motorola*
Camera, Internet Audio, Personal Qualcomm
Digital Assistant, Set-top Box Sharp*
and Smart Card Reader Sony
ST Microelectronics*
Computer Embedded Microprocessor, Laptop AMD
Computer, RISC Processor, Server Fujitsu
Processor Interconnect, Super SMSC*
I/O Chip, Microprocessor and USB Intel
Controller Lucent
Toshiba*
Office Automation 3-D Digital Audio, Floppy Disk Siemens*
Drive, Inkjet Printer, Laser Creative Labs
Printer, Page Scanner, PC Audio Hewlett-Packard*
Card, PC Video Camera and iomega
Removable Disk Drive Yamaha
</TABLE>

PROPRIETARY TECHNOLOGY AND INTELLECTUAL PROPERTY

We rely primarily on a combination of nondisclosure agreements and other
contractual provisions, as well as patent, trademark, trade secret, and
copyright law to protect our proprietary rights. Our general policy has been to
seek patent protection for those inventions and improvements likely to be
incorporated in our products or otherwise expected to be of value. We have an
active program to protect our proprietary technology through the filing of
patents.

As of February 1, 2000, we had applications for six U.S. patents on file
with the United States Patent and Trademark Office, or USPTO, and five draft
applications in the various stages of review in preparation for filing with the
USPTO. To date, the USPTO has issued two patents related to our design
simulation techniques and one patent related to our proprietary asynchronous PCI
design. As of December 31, 1999, we had filed two foreign applications under the
Patent Cooperation Treaty and had national filings in place for those countries
which are not members. We intend to continue to file

38
<PAGE>
patent applications as appropriate in the future. We cannot be sure, however,
that our pending patent applications will be approved, that any issued patents
will protect our intellectual property or will not be challenged by third
parties, or that the patents of others will not seriously harm our ability to do
business. In addition, others may independently develop similar or competing
technology or design around any of our patents.

We protect the source code of our technologies as both trade secrets and
unpublished copyrighted works. We license the source code to our customers for
limited uses and maintain contractual controls over the use of our software.
Wide dissemination of our software makes protection of our proprietary rights
difficult, particularly outside the United States.

We protect our trade secrets and other proprietary information through
nondisclosure agreements with our employees and customers and other security
measures, although others may still gain access to our trade secrets or discover
them independently.

From time to time, third parties, including our competitors, may assert
patent, copyright and other intellectual property rights to technologies that
are important to us. Although we believe that our technologies do not infringe
on any copyright or other proprietary rights of third parties, there are
currently significant legal uncertainties relating to the application of
copyright and patent law in the field of software.

COMPETITION

Our industry is very competitive and is characterized by constant
technological change, rapid rates of product obsolescence, and frequently
emerging new suppliers. Our existing competitors include other merchant
semiconductor intellectual property, or SIP, suppliers, such as the Mentor
Graphics' Inventra Division, Synopsys, Enthink and VAutomation; and suppliers of
application specific integrated circuits, or ASICs, such as LSI Logic, and the
ASIC divisions of IBM, Lucent, Toshiba and NEC. We also compete with the
internal development groups of large, vertically integrated semiconductor and
systems companies, such as Intel, Motorola, Cisco and Hewlett-Packard. In these
companies, SIP developed for an individual project sometimes is subject to
efforts by the company to re-use the SIP in multiple projects. Companies whose
principal business is providing design services as work-for-hire, such as
Intrinsix, Sican and the service division of Cadence, also provide competition.
These companies generally build a portfolio of internally developed SIP over
time and then re-use that SIP as applicable in new service projects in order to
gain productivity leverage. For firmware, our primary competitors are in-house
research and development departments of system companies and small
privately-held companies. As we introduce new SIP technologies, we will face
competition from both existing SIP suppliers and new SIP suppliers that we
anticipate will enter the market. We also may face competition from new
suppliers of technologies based on new or emerging standards.

We believe that important competitive factors in our market include:
performance; functionality; customizability; length of development cycle; price;
compatibility with prevailing design methodologies; interoperability with other
devices or subsystems; ease of use; reputation for successful designs and
installed base; technical service and support; technical training;
configurability of technologies for specific designs; and regional sales and
technical support.

EMPLOYEES

As of December 31, 1999, we had 78 employees, including 19 in sales, eight
in marketing, 45 in research and development and six in general and
administrative functions. We believe that our future success will depend in part
on our continued ability to attract, hire and retain qualified personnel. None
of our employees is represented by a labor union and we believe our employee
relations are good.

39
<PAGE>
LEGAL PROCEEDINGS

inSilicon is not a party to any pending litigation.

FACILITIES

Our executive, administrative and technical offices currently occupy
approximately 22,000 square feet in a building leased by Phoenix in San Jose,
California. We expect in the future to move to separate offices in the Silicon
Valley area. We believe that our current and planned facilities will be
adequate.

40
<PAGE>
MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The names and ages of our existing executive officers and directors as of
March 1, 2000 are set forth below.

<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- ---- -------- -----------
<S> <C> <C>
Wayne C. Cantwell.................. 35 President, Chief Executive Officer and Director
Barry A. Hoberman.................. 41 Executive Vice President and Chief Technical
Officer
William E. Meyer................... 38 Executive Vice President and Chief Financial
Officer
Anand C. Naidu..................... 46 Vice President of Internet Products
Robert G. Nalesnik................. 41 Vice President of Marketing
David J. Power..................... 42 Vice President and General Counsel
Linda V. Moore..................... 53 Secretary
Albert E. Sisto(1)................. 50 Chairman of the Board of Directors
Raymond J. Farnham(1)(2)........... 52 Director
John R. Harding(2)................. 45 Director
E. Thomas Hart(1)(2)............... 58 Director
</TABLE>

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

(1) Expected member of compensation committee

(2) Expected member of audit committee

WAYNE C. CANTWELL has served as our President and Chief Executive Officer
since our incorporation in November 1999 and as a Director of inSilicon since
November 1999. Mr. Cantwell also has served as Senior Vice President and General
Manager of Phoenix's Semiconductor IP Division since July 1999, a position from
which he will resign before the closing of this offering. He was Vice President
and General Manager, Worldwide Field Operations, for Phoenix from November 1998
to July 1999; Vice President and General Manager, North American Operations,
from March 1998 to October 1998; Vice President, Asia/America Operations, from
September 1997 to March 1998; and General Manager, Asia Operations, from
January 1996 to August 1997. Prior to that, Mr. Cantwell held various sales,
sales management and general management roles with Phoenix since joining in
March 1991. Prior to that, Mr. Cantwell held various roles in sales and
engineering at Intel and NEC Technologies. He received a B.S. in Electrical
Engineering from DeVry Institute of Technology.

BARRY A. HOBERMAN has served as our Executive Vice President and Chief
Technical Officer since November 1999. Prior to November 1999, Mr. Hoberman was
Vice President of Phoenix's Semiconductor IP Division from April 1999 to
November 1999, and the Senior Director of the same division from May 1996 to
March 1999. Prior to that, he was Product Line Director at Advanced Micro
Devices, a semiconductor manufacturer, from October 1987 to May 1996. He held
various roles in product management and development at Advanced Micro Devices
and Monolithic Memories. Mr. Hoberman has been issued 13 U.S. patents. He
received a B.S. in Electrical Engineering and a B.S. in Biology from the
Massachusetts Institute of Technology, and has done graduate work in Electrical
Engineering at Stanford University.

WILLIAM E. MEYER has served as our Executive Vice President and Chief
Financial Officer since December 1999. He was also a Director of inSilicon from
our incorporation in November 1999 until February 2000. He was Phoenix's Chief
Financial Officer from June 1999 to December 1999. He served as Phoenix's Vice
President of Finance and Controller from February 1998 to June 1999. Mr. Meyer
was Vice President and Corporate Controller for Microprose, a developer of
entertainment software, from November 1995 to February 1998. He served as Vice
President of Finance and Chief Financial Officer for SBT Accounting Systems, a
developer of accounting software applications, from 1992 to

41
<PAGE>
1995. Mr. Meyer also held various positions with Arthur Andersen. He is a
Certified Public Accountant and received a B.S. in Accounting from California
State University at Sacramento.

ANAND C. NAIDU has served as our Vice President of Internet Products since
November 1999. He has been the Vice President of Internet Products of Phoenix's
Semiconductor IP Division since October 1999, was the Senior Director of
Worldwide Sales in Phoenix's Semiconductor IP Division from July 1999 to
October 1999; and Director of Business Development from September 1998 to
July 1999. Mr. Naidu was a co-founder of Sand in 1991 and served as Sand's
President and Chief Executive Officer until Phoenix acquired Sand in
September 1998. Prior to founding Sand, he was President of Silicon Platforms,
which was acquired by S3. Mr. Naidu also held key marketing and development
management positions at Western Digital, STC, Intersil, and Rolm. He holds a
B.S. and an M.S. in Electrical Engineering from the University of California at
Berkeley and an M.B.A from the University of Santa Clara.

ROBERT G. NALESNIK has served as our Vice President of Marketing since
November 1999 and had held the same position at Phoenix's Semiconductor IP
Division since October 1999. Prior to that, he was Director of Marketing of the
Semiconductor IP Division since joining Phoenix in September 1998. He was Vice
President of Marketing at Sand from March 1998 until Phoenix acquired it in
September 1998. Prior to joining Sand, he was Director of Product Marketing at
Actel, a semiconductor manufacturer, from October 1995 to March 1998. Prior to
that, he spent five years at VLSI Technology, a semiconductor manufacturer, in
various marketing and engineering management roles. He has also held management
positions at Compass Design Automation and Fairchild Semiconductor.
Mr. Nalesnik holds a B.S. in Electrical Engineering from the Georgia Institute
of Technology.

DAVID J. POWER has served as Vice President and General Counsel of inSilicon
since November 1999. He was previously the Associate General Counsel for
Phoenix, overseeing the legal functions of the Semiconductor IP Division since
October 1997. Prior to coming to Phoenix, Mr. Power held corporate counsel
positions with CIDCO from July 1996 to October 1997, with Cymer Laser
Technologies from August 1995 through July 1996 and with Varian Associates from
January 1994 through August 1995. Mr. Power specializes in intellectual property
and technology licensing law. He received a B.S. in Engineering from Arizona
State University and a J.D. from the John Marshall Law School. We expect that
Mr. Power will become our Secretary immediately before the closing of this
offering.

LINDA V. MOORE has been Secretary of inSilicon since November 1999. She has
served as Phoenix's Secretary and General Counsel since November 1999. Prior to
joining us, she was Vice President and General Counsel of Nhancement
Technologies, a distributor of computer-telephony products, from September 1998
to August 1999. She served as General Counsel and Secretary of Jabil Circuit, an
electronics contract manufacturer, from 1989 to 1998. She has also served as a
consultant to internet start-ups and has six years experience in equipment
leasing. Ms. Moore received a B.A. from the University of Michigan, an M.A. from
Eastern Michigan University and a J.D. from the Detroit College of Law. We
expect that Ms. Moore will resign as our Secretary immediately before the
closing of this offering.

ALBERT E. SISTO has served as a Director of inSilicon since our
incorporation in November 1999 and as the Chairman of our Board of Directors
since December 1999. Since June 1999, he has served as Phoenix's Chief Executive
Officer. Mr. Sisto served as the Chief Operating Officer of RSA Data Security, a
subsidiary of Security Dynamics Technologies, providing encryption technology,
from October 1997 to February 1999. He was Chairman, President and Chief
Executive Officer of Documagix, a software developer of document imaging
software, from September 1994 through October 1997. Mr. Sisto is a Director of
hi/fn, efax.com, Insignia Solutions and Tekgraf, all publicly

42
<PAGE>

traded technology companies. Mr. Sisto holds a B.E. in Engineering from the
Stevens Institute of Technology.

JOHN R. HARDING has served as a Director of inSilicon since February 2000.
Since January 2000, he has served as Chairman of the Board of Directors and
Chief Executive Officer of The Dorset Group, a venture management and investment
firm. Mr. Harding served as Chief Executive Officer and as a Director of Cadence
Design Systems, a provider of software and services for electronic design, from
October 1997 through May 1999. From May 1997 through October 1997, he served as
Cadence's Senior Vice President of the Strategic Business Group. Mr. Harding
served as President and Chief Executive Officer of Cooper & Chyan
Technology, Inc., an electronic design automation software tool company, from
December 1994 until its merger with Cadence in May 1997. Prior to that,
Mr. Harding served as Executive Vice President of Zycad Corporation, an
electronic design automation company, from January 1992 through October 1994.
Mr. Harding is Chairman of the Board of Directors of SafeCorp.com, an
information security consulting firm. He is a Director of Zland.com, a provider
of internet-based applications for businesses. Mr. Harding holds a B.A. in
Economics and Chemistry from Drew University, where he is a member of the Board
of Trustees.

RAYMOND J. FARNHAM has served as a Director of inSilicon since
February 2000. Since October 1998, he has served as Chairman of the Board of
Directors, President and Chief Executive Officer of hi/fn, a designer and
developer of semiconductor devices and software. He served as Executive Vice
President of Integrated Device Technology, a supplier of microprocessor, logic
and memory integrated circuits, from July 1996 through July 1998. He worked as
an independent consultant from February 1995 through July 1996. Mr. Farnham was
President and Chief Executive Officer of OPTi, a fabless semiconductor company,
from February 1994 through February 1995. From 1972 through 1993, he had
numerous management responsibilities at National Semiconductor Corp., with his
final position being President of the Communication and Computing Group from
1991 through 1993. He received a B.S. in Electrical Engineering from
Pennsylvania State University.

E. THOMAS HART has served as a Director of inSilicon since February 2000.
Since June 1994, Mr. Hart has served as QuickLogic's President and Chief
Executive Officer. Prior to joining QuickLogic, Mr. Hart was Vice President and
General Manager of the Advanced Networks Division at National Semiconductor, a
semiconductor manufacturing company, from September 1992 to June 1994. Prior to
joining National Semiconductor, he was a private consultant with Hart Weston
International, a technology-based management consulting firm, from
February 1986 to September 1992. Mr. Hart holds a B.S. in Electrical Engineering
from the University of Washington.

There are no family relationships among any of our directors or executive
officers.

BOARD COMPOSITION

We currently have five directors, one of whom is an officer of Phoenix, and
one of whom is an officer of inSilicon.

After this offering, our board of directors will be divided into three
classes of directors serving staggered three-year terms. As a result, we will
elect only one class of directors at each annual meeting of our stockholders. We
expect the terms of office of the directors will expire as follows: Mr. Hart at
the annual meeting of stockholders in 2001, Mr. Farnham and Mr. Cantwell at the
annual meeting of stockholders in 2002 and Mr. Sisto and Mr. Harding at the
annual meeting of stockholders in 2003. For at least as long as Phoenix
continues to own more than 50% of our common stock, Phoenix will have the
ability to change the size and composition of our board of directors.

43
<PAGE>
BOARD COMMITTEES

Our board of directors expects to establish two committees: an audit
committee and a compensation committee. The responsibilities of the audit
committee are expected to include recommending to the board of directors the
independent public accountants to conduct the annual audit of our accounts;
reviewing the proposed scope of the audit and approving the audit fees to be
paid; and reviewing the adequacy and effectiveness of our internal auditing,
accounting and financial controls with the independent public accountants and
our financial and accounting staff. The audit committee will be comprised of the
three independent directors. The responsibilities of the compensation committee
are expected to include determining the compensation and benefits of inSilicon
officers, establishing and reviewing general policies relating to the
compensation and benefits of inSilicon officers and employees and administering
the stock option plans. We expect that the compensation committee will be
comprised of Mr. Sisto, Mr. Hart and Mr. Farnham.

The Board may, from time to time, establish other committees.

DIRECTOR COMPENSATION

We will pay to directors who are not officers or employees of inSilicon or
any of its affiliates $1,000 per board meeting and $500 for committee meetings.
We have also granted to each non-employee director options to purchase 20,000
shares of our common stock. Each person who becomes a non-employee director
after the completion of this offering will receive an initial grant of options
to purchase 20,000 shares of our common stock upon appointment or election under
the 2000 stock plan. The 2000 stock plan also provides for annual grants of
7,500 shares of our common stock to each non-employee director. Members of the
audit and compensation committees will also receive an additional 5,000 shares
upon appointment to that committee. We will also reimburse our directors for
reasonable expenses incurred in attending board of directors or committee
meetings.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

None of the expected members of the compensation committee of our board of
directors is or was an officer or employee of inSilicon. None of our executive
officers serves as a member of the board of directors or compensation committee
of any other public company. See "Related Party Transactions" for a description
of transactions between us and entities affiliated with prospective members of
the compensation committee.

BENEFIT PLANS

1999 STOCK OPTION PLAN. Our 1999 stock option plan was adopted by our board
of directors and approved by our stockholder in December 1999. Our 1999 stock
option plan provides for the granting to employees of incentive stock options
within the meaning of Section 422 of the Internal Revenue Code and for the
granting to employees, directors and consultants of nonstatutory stock options.
A total of 2,700,000 shares has been reserved for issuance under the 1999 stock
option plan. As of March 15, 2000, options to purchase an aggregate of 2,546,567
shares of our common stock were outstanding under our 1999 stock option plan.
Our board of directors has determined that no further options will be granted
under the 1999 stock option plan after this offering. The 1999 stock option plan
provides that in the event of our acquisition by another corporation, each
outstanding option may be assumed or substituted for by the successor
corporation. If outstanding options are not assumed or substituted for in
certain acquisitions, they will vest prior to the consummation of the
transaction.

2000 STOCK PLAN. Our 2000 stock plan was adopted by our board of directors
and approved by our stockholder in January 2000. The 2000 stock plan will become
effective when the underwriting agreement for this offering is signed. At that
time, all outstanding options under our 1999 stock option plan will be
administered under the 2000 stock plan but will continue to be governed by their
existing terms.

44
<PAGE>
The 2000 stock plan provides for the discretionary grant of incentive stock
options to employees, including officers and employee directors, and for the
discretionary grant of nonstatutory stock options and stock purchase rights to
employees, directors and consultants. The 2000 stock plan also provides for the
periodic automatic grant to non-employee directors of nonstatutory stock
options.

The total shares of common stock currently reserved for issuance under the
2000 stock plan equals 1,300,000 shares of common stock plus the number of
shares available for grant pursuant to options under the 1999 stock option plan
as of the date the 2000 option plan became effective.

In addition, commencing on the first day of our next fiscal year, shares
will be added to the 2000 stock plan annually equal to the lesser of (a) 5% of
the outstanding shares on the last day of the prior fiscal year and
(b) 2,000,000 shares.

Unless terminated sooner, the 2000 stock plan will terminate automatically
10 years from its effective date.

The administrator of our 2000 stock plan generally has the power to
determine:

- the terms of the options or stock purchase rights granted, including the
exercise price of the option or restricted stock grant;

- the number of shares subject to each option or restricted stock grant;

- the exercisability of each option or stock purchase right; and

- the form of consideration payable upon the exercise of each option or
stock purchase right.

The board is the administrator of the 2000 stock plan's automatic
non-employee director grant program. Under that program, non-employee directors
who first join our board after the date of this prospectus will receive a grant
of an option to purchase 20,000 shares when they become non-employee directors.
In addition, all non-employee directors will receive a grant of an option to
purchase 7,500 shares at each subsequent annual meeting, provided they continue
to serve after such annual meeting. Directors also receive an additional
one-time, automatic grant of an option to purchase 5,000 shares upon appointment
to the audit and compensation committees. These options vest quarterly at a rate
of 6.25% per quarter from the date of grant, provided the director continues to
serve as a director on the vesting date. These options also provide for
accelerated vesting in the event of certain changes of control.

In addition, the board has the authority to amend, suspend or terminate the
2000 stock plan, so long as no such action affects any shares of common stock
previously issued and sold or any option previously granted under the plan. The
maximum number of option shares each optionee may be granted during a fiscal
year is 1,000,000 shares. However, in connection with an optionee's initial
service with us, such optionee may be granted up to a total of 2,000,000 shares
during the initial fiscal year of service. Restricted stock grants are limited
to 200,000 shares in any fiscal year.

Options and restricted stock granted under our 2000 stock plan are generally
not transferable by the optionee, and each option and stock purchase right is
exercisable during the lifetime of the optionee and only by such optionee.
Options granted under the 2000 stock plan must generally be exercised within
three months after the end of optionee's status as an employee, director or
consultant of inSilicon, or within twelve months after such optionee's
termination by death or disability, but in no event later than the expiration of
the option's term. However, the compensation committee will have the power under
the 2000 stock plan to vary these terms, except for grants under the
non-employee director grant program.

In the case of restricted stock, unless the administrator determines
otherwise, the restricted stock purchase agreement shall grant inSilicon a
repurchase option exercisable after the purchaser's employment or consulting
relationship with inSilicon has ended for any reason, including death or
disability. The purchase price for shares repurchased pursuant to the restricted
stock purchase agreement shall be the original price paid by the purchaser and
may be paid by cancellation of any

45
<PAGE>
indebtedness of the purchaser to inSilicon. The repurchase option shall lapse at
a rate determined by the administrator.

The exercise price of all incentive stock options and nonstatutory stock
options granted automatically to non-employee directors must be at least equal
to the fair market value of the common stock on the date of grant. The exercise
price of other nonstatutory stock options and stock purchase rights granted
under the 2000 stock plan is determined by the administrator, but with respect
to nonstatutory stock options intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Internal Revenue Code,
the exercise price must be at least equal to the fair market value of our common
stock on the date of grant. With respect to any participant who owns stock
possessing more than 10% of the voting power of all classes of our outstanding
capital stock, the exercise price of any incentive stock option granted must at
least equal 110% of the fair market value on the grant date and the term of such
incentive stock option must not exceed five years. The term of all other options
granted under the 2000 stock plan may not exceed ten years.

The 2000 stock plan provides that in the event that we are acquired by
another corporation, or sell substantially all of our assets, each option and
stock purchase right may be assumed or an equivalent option substituted for by
the successor corporation. If the outstanding options and stock purchase rights
are not assumed or substituted for by the successor corporation, the option
holder will fully vest in and have the right to exercise the option or stock
purchase right as to all of the optioned stock, including shares as to which the
holder would not otherwise be entitled to exercise.

2000 EMPLOYEE STOCK PURCHASE PLAN. Our 2000 employee stock purchase plan
was adopted by our board of directors and approved by our stockholder in
January 2000. A total of 250,000 shares of our common stock has been reserved
for issuance under the 2000 purchase plan, plus annual increases equal to the
lesser of (a) 0.3125% of the outstanding shares on the last day of the prior
fiscal year and (b) 100,000 shares.

The 2000 purchase plan, which is intended to qualify under Section 423 of
the Internal Revenue Code, contains consecutive, overlapping, twenty-four month
offering periods. Each offering period includes four six-month purchase periods.
The offering periods generally start on the first trading day on or after
June 1 and December 1 of each year, except for the first such offering period
which commences on the first trading day on or after the effective date of this
offering and ends on the last trading day on or before May 31, 2000. The board
has the power to change the duration of the offering periods.

Employees of inSilicon or of any participating subsidiaries are eligible to
participate. However, employees may not be granted an option to purchase stock
under the 2000 purchase plan if they either:

- immediately after grant, own stock possessing 5% or more of the total
combined voting power or value of all classes of our capital stock; or

- hold rights to purchase stock under our employee stock purchase plan which
accrue at a rate which exceeds $25,000 worth of stock for each calendar
year.

The 2000 purchase plan permits participants to purchase our common stock
through payroll deductions of up to 10% of their total compensation, including
bonuses and commissions. The maximum number of shares a participant may purchase
during a single purchase period is 10,000 shares.

Amounts deducted and accumulated by the participant are used to purchase
shares of common stock at the end of each purchase period. The price of stock
purchased under the 2000 purchase plan is generally 85% of the lower of the fair
market value of the common stock either at the beginning of the offering period
or at the end of the purchase period.

In the event the fair market value at the end of a purchase period is less
than the fair market value at the beginning of the offering period, the
participants will be withdrawn from the current

46
<PAGE>
offering period following exercise and automatically re-enrolled in a new
offering period. Participants may end their participation at any time during an
offering period, and they will be paid their payroll deductions to date.
Participation ends automatically upon termination of employment with inSilicon.

Rights granted under the 2000 purchase plan are not transferable by a
participant other than upon death or by a special determination by the plan
administrator. Each outstanding option under the 2000 purchase plan will be
subject to the acquisition agreement in the event we merge with or into another
corporation or sell substantially all of our assets.

Our board of directors has the authority to amend or terminate the 2000
purchase plan, except that no such action may adversely affect any outstanding
rights to purchase stock under the 2000 purchase plan, provided that the board
of directors may terminate an offering period on any exercise date if the board
determines that the termination of the 2000 purchase plan is in the best
interests of inSilicon and its stockholders. Notwithstanding anything to the
contrary, the board of directors may in its sole discretion amend the 2000
purchase plan to the extent necessary and desirable to avoid unfavorable
financial accounting consequences by altering the purchase price for any
offering period, shortening any offering period or allocating remaining shares
among the participants. Unless earlier terminated by our board of directors, the
2000 purchase plan will terminate automatically ten years from its effective
date.

EXECUTIVE COMPENSATION

The following table summarizes the compensation of inSilicon's Chief
Executive Officer and the other four most highly compensated executive officers
based on employment with Phoenix whose aggregate compensation exceeded $100,000
during the year ended September 30, 1999. We refer to these individuals as the
"named executive officers" elsewhere in this prospectus.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION SECURITIES
----------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION(S) SALARY(1) BONUS(1) OPTIONS(2) COMPENSATION(3)
- ------------------------------ ------------- ------------- ------------- ----------------
<S> <C> <C> <C> <C>
Wayne C. Cantwell, President and Chief
Executive Officer......................... $199,166 $94,262 66,000 $ 1,000
Barry A. Hoberman, Executive Vice President
and Chief Technical Officer............... 169,125 32,918 25,996 1,000
William E. Meyer, Executive Vice President
and Chief Financial Officer............... 141,667 30,060 75,000 1,000
Anand C. Naidu, Vice President.............. 132,275 17,272 40,000 1,000
Robert G. Nalesnik, Vice President.......... 140,400 19,658 40,000 59,000(4)
</TABLE>

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

(1) Represents salary and bonus paid by Phoenix to the named executive officers
for their services to Phoenix while employed at Phoenix.

(2) Represents options to purchase Phoenix common stock granted by Phoenix. The
named executive officers have exchanged these Phoenix options for options to
purchase inSilicon common stock at a ratio of 1.862 shares of inSilicon
common stock for each share of Phoenix common stock, except for Mr. Naidu
and Mr. Nalesnik, each of whom did not exchange their options with respect
to 2,500 shares of Phoenix common stock.

(3) Consists of Phoenix's contribution to the individual's 401(k) savings
account while employed at Phoenix.

(4) Includes $58,000 paid in October 1999 that is the first of three annual
installments of a $174,000 retention bonus.

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<PAGE>
FUTURE COMPENSATION

Since January 1, 2000, our officers and other employees of inSilicon have
been compensated by inSilicon. However, through February 2000, they will
continue to participate in Phoenix's 401(k) savings plan, and at least until
January 1, 2002, they will continue to participate in Phoenix's welfare benefit
plans at inSilicon's expense. Phoenix employees who were seconded to inSilicon
in December 1999 had the opportunity to exchange their unexercised options to
purchase Phoenix common stock for new options to acquire inSilicon common stock.
On the date of the exchange, the inSilicon options had the same intrinsic value
and ratio of exercise price to market value of the underlying shares as the
Phoenix options exchanged. They also have equivalent vesting schedules to the
Phoenix options exchanged. For information with respect to the exchange of
options by the named executive officers, see "Related Party Transactions."

OPTION GRANTS

The following table provides summary information regarding options to
purchase Phoenix common stock that were granted by Phoenix to the named
executive officers during the fiscal year ended September 30, 1999.

OPTION GRANTS IN FISCAL YEAR 1999

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------------------------- ANNUAL RATES OF
NUMBER OF PERCENT OF MARKET STOCK PRICE
SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR ON DATE OPTION TERM(2)
OPTIONS EMPLOYEES IN BASE PRICE OF GRANT EXPIRATION --------------------------------
NAME GRANTED(1) FISCAL YEAR ($/SHARE) ($/SHARE) DATE 0%($) 5%($) 10%($)
- ---- ----------- ------------- ------------ --------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Wayne C. Cantwell...... 35,000(3) 1.1% $ 9.3000 $17.1880 07/01/09 $276,080 $654,410 $1,234,844
Wayne C. Cantwell...... 31,000 1.0 8.5000 8.5000 03/31/09 NA 165,714 419,951
Barry A. Hoberman...... 25,996 0.8 8.5000 8.5000 04/16/09 NA 138,964 352,163
William E. Meyer....... 45,000 1.4 11.1250 11.1250 06/17/09 NA 91,976 233,085
William E. Meyer....... 10,000 0.3 10.8130 10.8130 05/28/09 NA 68,002 172,331
William E. Meyer....... 20,000 0.6 7.3125 7.3125 02/26/09 NA 314,840 797,867
Anand C. Naidu......... 40,000 1.3 11.1875 11.1875 09/30/09 NA 281,430 713,200
Robert G. Nalesnik..... 40,000 1.3 11.1875 11.1875 09/30/09 NA 281,430 713,200
</TABLE>

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

(1) In the fiscal year 1999, Phoenix granted options to purchase an aggregate of
3,279,370 shares of Phoenix common stock. Unless otherwise stated, options
to purchase shares vest quarterly at the rate of 6.25% per quarter. Options
have a term of ten years but may terminate before their expiration dates if
the optionee's status as an employee is terminated or upon the optionee's
death or disability. Except as set forth in Note 2 to the Summary
Compensation Table, all of these options were exchanged for options to
purchase inSilicon common stock that have substantially the same terms and
conditions.

(2) 0%, 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by rules of the Securities and Exchange Commission and do not
represent our estimate or projection of our or Phoenix's future common stock
prices. The potential realizable values are calculated by assuming the
Exercise or Base Price shown on the table, that the common stock appreciates
at the indicated rate for the entire term of the option and that the option
is exercised at the exercise price and sold on the last day of the option
term at the appreciated price.

(3) 22,500 of these shares were subject to an accelerated vesting schedule,
based upon Mr. Cantwell's achievement of certain quarterly
management-related goals, of which options to purchase 15,000 shares had
vested as of December 31, 1999.

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<PAGE>
OPTION EXERCISES AND HOLDINGS

The following table provides summary information regarding options to
purchase Phoenix common stock that were exercised by the named executive
officers during the fiscal year ended September 30, 1999 and the number and
value of unexercised in the money Phoenix options held by the named executive
officers at September 30, 1999.

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

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR-END(1)(2) AT FISCAL YEAR-END(3)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Wayne C. Cantwell............... -- -- 58,362 86,638 $141,857 $213,442
Barry A. Hoberman............... -- -- 50,064 38,432 16,360 100,233
William E. Meyer................ -- -- 11,813 79,188 11,488 78,132
Anand C. Naidu.................. -- -- -- 40,000 -- --
Robert G. Nalesnik.............. -- -- 20,926 60,924 212,347 212,326
</TABLE>

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

(1) These options were granted on various dates during fiscal years 1991 through
1999 and generally vest quarterly at the rate of 6.25% per quarter. Except
for an option of Mr. Naidu to purchase 2,500 shares and options of
Mr. Nalesnik to purchase 23,426 shares, all of these options were exchanged
for options to purchase inSilicon common stock.

(2) Stock option exercise prices ranged from $1.0400 per share to $19.8750 per
share.

(3) The amounts in this column reflect the difference between the closing market
price of Phoenix's common stock on September 30, 1999, which was $11.1875,
and the option exercise price.

STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

For a table setting forth the number of shares of inSilicon common stock
owned by Phoenix and each of our directors and named executive officers, see
"Principal Stockholder" in this prosepctus.

RELATED TRANSACTIONS WITH PHOENIX

SAND ACQUISITION. On September 24, 1998, Phoenix acquired Sand for
approximately $18.6 million in cash and 464,000 shares of Phoenix common stock.
The Agreement and Plan of Reorganization which governed the acquisition also
provided for contingent payments of up to $3.7 million, based on a formula tied
to the actual net revenues and operating earnings of the Semiconductor IP
Division unit of which Sand became a part. Mr. Naidu was one of the three
majority stockholders of Sand, and as a result of the acquisition, he received
32.73% of the initial consideration. He will also receive the same percentage of
any future contingent payments. Through December 31, 1999, no contingent
payments have been made. Phoenix also assumed Sand's stock options, including
Mr. Nalesnik's Sand stock options which were converted to the right to purchase
41,850 shares of Phoenix common stock.

Also in connection with the acquisition, Sand assigned to Phoenix an
Independent Contractor Agreement, dated March 15, 1996, between Sand and Sand
Microelectronics Pvt. Ltd., India, or Sand India, which allows Phoenix to obtain
consulting services for hardware and software development and related fields of
technical computer expertise from Sand India from time to time. Mr. Naidu owns
approximately one-third of the shares of Sand India. During fiscal year 1999,
Phoenix paid or accrued payments to Sand India of $365,000 for services under
the Independent Contractor Agreement.

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The Agreement and Plan of Reorganization also required Mr. Naidu and the
other majority stockholders of Sand to enter into worldwide non-compete
agreements which are effective for three years after the acquisition regardless
of the status of their employment with Phoenix. Each non-compete agreement
provides that these individuals will not compete with Phoenix in the business
area in which Sand was engaged, including semiconductor intellectual property
and models and test environments based on interconnect standards.

In addition, as an incentive to encourage long-term service from certain
Sand personnel who remained in Phoenix's employ after the acquisition, Phoenix
established a retention bonus program. Under this program, Mr. Nalesnik is
entitled to receive up to $174,000 in three equal annual installments commencing
in fiscal year 1999 if he remains an employee of Phoenix. Phoenix paid
Mr. Nalesnik $58,000 as a retention bonus under this program related to fiscal
year 1999.

Phoenix has assigned the Agreement and Plan of Reorganization, the
Independent Contractor Agreement with Sand India, the non-compete agreements and
the retention bonus program agreements to inSilicon.

TECHNOLOGY LICENSE AGREEMENTS WITH HI/FN. Mr. Farnham, who is a director of
inSilicon, is chairman of the board of directors, president and chief executive
officer of hi/fn. Mr. Sisto, president and the chairman of the board of
directors of Phoenix and a director of inSilicon, is a director of hi/fn. During
fiscal years 1998 and 1999, Phoenix licensed to hi/fn PCI cores for $59,250 and
$89,750, respectively. This license agreement has been assigned to inSilicon.

INCENTIVE AND SEVERANCE AGREEMENT WITH MR. CANTWELL. In July 1999, Phoenix
entered into an Incentive and Severance Agreement with Mr. Cantwell. This
agreement provided an initial base compensation of $200,000 plus bonus and
benefits. In addition, the agreement provided that as a retention and
performance incentive, Phoenix grant to Mr. Cantwell a non-qualified option to
purchase 22,500 shares of Phoenix common stock at an exercise price of $9.30 per
share, vesting in three quarterly installments upon the fulfillment of various
objectives of which options to purchase 15,000 shares of Phoenix common stock
have vested. It also granted him options to purchase 12,500 shares of Phoenix
common stock at $9.30 per share that will immediately vest if Phoenix's
Semiconductor IP Division is no longer majority owned by Phoenix. On the date of
these grants, the market price of Phoenix common stock was $17.1875 per share.
If Mr. Cantwell's employment is terminated other than for cause or in a
constructive termination, the agreement also provides severance payments,
including continued salary for 12 months with continued option vesting during
such period. Benefits include participation in executive compensation programs
and company paid post-termination health insurance. This agreement has been
replaced with an agreement between Mr. Cantwell and inSilicon. See "Related
Party Transactions--Severance Agreements with inSilicon Named Executive
Officers."

ARRANGEMENTS BETWEEN INSILICON CORPORATION AND PHOENIX TECHNOLOGIES LTD.

We also have entered into various agreements with Phoenix including:

- a Contribution Agreement;

- an Initial Public Offering Agreement;

- a Services and Cost-Sharing Agreement;

- an Employee Matters Agreement;

- a Tax-Sharing Agreement;

- a Registration Rights Agreement; and

- a Technology Distributor Agreement.

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This description summarizes the material terms of these agreements. You
should read the full text of these agreements, which have been filed with the
Securities and Exchange Commission as exhibits to the registration statement of
which this prospectus is a part.

After this offering, any amendments to these agreements must be approved by
a majority of our independent directors.

CONTRIBUTION AGREEMENT

The separation was completed effective as of November 30, 1999. The
Contribution Agreement governs the terms of the transfer to us of assets and
liabilities from Phoenix. Some aspects of the contribution are also clarified in
the other agreements mentioned above. To the extent that the terms of any other
agreements conflict with the Contribution Agreement, the terms of the other
agreements govern.

Pursuant to the Contribution Agreement, Phoenix transferred to us ownership
of specified intellectual property and technology related to and necessary for
inSilicon to conduct its business, as well as customer and supplier contracts
related primarily to the SIP business.

The Contribution Agreement generally identifies the assets Phoenix
transferred to us and the liabilities we assumed from Phoenix in the separation.
The agreement also describes when and how these transfers and assumptions
occurred. The net book value of the assets transferred and the liabilities
assumed under this agreement was approximately $14.5 million.

ASSET TRANSFER. Effective on the separation date, Phoenix transferred
ownership of the following assets to us, subject to any exceptions expressly set
forth in an ancillary agreement:

- all assets reflected on our balance sheet as of September 30, 1999;

- all written-off, expensed or fully depreciated assets that would have
appeared on our balance sheet as of September 30, 1999 if we had not
written-off, expensed or fully depreciated them;

- all assets that Phoenix acquired after September 30, 1999 that would have
appeared in our financial statements as of the separation date if we
prepared these financial statements using the same principles we used in
preparing our balance sheet dated September 30, 1999;

- all assets used primarily by our business as of the separation date, but
are not reflected in our balance sheet as of September 30, 1999 due to
mistake or omission;

- intangible assets, including but not limited to, the following: (i) all
intellectual property assets such as copyrights, patents, patent
applications pending and in draft, trademarks, domain names, invention
disclosures, developed and developing technology, including ideas,
inventions, concepts currently in progress related to the SIP business;
and (ii) technology, software and know-how related to the current SIP
business and business plans;

- all supply, vendor, capital, equipment lease, software or technology
licenses, memberships in industry associations, or other contracts that
relate primarily to our business, including contracts representing
obligations reflected on our balance sheet as of September 30, 1999, and
all similar contracts obtained by Phoenix after that date;

- all computer-related assets used primarily by employees of Phoenix who
will become our employees due to the separation;

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- copies of, and the right to use, all corporate license agreement forms and
templates used in the in the licensing and evaluation of the SIP products;
and

- a credit for administrative services and allocated costs for the month of
December 1999 of $550,000.

ASSUMPTION OF LIABILITIES. Effective on the separation date, we assumed the
following liabilities from Phoenix, except as provided in an ancillary agreement
or other agreement:

- all liabilities reflected as liabilities on our balance sheet as of
September 30, 1999, less any liabilities that were discharged after the
date of the balance sheet;

- all liabilities of Phoenix arising after September 30, 1999, that would
have appeared in our financial statements as of the separation date if we
prepared these financial statements using the same principles we used in
preparing our balance sheet as of September 30, 1999;

- all liabilities that are primarily related to or primarily arise out of
our business but are not reflected in our balance sheet as of
September 30, 1999 due to mistake or omission; and

- all liabilities, other than income taxes, primarily resulting from the
operation of our business or resulting from any asset that Phoenix
transferred to us, including the contingent payment and other obligations
of Phoenix related to the acquisition of Sand.

EQUITY TO PHOENIX. For its contribution, we issued to Phoenix 10,400,000
shares of our Series A Preferred Stock, which converts to an equal number of
shares of our common stock at the completion of this offering. We also issued to
Phoenix a warrant to purchase 50,000 shares of our common stock at $.01 per
share, exercisable at any time until May 31, 2002.

BRIDGE LOAN FACILITY. Upon our written request, Phoenix will loan us any
funds necessary to fund our operations until the completion of this offering.
Such loan shall bear interest at a rate of 8.0% per annum and shall be repaid
from the proceeds of this offering.

OBTAINING APPROVALS AND CONSENTS. The parties agree to use all reasonable
efforts domestically and their best efforts internationally to obtain any
required consents, substitutions or amendments required to novate or assign all
rights and obligations under any contracts transferred in the separation.

DELAYED TRANSFERS. If it is not practicable to transfer specified assets
and liabilities on the separation date, the agreement provides that these assets
and liabilities will be transferred as promptly as possible after the separation
date. Pending receipt of any required consent or other action necessary to make
a transfer, Phoenix will hold the asset for the use and benefit of inSilicon or
the liability for the account of inSilicon and take all commercially reasonable
actions that inSilicon requests to place inSilicon in the same position as if
the transfer had occurred.

NO REPRESENTATIONS AND WARRANTIES. In general, Phoenix has provided no
representations or warranties with respect to the assets transferred, except
with respect to certain intellectual property developed by Phoenix outside of
the SIP division.

EXPENSES. We will reimburse Phoenix for its reasonable and actual third
party expenses incurred in connection with the separation.

TERMS OF OTHER AGREEMENTS GOVERN. To the extent that another agreement
expressly provides for the transfer of an asset or an assumption of a liability,
the terms of that other agreement will determine the manner of the transfer and
assumption.

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THE INITIAL PUBLIC OFFERING AGREEMENT

The Initial Public Offering Agreement governs the relationship between us
and Phoenix following this offering in a number of respects including without
limitation, the following:

INFORMATION EXCHANGE. Both Phoenix and we have agreed to share information
with each other, at no cost to the requesting party, unless the information is
confidential and the sharing would be commercially detrimental to us or contrary
to any contract term:

- Each party has agreed to maintain adequate internal accounting to allow
the other party to satisfy its own reporting obligations and prepare its
own financial statements.

- Each party will retain records that may be beneficial to the other party
for a specified period of time. If the records are going to be destroyed,
the destroying party will give the other party an opportunity to retrieve
all relevant information from the records.

- Each party will do its best to provide the other party with personnel,
directors, officers or agents who may be used as witnesses in legal
proceedings.

AUDITING PRACTICES. So long as Phoenix is required to consolidate our
results of operations and financial position, we have agreed to:

- not change independent accounting firms without Phoenix's consent, which
shall not unreasonably be withheld;

- use reasonable commercial efforts to generate quarterly financial
statements that have been reviewed by our independent accountants on a
timely basis following such fiscal quarter-end;

- use reasonable commercial efforts to cause our independent accountants to
date their opinion on our audited annual financial statements on the same
date as Phoenix's auditors date their opinion on Phoenix's financial
statements;

- provide Phoenix all relevant information to enable Phoenix to prepare
their financial statements (and Phoenix has agreed to provide us all
relevant information to enable us to prepare our financial statements);

- grant each other's internal accountants access to our relevant records;
and

- notify each other of any change in accounting principles.

DISPUTE RESOLUTION. If problems arise between us and Phoenix, we have
agreed to the following procedures:

- The parties will make a good faith effort to first resolve the dispute
through negotiation.

- If negotiations fail, the parties agree to attempt to resolve the dispute
through non-binding mediation. The selection of the mediator shall be
mutually agreed upon.

- If mediation fails, the parties can resort to litigation. In addition,
nothing prevents either party acting in good faith from initiating
litigation at any time if failure to do so would substantially
disadvantage the party.

NO SOLICITATION. Both parties have agreed not to directly recruit employees
of the other party for a period of one year after the separation date if the
recruiting would be damaging to the other party. However, general advertising
and employee-initiated solicitations are permissible.

NONCOMPETITION. Each of Phoenix and inSilicon has agreed not to engage in
any business conducted by the other as of the separation date for a period
ending at the earliest of (a) five years from the separation date, (b) the date
Phoenix no longer owns at least 10% of our outstanding voting

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securities and (c) the date the other ceases to engage in that business. Should
either we or Phoenix experience a change of control, the other agrees it will
not unreasonably withhold its waiver of this agreement not to compete upon the
request of the party undergoing the change of control. Refusal to waive the
agreement not to compete is deemed to be reasonable if the person acquiring
control competes with the party from which waiver is sought.

STANDSTILL. So long as it retains ownership of at least 50% of our
outstanding voting securities, Phoenix has agreed not to purchase more than 2%
of our then-outstanding shares of common stock on the open market during any
12-month period.

COSTS AND EXPENSES. The Initial Public Offering Agreement provides that we
will pay all of the third-party expenses related to the offering of our common
stock other than as provided in the Services and Cost-Sharing Agreement. After
the completion of the offering, any costs and expenses that are not allocated in
the Services and Cost-Sharing Agreement or any other agreement between Phoenix
and us shall be the responsibility of the party that incurs the costs and
expenses.

CONFIDENTIALITY. Both parties agree not to disclose confidential
information of the other party except in specific circumstances.

GENERAL RELEASE OF PRE-SEPARATION CLAIMS. Effective as of the separation
date, we have released Phoenix and its affiliates, agents, successors and
assigns, and Phoenix has released us, and our affiliates, agents, successors and
assigns, from any liabilities arising from events occurring on or before the
separation date, including events occurring in connection with the activities to
implement the separation and the initial public offering. This provision will
not impair a party from enforcing the Contribution Agreement, any other
agreement between Phoenix and inSilicon, or any arrangement specified in any of
these other agreements.

INDEMNIFICATION. In general, we have agreed to indemnify Phoenix and its
affiliates, agents, successors and assigns from all liabilities arising from:

- our business, any of our liabilities or any of our contracts; and

- any breach by us of the Contribution Agreement or any other agreement
between the parties.

Phoenix has agreed to indemnify us and our affiliates, agents, successors
and assigns from all liabilities arising from:

- Phoenix's business other than the businesses transferred to us pursuant to
the separation; and

- any breach by Phoenix of the Contribution Agreement or any other agreement
between the parties.

The indemnifying party will make all indemnification payments net of
insurance proceeds that the indemnified party receives. The agreement also
contains provisions governing notice and indemnification procedures.

DISCLOSURE LIABILITIES. We have agreed to bear any liability arising from
any untrue statement of a material fact or any omission of a material fact in
this prospectus, other than matters pertaining solely to Phoenix, which shall be
borne solely by Phoenix. We also have agreed to bear certain other liabilities
of Phoenix that might arise under the underwriting agreement.

INSURANCE MATTERS. The agreement also contains provisions governing our
insurance coverage from the separation date. Phoenix will generally act as
insurance administrator and claims administrator for Phoenix insurance policies
under which we are or have been insured; provided, however, no settlements
involving us shall be made without our consent and all awards regarding us shall
be promptly paid to us. We will fund a pro rata portion of the Phoenix insurance
costs under the Services and Cost-Sharing

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Agreement and will be entitled to receive the proceeds, if any, from insured
claims under these policies and applicable prior policies, after the applicable
deductible or retention.

ASSIGNMENT. The Initial Public Offering Agreement is not assignable by
either party without the prior written consent of the other, except in
connection with a merger or a sale of significant assets, in which event the
agreement must be assumed by the surviving party.

SERVICES AND COST-SHARING AGREEMENT

We have also entered into a Services and Cost-Sharing Agreement with
Phoenix. This agreement covers various services that Phoenix provides and the
method by which certain costs will be shared by the companies. The services
include data processing, telecommunications and information technology support
services, accounting, financial management, tax preparation, payroll,
stockholder and public relations, legal, human resources administration,
procurement, real estate management and other administrative functions. The
shared costs include the costs of the office space we occupy at Phoenix's
headquarters and insurance premiums.

The amount we will pay for services and shared costs will generally be equal
to the aggregate cost to Phoenix and inSilicon of the services and costs
multiplied by a percentage representing the number of our employees to the total
number of Phoenix and inSilicon employees. The Services and Cost-Sharing
Agreement will have an initial term that extends to June 30, 2000 for all
services other than accounting and an initial term that extends to
September 30, 2000 with respect to accounting services. The Services and
Cost-Sharing Agreement will be renewed on a month-to-month basis. Phoenix can
terminate after those dates on 30 days' written notice. We can terminate any one
or more of the services at any time on 30 days' written notice.

EMPLOYEE MATTERS AGREEMENT

We have entered into an Employee Matters Agreement with Phoenix to allocate
assets, liabilities, and responsibilities relating to current and former United
States employees of inSilicon Corporation and their participation in the benefit
plans, including stock plans, that Phoenix currently sponsors and maintains.

In general, separate agreements will address similar issues relating to
foreign employment and benefit matters.

Until the separation date, United States employees provided services to
inSilicon as employees of Phoenix. After the separation date, such employees
remained on the Phoenix payroll and provided services to inSilicon on a seconded
basis through December 31, 1999. Certain employees with pending visa
applications are being seconded for a longer period.

All eligible United States inSilicon employees will continue to participate
in the Phoenix benefit plans on comparable terms and conditions to those for
Phoenix employees until we establish comparable benefit plans for our current
and former employees. Once we establish our own corresponding benefit plan, we
may modify or terminate that plan in accordance with the terms of that plan and
our policies. inSilicon benefit plans generally will not provide benefits that
overlap benefits under the corresponding Phoenix benefit plan at the time of the
offering. Each inSilicon benefit plan will provide that all service,
compensation and other benefit determinations that, as of the offering, were
recognized under the corresponding Phoenix benefit plan will be taken into
account under that inSilicon benefit plan.

Each inSilicon benefit plan will assume any liabilities under the
corresponding Phoenix benefit plan for inSilicon employees. Assets relating to
the employee liabilities will also be transferred to inSilicon or the related
inSilicon plans and trusts from trusts and other funding vehicles associated
with Phoenix's benefit plans. However, with respect to the 401(k) retirement
plans, the companies may agree

55
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that assets and liabilities will be transferred by way of employer-mandated
transfer, employee voluntary transfer, employee elective rollover or a
combination thereof.

OPTIONS. Persons providing us services on December 21, 1999 had the ability
to have their Phoenix options exchanged for inSilicon stock options with the
same intrinsic value. The number of shares and the exercise price of Phoenix
options that were exchanged for inSilicon options were adjusted using a formula
based upon the relative fair market values of the two companies' stock on the
date of exchange. Each of the resulting inSilicon options maintains the original
vesting provisions and option period.

STOCK PURCHASE PLAN. We anticipate that inSilicon employees will continue
to participate in the Phoenix stock purchase plan through the end of May 2000.
Immediately following the completion of this offering, inSilicon employees may
begin participating in our 2000 stock purchase plan.

TAX-SHARING AGREEMENT

We have entered into a Tax-Sharing Agreement with Phoenix concerning each
party's obligations for various tax liabilities. The Tax-Sharing Agreement
provides that Phoenix generally will pay all federal, state, local and foreign
taxes relating to our business before November 30, 1999. For any taxable period
after that date in which we are included in a Phoenix consolidated or combined
tax return, the agreement provides that we will make payments to Phoenix based
upon the amount of U.S. federal and state income taxes that would have been paid
by us had we and each of our subsidiaries filed our own federal and state income
tax returns, subject to specific adjustments. Further, if we incur losses on
either a federal or state basis that reduce Phoenix's consolidated or combined
tax liability, Phoenix will pay us an amount equal to the tax savings generated
by our losses.

The net losses we incurred for all periods through November 30, 1999 are
attributable to our operations as a division of Phoenix and were included in
income tax returns filed by Phoenix. Because we will not receive any benefit for
our historical operating losses incurred through November 30, 1999, no income
tax benefit has been reflected for the periods presented.

Each member of a consolidated group for U.S. federal income tax purposes is
severally liable for the federal income tax liability of each other member of
the consolidated group. Accordingly, although the Tax-Sharing Agreement
allocates tax liabilities between Phoenix and us for any period in which we were
included in Phoenix's consolidated group, we could be liable in the event that
any federal tax liability was incurred, but not discharged, by any other member
of the group. Phoenix has agreed to indemnify us for any tax liability allocated
to Phoenix under the Tax-Sharing Agreement, and we have provided a similar
indemnity to Phoenix.

The Tax-Sharing Agreement further provides for cooperation with respect to
tax matters, the exchange of information and the retention of records which may
affect the income tax liability of either party.

REGISTRATION RIGHTS AGREEMENT

The Registration Rights Agreement provides that, at Phoenix's request, we
will use our best efforts to register for sale under federal and state
securities laws any shares of inSilicon common stock (or any other securities
Phoenix receives in exchange for inSilicon common stock) that Phoenix owns,
subject to specified limitations. Phoenix also will have the right to include
its inSilicon shares in other registrations of our common stock initiated by us.
In the first registration in which Phoenix participates after this offering,
following waiver or expiration of the lockup, we will be entitled to sell at
least 40% of the shares of the total offering if we so desire, and in all
registrations thereafter, 50% of the shares; provided that if the first
following registration involves a total of $50 million or less, we shall be
entitled to sell at least 50% of the shares of the total offering.

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So long as Phoenix owns 50% or more of our common stock, Phoenix may request
or participate in an unlimited number of registrations. Once it owns less than
50%, Phoenix will be limited to a total of four demand and an unlimited number
of "piggyback" registrations, provided that it is not entitled to more than two
demand registrations in any 12-month period. Phoenix must request registration
of a minimum of $25 million of shares in any demand registration. Subject to
specified limitations, Phoenix may assign these registration rights. The
Registration Rights Agreement also will require us to indemnify Phoenix, the
underwriters and others in connection with these registrations.

Phoenix will pay its pro rata share (according to the percentage of shares
sold for its account) of expenses relating to any registration in which it
participates, and Phoenix will pay all of the underwriting discounts and
commissions attributable to the shares Phoenix sells.

TECHNOLOGY DISTRIBUTOR AGREEMENT

We have entered into arrangements with Phoenix to act as our sales
representative and distributor of our firmware products in Japan and our full
line of products in the rest of Asia. Phoenix will promote the licensing of
inSilicon's firmware or other products, as applicable, identify prospective
customers, and solicit orders from prospective, as well as current, customers on
behalf of inSilicon. The agreement also provides Phoenix a nonexclusive license
for our firmware products that will allow it to perform customization, or
non-recurring engineering work, to the firmware in accordance with customer
specified requirements. Phoenix will provide all the customer support
obligations in Japan for the firmware and the firmware customization it
develops. We will pay Phoenix a commission of 20% of the net licensing and/or
royalty revenue specified under each license; and 80% of the net revenues for
customization and non-recurring engineering work. We believe that the terms of
this agreement are no less favorable than we would have obtained from an
unaffiliated third party.

RELATED PARTY TRANSACTIONS

Other than the transactions described in "Arrangements Between inSilicon
Corporation and Phoenix Technologies Ltd.," there has not been any transaction
or series of similar transactions since our inception to which we were or are a
party in which the amount involved exceeded or exceeds $60,000 and in which any
director, executive officer, holder of more than 5% of any class of our voting
securities or any member of the immediate family of any of the foregoing persons
had or will have a direct or indirect material interest, other than the
transactions described below.

OPTIONS TO NAMED EXECUTIVE OFFICERS AND DIRECTORS OF INSILICON. On
December 21, 1999, the named executive officers exchanged all or a portion of
their Phoenix options for options to purchase the following amounts of inSilicon
common stock based upon the exchange ratio of 1.862 options to purchase
inSilicon shares for each option to purchase Phoenix shares: Mr. Cantwell,
269,990 shares; Mr. Hoberman, 164,780 shares; Mr. Meyer, 169,442 shares;
Mr. Naidu, 69,825 shares; and Mr. Nalesnik, 108,785 shares. The exchange ratio
was determined based upon the relative fair values of Phoenix and inSilicon
common stock on the date of exchange. Therefore, on the date of the exchange,
the inSilicon options had the same intrinsic value and ratio of exercise price
to market value of the underlying shares as the Phoenix options exchanged. They
also have equivalent vesting schedules to the Phoenix options exchanged. In
addition, we granted the following named executive officers and directors
options to purchase additional inSilicon shares at a purchase price of $7.36 per
share, in the following amounts: Mr. Cantwell, 205,009 shares; Mr. Hoberman,
30,220 shares; Mr. Meyer, 60,000 shares; Mr. Naidu, 50,520 shares;
Mr. Nalesnik, 10,000 shares; Mr. Sisto, 20,000 shares; Mr. Farnham, 20,000
shares; and Mr. Hart, 20,000 shares. We later granted Mr. Harding an option to
purchase 20,000 inSilicon shares at a purchase price of $7.75 per share.

OPTIONS TO CONSULTANTS WHO ARE EMPLOYEES OF PHOENIX. On December 21, 1999,
we also granted options to purchase 40,000 shares of inSilicon common stock at
an exercise price of $7.36 per share to certain consultants of inSilicon who
were also employees of Phoenix.

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SEVERANCE AGREEMENTS WITH INSILICON NAMED EXECUTIVE OFFICERS. We have
entered into severance agreements with certain of our officers, including all of
our named executive officers other than Mr. Naidu. The severance agreements
provide for initial levels of base compensation, bonus, and benefits. The
initial base levels of compensation are as follows: Mr. Cantwell, $200,000;
Mr. Hoberman, $173,250; Mr. Meyer, $173,250; and Mr. Nalesnik, $160,000. The
agreements also provide for the continued payment of salary for 12 months (in
the case of Mr. Cantwell, Mr. Hoberman and Mr. Meyer) and six months (in the
case of the other officers) with continued option vesting during such period,
and a prorated portion of the executive's target bonus if the executive's
employment is terminated for reasons other than for cause or constructive
termination. Mr. Cantwell's and Mr. Meyer's agreements also provide for the full
vesting of all unvested options within 90 days of a change in control. Benefits
provided under the severance agreements include participation in an executive
bonus plan and company-paid post-termination health insurance.

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PRINCIPAL STOCKHOLDER

Until this offering, Phoenix will own substantially all of our outstanding
shares of common stock. Phoenix has previously conducted inSilicon's business
through Phoenix. As a division of Phoenix, inSilicon has historically utilized
Phoenix's cash management and certain other services. See Note 2 of Notes to
Consolidated Financial Statements of inSilicon. For a description of certain
agreements we entered into with Phoenix in connection with our separation from
Phoenix and this offering, see "Arrangements Between inSilicon Corporation and
Phoenix Technologies Ltd."

Phoenix Technologies Ltd. is a global leader in system-enabling software
solutions for PCs and connected devices. In addition to inSilicon, Phoenix has
two other operating divisions. One division focuses on platform-enabling
software providing critical functionality that links the hardware and operating
systems of tens of millions of PCs, embedded systems and information appliances
sold annually. The other is a recently launched Internet business to deliver new
value propositions to original equipment manufacturers, channel partners and end
users of connected PCs and other devices. The principal executive offices of
Phoenix are located at 411 East Plumeria Drive, San Jose, California 95134.

The following table sets forth certain information with respect to the
beneficial holders of inSilicon's common stock as of March 15, 2000, and as
adjusted to reflect the sale of the common stock being offered by this
prospectus, for each of inSilicon's directors and named executive officers, for
each holder of 5% or more of inSilicon's common stock and for all of inSilicon's
officers and directors as a group. The beneficial owners named in the table have
sole voting and investing power with respect to all shares of common stock shown
as beneficially owned by them, subject to community property laws, where
applicable. Except for 73,109 shares of Mr. Cantwell, 37,822 shares of
Mr. Meyer and 19,482 shares of Mr. Nalesnik, all shares beneficially owned by
our executive officers and directors are shares issuable upon the exercise of
stock options exercisable within 60 days of March 15, 2000. In addition, the
shares beneficially owned by Phoenix includes a currently exercisable warrant to
purchase 50,000 shares.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
BEFORE THE OFFERING AFTER THE OFFERING
---------------------------- ----------------------------
NAME OF BENEFICIAL OWNERS NUMBER PERCENT(1) NUMBER PERCENT(1)
- --------------------------------------- -------- ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
Phoenix Technologies Ltd............... 10,450,010 98.6% 10,450,010 74.1%
Wayne C. Cantwell...................... 152,316 1.4% 152,316 1.1%
Barry O. Hoberman...................... 111,816 1.0% 111,816 *
William E. Meyer....................... 43,176 * 43,176 *
Anand C. Naidu......................... 7,813 * 7,813 *
Robert G. Nalesnik..................... 24,760 * 24,760 *
Albert E. Sisto........................ 1,250 * 1,250 *
Raymond J. Farnham..................... 1,250 * 1,250 *
John R. Harding........................ 0 * 0 *
E. Thomas Hart......................... 1,250 * 1,250 *
All executive officers and directors as
a group (10 persons)................. 357,503 3.3% 357,503 2.5%
</TABLE>

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

* Less than 1%.

59
<PAGE>
DESCRIPTION OF CAPITAL STOCK

Upon the completion of this offering, we will be authorized to issue
100,000,000 shares of common stock, $.001 par value per share, and 15,000,000
shares of undesignated preferred stock, $.001 par value per share.

COMMON STOCK

Assuming the conversion of our Series A Preferred Stock to common stock, as
of March 15, 2000, there were 10,551,330 shares of common stock outstanding.
Options to purchase 2,546,567 shares of common stock were also outstanding.
There will be 14,051,330 shares of common stock outstanding (assuming no
exercise of the underwriters' overallotment option or exercise of outstanding
options), after giving effect to the sale of the shares offered by this
prospectus.

The holders of our common stock will be entitled to one vote for each share
held of record on all matters submitted to a vote of the stockholders, including
elections of directors. Subject to preferences that may be applicable to any
outstanding preferred stock, holders of common stock are entitled to receive
ratably any dividends declared by our board of directors out of funds legally
available for that purpose. See "Dividend Policy." In the event of our
liquidation, dissolution or winding up, the holders of our common stock will be
entitled to share ratably in all assets remaining after payment of liabilities,
subject to the prior distribution rights of any outstanding preferred stock. Our
common stock has no preemptive or conversion rights or other subscription
rights. The outstanding shares of our common stock are, and the shares of common
stock to be issued upon completion of this offering will be, fully paid and
non-assessable.

PREFERRED STOCK

Upon the completion of this offering, our board of directors will have the
authority, without further action by our stockholders, to issue up to 15,000,000
shares of preferred stock, $.001 par value, in one or more series. Our board of
directors also will have the authority to designate the rights, preferences,
privileges and restrictions of each series, including dividend rights, dividend
rates, conversion rights, voting rights, terms of redemption, redemption prices,
liquidation preferences and the number of shares constituting any series.

Issuances of preferred stock, while providing desirable flexibility in
connection with possible acquisitions and for other corporate purposes, may have
the effect of delaying, deferring or preventing a change in control of inSilicon
without further action by the stockholders. The issuance of preferred stock with
voting and conversion rights may also adversely affect the voting power of the
holders of common stock. In certain circumstances, an issuance of preferred
stock could have the effect of decreasing the market price of our common stock.
All outstanding shares of preferred stock will be converted to common stock upon
the completion of this offering and we currently have no plans to issue any
other shares of preferred stock.

COMMON STOCK WARRANT

We have issued to Phoenix a warrant to purchase 50,000 shares of our common
stock for $0.01 per share, immediately exercisable in whole or in part at any
time until May 31, 2002. The exercise price and number of shares of common stock
issuable upon the exercise of the warrant may be adjusted upon the occurrence of
certain events, including stock splits, stock dividends, reorganization,
recapitalization, merger, or sale of all or substantially all of our assets.

DELAWARE ANTI-TAKEOVER LAW AND CHARTER AND BYLAW PROVISIONS

Provisions of Delaware law and our charter documents could have an
anti-takeover effort and may delay, discourage or prevent a tender offer or
takeover attempt that a stockholder might consider to be

60
<PAGE>
in its best interests, including attempts that might result in a premium being
paid over the market price of our common stock.

SECTION 203. inSilicon is subject to the provisions of Section 203 of the
Delaware law. In general, the statute prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date that the person became
an interested stockholder unless, subject to exceptions, the business
combination or the transaction in which the person became an interested
stockholder is approved in a prescribed manner. Generally, a "business
combination" includes a merger, asset or stock sale, or other transaction
resulting in a financial benefit to the stockholder. Generally, an "interested
stockholder" is a person who, together with affiliates and associates, owns, or
within three years prior, did own, 15% or more of the corporation's voting
stock. These provisions may have the effect of delaying, deferring or preventing
a change in control of inSilicon without further action by the stockholders.

BOARD OF DIRECTORS. Our Restated Certificate of Incorporation will provide
that, subject to any rights of holders of preferred stock to elect additional
directors under specified circumstances, the number of directors will be fixed
from time to time exclusively by resolution of the board of directors. The
directors, other than those who may be elected by the holders of preferred
stock, will be divided into three classes, as nearly equal in number as
possible. Each director will hold office until such person's successor is duly
elected and qualified. In addition, subject to any rights of holders of
preferred stock, newly created directorships resulting from any increase in the
number of directors and any vacancies on the board of directors resulting from
death, resignation, disqualification, removal or other cause will be filled by
the affirmative vote of a majority of the remaining directors then in office,
even if less than a quorum, and not by the stockholders. No decrease in the
number of directors constituting the board of directors will shorten the term of
any incumbent director. Subject to the rights of holders of preferred stock,
generally any director may be removed from office only for cause by the
affirmative vote of the holders of at least a majority of our outstanding common
stock. Until Phoenix and its affiliates no longer own at least a majority of our
outstanding common stock, however, the holders of at least a majority of our
common stock may remove any director, with or without cause.

These provisions would preclude a third-party from removing incumbent
directors and simultaneously gaining control of our board of directors by
filling the vacancies created by removal with its own nominees. Under the
classified board provision described above, it would take at least two elections
of directors for any individual or group to gain control of our board of
directors. Accordingly, these provisions could discourage a third party from
initiating a proxy contest, making a tender offer or otherwise attempting to
gain control of inSilicon.

NO STOCKHOLDER ACTION BY WRITTEN CONSENT; SPECIAL MEETINGS. Our Restated
Certificate of Incorporation will provide that once Phoenix and its affiliates
no longer own at least a majority of our outstanding common stock, stockholders
may only take action at a duly called annual or special meeting and not by
written consent. At the same time, stockholders will no longer be able to call
special meetings; special meetings of stockholders may be called only by the
chairman of the board or the president or by any officer at the request in
writing of a majority of the directors. These provisions may delay consideration
of a stockholder proposal until the next annual meeting unless a special meeting
is called by our board of directors or certain specified officers.

ADVANCE NOTICE PROCEDURES. Our By-laws will provide for an advance notice
procedure for the nomination, other than by or at the direction of our board of
directors, of candidates for election as directors as well as for other
stockholder proposals to be considered at annual meetings of stockholders. The
advance notice procedures will not apply to Phoenix and its affiliates so long
as they own at least a majority of our outstanding common stock.

61
<PAGE>
CHARTER AMENDMENTS. Our Restated Certificate of Incorporation will provide
that the affirmative vote of the holders of at least 80% of our outstanding
common stock is required to amend, repeal or adopt any provision inconsistent
with the foregoing provisions of the Restated Certificate of Incorporation. The
Restated Certificate of Incorporation will also provide that the By-laws may be
altered, amended or repealed by the affirmative vote of directors constituting
not less than a majority of the entire board of directors (if effected by action
of the board of directors) or by the affirmative vote of the holders of at least
80% of the voting power of all classes of outstanding capital stock, voting
together as a single class (if effected by action of the stockholders).

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

As permitted by the Delaware General Corporation Law, we have included a
provision in our Restated Certificate of Incorporation to eliminate the personal
liability of our officers and directors for monetary damages for breach or
alleged breach of their fiduciary duties as officers or directors, other than in
cases of fraud or other willful misconduct. In addition, our By-laws provide
that we are required to indemnify our officers and directors even when
indemnification would otherwise be discretionary, and we are required to advance
expenses to our officers and directors as incurred in connection with
proceedings against them for which they may be indemnified. We have entered into
indemnification agreements with our officers and directors containing provisions
that are in some respects broader than the specific indemnification provisions
contained in the Delaware General Corporation Law. The indemnification
agreements require us to indemnify our officers and directors against
liabilities that may arise by reason of their status or service as officers and
directors and to advance their expenses incurred as a result of any proceeding
against them as to which they could be indemnified.

At present, we are not aware of any pending or threatened litigation or
proceeding involving a director, officer, employee or agent of inSilicon in
which indemnification would be required or permitted. We are not aware of any
threatened litigation or proceeding that might result in a claim for such
indemnification. We believe that our charter provisions and indemnification
agreements are necessary to attract and retain qualified persons as directors
and officers.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the common stock is EquiServe Trust
Company. The Transfer Agent's address and telephone number is P.O. Box 2533,
Jersey City, N.J. 07303; (201) 222-5610.

62
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

After completion of this offering, inSilicon will have outstanding
14,051,330 shares of common stock. Of these shares, the 3,500,000 shares sold in
this offering (plus any shares issued upon exercise of the underwriters'
over-allotment option) will be freely tradable without restriction under the
Securities Act, unless purchased by "affiliates" of inSilicon.

The remaining 10,551,330 shares are "restricted securities" within the
meaning of Rule 144 under the Securities Act of 1933. These restricted
securities generally may not be sold in the absence of an effective registration
statement under the Securities Act, other than in accordance with Rule 144 or
another exemption from registration. Phoenix has certain rights to require
inSilicon to register its inSilicon shares, which rights may be assigned. See
"Arrangements Between inSilicon Corporation and Phoenix Technologies Ltd."

Our officers, directors and optionholders have entered into lock-up
agreements under which they have agreed not to offer or sell any shares of our
common stock for a period of 180 days after the date of this prospectus without
the prior written consent of FleetBoston Robertson Stephens Inc., on behalf of
the underwriters. See "Underwriting." These individuals or entities may request
that FleetBoston Robertson Stephens Inc. consider an early release from their
lock-up agreements. FleetBoston Robertson Stephens Inc. may, at any time and
without notice, grant an early release for shares subject to these lock-up
agreements. Following the lock-up period, these shares will not be eligible for
sale in the public market without registration under the Securities Act unless
such sales meet the applicable conditions and restrictions of Rule 144 or
Rule 701, as described below.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including an affiliate, who has beneficially owned
shares of our common stock for at least one year is entitled to sell in any
three-month period a number of shares that does not exceed the greater of 1% of
the number of shares of our common stock then outstanding (which will equal
approximately 141,000 shares immediately after this offering) or the average
weekly trading volume of our common stock during the four calendar weeks
preceding the sale. Sales under Rule 144 are also subject to certain manner of
sale provisions and notice requirements and to the availability of current
public information about inSilicon. Since these shares or options were issued
pursuant to a written compensatory plan, directors, officers, employees,
advisors and consultants also may be entitled to rely on the resale provisions
of Rule 701, which permits nonaffiliates to sell their Rule 701 shares without
having to comply with the public information, holding periods, volume limitation
or notice provisions of Rule 144, and permits affiliates to sell their Rule 701
shares without having to comply with Rule 144's holding period restrictions, in
each case commencing 90 days after the date of this prospectus.

We also intend to file a registration statement under the Securities Act as
soon as practicable following this offering to register 4,098,680 shares of
common stock issuable upon the exercise of outstanding stock options or reserved
for issuance under our stock option plans or employee purchase plan. After the
effective date of such registration statement, these shares will be available
for sale in the open market subject to the lock-up agreements described above
and, for our affiliates, to the conditions and restrictions of Rule 144.

Before this offering, there has been no public market for our common stock,
and no prediction can be made as to the effect, if any, that market sales of
outstanding shares of inSilicon common stock owned by Phoenix, or the
availability of such shares for sale, will have on the market price of our
common stock prevailing from time to time. Nevertheless, sales of substantial
amounts of our common stock owned by Phoenix in the public market, or the
perception that such sales could occur, could reduce the prevailing market price
of our common stock. Although Phoenix may in the future effect or direct sales
or other dispositions of common stock that would reduce its ownership interest
in inSilicon, Phoenix has advised us that it currently intends to continue to
hold all of its inSilicon common stock following this offering. However, Phoenix
is not subject to any contractual obligation to retain its controlling interest,
except that it has agreed not to sell or otherwise dispose of any shares of
inSilicon common stock for a period of 365 days after the date of this
Prospectus without the prior written consent of FleetBoston Robertson Stephens
Inc. As a result, we cannot be sure how long Phoenix will maintain its ownership
of inSilicon common stock after this offering.

63
<PAGE>
UNDERWRITING

GENERAL. The underwriters named below, acting through their
representatives, FleetBoston Robertson Stephens Inc., Prudential Securities
Incorporated and Needham & Company, Inc. have severally agreed with us, subject
to the terms and conditions of the underwriting agreement, to purchase from us
the number of shares of our common stock indicated opposite their names below.
The underwriters are committed to purchase and pay for all these shares if any
are purchased.

<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITERS SHARES
- ----------------- ----------
<S> <C>
FleetBoston Robertson Stephens Inc..........................
Prudential Securities Incorporated..........................
Needham & Company, Inc......................................
</TABLE>

<TABLE>
<CAPTION>
INTERNATONAL UNDERWRITERS
- -------------------------
<S> <C>
FleetBoston Robertson Stephens International Limited........
Prudential Securities Incorporated..........................
Needham & Company, Inc......................................
----------

Total..................................................... 3,500,000
==========
</TABLE>

Our common stock is offered by the underwriters as stated herein, subject to
receipt and acceptance by them and subject to their right to reject any order in
whole or in part. FleetBoston Robertson Stephens Inc. expects to deliver the
shares of our common stock to purchasers on . The underwriters do
not intend to confirm sales to any accounts over which they exercise
discretionary authority.

CONCESSIONS AND REALLOWANCES. We have been advised that the underwriters
propose to offer the shares of our common stock to the public at the initial
public offering price located on the cover page of this prospectus and to
certain dealers at that price less a concession of not in excess of $ per
share, of which $ may be reallowed to other dealers. After the initial public
offering, the public offering price, concession and reallowance to dealers may
be reduced by the representatives. No reduction will change the amount of
proceeds to be received by us as indicated on the cover page of this prospectus.

OVER-ALLOTMENT OPTION. We have granted to the underwriters an option,
exercisable during the 30-day period after the date of this prospectus, to
purchase up to 525,000 additional shares of our common stock at the same price
per share as we will receive for the 3,500,000 shares that the underwriters have
agreed to purchase. To the extent that the underwriters exercise this option,
each of the underwriters will have a firm commitment to purchase approximately
the same percentage of additional shares that the number of shares of our common
stock to be purchased by it shown in the above table represents as a percentage
of the shares offered by this prospectus. If purchased, the additional shares
will be sold by the underwriters on the same terms as those on which the
3,500,000 shares are being sold. We will be obligated, under this option, to
sell shares to the extent the option is exercised. The underwriters may exercise
such option only to cover over-allotments made in connection with the sale of
the shares of our common stock offered by this prospectus.

UNDERWRITING DISCOUNTS AND COMMISSIONS. The following table shows the per
share and total underwriting discounts and commissions to be paid by us to the
underwriters. This information is

64
<PAGE>

presented assuming either no exercise or full exercise by the underwriters of
their over-allotment option.

<TABLE>
<CAPTION>
PER WITHOUT WITH
SHARE OPTION OPTION
-------- -------- --------
<S> <C> <C> <C>
Public offering price............................ $ $ $
Underwriting discounts and commissions........... $ $ $
Expenses payable by us........................... $ $ $
Proceeds to us................................... $ $ $
</TABLE>

ONLINE ACTIVITIES. Prudential Securities Incorporated facilitates the
marketing of new issues online through its PrudentialSecurities.com division.
Clients of Prudential Advisor-SM-, a full service brokerage firm program, may
view offering terms and a prospectus online and place orders through their
financial advisors.

INDEMNIFICATION OF UNDERWRITERS. The underwriting agreement contains
covenants of indemnity among the underwriters, Phoenix and us against certain
civil liabilities, including liabilities under the Securities Act of 1933 and
liabilities arising from breaches of representations and warranties contained in
the underwriting agreement.

LOCK-UP AGREEMENT. Each of our executive officers, directors and
optionholders have agreed with the representatives for a period of 180 days
after the date of this prospectus, subject to certain exceptions, not to offer
to sell, contract to sell, or otherwise sell, dispose of, loan, pledge or grant
any rights with respect to any shares of common stock, any options or warrants
to purchase any shares of our common stock, or any securities convertible into
or exchangeable for shares of our common stock owned as of the date of this
prospectus or thereafter acquired directly from us by such holders or with
respect to which they have or hereafter acquire the power of disposition,
without the prior written consent of FleetBoston Robertson Stephens Inc. Phoenix
has agreed with the representatives for a period of 365 days after the date of
this prospectus, subject to certain exceptions, not to offer to sell, contract
to sell, or otherwise sell, dispose of, loan, pledge or grant any rights with
respect to any shares of common stock, any options or warrants to purchase any
shares of our common stock, or any securities convertible into or exchangeable
for shares of our common stock owned as of the date of this prospectus or
thereafter acquired directly from us by such holders or with respect to which
they have or hereafter acquire the power of disposition, without the prior
written consent of FleetBoston Robertson Stephens Inc. However, FleetBoston
Robertson Stephens Inc. may, in its sole discretion and at any time without
notice, release all or any portion of the securities subject to the lock-up
agreements. There are no agreements between the representatives and any of
inSilicon's stockholders providing consent by the representatives to the sale of
shares prior to the expiration of the lock-up period.

FUTURE SALES. In addition, we have agreed that during the 180-day lock-up
period, we will not, without the prior written consent of FleetBoston Robertson
Stephens Inc., subject to certain exceptions,

- consent to the disposition of any shares held by stockholders subject to
lock-up agreements prior to the expiration of the lock-up period; or

- issue, sell, contract to sell, or otherwise dispose of, any shares of our
common stock, any options or warrants to purchase any shares of our common
stock or any securities convertible into, exercisable for or exchangeable
for shares of our common stock other than our sale of shares in this
offering, our issuance of common stock upon the exercise of currently
outstanding options, and our issuance of incentive awards under our stock
incentive plans. See "Shares Eligible for Future Sale."

NO PRIOR PUBLIC MARKET. Before this offering, there has been no public
market for the common stock of inSilicon. Consequently, the initial public
offering price for our common stock offered by this prospectus will be
determined through negotiations between us and the representatives of the

65
<PAGE>
underwriters. Among the factors to be considered in such negotiations are
prevailing market conditions, our financial information, market valuations of
other companies that we and the representatives believe to be comparable to us,
estimates of our business potential, the present state of our development and
other factors deemed relevant.

LISTING. We have applied to have our shares approved for quotation on the
Nasdaq National Market under the symbol "INSN."

STABILIZATION. The representatives have advised us that, under Regulation M
under the Securities Exchange Act, certain persons participating in this
offering may engage in transactions, including stabilizing bids, syndicate
covering transactions or the imposition of penalty bids that may have the effect
of stabilizing or maintaining the market price of our common stock at a level
above that which might otherwise prevail in the open market. A "stabilizing bid"
is a bid for or the purchase of the common stock on behalf of the underwriters
for the purpose of fixing or maintaining the price of the common stock. A
"syndicate covering transaction" is the bid for or the purchase of our common
stock on behalf of the underwriters to reduce a short position incurred by the
underwriters in connection with the offering. A "penalty bid" is an arrangement
permitting the representatives to reclaim the selling concession otherwise
accruing to an underwriter or syndicate member in connection with the offering
if the common stock originally sold by such underwriter or syndicate member is
purchased by the representatives in a syndicate covering transaction and has
therefore not been effectively placed by such underwriter or syndicate member.
The representatives have advised us that these transactions may be effected on
the Nasdaq National Market or otherwise and, if commenced, may be discontinued
at any time.

PASSIVE MARKET MAKING. Following the pricing of this offering, and until
the commencement of any stabilizing bid, underwriters and dealers who are
qualified market makers on the Nasdaq National Market may engage in passive
market making transactions. Passive market making is allowed during the period
when the Securities and Exchange Commission's rules would otherwise prohibit
market activity by the underwriters and dealers who are participating in this
offering. Passive market makers must comply with applicable volume and price
limitations and must be identified as such. In general, a passive market maker
must display its bid at a price not in excess of the highest independent bid for
our common stock; but if all independent bids are lowered below the passive
market maker's bid, the passive market maker must also lower its bid once it
exceeds specified purchase limits. Net purchases by a passive market maker on
each day are limited to a specified percentage of the passive market maker's
average daily trading volume in our common stock during a specified period and
must be discontinued when such limit is reached. Underwriters and dealers are
not required to engage in passive market making and may end passive market
making activities at any time.

DIRECTED SHARE PROGRAM. At our request, the underwriters have reserved up
to 175,000 shares of common stock to be issued by us and offered hereby for
sale, at the initial public offering price, to directors, officers, employees,
other business associates and related persons of inSilicon. The number of shares
of our common stock available for sale to the general public will be reduced to
the extent that these individuals purchase all or a portion of these reserved
shares. Any reserved shares which are not purchased will be offered by the
underwriters to the general public on the same basis as the shares of common
stock offered by this prospectus.

CONFLICTS OF INTERESTS. From time to time, the underwriters may perform
investment banking or other services for Phoenix and for inSilicon in the
future.

LEGAL MATTERS

The validity of the common stock offered hereby will be passed upon for us
by Orrick, Herrington & Sutcliffe LLP, San Francisco, California. Certain legal
matters in connection with this offering will be passed upon for the
underwriters by O'Melveny & Myers LLP, San Francisco, California.

66
<PAGE>
EXPERTS

Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and financial statement schedule at September 30, 1998 and
1999 and for each of the three years in the period ended September 30, 1999, as
set forth in their report. We have included our consolidated financial
statements in the prospectus and elsewhere in the registration statement in
reliance on Ernst & Young LLP's report, given on their authority as experts in
accounting and auditing.

The financial statements of Sand Microelectronics, Inc., as of December 31,
1996 and 1997 and for the years then ended included in this prospectus have been
so included in reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.

67
<PAGE>
WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act with respect to the shares of our
common stock offered by this prospectus. This prospectus does not contain all of
the information set forth in the registration statement or the exhibits and
schedules to that registration statement. For further information with respect
to inSilicon and the common stock, we refer you to the registration statement,
including the exhibits and schedules. Statements made in this prospectus
concerning the contents of any contract or other document are not necessarily
complete. Please refer to the copy of the document filed as an exhibit to the
registration statement for a more complete description.

Each statement is qualified in all respects by reference to the exhibit. You
may inspect the registration statement without charge and obtain copies of all
or any part by paying certain fees at the SEC's public reference facilities at
450 Fifth Street, N.W., Washington, D.C. 20549, and its regional offices at
Seven World Trade Center, 13th Floor, New York, NY 10048, and the Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further
information on the operation of the public reference rooms. Our Securities and
Exchange Commission filings, including the registration statement, are also
available to you on the SEC's web site at http://www.sec.gov.

As a result of this offering, we will become subject to the information and
reporting requirements of the Exchange Act, and, in accordance therewith, will
file periodic reports, proxy statements and other information with the SEC.

We intend to furnish our stockholders with annual reports containing audited
consolidated financial statements and with quarterly reports for the first three
quarters of each year containing unaudited interim consolidated financial
information.

68
<PAGE>
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF INSILICON CORPORATION

Report of Ernst & Young LLP, Independent Auditors....... F-2

Consolidated Balance Sheets............................. F-3

Consolidated Statements of Operations................... F-4

Consolidated Statements of Changes in Stockholder's Net
Investment/Stockholder's Equity........................ F-5

Consolidated Statements of Cash Flows................... F-6

Notes to Consolidated Financial Statements.............. F-7

AUDITED FINANCIAL STATEMENTS OF SAND MICROELECTRONICS, INC.

Report of PricewaterhouseCoopers LLP, Independent
Accountants............................................ F-22

Balance Sheets.......................................... F-23

Statements of Operations................................ F-24

Statements of Shareholders' Equity...................... F-25

Statements of Cash Flows................................ F-26

Notes to Financial Statements........................... F-27

UNAUDITED INTERIM FINANCIAL STATEMENTS OF SAND
MICROELECTRONICS, INC.
AS OF JUNE 30, 1998..................................... F-35
</TABLE>

F-1
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Stockholder
inSilicon Corporation

We have audited the accompanying consolidated balance sheets of inSilicon
Corporation as of September 30, 1998 and 1999 and the related consolidated
statements of operations, stockholder's net investment/stockholder's equity, and
cash flows for each of the three years in the period ended September 30, 1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
inSilicon Corporation at September 30, 1998 and 1999, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended September 30, 1999, in conformity with generally accepted
accounting principles.

/S/ ERNST & YOUNG LLP

San Jose, California
December 17, 1999,
except for Notes 5 and 10, as to which the date is
February 11, 2000

F-2
<PAGE>
INSILICON CORPORATION

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
PRO FORMA
STOCKHOLDER'S
SEPTEMBER 30, EQUITY AT
------------------- DECEMBER 31, DECEMBER 31,
1998 1999 1999 1999
-------- -------- ------------- -------------
(UNAUDITED) (UNAUDITED)
------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ -- $ -- $ --
Accounts receivable, net of allowances of $198, $364 and
$216 at September 30, 1998 and 1999, and December 31,
1999, respectively...................................... 2,416 5,104 3,415
Other current assets...................................... 147 135 93
-------- -------- --------
Total current assets.................................... 2,563 5,239 3,508

Investments................................................. 838 838 838
Property and equipment, net................................. 1,477 1,174 1,004
Computer software costs, net................................ 13,958 6,974 6,408
Goodwill and other intangible assets, net................... 12,439 10,220 9,665
Other assets................................................ 56 36 600
-------- -------- --------
Total assets.............................................. $ 31,331 $ 24,481 $ 22,023
======== ======== ========
LIABILITIES AND STOCKHOLDER'S NET INVESTMENT/STOCKHOLDER'S EQUITY

Current liabilities:
Accounts payable.......................................... $ 830 $ 205 $ 378
Payroll and related liabilities........................... 1,223 1,776 1,312
Deferred revenue.......................................... 1,211 1,589 1,196
Payable to Phoenix........................................ -- -- 748
Accrued merger costs...................................... 1,560 1,560 1,560
Accrued restructuring costs............................... 696 200 200
Other accrued liabilities................................. 383 302 109
-------- -------- --------
Total current liabilities............................... 5,903 5,632 5,503
Deferred tax liabilities.................................... -- -- 2,736

Other liabilities........................................... 16 45 --
Commitments
Stockholder's net investment/stockholder's equity:
Preferred stock, par value $0.001; 15,000,000 shares
authorized, 10,400,000 Series A shares issued and
outstanding at December 31, 1999 (none pro forma)....... -- -- 10 $ --
Common stock, par value $0.001; 100,000,000 shares
authorized, 10 shares issued and outstanding at
December 31, 1999 (10,400,010 shares pro forma)......... -- -- -- --
Additional paid-in capital................................ -- -- 38,953 38,963
Net contribution from stockholder......................... 36,158 41,632 -- --
Deferred stock-based compensation......................... -- -- (1,360) (1,360)
Accumulated deficit....................................... (10,746) (22,828) (23,819) (23,819)
-------- -------- -------- --------
Total stockholder's net investment/stockholder's
equity................................................ 25,412 18,804 13,784 $ 13,784
========
Total liabilities and stockholder's net
investment/stockholder's
equity.................................................... $ 31,331 $ 24,481 $ 22,023
======== ======== ========
</TABLE>

The accompanying notes are an integral part of these consolidated balance
sheets.

F-3
<PAGE>
INSILICON CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEARS ENDED SEPTEMBER 30, DECEMBER 31,
------------------------------ -------------------
1997 1998 1999 1998 1999
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue:
License fees................................ $ 4,272 $ 7,304 $ 14,973 $ 3,677 $ 3,857
Services.................................... 839 1,488 3,982 1,189 1,400
------- ------- -------- ------- --------
Total revenue............................. 5,111 8,792 18,955 4,866 5,257
Cost of revenue:
License fees................................ 972 1,223 1,003 158 553
Services.................................... 638 734 826 27 208
Amortization of purchased technology........ -- -- 2,132 533 314
------- ------- -------- ------- --------
Total cost of revenue..................... 1,610 1,957 3,961 718 1,075
------- ------- -------- ------- --------
Gross margin.................................. 3,501 6,835 14,994 4,148 4,182
Operating expenses:
Research and development.................... 2,310 2,947 9,092 2,348 2,007
Sales and marketing......................... 2,128 3,843 6,350 1,622 1,712
General and administrative.................. 1,049 1,368 3,364 852 731
Amortization of intangible assets........... -- -- 2,220 555 555
Stock-based compensation.................... -- -- -- -- 236
Merger and restructuring charges............ -- 5,778 6,050 86 --
------- ------- -------- ------- --------
Total operating expenses.................. 5,487 13,936 27,076 5,463 5,241
------- ------- -------- ------- --------
Loss from operations.......................... (1,986) (7,101) (12,082) (1,315) (1,059)
Income tax benefit............................ -- -- -- -- (68)
------- ------- -------- ------- --------
Net loss...................................... $(1,986) $(7,101) $(12,082) $(1,315) $ (991)
======= ======= ======== ======= ========
Pro forma net loss (unaudited)................ $ (8,566) $ (817)
======== ========
Pro forma net loss per share (unaudited)...... $ (0.82) $ (0.08)
======== ========
Shares used in computing pro forma net loss
per share (unaudited)....................... 10,400 10,400
======== ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-4
<PAGE>
INSILICON CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S NET INVESTMENT/
STOCKHOLDER'S EQUITY

(IN THOUSANDS)
<TABLE>
<CAPTION>

NET
PREFERRED STOCK COMMON STOCK ADDITIONAL CONTRIBUTION DEFERRED
------------------- ---------------------- PAID-IN FROM STOCK-BASED ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL STOCKHOLDER COMPENSATION DEFICIT
-------- -------- --------- ---------- ---------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, September 30,
1996.................... -- $-- -- $ -- $ -- $ 2,150 $ -- $ (1,659)
Net increase in
contribution from
stockholder........... -- -- -- -- -- 5,049 -- --
Net loss and
comprehensive loss.... -- -- -- -- -- -- -- (1,986)
------ --- --------- ---------- ------- -------- -------- --------
Balance, September 30,
1997.................... -- -- -- -- -- 7,199 -- (3,645)
Net increase in
contribution from
stockholder........... -- -- -- -- -- 28,959 -- --
Net loss and
comprehensive loss.... -- -- -- -- -- -- -- (7,101)
------ --- --------- ---------- ------- -------- -------- --------
Balance, September 30,
1998.................... -- -- -- -- -- 36,158 -- (10,746)
Net increase in
contribution from
stockholder........... -- -- -- -- -- 5,474 -- --
Net loss and
comprehensive loss.... -- -- -- -- -- -- -- (12,082)
------ --- --------- ---------- ------- -------- -------- --------
Balance, September 30,
1999.................... -- -- -- -- -- 41,632 -- (22,828)
Net decrease in
contribution from
stockholder
(unaudited)........... -- -- -- -- -- (1,529) -- --
Issuance of common and
preferred stock upon
capitalization, net of
deferred taxes
(unaudited)........... 10,400 10 -- -- 37,357 (40,103) -- --
Deferred stock-based
compensation
(unaudited)........... -- -- -- -- 1,596 -- (1,596) --
Amortization of deferred
stock-based
compensation
(unaudited)........... -- -- -- -- -- -- 236 --
Net loss and
comprehensive loss
(unaudited)........... -- -- -- -- -- -- -- (991)
------ --- --------- ---------- ------- -------- -------- --------
Balance, December 31, 1999
(unaudited)............. 10,400 $10 -- $ -- $38,953 $ -- $ (1,360) $(23,819)
====== === ========= ========== ======= ======== ======== ========

<CAPTION>
TOTAL
STOCKHOLDER'S
NET
INVESTMENT/
STOCKHOLDER'S
EQUITY
-------------
<S> <C>
Balance, September 30,
1996.................... $ 491
Net increase in
contribution from
stockholder........... 5,049
Net loss and
comprehensive loss.... (1,986)
--------
Balance, September 30,
1997.................... 3,554
Net increase in
contribution from
stockholder........... 28,959
Net loss and
comprehensive loss.... (7,101)
--------
Balance, September 30,
1998.................... 25,412
Net increase in
contribution from
stockholder........... 5,474
Net loss and
comprehensive loss.... (12,082)
--------
Balance, September 30,
1999.................... 18,804
Net decrease in
contribution from
stockholder
(unaudited)........... (1,529)
Issuance of common and
preferred stock upon
capitalization, net of
deferred taxes
(unaudited)........... (2,736)
Deferred stock-based
compensation
(unaudited)........... --
Amortization of deferred
stock-based
compensation
(unaudited)........... 236
Net loss and
comprehensive loss
(unaudited)........... (991)
--------
Balance, December 31, 1999
(unaudited)............. $ 13,784
========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-5
<PAGE>
INSILICON CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEARS ENDED SEPTEMBER 30, DECEMBER 31,
------------------------------ -------------------
1997 1998 1999 1998 1999
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss........................................... $(1,986) $ (7,101) $(12,082) $(1,315) $ (991)
Adjustments to reconcile net loss to
net cash provided by (used in) operating
activities:
Depreciation and amortization.................... 1,175 1,411 5,787 1,314 1,355
Write-off of in-process research and
development.................................... -- 4,250 -- -- --
Write-off of capitalized software................ -- 1,478 4,855 -- --
Stock-based compensation......................... -- -- -- -- 236
Changes in operating assets and liabilities:
Accounts receivable............................ (754) (402) (2,688) (1,518) 1,689
Other assets................................... (299) 546 33 108 (522)
Accounts payable............................... (421) 675 (625) (675) 173
Payroll and related liabilities................ 68 328 553 172 (464)
Other accrued liabilities...................... (11) 2,438 (171) (802) 117
------- -------- -------- ------- -------
Total adjustments............................ (242) 10,724 7,745 (1,401) 2,584
------- -------- -------- ------- -------
Net cash provided by (used in) operating
activities................................... (2,228) 3,623 (4,337) (2,716) 1,593
------- -------- -------- ------- -------
Cash flows from investing activities:
Purchases of short-term and long-term
investments.................................... (500) (338) -- -- --
Additions to computer software costs............. (1,774) (2,359) (712) (162) --
Purchases of property and equipment.............. (547) (625) (425) (163) (64)
Acquisition of Sand, net of cash acquired........ -- (15,573) -- -- --
------- -------- -------- ------- -------
Net cash used in investing activities.......... (2,821) (18,895) (1,137) (325) (64)
------- -------- -------- ------- -------
Cash flows from financing activities:
Increase (decrease) in net contribution from
stockholder.................................... 5,049 15,272 5,474 3,041 (1,529)
------- -------- -------- ------- -------
Net cash provided by (used in) financing
activities................................... 5,049 15,272 5,474 3,041 (1,529)
------- -------- -------- ------- -------
Change in cash and cash equivalents................ -- -- -- -- --
Cash and cash equivalents at beginning of period... -- -- -- -- --
------- -------- -------- ------- -------
Cash and cash equivalents at end of period......... $ -- $ -- $ -- -- --
======= ======== ======== ======= =======
Supplemental disclosure of cash flow information:
Non-cash portion of Sand acquisition contributed
by stockholder................................. $ -- $ 13,687 $ -- $ -- $ --
Issuance of common and preferred stock upon
capitalization, net of deferred taxes............ $ -- $ -- $ -- $ -- $ 2,736
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-6
<PAGE>
INSILICON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(INFORMATION AS OF DECEMBER 31, 1999 AND FOR THE THREE MONTHS ENDED
DECEMBER 31, 1998 AND 1999 IS UNAUDITED)

NOTE 1. DESCRIPTION OF OPERATIONS

inSilicon Corporation ("inSilicon" or the "Company") provides communications
semiconductor intellectual property, or SIP, that is used by semiconductor and
systems companies to design the complex semiconductors called systems-on-a-chip,
or SOCs, which are critical components of digital devices. The Company provides
SIP cores, related silicon subsystems and firmware to over 400 customers that
use its technologies in hundreds of different digital devices ranging from
network routers to cellular phones.

The Company was incorporated on November 1, 1999. Prior to that date, the
Company was operated as a division of Phoenix Technologies Ltd. ("Phoenix"). As
of November 30, 1999, the assets, liabilities and operations of the Company were
contributed by Phoenix to inSilicon in exchange for 10.4 million shares of
inSilicon's Series A preferred stock.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

FINANCIAL STATEMENT PRESENTATION. The consolidated financial statements
include the accounts of inSilicon and its wholly owned subsidiaries after the
elimination of all significant intercompany balances.

The consolidated balance sheets as of September 30, 1998 and 1999, and
December 31, 1999, have been prepared using the historical basis of accounting
and include all of the assets and liabilities specifically identifiable to the
Company and certain liabilities that are not specifically identifiable, for
which estimates have been used to allocate a portion of Phoenix's liabilities to
the Company. Until December 1999, cash management for the Company was performed
by Phoenix on a centralized basis and all cash provided by Phoenix was recorded
as equity contributions from Phoenix in these consolidated financial statements.

The consolidated statements of operations include all revenue and costs
attributable to the Company, including an allocation of the costs of facilities
and employee benefits. Additionally, corporate administration, finance and
management costs have been allocated by Phoenix to the Company based on certain
methodologies that management believes are reasonable under the circumstances
(see Note 5).

INTERIM FINANCIAL INFORMATION. The interim financial information as of
December 31, 1999 and for the three months ended December 31, 1998 and 1999 is
unaudited, but includes all adjustments, consisting only of normal recurring
adjustments, that the Company considers necessary for a fair presentation of its
consolidated financial position at that date and its consolidated results of
operations and cash flows for those periods. Operating results for the three
months ended December 31, 1999 are not necessarily indicative of results that
may be expected for any future periods.

FOREIGN CURRENCY TRANSLATION. The Company has determined that the
functional currency of its foreign operations is the local currency. Therefore,
assets and liabilities are translated at year-end exchange rates and
transactions are translated at average exchange rates prevailing during each
period. Translation gains and losses are recorded as a component of
stockholder's equity and transaction gains and losses are recorded in the
consolidated statement of operations in the period in which they occur.

F-7
<PAGE>
INSILICON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF DECEMBER 31, 1999 AND FOR THE THREE MONTHS ENDED
DECEMBER 31, 1998 AND 1999 IS UNAUDITED)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
To date, transaction and translation gains and losses related to foreign
currencies have not been significant.

USE OF ESTIMATES. The presentation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

REVENUE RECOGNITION. The Company's revenue is derived from license fees,
engineering services and maintenance and support services sold primarily to
systems and semiconductor companies. Revenue from software license fees is
generally recognized when a non-cancelable license agreement has been signed,
the software product has been shipped, there are no uncertainties surrounding
product acceptance, the fees are fixed and determinable, and collection of the
receivable is considered probable. Engineering services revenue is generally
recognized on a time-and-materials basis or when contractual milestones are met.
Maintenance revenue, which relates principally to maintenance and support
contracts, is generally recognized ratably over the contract period, which is
typically one year. Deferred revenue consists mostly of billings under
maintenance contracts in advance of revenue recognition.

The Company adopted the American Institute of Certified Public Accountants'
("AICPA") Statement of Position, or SOP, 97-2, "Software Revenue Recognition,"
and SOP 98-4, "Deferral of the Effective Date of a Provision of SOP 97-2,
Software Revenue Recognition," as of October 1, 1998. The adoption of SOP 97-2
and SOP 98-4 did not have a material impact on the Company's consolidated
financial statements or results of operations.

In December 1998, the AICPA issued SOP 98-9, "Modification of SOP 97-2,
Software Revenue Recognition, with Respect to Certain Transactions." SOP 98-9
amends SOP 98-4 to extend the deferral of the application of certain provisions
of SOP 97-2 with respect to the fair value of elements in multiple element
arrangements. The adoption of SOP 98-9 as of October 1, 1999 did not have a
material impact on the Company's consolidated financial statements for the three
months ended December 31, 1999 and such adoption is not expected to
significantly impact future periods. However, full implementation guidelines for
SOP 97-2, SOP 98-4 and SOP 98-9 have not been issued. Once available, the
current revenue recognition accounting practices may need to change and such
changes could effect the timing of the Company's future revenue recognition.

Allowances for estimated returns and customer credits are recorded in the
same period as the related revenue.

No customer accounted for more than 10% of revenue in fiscal years 1997,
1998 or 1999.

FAIR VALUE OF FINANCIAL INSTRUMENTS. The carrying values of the Company's
financial instruments, including accounts receivable, accounts payable and
accrued liabilities, approximate their fair values due to their short
maturities. The estimated fair values may not be representative of actual values
of the financial instruments that could be realized as of the period end or that
will be realized in the future.

BUSINESS AND CREDIT RISK. The Company's product revenues are concentrated
in the computer industry, which is highly competitive and rapidly changing.
Significant changes in the industry, customer

F-8
<PAGE>
INSILICON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF DECEMBER 31, 1999 AND FOR THE THREE MONTHS ENDED
DECEMBER 31, 1998 AND 1999 IS UNAUDITED)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
requirements, or customer buying behavior or the emergence of competitive
products with new capabilities or technologies could adversely affect operating
results.

Financial instruments that potentially subject the Company to concentrations
of credit risk consist principally of trade receivables. The Company extends
credit on open accounts to its customers and generally does not require
collateral. It performs ongoing credit evaluations of all customers and
establishes an allowance for doubtful accounts based upon factors surrounding
the credit risk of specific customers, historical trends and other information.
At September 30, 1998 and 1999, no customer accounted for 10% of accounts
receivable.

INVESTMENTS. Investments consist of non-controlling interests in private
company securities, which are recorded at cost. At September 30, 1998 and 1999,
and December 31, 1999, the fair value of such securities approximated cost and
unrealized holding gains were not material.

PROPERTY AND EQUIPMENT. Property and equipment are carried at cost and
depreciated using the straight-line method over the estimated useful life of the
assets, typically three to five years. Leasehold improvements are recorded at
cost and amortized over the lesser of the useful life of the assets or the
remaining term of the related lease.

COMPUTER SOFTWARE COSTS. Computer software costs consist of internally
developed and purchased software under the provisions of Statement of Financial
Accounting Standards No. 86, "COMPUTER SOFTWARE TO BE SOLD, LEASED OR OTHERWISE
MARKETED" ("SFAS 86"). Costs incurred in the research and development of new
software products and enhancements to existing products are expensed as incurred
until technological feasibility has been established, at which time such costs
are capitalized. Capitalized computer software costs are amortized over the
estimated economic life of the product, generally three to six years, using the
straight-line method or a ratio of current revenue to total anticipated revenue.

inSilicon evaluates the net realizable value of computer software costs on
an ongoing basis based upon gross expected future revenue to be generated from
each product less projected future costs of those sales, and records charges to
reduce carrying value to net realizable value, as necessary. In assessing
expected future revenue and costs, inSilicon relies on a number of factors,
including operating results, business plans, budgets and economic projections.
In addition, inSilicon's evaluation considers non-financial data such as market
trends and customer relationships, buying patterns and product development
cycles.

INCOME TAXES. Income taxes are accounted for in accordance with SFAS No.
109, "ACCOUNTING FOR INCOME TAXES" ("SFAS 109"). Under the asset and liability
method of SFAS 109, deferred tax assets and liabilities are recognized for
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities, and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates which apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period of enactment.

F-9
<PAGE>
INSILICON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF DECEMBER 31, 1999 AND FOR THE THREE MONTHS ENDED
DECEMBER 31, 1998 AND 1999 IS UNAUDITED)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The net losses incurred for fiscal years 1997, 1998 and 1999 are
attributable to the operations of the Company as a division of Phoenix and were
included in the income tax returns filed or to be filed by Phoenix. See Note 8.

STOCK-BASED COMPENSATION. The Company accounts for its stock option plans
and employee stock purchase plan in accordance with the provisions of the
Accounting Principles Board's Opinion No. 25, "ACCOUNTING FOR STOCK ISSUED TO
EMPLOYEES" ("APB 25"). The Company has adopted disclosure only criteria
described in SFAS No. 123, "ACCOUNTING FOR STOCK-BASED COMPENSATION" ("SFAS
123"). See Note 10. As a result, no expense has been recognized related to
employee options to purchase common stock granted with an exercise price equal
to fair market value at the date of grant.

The Company accounts for stock options and other equity instruments issued
to consultants and other non-employees under the provisions of Emerging Issues
Task Force Issue No. 98-16. The Company generally measures the fair value of
such equity instruments as of the date at which the non-employee's performance
under the grant is complete, with interim measurements of fair value as of dates
prior to the measurement date. Such amounts are charged to operations over the
period of performance.

NET LOSS PER SHARE. Through November 30, 1999, the Company was not a
separate legal entity and, as a division of Phoenix, had no historical capital
structure. Therefore, historical net loss per share amounts have not been
presented in the consolidated financial statements.

Pro forma net loss per share amounts for fiscal 1999 and for the three
months ended December 31, 1999, have been computed in accordance with SFAS 128,
"EARNINGS PER SHARE" to reflect the pro forma effect of the Company's
capitalization. Pro forma net loss per share has been computed by dividing the
pro forma net loss by the pro forma number of common shares outstanding, giving
effect to the issuance of preferred shares upon the capitalization of the
Company and the conversion of those preferred shares to common shares upon
completion of the Company's initial public offering of common stock.

COMPREHENSIVE INCOME. The Company adopted SFAS No. 130, "Reporting
Comprehensive Income" ("SFAS 130") which requires that all items that are
required to be recognized under accounting standards as components of
comprehensive income (revenues, expenses, gains and losses) be reported in the
consolidated financial statements. The Company adopted SFAS 130 effective
October 1, 1998. Comprehensive losses were not materially different from net
losses incurred for all periods presented.

SEGMENT INFORMATION. The Company has organized and managed its operations
in a single operating segment for all periods presented. Revenues from customers
outside of the United States were less than 10% of net revenues for all periods
presented in the accompanying consolidated statements of operations.

F-10
<PAGE>
INSILICON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF DECEMBER 31, 1999 AND FOR THE THREE MONTHS ENDED
DECEMBER 31, 1998 AND 1999 IS UNAUDITED)

NOTE 3. PROPERTY AND EQUIPMENT

Property and equipment consist of the following (in thousands):

<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------------
1998 1999
-------- --------
<S> <C> <C>
Equipment................................................. $ 2,345 $ 2,799
Leasehold improvements.................................... 7 --
Furniture and fixtures.................................... 187 165
------- -------
2,539 2,964
Less accumulated depreciation and amortization............ (1,062) (1,790)
------- -------
$ 1,477 $ 1,174
======= =======
</TABLE>

Depreciation and amortization expense related to property and equipment
totaled $277,000, $406,000 and $728,000 for fiscal years 1997, 1998 and 1999,
respectively.

NOTE 4. COMPUTER SOFTWARE COSTS

Costs associated with purchased and internally developed computer software
of $2.4 million and $711,000, were capitalized during fiscal years 1998 and
1999, respectively. In addition, inSilicon capitalized approximately $12.8
million of software costs in conjunction with its September 1998 acquisition of
Sand Microelectronics, Inc. ("Sand"). Amortization of computer software costs
charged to cost of revenue was $898,000, $1.0 million, and $2.8 million in
fiscal years 1997, 1998 and 1999, respectively. Accumulated amortization of
capitalized computer software costs was $3.2 million and $5.0 million at
September 30, 1998 and 1999, respectively.

NOTE 5. RELATED PARTY TRANSACTIONS

The Company has entered into an Independent Contractor Agreement with a
company in India of which an officer of the Company is a significant stockholder
for the provision of hardware and software development consulting services.
During fiscal year 1999, the Company paid or accrued $365,000 for services to
that company.

Prior to December 1999, the Company was operated as a division of Phoenix
and the Company's operations were funded entirely by Phoenix. Net financing
provided to the Company by Phoenix in fiscal years 1997, 1998 and 1999 was
approximately $5.0 million, $29.0 million and $5.5 million, respectively. These
cumulative contributions decreased by approximately $1.5 million in the three
months ended December 31, 1999.

For all periods through December 31, 1999, Phoenix has allocated a portion
of its domestic corporate expenses to its divisions, including the Company, in
accordance with SEC Staff Accounting Bulletin No. 55, "Allocation of Expenses
and Related Disclosure in Financial Statements of Subsidiaries, Divisions or
Lesser Business Components of Another Entity." These expenses have included
corporate communications, management, compensation and benefits administration,
payroll, accounts payable, income tax compliance, treasury and other
administration and finance overhead. Allocations and charges were based on
either a direct cost pass-through or a percentage allocation for

F-11
<PAGE>
INSILICON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF DECEMBER 31, 1999 AND FOR THE THREE MONTHS ENDED
DECEMBER 31, 1998 AND 1999 IS UNAUDITED)

NOTE 5. RELATED PARTY TRANSACTIONS (CONTINUED)
such services provided based on factors such as net revenue, headcount and
relative expenditure levels. Such allocations and corporate charges totaled
$2.5 million, $3.3 million, $8.3 million and $1.3 million for fiscal years 1997,
1998 and 1999, and the three months ended December 31, 1999, respectively.

Management believes that the basis used for allocating corporate services is
reasonable. While the terms of these transactions may differ from those that
would result from transactions among unrelated parties, management does not
believe such differences would be material.

The Company has entered into certain agreements with Phoenix effective
November 30, 1999 for the purpose of defining their ongoing relationship.

CONTRIBUTION AGREEMENT

Pursuant to the Contribution Agreement, Phoenix transferred to the Company
ownership of all assets reflected on the Company's consolidated balance sheet,
specified intellectual property and technology related to and necessary for
inSilicon to conduct its business, as well as customer and supplier contracts
related primarily to the semiconductor intellectual property business. As of the
effective date, the Company also assumed all liabilities from Phoenix primarily
resulting from operations of the business or resulting from any asset that
Phoenix transferred to the Company. For its contribution, Phoenix received
10,400,000 shares of inSilicon Series A Preferred Stock that convert to an equal
number of shares of common stock at the completion of the initial public
offering of common stock. The Company also issued to Phoenix a warrant to
purchase 50,000 shares of inSilicon common stock at $.01 per share, exercisable
at any time until May 31, 2002.

SERVICES AND COST-SHARING AGREEMENT

The Services and Cost-Sharing Agreement covers various services that Phoenix
provides to the Company and the method by which certain costs will be shared by
the companies. The services include data processing, telecommunications and
information technology support services, accounting, financial management, tax
preparation, payroll, stockholder and public relations, legal, human resources
administration, procurement, real estate management and other administrative
functions. The shared costs include the costs of the office space the Company
occupies at Phoenix's headquarters and insurance premiums.

The amount the Company will pay for services and shared costs will generally
be equal to the aggregate cost to Phoenix and inSilicon of the services and
costs multiplied by a percentage representing the number of the Company's
employees to the total number of Phoenix and inSilicon employees. The Services
and Cost-Sharing Agreement has an initial term that extends to June 30, 2000 for
all services other than accounting and an initial term that extends to
September 30, 2000 with respect to accounting services. The Services and
Cost-Sharing Agreement will be renewed on a month-to-month basis. Phoenix can
terminate after those dates on 30 days' written notice. The Company can
terminate any one or more of the services at any time on 30 days' written
notice.

F-12
<PAGE>
INSILICON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF DECEMBER 31, 1999 AND FOR THE THREE MONTHS ENDED
DECEMBER 31, 1998 AND 1999 IS UNAUDITED)

NOTE 5. RELATED PARTY TRANSACTIONS (CONTINUED)
TAX-SHARING AGREEMENT

The Company entered into a Tax-Sharing Agreement with Phoenix concerning
each party's obligations for various tax liabilities. The Tax-Sharing Agreement
provides that Phoenix generally will pay all federal, state, local and foreign
taxes relating to the Company's business before November 30, 1999. For any
taxable period after that date in which the Company is included in a Phoenix
consolidated or combined tax return, the agreement provides that the Company
will make payments to Phoenix based upon the amount of U.S. federal and state
income taxes that would have been paid by the Company had it and each of its
subsidiaries filed separate federal and state income tax returns, subject to
specific adjustments. Further, if the Company incurs losses on either a federal
or state basis that reduce Phoenix's consolidated or combined tax liability,
Phoenix will pay the Company an amount equal to the tax savings generated by the
Company's losses.

INITIAL PUBLIC OFFERING AGREEMENT

The Initial Public Offering Agreement governs the relationship between the
Company and Phoenix following the initial public offering in a number of
respects. Management does not believe that this Initial Public Offering
Agreement will have a significant impact on the Company's accounting practices
or financial reporting.

EMPLOYEE MATTERS AGREEMENT

The Company entered into an Employee Matters Agreement with Phoenix to
allocate assets, liabilities, and responsibilities relating to current and
former United States employees of inSilicon Corporation and their participation
in the benefit plans, including stock plans, that Phoenix currently sponsors and
maintains. Management does not believe that this Employee Matters Agreement will
have a significant impact on the Company's accounting practices or financial
reporting.

REGISTRATION RIGHTS AGREEMENT

The Registration Rights Agreement provides that, at Phoenix's request, the
Company will use its best efforts to register for sale under federal and state
securities laws any shares of inSilicon common stock (or any other securities
Phoenix receives in exchange for inSilicon common stock) that Phoenix owns,
subject to specified limitations. Phoenix also will have the right to include
its inSilicon shares in other registrations of common stock initiated by the
Company.

TECHNOLOGY DISTRIBUTOR AGREEMENT

The Company entered into arrangements with Phoenix to act as its sales
representative and distributor of its firmware technology in Japan and our full
line of technology and related services in the rest of Asia.

NOTE 6. BUSINESS COMBINATIONS

SAND MICROELECTRONICS, INC. In September 1998, Phoenix acquired Sand, a
leading supplier of standards-based system software and semiconductor
intellectual property for PCs and information

F-13
<PAGE>
INSILICON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF DECEMBER 31, 1999 AND FOR THE THREE MONTHS ENDED
DECEMBER 31, 1998 AND 1999 IS UNAUDITED)

NOTE 6. BUSINESS COMBINATIONS (CONTINUED)
appliances. The purchase price consisted of approximately $18.6 million in cash,
464,000 shares of Phoenix's common stock with a fair value of $2.7 million,
options to purchase approximately 264,000 shares of Phoenix's common stock with
a fair value of $1.6 million in exchange for Sand stock options, and up to $3.7
million in performance incentives to be paid through fiscal 2001. Of the total
performance incentives, approximately $1.6 million of minimum anticipated
payments was recorded as accrued merger costs. None of these costs had been paid
as of December 31, 1999.

The acquisition was accounted for using the purchase method of accounting.
Accordingly, the assets and liabilities of the acquired business are included in
the consolidated balance sheet as of September 30, 1998. The results of
operations of Sand from the date of acquisition through September 30, 1998 were
included in the accompanying consolidated statement of operations for the year
ended September 30, 1998.

The total purchase cost of approximately $33.7 million exceeded the assets
acquired as follows (in thousands):

<S> <C>
Total consideration......................................... $ 24,494
Liabilities assumed......................................... 7,749
Acquisition costs........................................... 1,465
--------
Total purchase cost......................................... 33,708
Less: Assets acquired....................................... (19,831)
Less: Acquired in-process research and development.......... (4,250)
--------
Excess of purchase cost over assets acquired................ $ 9,627
========
</TABLE>

The assets acquired include $12.8 million of software development costs
(that are being amortized on a straight-line basis over six years) and $2.8
million of other intangible assets (that are being amortized on a straight-line
basis over three to six years). The other intangible assets capitalized
represents the value of the distribution channel, assembled workforce and
related agreements acquired. The $9.6 million of excess of purchase cost over
assets acquired was recorded as goodwill and is being amortized on a
straight-line basis over six years. The Company regularly reviews the carrying
value of these intangible assets for impairment in accordance with SFAS
No. 121, "ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED
ASSETS TO BE DISPOSED OF." Any impairment to be recognized is measured by the
amount by which the carrying amount of the asset exceeds its fair market value.

The in-process research and development charge in fiscal year 1998 was an
allocation of a portion of the Sand purchase price for development projects that
were not yet capitalizable under the provisions of Statement of Financial
Accounting Standards No. 86, "Computer Software to be Sold, Leased or Otherwise
Marketed." The Sand projects under development upon acquisition related to the
development of semiconductor intellectual property technology designed for
various communications standards. The value of the in-process charge associated
with each project is the responsibility of Company management, and was
determined by estimating the future net cash flows from the project, and
discounting the net cash flows back to their present value. If these projects
are not successfully

F-14
<PAGE>
INSILICON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF DECEMBER 31, 1999 AND FOR THE THREE MONTHS ENDED
DECEMBER 31, 1998 AND 1999 IS UNAUDITED)

NOTE 6. BUSINESS COMBINATIONS (CONTINUED)
developed and/or marketed, future revenue and profitability of the Company may
be adversely affected. Additionally, the value of other intangible assets
acquired may become impaired.

The following pro forma, unaudited information includes the consolidated
results of operations for the years ended September 30, 1997 and 1998, as if the
Sand acquisition had occurred at the beginning of each period presented at the
purchase price established in September 1998. The results of operations are not
necessarily indicative of those which would have occurred had the acquisition
actually been made at the beginning of each of the respective periods presented
or of future operations of the combined companies. The pro forma results for
1997 combine inSilicon's results for the year ended September 30, 1997 with the
results of Sand for the year ended December 31, 1997. The pro forma results for
fiscal year 1998 combine inSilicon's results for the year ended September 30,
1998, with the results of Sand for the same period. Accordingly, the fiscal 1997
operating results included a three-month period (ended December 31, 1997) that
is also included in the fiscal 1998 operating results. Revenue and an operating
loss of $443,000 and $470,000 were recorded in this three-month period,
respectively. The following pro forma results for the years ended September 30,
1997 and 1998, include the straight-line amortization of acquired intangibles,
primarily over a period of six years; and the pro forma fiscal 1998 results
include a $4.3 million write-off of acquired in-process research and development
discussed above (in thousands):

<TABLE>
<CAPTION>
PRO FORMA,
UNAUDITED
-------------------
1997 1998
-------- --------
<S> <C> <C>
Revenue................................................... $10,135 $15,128
Net loss.................................................. (3,978) (9,761)
</TABLE>

AWARD SOFTWARE INTERNATIONAL, INC. Also in September 1998, Phoenix
completed a merger with Award Software International, Inc. ("Award"), a leading
provider of system enabling and management software for personal computers.
Phoenix exchanged approximately 8.8 million shares of its common stock for all
of the common stock of Award. Each share of Award was exchanged for 1.225 shares
of Phoenix common stock. In addition, outstanding Award employee stock options
were converted at the same exchange ratio into options to purchase approximately
2.3 million shares of Phoenix common stock. The merger was accounted for as a
pooling of interests. Certain of Award's operations were merged with inSilicon's
operations, and accordingly, inSilicon's consolidated financial statements
include the combined results of operations and financial position for all
periods and dates presented. The Award operations accounted for less than 10% of
the Company's revenue and operating costs for all periods prior to the merger.

Prior to the Award merger, Award's fiscal year ended on December 31. The
Award statement of income for the year ended December 31, 1997 has been combined
with the Company's statement of income for the year ended September 30, 1997. In
order to conform Award's year-end to the Company's year-end, the fiscal 1997
operating results include a three-month period (ended December 31, 1997) that is
also included in the fiscal 1998 operating results. During this three-month
period, Award generated revenue of $105,000 and a net loss of $118,000 related
to the Company's operations.

F-15
<PAGE>
INSILICON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF DECEMBER 31, 1999 AND FOR THE THREE MONTHS ENDED
DECEMBER 31, 1998 AND 1999 IS UNAUDITED)

NOTE 6. BUSINESS COMBINATIONS (CONTINUED)
The results of operations for the separate companies prior to the merger and
the combined amounts included in the consolidated financial statements were as
follows:

<TABLE>
<CAPTION>
NINE-MONTHS
YEAR ENDED ENDED
SEPTEMBER 30, 1997 JUNE 30, 1998
<S> <C> <C>
----------------------------------
<CAPTION>
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Revenue:
inSilicon..................................... $ 5,006 $ 6,001
Award......................................... 105 180
-------- --------
Combined...................................... $ 5,111 $ 6,181
======== ========

Net Loss:
inSilicon..................................... $ (1,868) $ (707)
Award......................................... (118) (523)
-------- --------
Combined...................................... $ (1,986) $ (1,230)
======== ========
</TABLE>

NOTE 7. MERGER AND RESTRUCTURING CHARGES

Merger and restructuring charges during the years ended September 30, 1998
and 1999, were as follows:

<TABLE>
<CAPTION>
1998 1999
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Restructuring............................................... $ 50 $1,195
Asset write-offs............................................ 1,478 4,855
In-process research and development......................... 4,250 --
------ ------
$5,778 $6,050
====== ======
</TABLE>

These charges were mostly related to the integration of Sand into inSilicon
and severance costs allocated to inSilicon from Phoenix related to the
elimination of certain corporate management positions.

1998 CHARGES

Included in the fourth quarter of fiscal 1998 was a charge of $5.8 million
related to the acquisition of Sand. Included in this charge was a $1.5 million
write-off of software development costs associated with semiconductor
intellectual property that were capitalized on the historical balance sheet of
inSilicon under SFAS 86. The write-off was calculated based upon the excess of
carrying value over the difference between the gross expected future revenue to
be generated and the projected future costs of such revenue, and related
primarily to projects that were redundant between inSilicon and Sand.

F-16
<PAGE>
INSILICON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF DECEMBER 31, 1999 AND FOR THE THREE MONTHS ENDED
DECEMBER 31, 1998 AND 1999 IS UNAUDITED)

NOTE 7. MERGER AND RESTRUCTURING CHARGES (CONTINUED)
The in-process research and development charge in fiscal 1998 was an
allocation of a portion of the purchase price for Sand for projects that were
not yet capitalizable under the provisions of SFAS 86.

1999 CHARGES

Included in fiscal 1999 was a restructuring charge of $6.1 million due to
the write-off of $4.9 million of capitalized software development costs and
approximately $1.2 million of severance and other costs allocated from Phoenix.
The capitalized software development cost write-off was calculated based upon
the excess of carrying value over the difference between the gross expected
future revenue to be generated and the projected future costs of such revenue,
and was related primarily to reduced revenue expectations due to changing market
conditions. The severance and other costs allocated from Phoenix related to the
elimination of nine Phoenix corporate management positions ($1.1 million) and
three inSilicon positions ($90,000). The severance costs incurred for the
Phoenix positions were allocated to the Company based upon relative headcount,
consistent with the allocation of other Company costs incurred by Phoenix.

None of the fiscal 1998 merger and restructuring charges and approximately
$200,000 of the fiscal 1999 restructuring charges were unpaid as of
December 31, 1999. The remaining unpaid charges will mostly be paid in fiscal
year 2000.

NOTE 8. INCOME TAXES

The net losses incurred through November 30, 1999, are attributable to the
operations of the Company as a division of Phoenix and were included in the
income tax returns filed or to be filed by Phoenix. Because the Company will not
receive any benefit for its historical operating losses incurred through
November 30, 1999, no income tax benefit has been reflected for the periods
presented.

The unaudited pro forma net losses for fiscal 1999 and for the three months
ended December 31, 1999, give effect to income tax credits related to the
reversal of deferred income tax liabilities in connection with the Company's
acquisition of Sand. These credits would have been recorded had the Company
operated as a separate, stand-alone entity.

In conjunction with the capitalization of the Company as of November 30,
1999, a net deferred tax liability of $2.7 million was transferred by Phoenix to
the Company, representing the future tax effects of historical temporary
book/tax differences applicable to the Company.

The Company and Phoenix have entered into a tax-sharing agreement. See
Note 5. In general, the Company will be included in Phoenix's consolidated group
for federal income tax purposes for so long as Phoenix beneficially owns at
least 80% of the total voting power and value of the Company's outstanding
stock.

F-17
<PAGE>
INSILICON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF DECEMBER 31, 1999 AND FOR THE THREE MONTHS ENDED
DECEMBER 31, 1998 AND 1999 IS UNAUDITED)

NOTE 9. STOCKHOLDER'S EQUITY

In November 1999, the Company issued 10,400,000 shares of Series A
convertible preferred stock and a warrant to purchase 50,000 shares of common
stock to Phoenix in exchange for its accumulated net investment. The rights and
preferences of each Series A preferred share are as follows:

- liquidation preference of $8.66;

- voting rights equal to one vote for each share of common stock into which
such convertible preferred stock could be converted;

- convertible into one share of common stock at the option of the holder;
and

- automatically converted into one share of common stock upon the sale of
common stock in a public offering pursuant to a registration statement
under the Securities Act of 1933, as amended, with proceeds of greater
than $10 million and a price to the public of at least $7.50 per share.

The warrant has an exercise price of $0.01 per share, is immediately
exercisable and expires May 31, 2002.

NOTE 10. EMPLOYEE BENEFIT PLANS

Employees of the Company have historically participated in stock-based
compensation and savings plans that are administered through Phoenix and involve
options to acquire Phoenix's common stock.

EMPLOYEE STOCK PURCHASE PLAN. Phoenix has an employee stock purchase plan
for all eligible employees. Under the terms of the plan, shares of Phoenix's
common stock may be purchased at six-month intervals at 85% of the lower of the
fair market value on the first or the last day of each six-month period.
Employees may purchase shares having a value not exceeding 10% of their gross
compensation during an offering period. During fiscal 1997, 1998 and 1999,
employees of the Company purchased approximately 7,000, 20,000 and 61,000 shares
under the Phoenix plan at average prices of $12.37, $9.96 and $5.92 per share,
respectively.

401(K) SAVINGS PLAN. Phoenix has a retirement plan ("401(k) Plan") that is
intended to qualify under Section 401(k) of the Internal Revenue Code. This plan
covers U.S. employees who meet minimum age and service requirements and allows
participants to defer a portion of their annual compensation on a pre-tax basis.
In addition, Company contributions to the 401(k) Plan may be made at the
discretion of the board of directors. Phoenix has historically made matching
contributions of 25% of each participant's contribution, up to a match of $1,000
per year per participant. Matching contributions vest over a four-year period
which starts with the participant's employment start date with Phoenix.
Phoenix's matching contributions for employees of the Company were approximately
$17,000, $29,000 and $30,000 in fiscal 1997, 1998 and 1999, respectively.

STOCK OPTION PLANS. Phoenix has various stock option plans for employees,
officers, consultants and independent contractors. Incentive stock options under
these Phoenix plans may not be granted at a price less than 100% (110% in
certain cases) of the fair market value of the shares on the date of grant.
Nonqualified options may not be granted at a price less than 85% of the fair
value of the shares

F-18
<PAGE>
INSILICON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF DECEMBER 31, 1999 AND FOR THE THREE MONTHS ENDED
DECEMBER 31, 1998 AND 1999 IS UNAUDITED)

NOTE 10. EMPLOYEE BENEFIT PLANS (CONTINUED)
on the date of grant. Options vest over a period determined by the board of
directors, generally four years, and have a term not exceeding ten years.

The following table sets forth the option activity under Phoenix's and in
Silicon's option plans for all employees of the Company. Phoenix shares have
been restated to equivalent inSilicon shares based upon the appropriate exchange
ratio. See further discussion of the exchange ratio below in Note 10.

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
SHARES EXERCISE PRICE
--------- --------------
<S> <C> <C>
Shares under option, September 30, 1996.............. 493,268 $3.60

Options granted...................................... 361,476 5.64
Options exercised.................................... (87,086) 0.17
Options canceled..................................... (31,885) 5.38
--------- -----
Shares under option, September 30, 1997.............. 735,773 4.94

Options granted...................................... 494,128 2.78
Options exercised.................................... (28,029) 0.17
Options canceled..................................... (57,798) 6.98
--------- -----
Shares under option, September 30, 1998.............. 1,144,074 4.02

Options granted...................................... 639,390 5.33
Options exercised.................................... (156,767) 0.80
Options canceled..................................... (154,749) 6.00
--------- -----
Shares under option, September 30, 1999.............. 1,471,948 4.72
Options granted (unaudited).......................... 1,036,621 7.37
Options exercised (unaudited)........................ (14,092) 1.76
Phoenix options not exchanged (unaudited)............ (133,486) 6.87
--------- -----
Shares under option, December 31, 1999 (unaudited)... 2,348,844 $6.14
========= =====
</TABLE>

The following table summarizes information about Phoenix's stock options
outstanding at September 30, 1999, on an as-converted basis to the Company's
shares:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
-------------------------------------- OPTIONS EXERCISABLE
WEIGHTED -----------------------------
NUMBER AVERAGE WEIGHTED NUMBER
OUTSTANDING REMAINING AVERAGE EXERCISABLE WEIGHTED
AT SEPT. 30, CONTRACTUAL EXERCISE AT SEPT. 30, AVERAGE
RANGE OF EXERCISE PRICES 1999 LIFE (YEARS) PRICE 1999 EXERCISE PRICE
- ------------------------ ------------ ------------ -------- ------------ --------------
<S> <C> <C> <C> <C> <C>
$0.06 - $0.44........................ 76,789 6.89 $0.18 33,294 $0.19
$0.56 - $2.82........................ 254,815 6.45 0.72 90,410 1.02
$2.96 - $4.66........................ 394,565 8.72 4.12 100,328 4.00
$4.70 - $7.42........................ 513,076 9.50 5.91 52,620 6.37
$7.45 - $10.67....................... 232,703 7.33 8.99 167,176 9.29
--------- ---- ----- ------- -----
1,471,948 8.28 $4.72 443,828 $5.38
========= ==== ===== ======= =====
</TABLE>

F-19
<PAGE>
INSILICON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF DECEMBER 31, 1999 AND FOR THE THREE MONTHS ENDED
DECEMBER 31, 1998 AND 1999 IS UNAUDITED)

NOTE 10. EMPLOYEE BENEFIT PLANS (CONTINUED)
In December 1999, the Company's stockholder authorized the 1999 Stock Option
Plan for the issuance of up to 2,700,000 shares of common stock to employees,
officers, directors and independent contractors. Incentive stock options may be
granted under this plan at a price not less than 100% (110% in some cases) of
the fair market value of the shares on the date of grant. Non-qualified options
may be granted at a price not less than 85% of the fair value of the shares on
the date of the grant.

In December 1999, the Company implemented a program under which options to
purchase shares of Phoenix common stock held by inSilicon employees could be
exchanged for options to purchase the Company's common stock under the 1999
Stock Option Plan. The exchange was based upon a ratio of 1.862 shares of
inSilicon common stock for each share of Phoenix common stock. Options to
purchase 1,358,779 shares of inSilicon common stock with an average exercise
price of $5.25 were issued under this exchange program. The new options have
comparable terms and vesting schedules and, at the date of the exchange, had
equivalent intrinsic value and ratio of exercise price to fair value of common
stock as the exchanged Phoenix options.

In December 1999, the Company granted options to employees, directors and
consultants to purchase 990,065 shares of common stock under the 1999 Stock
Option Plan. These options have exercises prices that were less than the per
share value of the Company's common stock on the date of grant, and therefore
the Company recorded deferred stock compensation associated with these grants of
approximately $1.4 million. In addition, the Company recorded deferred
compensation of $219,000 related to certain performance-based options held by an
officer of the Company to acquire 65,170 shares of common stock issued in
exchange for similar options granted by Phoenix. This deferred stock
compensation will be amortized over the vesting period of the underlying
options, generally straight-line over four years. As of December 31, 1999,
options to purchase 1,651,156 shares were available for future grants under this
plan.

FAIR VALUE DISCLOSURES. Pro forma information regarding net loss is
required by SFAS 123. This information is required to be determined as if
Phoenix had accounted for its employee stock options granted to inSilicon
employees under the fair value method of that statement. The fair value of
options granted in fiscal 1997, 1998 and 1999, reported below has been estimated
as of the date of the grant using a Black-Scholes multiple option pricing model
with the following assumptions:

<TABLE>
<CAPTION>
EMPLOYEE STOCK PURCHASE
EMPLOYEE STOCK OPTIONS PLAN
------------------------------ ------------------------------
1997 1998 1999 1997 1998 1999
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Expected life from vest date (in years).......... 0.70 0.70 0.70 0.50 0.50 0.50
Risk-free interest rate.......................... 6-7% 6-7% 5-6% 6-7% 6-7% 5-6%
Volatility....................................... 0.63 0.57 0.56 0.63 0.57 0.56
Dividend yield................................... None None None None None None
</TABLE>

The weighted average estimated fair value of employee stock options granted
during fiscal 1997, 1998 and 1999, was $4.25, $4.03 and $2.35 per share,
respectively. The weighted average estimated fair value of shares granted under
the Purchase Plan during fiscal 1997, 1998 and 1999 was $2.21, $1.97 and $1.15,
respectively. For purposes of pro forma disclosures, the estimated fair value of
the options is amortized to expense over the vesting period of the options. Had
compensation costs for inSilicon's

F-20
<PAGE>
INSILICON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF DECEMBER 31, 1999 AND FOR THE THREE MONTHS ENDED
DECEMBER 31, 1998 AND 1999 IS UNAUDITED)

NOTE 10. EMPLOYEE BENEFIT PLANS (CONTINUED)
stock-based compensation plans been determined based on the fair value at the
grant date for awards under those plans consistent with the method of SFAS 123,
inSilicon's net loss for the years ended September 1997, 1998 and 1999, would
have been $2.4 million, $7.7 million, and $12.2 million, respectively.

NOTE 11. SUBSEQUENT EVENTS

In January 2000, the Board of Directors of the Company approved the filing
of a registration statement by the Company under the Securities Act of 1933, as
amended, relating to an initial public offering of the Company's common stock.

In January 2000, the Company entered into a $5.0 million secured bank line
of credit agreement that will be effective upon the closing of an underwritten
public offering. Borrowings on the line bear interest at the bank's prime rate
plus 0.25%. The line of credit agreement contains various covenants that require
the Company to meet certain financial ratios. The line of credit is secured by
the assets of the Company and expires in January 2001.

In January 2000, the Company's stockholders authorized the 2000 employee
stock purchase plan. Under the terms of the plan, employees may elect to deduct
up to 10% of their total compensation to purchase the Company's common stock.
The plan contains consecutive, overlapping, twenty-four month offering periods,
and each offering period includes four six-month purchase periods. Purchases of
Company stock are made at the end of each purchase period at a price generally
equal to 85% of the lower of the fair market value of the common stock either at
the beginning of the offering period or at the end of the purchase period. A
total of 250,000 shares of common stock have been reserved for issuance under
this 2000 purchase plan, plus annual increases equal to the lesser or
(a) 0.3125% of the outstanding shares on the last day of the prior fiscal year
and (b) 100,000 shares.

F-21
<PAGE>
REPORT OF PRICEWATERHOUSECOOPERS LLP, INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders
of Sand Microelectronics, Inc.

In our opinion, the accompanying balance sheets and the related statements
of operations, of shareholders' equity and of cash flows present fairly, in all
material respects, the financial position of Sand Microelectronics, Inc. at
December 31, 1996 and 1997, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.

/s/ PRICEWATERHOUSECOOPERS LLP
San Jose, California
March 30, 1998

F-22
<PAGE>
SAND MICROELECTRONICS, INC.
BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1996 1997
-------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $601,000 $3,116,000
Accounts receivable....................................... 127,000 188,000
Prepaid expenses and other current assets................. 34,000 22,000
Deferred tax assets....................................... 35,000 158,000
-------- ----------

Total current assets.................................... 797,000 3,484,000

Property and equipment, net................................. 121,000 209,000
Deposits.................................................... 5,000 5,000
-------- ----------
$923,000 $3,698,000
======== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 45,000 $ 71,000
Accrued liabilities....................................... 26,000 141,000
Income taxes payable...................................... 98,000 897,000
Sales taxes payable....................................... 18,000 24,000
Current portion of capital leases......................... 13,000 32,000
Current portion of notes payable to founders.............. 40,000 20,000
Deferred revenue.......................................... 300,000 730,000
-------- ----------
Total current liabilities............................... 540,000 1,915,000

Notes payable to founders, net of current portion........... 20,000 --
Capital lease obligations, long term........................ 12,000 12,000
-------- ----------
572,000 1,927,000
======== ==========

Commitments (Note 7)

Shareholders' equity:
Common stock, no par value; 50,000,000 shares authorized;
12,000,000 and 12,107,000 shares issued and
outstanding............................................. 5,000 9,000
Retained earnings......................................... 346,000 1,762,000
-------- ----------

Total shareholders' equity.............................. 351,000 1,771,000
-------- ----------
$923,000 $3,698,000
======== ==========
</TABLE>

F-23
<PAGE>
SAND MICROELECTRONICS, INC.
STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1997
---------- ----------
<S> <C> <C>
Revenues:
Licenses.................................................. $1,478,000 $4,330,000
Maintenance, engineering services and other services...... 344,000 694,000
---------- ----------
Net revenues............................................ 1,822,000 5,024,000
========== ==========

Cost of net revenue
Licenses.................................................. 8,000 8,000
Maintenance, engineering services and other services...... 140,000 93,000
---------- ----------
Cost of net revenues.................................... 148,000 101,000
---------- ----------

Gross profit................................................ 1,674,000 4,923,000
---------- ----------
Operating expenses:
Research and development.................................. 738,000 1,562,000
Sales and marketing....................................... 437,000 652,000
General and administrative................................ 177,000 416,000
---------- ----------
Total operating expenses................................ 1,352,000 2,630,000
---------- ----------
Income from operations...................................... 322,000 2,293,000

Interest income............................................. 8,000 75,000
Interest expense............................................ (6,000) (8,000)
---------- ----------
Income before provision for income taxes.................... 324,000 2,360,000

Provision for income taxes.................................. (121,000) (944,000)
---------- ----------
Net income.................................................. $ 203,000 $1,416,000
========== ==========
</TABLE>

F-24
<PAGE>
SAND MICROELECTRONICS, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK TOTAL
--------------------- RETAINED SHAREHOLDERS'
SHARES AMOUNT EARNINGS EQUITY
---------- -------- ---------- -------------
<S> <C> <C> <C> <C>
Balance at December 31, 1995..................... 12,000,000 $5,000 $ 143,000 $ 148,000
Net income....................................... -- -- 203,000 203,000
---------- ------ ---------- ----------
Balance at December 31, 1996..................... 12,000,000 5,000 346,000 351,000

Issuance of Common Stock......................... 2,000 1,000 -- 1,000
Exercise of Common Stock options................. 105,000 3,000 -- 3,000
Net income....................................... -- -- 1,416,000 1,416,000
---------- ------ ---------- ----------
Balance at December 31, 1997..................... 12,107,000 $9,000 $1,762,000 $1,771,000
========== ====== ========== ==========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-25
<PAGE>
SAND MICROELECTRONICS, INC.
STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1997
--------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $203,000 $1,416,000

Adjustments to reconcile net income to net cash provided
by
operating activities:
Depreciation.......................................... 37,000 82,000
Changes in assets and liabilities:
Accounts receivable................................. (58,000) (61,000)
Prepaid expenses and other current assets........... (38,000) 12,000
Accounts payable.................................... 56,000 26,000
Accrued liabilities................................. (48,000) 115,000
Taxes payable....................................... 75,000 682,000
Deferred revenue.................................... 278,000 430,000
-------- ----------
Net cash provided by operating activities......... 505,000 2,702,000
-------- ----------

Cash flows from investing activities:
Purchases of property and equipment..................... (93,000) (127,000)
-------- ----------
Net cash used in investing activities............. (93,000) (127,000)
-------- ----------
Cash flows from financing activities:
Proceeds from issuance of Common Stock.................. -- 4,000
Repayment of notes payable.............................. -- (40,000)
Principal payment of capital lease obligations.......... (1,000) (24,000)
-------- ----------
Net cash (provided by) used in financing
activities...................................... (1,000) (60,000)
-------- ----------
Net increase in cash and cash equivalents................... 411,000 2,515,000

Cash and cash equivalents at beginning of year.............. 190,000 601,000
-------- ----------

Cash and cash equivalents at end of year.................... $601,000 $3,116,000
======== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes.............................. $ 43,000 $ 152,000
Cash paid for interest.................................. 6,000 8,000
Capital leases for equipment............................ 26,000 43,000
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-26
<PAGE>
SAND MICROELECTRONICS, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 1--THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

THE COMPANY

Sand Microelectronics, Inc., (the "Company"), designs, develops and markets
semiconductor intellectual property ("IP") with a focus on connectivity
standards, such as IEEE 1394, USB and PCI. The Company licenses IP
(synthesizable cores and related tools) to systems and semiconductor companies
in the computer, communication and consumer markets. The Company was
incorporated in California in June 1991.

Following is a summary of the Company's significant accounting policies.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

REVENUE RECOGNITION

The Company's revenues are derived from product licenses, support and
engineering services. Annual maintenance services are charged separately from
product licenses.

Product license fees are recognized upon shipment if no significant vendor
obligations remain and if collection of the resulting receivable is considered
probable. In instances where significant vendor obligations exist, revenue
recognition is delayed until the obligation has been satisfied.

Annual support revenues consist of ongoing support and product updates and
are recognized ratably over the term of the related contract. Payments received
in advance of revenue recognition are recorded as deferred revenue. Engineering
and other services consist of contract consulting, training and development
services and the related revenue is recognized as the services are performed.

CASH EQUIVALENTS

The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents. Cash
equivalents consist primarily of certificates of deposit, money market accounts
and savings accounts, the fair value of which approximates cost.

SIGNIFICANT CUSTOMERS AND CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to a
concentration of credit risk consist of cash equivalents, short-term investments
and accounts receivable. The Company deposits cash and cash equivalents with
high credit quality financial institutions. The Company's accounts receivable
are derived from revenue earned primarily from customers located in the U.S.,
Japan and Germany. Export sales, principally to Japan and Europe, are generally
transacted in U.S. dollars and represented 4% and 2%, respectively, of net
revenues in 1996 and 14% and 12%, respectively, of net revenues in 1997. The
Company performs ongoing credit evaluations of its customers' financial
condition and, generally,

F-27
<PAGE>
SAND MICROELECTRONICS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 1--THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
requires no collateral from its customers. The Company maintains an allowance
for doubtful accounts receivable based upon the expected collectibility of all
accounts receivable.

At December 31, 1996, approximately 78% of total accounts receivable
represented amounts due from three customers. At December 31, 1997,
approximately 81% of total accounts receivable represented amounts due from five
customers. Sales to two of the Company's customers accounted for 33% and 12% of
net revenues for the year ended December 31, 1996, and 14% and 12% of net
revenues for the year ended December 31, 1997.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the assets,
generally three to seven years.

SOFTWARE DEVELOPMENT COSTS

Software development costs are classified as research and development and
are expensed as incurred and capitalized once technological feasibility is
established. The capitalized costs are then amortized on a straight-line basis
over the estimated product life, or based on the ratio of current revenues to
total projected product revenues, whichever is greater. To date, no software
development costs have been capitalized.

INCOME TAXES

The Company utilizes the liability method of accounting for income taxes.
Under the liability method, deferred tax liabilities and assets are recognized
for the expected future tax consequences of temporary differences between the
carrying amounts and the tax bases of the Company's assets and liabilities.

STOCK-BASED COMPENSATION

The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees," ("APB No. 25") and related interpretations in
accounting for its stock-based compensation plans, as permitted by Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("FAS No. 123"). FAS 123 defines a "fair value" based method of
accounting for an employee stock option or similar equity instrument and
encourages, but does not require, entities to adopt that method of accounting
for their employee stock compensation plans. The Company has adopted, as
required, the disclosure provisions of FAS 123. The pro forma disclosures of the
difference between compensation cost included in net income under APB 25 and the
related cost measured by the fair value method of FAS 123 are presented in
Note 6.

RECENT ACCOUNTING PRONOUNCEMENTS

In October 1997, the American Institute of Certified Public Accountants
issued Statement of Position No. 97-2 ("SOP 97-2"), "Software Revenue
Recognition," which the Company is required to adopt for transactions entered
into in the fiscal year beginning January 1, 1998. SOP 97-2 provides guidance on
recognizing revenue on software transactions and supersedes SOP 91-1, "Software

F-28
<PAGE>
SAND MICROELECTRONICS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 1--THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
Revenue Recognition." The Company believes that the adoption of SOP 97-2 will
not have a significant impact on its current licensing or revenue recognition
practices.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value of the Company's financial instruments, including
accounts receivable, accounts payable and accrued liabilities, approximate fair
value due to their short maturities. The carrying value of the Company's
long-term debt approximates fair value as its interest rates approximate market
rates for borrowings with similar terms and maturities.

NOTE 2--BALANCE SHEET COMPONENTS:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1996 1997
-------- --------
<S> <C> <C>
PROPERTY AND EQUIPMENT
Computers, lab equipment and software..................... $198,000 $345,000
Furniture, fixtures and office equipment.................. 4,000 27,000
-------- --------
202,000 372,000
Less: Accumulated depreciation and amortization........... (81,000) (163,000)
-------- --------
$121,000 $209,000
======== ========
ACCRUED LIABILITIES
Vacation.................................................. $ 14,000 $ 31,000
Sales commission.......................................... -- 35,000
Other..................................................... 12,000 75,000
-------- --------
$ 26,000 $141,000
======== ========
</TABLE>

NOTE 3--RELATED PARTY TRANSACTIONS:

SAND MICROELECTRONICS PVT. LTD., INDIA

The Company obtains consulting services from Sand Microelectronics
Pvt. Ltd., India ("Sand India") which is 100% owned by the owners of Sand
Microelectronics, Inc.

Purchases from Sand India for the years ended December 31, 1996 and 1997 of
$61,000 and $178,000, respectively, are for consulting for design and
engineering services. There were no receivables or payables outstanding at
December 31, 1996 and 1997.

On January 22, 1998, the Company entered into a contract for $300,000 for
engineering services from Sand India. Payment terms are $30,000 per month,
commencing in January 1998.

F-29
<PAGE>
SAND MICROELECTRONICS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 3--RELATED PARTY TRANSACTIONS: (CONTINUED)
ASPEN TECHNOLOGIES PVT. LTD. INDIA

From time to time the company obtains consulting services from Aspen
Technologies ("Aspen") which is partially owned by the owners of Sand
Microelectronics, Inc.

There were no purchases from Aspen Technologies for the years ended
December 31, 1996 and 1997. There were no receivables/payables outstanding at
December 31, 1996 and 1997.

NOTES PAYABLE TO FOUNDERS

<TABLE>
<CAPTION>
DECEMBER 31
-------------------
1996 1997
-------- --------
<S> <C> <C>
10% note; interest payable December 31, 1997; matures
January 1998.............................................. $60,000 $20,000
Less current portion........................................ (40,000) (20,000)
------- -------
Long-term portion of notes payable to founders $20,000 $ --
======= =======
</TABLE>

NOTE 4--INCOME TAXES:

The provisions for income taxes consist of the following, for the years
ended December 31, 1996 and 1997:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------
1996 1997
-------- ---------
<S> <C> <C>
Current tax expense:
Federal................................................... $124,000 $ 840,000
State..................................................... 27,000 207,000
Foreign................................................... 5,000 20,000
-------- ---------
156,000 1,067,000
-------- ---------
Deferred tax benefit:
Federal................................................... (30,000) (105,000)
State..................................................... (5,000) (18,000)
-------- ---------
(35,000) (123,000)
-------- ---------
Provision for income taxes.................................. $121,000 $ 944,000
======== =========
</TABLE>

Deferred income tax assets consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1996 1997
-------- --------
<S> <C> <C>
Deferred revenue.......................................... $30,000 $126,000
Nondeductible reserves and other.......................... 5,000 32,000
------- --------
Total................................................... $35,000 $158,000
======= ========
</TABLE>

F-30
<PAGE>
SAND MICROELECTRONICS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 4--INCOME TAXES: (CONTINUED)
Differences between the Company's effective tax rate and the federal
statutory rate were as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1996 1997
---- ----
<S> <C> <C>
Federal statutory rate...................................... 35% 35%
Research and development tax credit......................... (8%) (3%)
State taxes (net of federal benefit)........................ 8% 9%
Non deductible expenses..................................... 1% 1%
Other....................................................... 1% (2%)
------- -------
Effective tax rate.......................................... 37% 40%
======= =======
</TABLE>

NOTE 5--BORROWINGS:

LINE OF CREDIT

In December 1997, the Company entered into a line of credit agreement ("Line
of Credit") with a bank, which allows the Company to borrow up to $500,000
through December 14, 1998. At December 31, 1997, the Company has not drawn down
on the Line of Credit. The Line of Credit bears interest at the bank's prime
rate plus 0.5% (8.5% at December 31, 1997). Borrowings are secured by
substantially all of the Company's assets. The credit agreement requires the
Company to meet certain financial covenants including quick ratio, tangible net
worth and profitability requirements. At December 31, 1997, the Company met all
such requirements.

EQUIPMENT LEASE

At December 31, 1996, the Company had $25,000 outstanding and due under
various equipment lease financings. These financings expire in October 1998 and
accrue interest at a rate of 11.8% per annum. At December 31, 1997, the Company
had $44,000 outstanding and due under various equipment lease financings. These
financings expire between January 1998 and May 1999, and accrue interest at a
rate of 11.8% to 15.4% per annum.

NOTE 6--EMPLOYEE STOCK OPTION AND BENEFIT PLANS:

In 1995, the Company adopted a stock option plan (the "Plan"). The Plan
provides for the granting of nonqualified stock options to employees and
consultants of the Company. At December 31, 1997, the Company has reserved
2,000,000 shares of Common Stock for issuance under the Plan.

F-31
<PAGE>
SAND MICROELECTRONICS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 6--EMPLOYEE STOCK OPTION AND BENEFIT PLANS: (CONTINUED)
Plan activity was as follows:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
--------------------
WEIGHTED
OPTIONS AVERAGE
AVAILABLE NUMBER OF EXERCISE
FOR GRANT OPTIONS PRICE
--------- --------- --------
<S> <C> <C> <C>
Outstanding at December 31, 1995............................ 1,930,000 70,000 $0.03
Options granted........................................... (625,000) 625,000 0.04
Options canceled.......................................... 15,000 (15,000) 0.10
--------- -------- -----

Outstanding at December 31, 1996............................ 1,320,000 680,000 0.04
Options granted........................................... (68,750) 68,750 0.14
Options canceled.......................................... 2,500 (2,500) 0.15
Options exercised......................................... -- (105,000) 0.03
--------- -------- -----

Balance at December 31, 1997................................ 1,253,750 641,250 $0.05
========= ======== =====
</TABLE>

Stock option grants to date have been made at prices that were no less than
fair value of the underlying stock on the date of grant. Fair value of Sand
common stock is determined periodically in good faith by the board of directors.

At December 31, 1996 and 1997, options to purchase 17,500 and 191,250,
respectively, were exercisable.

The following table summarizes information about employee and consultant
stock options outstanding at December 31, 1997:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
--------------------------------------- OPTIONS EXERCISABLE
WEIGHTED -----------------------
NUMBER AVERAGE WEIGHTED NUMBER WEIGHTED
OUTSTANDING AT REMAINING AVERAGE EXERCISABLE AVERAGE
EXERCISE DECEMBER 31, CONTRACTUAL EXERCISE DECEMBER 31, EXERCISE
PRICE PER SHARE 1997 LIFE PRICE 1997 PRICE
- --------------- -------------- ----------- -------- ------------ --------
<S> <C> <C> <C> <C> <C>
$0.03 488,750 8.64 $0.03 165,000 $0.03
0.10 90,000 8.20 0.10 26,250 0.10
0.15 62,500 9.71 0.15 -- 0.15
------- ---- ----- ------- -----
641,250 8.68 0.05 191,250 0.04
======= ==== ===== ======= =====
</TABLE>

On February 6, 1998, the Company adopted the 1998 Incentive Stock Option
Plan and 1,253,750 shares remaining in the previous plan were reserved for under
this new plan.

F-32
<PAGE>
SAND MICROELECTRONICS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 6--EMPLOYEE STOCK OPTION AND BENEFIT PLANS: (CONTINUED)
PRO FORMA DISCLOSURES

Had compensation cost for the Plan been determined based on the fair value
of each stock option grant on its grant date, as prescribed in FAS 123, the
Company's net income would have been as follows:

<TABLE>
<CAPTION>
DECEMBER 31, YEAR ENDED
-----------------------
1996 1997
---------- ----------
<S> <C> <C>
Net income after taxes:
As reported............................................... $1,416,000 $ 203,000

Pro forma................................................. $1,414,000 $ 202,000
</TABLE>

The fair value of each option grant is estimated on the date of grant using
the minimum value method with the following assumptions used for grants during
the respective years:

<TABLE>
<CAPTION>
DECEMBER 31, YEAR ENDED
-----------------------
1996 1997
---------- ----------
<S> <C> <C>
Expected life (in years).................................... 4 4
Risk-free interest rate..................................... 6.48% 6.23%
Volatility.................................................. 0% 0%
Dividend yield.............................................. 0% 0%
</TABLE>

The weighted average fair value of options granted was $0.01 per share for
the year ended December 31, 1996 and $0.03 for the year end December 31, 1997.

Because additional option grants are expected to be made each year, the
above pro forma disclosures are not representative of the pro forma effects on
option grants on reported net income for future years.

The Company offers its employees a 401(k) plan that qualifies as a deferred
salary arrangement under Section 401 of the Internal Revenue Code. Under the
401(k) plan, participating employees may defer a portion of their pretax
earnings not to exceed certain statutorily specified amounts ($9,500 for the
calendar year 1997). The Company, at its discretion, may make contributions for
the benefit of eligible employees. In fiscal 1997, the Company made
contributions of $26,000 under the 401(k) plan.

NOTE 7--COMMITMENTS:

LEASES

The Company leases equipment and office space under noncancelable operating
and capital leases. In January 1998, the Company entered into a sublease
agreement for a portion of its primary office facility with a third party. Rent
expense for the years ended December 31, 1996 and 1997 was $63,000 and $51,000,
respectively. The terms of the facility lease provide for rental payments on a
graduated scale. The Company recognizes rent expense on a straight-line basis
over the lease period, and has accrued for rent expense incurred but not paid.

F-33
<PAGE>
SAND MICROELECTRONICS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 7--COMMITMENTS: (CONTINUED)
Future minimum lease payments under noncancelable operating and capital
leases, including lease commitments entered into subsequent to December 31,
1997, and future minimum sub-lease rental receipts under noncancelable operating
leases are as follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING SUB-LEASE
YEAR ENDED DECEMBER 31, LEASES LEASES INCOME
- ----------------------- -------- --------- ---------
<S> <C> <C> <C>
1998........................................................ $ 38,000 $238,000 $ 97,000
1999........................................................ 9,000 189,000 15,000
2000........................................................ -- 168,000 --
2001........................................................ -- 7,000 --
-------- -------- --------
Total minimum lease payments and sublease income............ 47,000 $602,000 $112,000
======== ========

Less: amount representing interest.......................... 3,000
--------

Present value of capital lease obligations.................. 44,000

Less: current portion....................................... (32,000)
--------
Long-term portion of capital lease obligations.............. $ 12,000
========
</TABLE>

F-34
<PAGE>
SAND MICROELECTRONICS, INC.
BALANCE SHEET
(UNAUDITED)

<TABLE>
<CAPTION>
JUNE 30,
1998
------------
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 2,688,000
Accounts receivable....................................... 1,111,000
Prepaid expenses and other current assets................. 218,000
Deferred tax assets....................................... 103,000
------------

Total current assets.................................... 4,120,000

Property and equipment, net................................. 451,000
Deposits.................................................... 20,000
------------

$ 4,591,000
============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable.......................................... $ 72,000
Accrued liabilities....................................... 382,000
Current portion of capital leases......................... 23,000
Deferred revenue.......................................... 1,113,000
------------
Total current liabilities............................... 1,590,000

Capital lease obligations, long term........................ 8,000
------------

1,598,000
------------

Commitments................................................. --

Shareholders' Equity:
Common Stock, no par value; 50,000,000 shares authorized;
12,218,000 shares issued and outstanding................ 13,000
Retained earnings......................................... 2,980,000
------------

Total shareholders' equity................................ 2,993,000
------------

$ 4,591,000
============
</TABLE>

F-35
<PAGE>
SAND MICROELECTRONICS, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------
1997 1998
----------- -----------
<S> <C> <C>
Revenues:
Licenses.................................................. $2,986,000 $3,971,000
Maintenance, engineering services and other services...... 384,000 579,000
---------- ----------

Net revenues............................................ 3,370,000 4,550,000

Cost of net revenues:
Licenses.................................................. 8,000 --
Maintenance, engineering services and other services...... 33,000 157,000
---------- ----------

Cost of net revenues.................................... 41,000 157,000
---------- ----------

Gross profit................................................ 3,329,000 4,393,000
---------- ----------

Operating expenses:
Research and development.................................. 665,000 1,139,000
Sales and marketing....................................... 309,000 880,000
General and administrative................................ 168,000 402,000
---------- ----------

Total operating expenses................................ 1,142,000 2,421,000
---------- ----------

Income from operations...................................... 2,187,000 1,972,000

Interest income............................................. 18,000 60,000
Interest expense............................................ (4,000) (2,000)
---------- ----------

Income before provision for income taxes.................... 2,201,000 2,030,000

Provision for income taxes.................................. (845,000) (812,000)
---------- ----------

Net income.................................................. $1,356,000 $1,218,000
========== ==========
</TABLE>

See notes to condensed financial statements

F-36
<PAGE>
SAND MICROELECTRONICS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------
1997 1998
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $1,356,000 $1,218,000
Adjustments to reconcile net income to net cash provided
by
operating activities:
Depreciation.......................................... 33,000 71,000
Loss on disposals of assets........................... -- 1,000
Changes in assets and liabilities:
Accounts receivable................................. (850,000) (923,000)
Prepaid expenses and other current assets........... (4,000) (196,000)
Deposits............................................ -- (15,000)
Accounts payable.................................... 7,000 1,000
Accrued liabilities................................. 3,000 237,000
Taxes payable....................................... 658,000 (862,000)
Deferred revenue.................................... 292,000 383,000
---------- ----------

Net cash provided by (used in) operating
activities........................................ 1,495,000 (85,000)
---------- ----------

Cash flows from investing activities:
Purchases of property and equipment....................... (43,000) (332,000)
Proceeds from sales of assets............................. -- 18,000
---------- ----------

Net cash used in investing activities............. (43,000) (314,000)
---------- ----------

Cash flows from financing activities:
Repayment of notes payable................................ (40,000) (20,000)
Proceeds from issuance of common stock.................... 4,000 4,000
Principal payments on capital lease obligations........... (8,000) (13,000)
---------- ----------

Net cash used in financing activities............. (44,000) (29,000)
---------- ----------

Net increase (decrease) in cash and cash equivalents........ 1,408,000 (428,000)

Cash and cash equivalents at beginning of period............ 601,000 3,116,000
---------- ----------

Cash and cash equivalents at end of period.................. $2,009,000 $2,688,000
========== ==========
Supplemental disclosure of cash flow information:
Capital leases for equipment........................ $ 43,000 $ --
</TABLE>

See notes to condensed financial statements

F-37
<PAGE>
SAND MICROELECTRONICS, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION

The accompanying unaudited financial statements include the accounts of Sand
Microelectronics, Inc. These financial statements have been prepared by Sand
Microelectronics, Inc., without audit, and reflect all adjustments, which in the
opinion of management are necessary to present fairly the financial position and
the results of operation for the interim periods. These financial statements
have been prepared in accordance with the rules and regulations of the
Securities and Exchange Commission. However, they omit certain information and
footnote disclosures necessary to conform to generally accepted accounting
principles. These statements should be read in conjunction with the audited
financial statements and notes to the financial statements included elsewhere
herein. The results of operations presented are not necessarily indicative of
the results expected for the full fiscal year or for any future period.

F-38
<PAGE>
[LOGO]
<PAGE>

THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS DECLARED EFFECTIVE. THIS
PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND WE ARE NOT
SOLICITING OFFERS TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE
IS NOT PERMITTED.
<PAGE>

SUBJECT TO COMPLETION, DATED MARCH 20, 2000

[LOGO]

3,500,000 SHARES
COMMON STOCK

Phoenix Technologies Ltd. currently substantially owns all of inSilicon's
common stock. After this offering, Phoenix will own approximately 74.0% of
inSilicon's common stock (approximately 71.3% if the underwriters exercise their
overallotment option in full). Phoenix is not selling any of its inSilicon
common stock in this offering.

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

INVESTING IN OUR COMMON STOCK INVOLVES RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 7.

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

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

ROBERTSON STEPHENS INTERNATIONAL

PRUDENTIAL VOLPE TECHNOLOGY

A UNIT OF PRUDENTIAL SECURITIES

NEEDHAM & COMPANY, INC.

THE DATE OF THIS PROSPECTUS IS , 2000
<PAGE>
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by inSilicon in connection with
the sale of common stock being registered. All amounts are estimates except the
SEC registration fee, the NASD filing fee and the Nasdaq National Market listing
fee.

<S> <C> <C>
SEC registration fee........................................ $ 11,688
NASD filing fee............................................. 4,927
Nasdaq National Market listing fee.......................... 60,000
Printing and engraving expenses............................. 350,000
Legal fees and expenses..................................... 500,000
Accounting fees and expenses................................ 350,000
Blue Sky qualification fees and expenses.................... 6,000
Transfer Agent and Registrar fees........................... 10,000
Miscellaneous fees and expenses............................. 107,385
----------
Total................................................. $1,400,000
==========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law (the "Delaware Law")
authorizes a court to award, or a corporation's Board of Directors to grant,
indemnity to directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended (the "Securities Act"). Article VI of inSilicon's By-laws (Exhibits
3.3 and 3.4) provide for indemnification of inSilicon's directors and officers
to the maximum extent permitted by Delaware Law. In addition, inSilicon will
enter into Indemnification Agreements (Exhibit 10.3) with its officers and
directors. The Underwriting Agreement (Exhibit 1.1) also provides for
cross-indemnification among inSilicon, and the Underwriters with respect to
certain matters, including matters arising under the Securities Act.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Since its incorporation, inSilicon has sold and issued the following
securities:

1. On November 15, 1999, inSilicon issued 10 shares of its common stock to
Phoenix for an aggregate cash consideration of $1,000.

2. As of November 30, 1999, inSilicon agreed to issue 10,400,000 shares of
Series A Preferred Stock and a warrant to purchase 50,000 shares of common stock
at $0.01 per share to Phoenix in consideration for Phoenix's contribution of
assets to inSilicon, which shares and warrant were subsequently issued.

3. As of December 21, 1999, inSilicon issued options to purchase
2,348,844 shares of common stock of inSilicon with a weighted average price of
$6.14 per share to a number of employees, directors and consultants of
inSilicon.

4. As of February 10, 2000, inSilicon issued options to purchase 20,000
shares of common stock of inSilicon at $7.75 per share to a director of
inSilicon.

II-1
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES (CONTINUED)

5. As of February 29, 2000, inSilicon issued options to purchase 87,950
shares of common stock of inSilicon with a weighted average price of $8.59 per
share to a number of employees and consultants of inSilicon.

6. As of March 1, 2000, inSilicon issued options to purchase 80,900 shares
of common stock of inSilicon at $9.00 per share to a number of employees of
inSilicon.

7. As of March 1, 2000, inSilicon issued options to purchase 7,600 shares
of common stock of inSilicon at $7.65 per share to an employee of inSilicon.

8. As of March 13, 2000, inSilicon issued options to purchase 115,800
shares of common stock of inSilicon at $9.00 per share to a number of employees
of inSilicon.

9. As of March 15, 2000, inSilicon issued options to purchase 84,000 shares
of common stock of inSilicon at $9.00 per share to a number of employees of
inSilicon.

10. Between March 3, 2000 and March 13, 2000, inSilicon issued 151,320
shares of common stock upon the exercise of options included in paragraph 3 of
this item 15 for aggregate cash consideration of $666,462.49.

The issuances of the above securities were deemed to be exempt from
registration under the Securities Act in reliance on Section 4(2) of the
Securities Act as transactions by an issuer not involving any public offering.
In addition, certain issuances described in Item 2 were deemed exempt from
registration under the Securities Act in reliance upon Rule 701 promulgated
under the Securities Act. The recipients of securities in each such transaction
represented their intentions to acquire the securities for investment only and
not with a view to or for sale in connection with any distribution thereof and
appropriate legends were affixed to the share certificates and warrants issued
in such transactions. All recipients had adequate access, through their
relationships with inSilicon, to information about inSilicon.

II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- -------------- -----------
<C> <S>
1.1 Form of Underwriting Agreement.
3.1 Amended and Restated Certificate of Incorporation of
inSilicon Corporation.*
3.2 Amended and Restated Certificate of Incorporation of
inSilicon Corporation (proposed).
3.3 By-laws of inSilicon Corporation.*
3.4 Amended and Restated By-laws of inSilicon Corporation
(proposed).
4.1 Specimen Stock Certificate.*
4.2 Common Stock Purchase Warrant.*
5.1 Opinion of Orrick, Herrington & Sutcliffe LLP regarding the
legality of the common stock being registered.*
10.1 Agreement and Plan of Reorganization dated as of
September 17, 1998 by and among Phoenix Technologies Ltd.,
Phoenix Sub Corporation, Sand Microelectronics, Inc. and
Babu Chilukuri, Anand C. Naidu and Ajit Deora.*
10.2 Contribution Agreement dated as of November 30, 1999,
between inSilicon Corporation and Phoenix Technologies Ltd.
(Schedules omitted).*
10.3 Form of Indemnification Agreement between inSilicon
Corporation and each of its Officers and Directors.*
10.4 1999 Stock Option Plan.*
10.5 2000 Stock Plan.
10.6 2000 Employee Stock Purchase Plan.
10.7 Amended and Restated Initial Public Offering Agreement dated
as of March 15, 2000 by and between inSilicon Corporation
and Phoenix Technologies Ltd.
10.8 Registration Rights Agreement dated as of November 30, 1999
by and between inSilicon Corporation and Phoenix
Technologies Ltd.*
10.9 Services and Cost-Sharing Agreement dated as of
November 30, 1999 by and between inSilicon Corporation and
Phoenix Technologies Ltd.*
10.10 Employee Matters Agreement dated as of November 30, 1999 by
and between inSilicon Corporation and Phoenix Technologies
Ltd.*
10.11 Tax-Sharing Agreement dated as of November 30, 1999 by and
between inSilicon Corporation and Phoenix Technologies Ltd.*
10.12 Technology Distributor Agreement dated as of November 30,
1999 by and between inSilicon Corporation and Phoenix
Technologies Ltd.*
10.13 Key Executive Officer Severance Agreement with Wayne
Cantwell.*
10.14 Key Executive Officer Severance Agreement with William
Meyer.*
10.15 Key Executive Officer Severance Agreement with Barry
Hoberman.*
10.16 Key Executive Officer Severance Agreement with Robert
Nalesnik.*
10.17 Loan and Security Agreement dated January 18, 2000 between
Silicon Valley Bank and inSilicon Corporation.*
21.1 List of Subsidiaries.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of PricewaterhouseCoopers LLP.
23.3 Consent of Orrick, Herrington & Sutcliffe LLP (contained in
Exhibit 5.1).
23.4 Consent of Integrated Circuit Engineering.*
24.1 Power of Attorney.*
</TABLE>

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

* Previously filed

II-3
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (CONTINUED)
(b) Financial Statement Schedules

Schedule II--Valuations and Qualifying Account

Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 14, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

II-4
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 3 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the city of San
Jose, State of California on March 17, 2000.

<TABLE>
<S> <C> <C>
INSILICON CORPORATION

By: /s/ WAYNE C. CANTWELL
----------------------------------------
Wayne C. Cantwell
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 3 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated:

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ WAYNE C. CANTWELL President, Chief Executive Officer and March 17, 2000
- ---------------------------- Director (Principal Executive Officer)
Wayne C. Cantwell

/s/ WILLIAM E. MEYER Chief Financial Officer (Principal March 17, 2000
- ---------------------------- Financial Officer and Principal
William E. Meyer Accounting Officer)

ALBERT E. SISTO* Director March 17, 2000
- ----------------------------
Albert E. Sisto

E. THOMAS HART* Director March 17, 2000
- ----------------------------
E. Thomas Hart

RAYMOND J. FARNHAM* Director March 17, 2000
- ----------------------------
Raymond J. Farnham

JOHN R. HARDING* Director March 17, 2000
- ----------------------------
John R. Harding
</TABLE>

*By: /s/ WAYNE C. CANTWELL
---------------------------------------------
Wayne C. Cantwell
Attorney-in-fact

II-5
<PAGE>
INSILICON CORPORATION

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

(IN THOUSANDS)

<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
DESCRIPTION BEGINNING OF YEAR PROVISIONS WRITE-OFFS END OF YEAR
- ----------- ----------------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Allowance for doubtful accounts
Year ended September 30, 1999....... $198 224 $(58) $364
Year ended September 30, 1998....... 224 (21) (5) 198
Year ended September 30, 1997....... 25 199 -- 224
</TABLE>

S-1
<PAGE>
EXHIBIT INDEX

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

* Previously filed

<PAGE>

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

3,500,000 Shares
Common Stock

UNDERWRITING AGREEMENT

by and among

INSILICON CORPORATION,
a Delaware corporation

and

PHOENIX TECHNOLOGIES, LTD.,
a Delaware Corporation

and

FLEETBOSTON ROBERTSON STEPHENS INC.,
PRUDENTIAL SECURITIES INCORPORATED,
and
NEEDHAM & COMPANY, INC.,

as Representatives of the several Underwriters

Dated March [__], 2000

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

<PAGE>

UNDERWRITING AGREEMENT

March [__], 2000

FleetBoston Robertson Stephens Inc.
Prudential Securities Incorporated
Needham & Company, Inc.
As Representatives of the several Underwriters
c/o FleetBoston Robertson Stephens Inc.
555 California Street, Suite 2600
San Francisco, CA 94104

Ladies and Gentlemen:

INTRODUCTORY. inSilicon Corporation, a Delaware corporation (the
"Company"), and Phoenix Technologies, Ltd., a Delaware corporation ("Phoenix"),
hereby confirm their agreement with the several Underwriters named in SCHEDULE A
hereto (the "Underwriters") as follows. The Company proposes to issue and sell
to the Underwriters an aggregate of 3,500,000 shares (the "Firm Shares") of its
Common Stock, par value $0.001 per share ("Common Shares"). In addition, the
Company has granted to the Underwriters an option to purchase up to an
additional 525,000 Common Shares (the "Option Shares") as provided in Section 2.
The Firm Shares and, if and to the extent such option is exercised, the Option
Shares are collectively called the "Shares." FleetBoston Robertson Stephens Inc.
("Robertson Stephens"), Prudential Securities Incorporated and Needham &
Company, Inc., have agreed to act as representatives of the several Underwriters
(in such capacity, the "Representatives") in connection with the offering and
sale of the Shares. As a part of this offering contemplated by this Agreement,
Robertson Stephens has agreed to reserve out of the Shares set forth opposite
its name on SCHEDULE A to this Agreement, up to 175,000 shares, for sale to the
Company's employees, officers, and directors and other parties associated with
the Company (collectively, "Participants"), as set forth in the Prospectus under
the heading "Underwriting--Directed Share Program"). The Shares to be sold by
Robertson Stephens pursuant to the Directed Share Program (the "Directed
Shares") will be sold by Robertson Stephens pursuant to this Agreement at the
public offering price. Any Directed Shares not orally confirmed for purchase by
any Participants as of 7:00am New York time on the first day trading of the
shares commences will be offered to the public by Robertson Stephens as set
forth in the Prospectus.

The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (File No.
333- 94573), which contains a form of prospectus, subject to completion, to be
used in connection with the public offering and sale of the Shares. Each such
prospectus, subject to completion, used in connection with such public offering
is called a "preliminary prospectus." Such registration statement, as

1
<PAGE>

amended, including the financial statements, exhibits and schedules thereto, in
the form in which it was declared effective by the Commission under the
Securities Act of 1933 and the rules and regulations promulgated thereunder
(collectively, the "Securities Act"), including any information deemed to be a
part thereof at the time of effectiveness pursuant to Rule 430A under the
Securities Act, is called the "Registration Statement." Any registration
statement filed by the Company pursuant to Rule 462(b) under the Securities Act
is called the "Rule 462(b) Registration Statement," and from and after the date
and time of filing of the Rule 462(b) Registration Statement the term
"Registration Statement" shall include the Rule 462(b) Registration Statement.
Such prospectus, in the form first used by the Underwriters to confirm sales of
the Shares, is called the "Prospectus." All references in this Agreement to the
Registration Statement, the Rule 462(b) Registration Statement, a preliminary
prospectus or the Prospectus, or any amendments or supplements to any of the
foregoing, shall include any copy thereof filed with the Commission pursuant to
its Electronic Data Gathering, Analysis and Retrieval System ("EDGAR").

SECTION 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND PHOENIX.

Each of the Company and Phoenix hereby represents, warrants and covenants
to each Underwriter as follows:

(a) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Company represents and
warrants that the Registration Statement and any Rule 462(b) Registration
Statement have been declared effective by the Commission under the Securities
Act. The Company represents and warrants that the Company has complied to the
Commission's satisfaction with all requests of the Commission for additional or
supplemental information. The Company represents and warrants that no stop order
suspending the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement is in effect and no proceedings for such purpose have
been instituted or are pending or, to the best knowledge of the Company, are
contemplated or threatened by the Commission.

The Company represents and warrants that each preliminary prospectus and
the Prospectus when filed complied in all material respects with the Securities
Act and, if filed by electronic transmission pursuant to EDGAR (except as may be
permitted by Regulation S-T under the Securities Act), was identical to the copy
thereof delivered to the Underwriters for use in connection with the offer and
sale of the Shares. The Company represents and warrants that each of the
Registration Statement, any Rule 462(b) Registration Statement and any
post-effective amendment thereto, at the time it became effective and at all
subsequent times, complied and will comply in all material respects with the
Securities Act and did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The Company represents
and warrants that each preliminary prospectus, as of its date, and the
Prospectus, as amended or supplemented, as of its date and at all subsequent
times through the 30th day after the date hereof, did not and will not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The representations
and warranties set forth in the two immediately preceding sentences do not apply
to statements in or omissions from the Registration Statement, any Rule 462(b)
Registration Statement, or any post-effective amendment thereto, or the
Prospectus, or any amendments or supplements thereto, made in reliance upon and
in conformity with information relating to any Underwriter furnished to the
Company in writing by the Representatives expressly for use therein. The

2
<PAGE>

Company represents and warrants that there are no contracts or other documents
required to be described in the Prospectus or to be filed as exhibits to the
Registration Statement which have not been described or filed as required.

(b) OFFERING MATERIALS FURNISHED TO UNDERWRITERS. The Company represents
and warrants that the Company has delivered to the Representatives three
complete conformed copies of the Registration Statement and of each consent and
certificate of experts filed as a part thereof, and conformed copies of the
Registration Statement (without exhibits) and preliminary prospectuses and the
Prospectus, as amended or supplemented, in such quantities and at such places as
the Representatives have reasonably requested for each of the Underwriters.

(c) DISTRIBUTION OF OFFERING MATERIAL BY THE COMPANY. The Company
represents and warrants that the Company has not distributed and will not
distribute, prior to the later of the Second Closing Date (as defined below) and
the completion of the Underwriters' distribution of the Shares, any offering
material in connection with the offering and sale of the Shares other than a
preliminary prospectus, the Prospectus or the Registration Statement.

(d) THE UNDERWRITING AGREEMENT. Each of the Company and Phoenix represents
and warrants as to itself that this Agreement has been duly authorized, executed
and delivered by, and is a valid and binding agreement of, each of the Company
and Phoenix, enforceable in accordance with its terms, except as rights to
indemnification hereunder may be limited by applicable law and except as the
enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.

(e) THE INTERCOMPANY AGREEMENTS. Each of the Company and Phoenix represents
and warrants as to itself that each of the Contribution Agreement, the Initial
Public Offering Agreement, the Services and Cost-Sharing Agreement, the Employee
Matters Agreement, the Tax-Sharing Agreement, the Registration Rights Agreement
and the Technology Distributor Agreement by and between the Company and Phoenix
(each an "Intercompany Agreement and, collectively, the "Intercompany
Agreements") has been duly authorized, has been or no later than the First
Closing Date (as defined below) shall be, executed and delivered by, and is or
shall be upon execution and delivery (as applicable) a valid and binding
agreement of, each of the Company and Phoenix, enforceable against each of them
in accordance with its terms, except as the enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles, and except as rights to indemnification under the
Registration Rights Agreement and the Initial Public Offering Agreement for
liabilities arising under the federal securities laws may be limited by
applicable law.

(f) AUTHORIZATION OF THE SHARES. The Company represents and warrants that
the Shares to be purchased by the Underwriters from the Company have been duly
authorized for issuance and sale pursuant to this Agreement and, when issued and
delivered by the Company pursuant to this Agreement, will be validly issued,
fully paid and nonassessable and no personal liability shall attach to the
holders of the shares by reason of their ownership thereof.

(g) NO APPLICABLE REGISTRATION OR OTHER SIMILAR RIGHTS. The Company
represents and warrants that there are no persons with registration or other
similar rights to have any equity or debt securities registered for sale under
the Registration Statement or included in the offering contemplated by this
Agreement except for such rights as have been duly waived.

3
<PAGE>

(h) NO MATERIAL ADVERSE CHANGE. The Company represents and warrants that
subsequent to the respective dates as of which information is given in the
Prospectus: (i) there has been no material adverse change, or any development
that could reasonably be expected to result in a material adverse change, in the
condition, financial or otherwise, or in the earnings, business or operations,
whether or not arising from transactions in the ordinary course of business, of
the Company and its subsidiaries, considered as one entity (any such change or
effect, where the context so requires, is called a "Material Adverse Change" or
a "Material Adverse Effect"); (ii) the Company and its subsidiaries, considered
as one entity, have not incurred any material liability or obligation, indirect,
direct or contingent, not in the ordinary course of business nor entered into
any material transaction or agreement not in the ordinary course of business;
and (iii) there has been no dividend or distribution of any kind declared, paid
or made by the Company or, except for dividends paid to the Company or other
subsidiaries, any of its subsidiaries on any class of capital stock or
repurchase or redemption by the Company or any of its subsidiaries of any class
of capital stock.

(i) INDEPENDENT ACCOUNTANTS. The Company represents and warrants that Ernst
& Young, LLP and PriceWaterhouseCoopers LLP who have expressed their opinions
with respect to the financial statements (which term as used in this Agreement
includes the related notes thereto) and supporting schedules filed with the
Commission as a part of the Registration Statement and included in the
Prospectus, are independent public or certified public accountants as required
by the Securities Act.

(j) PREPARATION OF THE FINANCIAL STATEMENTS. Each of the Company and
Phoenix represents and warrants that the financial statements of the Company
filed with the Commission as a part of the Registration Statement and included
in the Prospectus present fairly the consolidated financial position of the
Company and its subsidiaries as of and at the dates indicated and the results of
its operations and cash flows for the periods specified. Each of the Company and
Phoenix represents and warrants that, to its knowledge, the financial statements
of Sand Microelectronics, Inc. filed with the Commission as a part of the
Registration Statement and included in the Prospectus present fairly the
financial position of Sand Microelectronics, Inc. of and at the dates indicated
and the results of its operations and cash flows for the periods specified. Each
of the Company and Phoenix represents and warrants that the supporting schedules
included in the Registration Statement presents fairly the information required
to be stated therein. Each of the Company and Phoenix represents and warrants
that such financial statements and supporting schedules have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis throughout the periods involved, except as may be expressly stated in the
related notes thereto. Each of the Company and Phoenix represents and warrants
that no other financial statements or supporting schedules are required to be
included in the Registration Statement. Each of the Company and Phoenix
represents and warrants that the financial data set forth in the Prospectus
under the captions "Prospectus Summary--Summary Financial Data," "Selected
Consolidated Financial Data" and "Capitalization" fairly present the information
set forth therein on a basis consistent with that of the audited financial
statements contained in the Registration Statement. Each of the Company and
Phoenix represents and warrants that the pro forma information included in the
consolidated financial statements of the Company and the related notes thereto
and the pro forma financial information included under the caption "Prospectus
Summary--Summary Financial Data", "Selected Consolidated Financial Data" and
elsewhere in the Prospectus and in the Registration Statement present fairly the
information contained therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial statements
and have been properly presented on the bases described therein, and the
assumptions used in the preparation thereof are reasonable and the adjustments
used therein

4
<PAGE>

are appropriate to give effect to the transactions and circumstances referred to
therein. Each of the Company and Phoenix represents and warrants that no other
pro forma financial information is required to be included in the Registration
Statement pursuant to Regulation S-X under the Securities Act.

(k) COMPANY'S ACCOUNTING SYSTEM. Each of the Company and Phoenix represents
and warrants that it maintains a system of accounting controls sufficient to
provide reasonable assurances that (i) the Company's transactions are executed
in accordance with management's general or specific authorization; (ii) the
Company's transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting principles
and to maintain accountability for the Company's assets; (iii) access to the
Company's assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for the Company's
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.

(l) SUBSIDIARIES OF THE COMPANY. The Company represents and warrants that
the Company has no subsidiaries other than the subsidiaries listed in Exhibit 21
to the Registration Statement.

(m) INCORPORATION AND GOOD STANDING OF THE COMPANY, ITS SUBSIDIARIES AND
PHOENIX. The Company represents and warrants that the Company and each of its
subsidiaries, and Phoenix represents and warrants that Phoenix, has been duly
organized and is validly existing as a corporation in good standing under the
laws of its jurisdiction of organization with full corporate power and authority
to own its properties and conduct its business as described in the prospectus
and to enter into and perform this Agreement, and is duly qualified to do
business as a foreign corporation and is in good standing under the laws of each
jurisdiction which requires such qualification.

(n) CAPITALIZATION OF THE SUBSIDIARIES. The Company represents and warrants
that all the outstanding shares of capital stock of each subsidiary have been
duly and validly authorized and issued and are fully paid and nonassessable,
and, except as otherwise set forth in the Prospectus, all outstanding shares of
capital stock of the subsidiaries are owned by the Company, either directly or
through wholly owned subsidiaries, free and clear of any security interests,
claims, liens or encumbrances.

(o) NO PROHIBITION ON SUBSIDIARIES FROM PAYING DIVIDENDS OR MAKING OTHER
DISTRIBUTIONS. The Company represents and warrants that no subsidiary of the
Company is currently prohibited, directly or indirectly, from paying any
dividends to the Company, from making any other distribution on such
subsidiary's capital stock, from repaying to the Company any loans or advances
to such subsidiary from the Company or from transferring any of such
subsidiary's property or assets to the Company or any other subsidiary of the
Company, except as expressly described in or expressly contemplated by the
Prospectus.

(p) CAPITALIZATION AND OTHER CAPITAL STOCK MATTERS. As adjusted to give
effect to the conversion of the Series A Preferred Shares (as defined below),
the Company represents and warrants that the authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectus under the caption
"Capitalization" (other than for subsequent issuances, if any, pursuant to
employee benefit plans described in the Prospectus or upon exercise of the
outstanding warrant to purchase securities of the Company (the "Warrant") and
options described in the Prospectus). The Company represents and warrants that
the Common Shares

5
<PAGE>

(including the Shares) conform in all material respects to the description
thereof contained in the Prospectus. The Company represents and warrants that
all of the issued and outstanding shares of Series A Preferred Stock, par value
$0.001 per share (the "Series A Preferred Shares") and Common Shares have been
duly authorized and validly issued, are fully paid and nonassessable and have
been issued in compliance with federal and state securities laws. The Company
represents and warrants that none of the outstanding Series A Preferred Shares
or Common Shares was issued in violation of any preemptive rights, rights of
first refusal or other similar rights to subscribe for or purchase securities of
the Company. The Company represents and warrants that there are no authorized or
outstanding options, warrants, preemptive rights, rights of first refusal or
other rights to purchase, or equity or debt securities convertible into or
exchangeable or exercisable for, any capital stock of the Company or any of its
subsidiaries other than those accurately described in the Prospectus. The
Company represents and warrants that the description of the Company's stock
option, stock bonus and other stock plans or arrangements, and the options or
other rights granted thereunder, set forth in the Prospectus accurately and
fairly presents the information required to be shown with respect to such plans,
arrangements, options and rights.

(q) NO REGISTRATION REQUIRED IN CONNECTION WITH THE SERIES A PREFERRED
SHARES OR THE WARRANT. The Company represents and warrants that it is not
necessary in connection with (i) the sale of the Series A Preferred Shares and
the Warrant from the Company to Phoenix, (ii) the conversion of the Series A
Preferred Shares into Common Shares at the First Closing Date, or (iii) the
exercise of the Warrant, to register either the Series A Preferred Shares, the
Warrant or the underlying Common Shares under the Securities Act or to qualify
the offer or sale thereof under the California Corporate Securities Law.

(r) STOCK EXCHANGE LISTING. The Company represents and warrants that the
Shares have been approved for inclusion in the Nasdaq National Market, subject
only to official notice of issuance.

(s) NO REGULATORY CONSENTS, APPROVALS OR AUTHORIZATIONS REQUIRED. Each of
the Company and Phoenix represents and warrants as to itself that no consent,
approval, authorization, filing with or order of any court or governmental
agency or regulatory body is required in connection with the transactions
contemplated herein (including, without limitation, the execution, delivery and
performance of this Agreement and the Intercompany Agreements by the Company and
Phoenix), except such as have been obtained or made under the Securities Act and
such as may be required (i) under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the Shares by the Underwriters
in the manner contemplated here and in the Prospectus, (ii) by the National
Association of Securities Dealers, Inc. or its subsidiary NASD Regulation, Inc.
(together with their affiliates, the "NASD"), or (iii) by the federal and
provincial securities laws of Canada or other foreign jurisdiction in which the
Shares are offered or sold.

(t) NON-CONTRAVENTION OF EXISTING INSTRUMENTS AND AGREEMENTS; NO ADDITIONAL
THIRD-PARTY CONSENTS REQUIRED. Each of the Company and Phoenix represents and
warrants as to itself that neither the issue and sale of the Shares nor the
consummation of any of the other transactions contemplated herein or in the
Intercompany Agreements (including, without limitation, assignment of certain
contracts and intellectual property rights from Phoenix to the Company as
contemplated by the Contribution Agreement) nor the fulfillment of the terms
hereof or thereof will conflict with, or require the consent of any other party
to, or result in a breach or violation of, or result in the imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any of
its subsidiaries pursuant to, (i) the charter or

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<PAGE>

by-laws of the Company or any of its subsidiaries or Phoenix, (ii) the terms of
any indenture, contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant or instrument to
which the Company or any of its subsidiaries or Phoenix is a party or bound or
to which their respective properties are subject, except for such conflicts,
breaches, violations, liens, charges or encumbrances as, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, and except for such third-party consents as have been obtained or which
the failure to obtain individually or in the aggregate could not reasonably be
expected to result in a Material Adverse Effect, or (iii) any statute, law,
rule, regulation, judgment, order or decree applicable to the Company or any of
its subsidiaries or Phoenix of any court, regulatory body, administrative
agency, governmental body, arbitrator or other authority having jurisdiction
over the Company or any of its subsidiaries or Phoenix or any of their
properties.

(u) NO DEFAULTS OR VIOLATIONS. The Company represents and warrants that
none of the Company or any of its subsidiaries is, and Phoenix represents and
warrants that Phoenix is not, in violation or default of (i) any provision of
its charter or by-laws, (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument to which it is a party or bound or
to which its property is subject or (iii) any statute, law, rule, regulation,
judgment, order or decree of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over the
Company or such subsidiary or Phoenix or any of their respective properties, as
applicable, except any such violation or default which, singly or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Change and except as otherwise disclosed in the Prospectus.

(v) NO ACTIONS, SUITS OR PROCEEDINGS. The Company represents and warrants
as to itself and its subsidiaries, and Phoenix represents and warrants as to
itself, that no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
or any of its subsidiaries or Phoenix or their respective properties is pending
or, to the best knowledge of the Company and Phoenix, threatened that (i) could
reasonably be expected to have a Material Adverse Effect on the performance of
this Agreement or the consummation of any of the transactions contemplated
hereby or (ii) could reasonably be expected to result in a Material Adverse
Effect.

(w) ALL NECESSARY PERMITS, ETC. The Company represents and warrants that
the Company and each of its subsidiaries possess such valid and current
certificates, authorizations or permits issued by the appropriate state, federal
or foreign regulatory agencies or bodies necessary to conduct their respective
businesses, and the Company represents and warrants that neither the Company nor
any of its subsidiaries has, and Phoenix represents and warrants that Phoenix
has not, received any notice of proceedings relating to the revocation or
modification of, or non-compliance with, any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, could result in a Material Adverse Change.

(x) TITLE TO PROPERTIES. The Company represents and warrants that the
Company and each of its subsidiaries has good and marketable title to all the
properties and assets reflected as owned in the financial statements referred to
in Section 1(j) above, in each case free and clear of any security interests,
mortgages, liens, encumbrances, equities, claims and other defects, except such
as do not materially and adversely affect the value of such property and do not
materially interfere with the use made or proposed to be made of such property
by the Company or such subsidiary. The Company represents and warrants that the
real property,

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<PAGE>

improvements, equipment and personal property held under lease by the Company or
any of its subsidiaries are held under valid and enforceable leases, with such
exceptions as are not material and do not materially interfere with the use made
or proposed to be made of such real property, improvements, equipment or
personal property by the Company.

(y) TAX LAW COMPLIANCE. The Company represents and warrants that the
Company and its subsidiaries, and Phoenix represents and warrants that it, has
filed all necessary federal, state and foreign income and franchise tax returns
or has properly requested extensions thereof and has paid all taxes required to
be paid by any of them and, if due and payable, any related or similar
assessment, fine or penalty levied against it. The Company represents and
warrants as to itself, and Phoenix represents and warrants as to itself, that it
has made adequate charges, accruals and reserves in the applicable financial
statements referred to in Section 1(j) above in respect of all federal, state
and foreign income and franchise taxes for all periods as to which the tax
liability of the Company or any of its subsidiaries or Phoenix has not been
finally determined. The Company represents and warrants as to itself, and
Phoenix represents and warrants as to itself, that it is not aware of any tax
deficiency that has been or might be asserted or threatened against the Company
or any of its subsidiaries or Phoenix that could result in a Material Adverse
Change.

(z) INTELLECTUAL PROPERTY RIGHTS. Each of the Company and Phoenix
represents and warrants that the Company and its subsidiaries owns or possesses
adequate rights to use all patents, patent rights or licenses, inventions,
collaborative research agreements, trade secrets, know-how, trademarks, service
marks, trade names and copyrights which are necessary to conduct its businesses
as described in the Registration Statement and Prospectus, including, without
limitation, those listed on SCHEDULE B hereto; the expiration of any patents,
patent rights, trade secrets, trademarks, service marks, trade names or
copyrights would not result in a Material Adverse Change that is not otherwise
disclosed in the Prospectus; the Company has not received any notice of, and
neither the Company nor Phoenix has any knowledge of, any infringement of or
conflict with asserted rights of the Company by others with respect to any
patent, patent rights, inventions, trade secrets, know-how, trademarks, service
marks, trade names or copyrights; and the Company has not received any notice
of, and neither the Company nor Phoenix has any knowledge of, any infringement
of or conflict with asserted rights of others with respect to any patent, patent
rights, inventions, trade secrets, know-how, trademarks, service marks, trade
names or copyrights which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, might result in a Material Adverse
Change. Each of the Company and Phoenix represents and warrants that there is no
claim pending or, to the knowledge of the Company and Phoenix, threatened
against the Company regarding patents, patent rights or licenses, inventions,
collaborative research, trade secrets, know-how, trademarks, service marks,
trade names or copyrights. Each of the Company and Phoenix represents and
warrants that the Company and its subsidiaries do not in the conduct of their
business as now or proposed to be conducted as described in the Prospectus
infringe or conflict with any right or patent of any third party, or any
discovery, invention, product or process which is the subject of a patent
application filed by any third party, known to the Company or any of its
subsidiaries, which such infringement or conflict might result in a Material
Adverse Change.

(aa) YEAR 2000 PREPAREDNESS. The Company represents and warrants that there
are no year 2000 issues related to the Company or any of its subsidiaries that
(i) are of a character required to be described or referred to in the
Registration Statement or Prospectus by the Securities Act which have not been
accurately described in the Registration Statement or Prospectus or (ii) might
reasonably be expected to result in any Material Adverse Change or that might
materially affect its properties, assets or rights.

8
<PAGE>

(bb) NO TRANSFER TAXES OR OTHER FEES. The Company represents and warrants
that there are no transfer taxes or other similar fees or charges under Federal
law or the laws of any state, or any political subdivision thereof, required to
be paid in connection with the execution and delivery of this Agreement or the
issuance and sale by the Company of the shares.

(cc) COMPANY NOT AN "INVESTMENT COMPANY". The Company represents and
warrants as to itself, and Phoenix represents and warrants as to itself, that it
has been advised of the rules and requirements under the Investment Company Act
of 1940, as amended (the "Investment Company Act"). The Company represents,
warrants and covenants as to itself, and Phoenix represents, warrants and
covenants as to itself, that it is not, and after the Company's receipt of
payment for the Shares, will not be, an "investment company" or an entity
"controlled" by an "investment company" within the meaning of the Investment
Company Act. The Company represents, warrants and covenants that the Company
will conduct its business in a manner so that it will not become subject to the
Investment Company Act.

(dd) INSURANCE. The Company represents and warrants that the Company and
each of its subsidiaries are insured by recognized, financially sound and
reputable institutions with policies in such amounts and with such deductibles
and covering such risks as are generally deemed adequate and customary for their
respective businesses including, but not limited to, policies covering real and
personal property owned or leased by the Company or any subsidiary against
theft, damage, destruction, acts of vandalism and earthquakes, general liability
and Directors and Officers liability. The Company represents and warrants that
the Company has no reason to believe that the Company or any of its subsidiaries
will not be able (i) to renew its existing insurance coverage as and when such
policies expire or (ii) to obtain comparable coverage from similar institutions
as may be necessary or appropriate to conduct its business as now conducted and
at a cost that would not result in a Material Adverse Change. The Company
represents and warrants that neither the Company nor any of its subsidiaries has
been denied any insurance coverage which it has sought or for which it has
applied.

(ee) LABOR MATTERS. The Company represents and warrants that to the best of
its knowledge, no labor disturbance by the employees of the Company or any of
its subsidiaries exists or is imminent; and the Company is not aware of any
existing or imminent labor disturbance by the employees of any of its principal
suppliers, subassemblers, value added resellers, subcontractors, original
equipment manufacturers, authorized dealers or international distributors that
might be expected to result in a Material Adverse Change.

(ff) NO PRICE STABILIZATION OR MANIPULATION. Each of the Company and
Phoenix represents and warrants as to itself that it has not taken and will not
take, directly or indirectly, any action designed to or that might be reasonably
expected to cause or result in stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of the Shares.

(gg) LOCK-UP AGREEMENTS. The Company represents and warrants that each
officer and director of the Company and each beneficial owner of one or more
percent of the outstanding issued share capital of the Company has agreed to
sign an agreement substantially in the form attached hereto as EXHIBIT A (the
"Lock-up Agreements"). The Company represents and warrants that the Company has
provided to counsel for the Underwriters a complete and accurate list of all
security holders of the Company and the number and type of securities held by
each securityholder. The Company represents and warrants that the Company has
provided to counsel for the Underwriters true, accurate and complete copies of
all of the Lock-up Agreements presently in effect or effected hereby. The
Company hereby represents and warrants that it will not release any of its
officers, directors or other stockholders from any other

9
<PAGE>

lock-up agreements currently existing (or hereafter effected in connection with
the offering of the Shares) without the prior written consent of Robertson
Stephens.

(hh) RELATED PARTY TRANSACTIONS. The Company represents and warrants that
there are no business relationships or related-party transactions involving the
Company or any of its subsidiaries or any other person required to be described
in the Prospectus which have not been described as required.

(ii) NO UNLAWFUL CONTRIBUTIONS OR OTHER PAYMENTS. The Company represents
and warrants that neither the Company nor, to the best of the Company's
knowledge, any employee or agent of the Company or any of its subsidiaries, has
made any contribution or other payment to any official of, or candidate for, any
federal, state or foreign office in violation of any law or of the character
required to be disclosed in the Prospectus.

(jj) ENVIRONMENTAL LAWS. The Company represents and warrants that (i) the
Company and each of its subsidiaries are in compliance with all rules, laws and
regulations relating to the use, treatment, storage and disposal of toxic
substances and protection of health or the environment ("Environmental Laws")
which are applicable to its business, except where the failure to comply would
not result in a Material Adverse Change, (ii) neither the Company nor any of its
subsidiaries has received any notice from any governmental authority or third
party of an asserted claim under Environmental Laws, which claim is required to
be disclosed in the Registration Statement and the Prospectus, (iii) neither the
Company nor any of its subsidiaries is currently aware that it will be required
to make future material capital expenditures to comply with Environmental Laws
and (iv) no property which is owned, leased or occupied by the Company or any of
its subsidiaries has been designated as a Superfund site pursuant to the
Comprehensive Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. Section 9601, ET SEQ.), or otherwise designated as a contaminated site
under applicable state or local law.

(kk) ERISA COMPLIANCE. The Company represents and warrants that it and any
"employee benefit plan" (as defined under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, "ERISA")) established or maintained by
the Company, or its subsidiaries or their "ERISA Affiliates" (as defined below)
are in compliance in all material respects with ERISA. "ERISA Affiliate" means,
with respect to the Company or a subsidiary, any member of any group of
organizations described in Sections 414(b),(c),(m) or (o) of the Internal
Revenue Code of 1986, as amended, and the regulations and published
interpretations thereunder (the "Code") of which the Company or such subsidiary
is a member. The Company represents and warrants that no "reportable event" (as
defined under ERISA) has occurred or is reasonably expected to occur with
respect to any "employee benefit plan" established or maintained by the Company,
its subsidiaries, or any of their ERISA Affiliates. The Company represents and
warrants that no "employee benefit plan" established or maintained by the
Company, or any of its subsidiaries, or any of their ERISA Affiliates, if such
"employee benefit plan were terminated, would have any "amount of unfounded
benefit liabilities" (as defined under ERISA). The Company represents and
warrants that neither the Company, nor any of its subsidiaries, nor any of their
ERISA Affiliates has incurred or reasonably expects to incur any liability under
(i) Title IV of ERISA with respect to termination of, or withdrawal from, any
employee benefit plan" or (ii) Sections 412, 4971, 4975 or 4980B of the Code.
The Company represents and warrants that each employee benefit plan" established
or maintained by the Company, its subsidiaries or any of their ERISA Affiliates
that is intended to be qualified under Section 401(a) of the Code is so
qualified and

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<PAGE>

nothing has occurred, whether by action or failure to act, which would cause the
loss of such qualification.

(ll) CERTAIN EMPLOYMENT MATTERS. Each of the Company and Phoenix represents
and warrants that every material agreement between Phoenix and officers of the
Company (including, without limitation, any agreement to employ any such person
should his or her employment with the Company be terminated) has been disclosed
in the Prospectus.

(mm) CONSENTS REQUIRED IN CONNECTION WITH THE DIRECTED SHARE PROGRAM. The
Company represents and warrants that no consent, approval, authorization or
order of, or qualification with, any governmental body or agency, other than
those obtained, is required in connection with the offering of the Directed
Shares in any jurisdiction where the Directed Shares are being offered.

(nn) NO IMPROPER INFLUENCE IN CONNECTION WITH THE DIRECTED SHARE PROGRAM.
The Company represents and warrants that the Company has not offered, or caused
Robertson Stephens to offer, Shares to any person pursuant to the Directed Share
Program with the specific intent to unlawfully influence (i) a customer or
supplier of the Company to alter the customer's or supplier's level or type of
business with the Company or (ii) a trade journalist or publication to write or
publish favorable information about the Company or its products.

Any certificate signed by an officer of the Company or Phoenix and
delivered to the Representatives or to counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company or Phoenix, as the
case may be, to each Underwriter as to the matters set forth therein.

SECTION 2. PURCHASE, SALE AND DELIVERY OF THE SHARES.

(a) THE FIRM SHARES. The Company agrees to issue and sell to the several
Underwriters the Firm Shares upon the terms herein set forth. On the basis of
the representations, warranties and agreements of the Company and Phoenix herein
contained, and upon the terms but subject to the conditions herein set forth,
the Underwriters agree, severally and not jointly, to purchase from the Company
the respective number of Firm Shares set forth opposite their names on SCHEDULE
A. The purchase price per Firm Share to be paid by the several Underwriters to
the Company shall be $[__] per share.

(b) THE FIRST CLOSING DATE. Delivery of the Firm Shares to be purchased by
the Underwriters and payment therefor shall be made by the Company and the
Representatives at 6:00 a.m. San Francisco time, at the offices of Orrick,
Herrington & Sutcliffe LLP, San Francisco, California (or at such other place as
may be agreed upon among the Representatives and the Company), (i) on the third
(3rd) full business day following the first day that Shares are traded, (ii) if
this Agreement is executed and delivered after 1:30 P.M., San Francisco time,
the fourth (4th) full business day following the day that this Agreement is
executed and delivered or (iii) at such other time and date not later that seven
(7) full business days following the first day that Shares are traded as the
Representatives and the Company may determine (or at such time and date to which
payment and delivery shall have been postponed pursuant to Section 8 hereof),
such time and date of payment and delivery being herein called the "First
Closing Date"; provided, however, that if the Company has not made available to
the Representatives copies of the Prospectus within the time provided in
Sections 2(g) and 3(e) hereof, the Representatives may, in their sole
discretion, postpone the Closing

11
<PAGE>

Date until no later that two (2) full business days following delivery of copies
of the Prospectus to the Representatives.

(c) THE OPTION SHARES; THE SECOND CLOSING DATE. In addition, on the basis
of the representations, warranties and agreements of the Company and Phoenix
herein contained, and upon the terms but subject to the conditions herein set
forth, the Company hereby grants an option to the several Underwriters to
purchase, severally and not jointly, up to an aggregate of 525,000 Option Shares
from the Company at the purchase price per share to be paid by the Underwriters
for the Firm Shares. The option granted hereunder is for use by the Underwriters
solely in covering any overallotments in connection with the sale and
distribution of the Firm Shares. The option granted hereunder may be exercised
at any time upon notice by the Representatives to the Company, which notice may
be given at any time within 30 days from the date of this Agreement. The time
and date of delivery of the Option Shares, if subsequent to the First Closing
Date, is called the "Second Closing Date" and shall be determined by the
Representatives and shall not be earlier than three nor later than five full
business days after delivery of such notice of exercise. If any Option Shares
are to be purchased, each Underwriter agrees, severally and not jointly, to
purchase the number of Option Shares (subject to such adjustments to eliminate
fractional shares as the Representatives may determine) that bears the same
proportion to the total number of Option Shares to be purchased as the number of
Firm Shares set forth on SCHEDULE A opposite the name of such Underwriter bears
to the total number of Firm Shares. The Representatives may cancel the option at
any time prior to its expiration by giving written notice of such cancellation
to the Company.

(d) PUBLIC OFFERING OF THE SHARES. The Representatives hereby advise the
Company that the Underwriters intend to offer for sale to the public, as
described in the Prospectus, their respective portions of the Shares as soon
after this Agreement has been executed and the Registration Statement has been
declared effective as the Representatives, in their sole judgment, may
determined is advisable and practicable.

(e) PAYMENT FOR THE SHARES. Payment for the Shares shall be made at the
First Closing Date (and, if applicable, at the Second Closing Date) by wire
transfer in immediately available-funds to the order of the Company.

It is understood that the Representatives have been authorized, for their
own account and the accounts of the several Underwriters, to accept delivery of
and receipt for, and make payment of the purchase price for, the Firm Shares and
any Option Shares the Underwriters have agreed to purchase. Robertson Stephens,
individually and not as the Representative of the Underwriters, may (but shall
not be obligated to) make payment for any Shares to be purchased by any
Underwriter whose funds shall not have been received by the Representatives by
the First Closing Date or the Second Closing Date, as the case may be, for the
account of such Underwriter, but any such payment shall not relieve such
Underwriter from any of its obligations under this Agreement.

(f) DELIVERY OF THE SHARES. The Company shall deliver, or cause to be
delivered, a credit representing the Firm Shares to an account or accounts at
The Depository Trust Company, as designated by the Representatives for the
accounts of the Representatives and the several Underwriters at the First
Closing Date, against the irrevocable release of a wire transfer of immediately
available funds for the amount of the purchase price therefor. The Company shall
also deliver, or cause to be delivered a credit representing the Option Shares
the Underwriters have agreed to purchase at the First Closing Date (or the
Second Closing Date, as the case may be), to an account or accounts at The
Depository Trust Company as designated by the

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<PAGE>

Representatives for the accounts of the Representatives and the several
Underwriters, against the irrevocable release of a wire transfer of immediately
available funds for the amount of the purchase price therefor. Time shall be of
the essence, and delivery at the time and place specified in this Agreement is a
further condition to the obligations of the Underwriters.

(g) DELIVERY OF PROSPECTUS TO THE UNDERWRITERS. Not later than 12:00 noon
on the second business day following the date the Shares are released by the
Underwriters for sale to the public, the Company shall deliver or cause to be
delivered copies of the Prospectus in such quantities and at such places as the
Representatives shall request.

SECTION 3. COVENANTS OF THE COMPANY AND PHOENIX.

Each of the Company and Phoenix further covenant and agree with each
Underwriter as to itself as follows (but and only to the extent the Company or
Phoenix, as the case may be, is a named entity in respect of such covenant or
agreement):

(a) REGISTRATION STATEMENT MATTERS. The Company shall, and Phoenix shall
use its best efforts to cause the Company to, (i) use its best efforts to cause
a registration statement on Form 8-A (the "Form 8-A Registration Statement") as
required by the Securities Exchange Act of 1934 (the "Exchange Act") to become
effective simultaneously with the Registration Statement, (ii) use its best
efforts to cause the Registration Statement to become effective or, if the
procedure in Rule 430A of the Securities Act is followed, to prepare and timely
file with the Commission under Rule 424(b) under the Securities Act a Prospectus
in a form approved by the Representatives containing information previously
omitted at the time of effectiveness of the Registration Statement in reliance
on Rule 430A of the Securities Act and (iii) not file any amendment to the
Registration Statement or supplement to the Prospectus of which the
Representatives shall not previously have been advised and furnished with a copy
or to which the Representatives shall have reasonably objected in writing or
which is not in compliance with the Securities Act. If the Company elects to
rely on Rule 462(b) under the Securities Act, the Company shall, and Phoenix
shall use its best efforts to cause the Company to, file a Rule 462(b)
Registration Statement with the Commission in compliance with Rule 462(b) under
the Securities Act prior to the time confirmations are sent or given, as
specified by Rule 462(b)(2) under the Securities Act, and shall pay the
applicable fees in accordance with Rule 111 under the Securities Act.

(b) SECURITIES ACT COMPLIANCE. The Company shall, and Phoenix shall use its
best efforts to cause the Company to, advise the Representatives promptly (i)
when the Registration Statement or any post-effective amendment thereto shall
have become effective, (ii) of receipt of any comments from the Commission,
(iii) of any request of the Commission for amendment of the Registration
Statement or for supplement to the Prospectus or for any additional information
and (iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the use of the Prospectus or of
the institution of any proceedings for that purpose. The Company shall, and
Phoenix shall use its best efforts to cause the Company to, use its best efforts
to prevent the issuance of any such stop order preventing or suspending the use
of the Prospectus and to obtain as soon as possible the lifting thereof, if
issued.

(c) BLUE SKY COMPLIANCE. The Company shall, and Phoenix shall use its best
efforts to cause the Company to, cooperate with the Representatives and counsel
for the Underwriters in endeavoring to qualify the Shares for sale under the
securities laws of such jurisdictions (both national and foreign) as the
Representatives may reasonably have designated in writing and

13
<PAGE>

shall make such applications, file such documents, and furnish such information
as may be reasonably required for that purpose, provided the Company shall not
be required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction where it is not now so qualified or
required to file such a consent. The Company shall, from time to time, prepare
and file such statements, reports and other documents, as are or may be required
to continue such qualifications in effect for so long a period as the
Representatives may reasonably request for distribution of the Shares.

(d) AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS AND OTHER SECURITIES ACT
MATTERS. The Company shall, and Phoenix shall use its best efforts to cause the
Company to, comply with the Securities Act and the Exchange Act, and the rules
and regulations of the Commission thereunder, so as to permit the completion of
the distribution of the Shares as contemplated in this Agreement and the
Prospectus. If during the period in which a prospectus is required by law to be
delivered by an Underwriter or dealer, any event shall occur as a result of
which, in the judgment of the Company or in the reasonable opinion of the
Representatives or counsel for the Underwriters, it becomes necessary to amend
or supplement the Prospectus in order to make the statements therein, in the
light of the circumstances existing at the time the Prospectus is delivered to a
purchaser, not misleading, or, if it is necessary at any time to amend or
supplement the Prospectus to comply with any law, the Company promptly shall,
and Phoenix shall use its best efforts to cause the Company to, prepare and file
with the Commission, and furnish at the Company's own expense to the
Underwriters and to dealers, an appropriate amendment to the Registration
Statement or supplement to the Prospectus so that the Prospectus as so amended
or supplemented will not, in the light of the circumstances when it is so
delivered, be misleading, or so that the Prospectus will comply with the law.

(e) COPIES OF ANY AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS. The Company
agrees to, and Phoenix agrees to use its best efforts to cause the Company to,
furnish the Representative, without charge, during the period beginning on the
date hereof and ending on the later of the First Closing Date or such date, as
in the opinion of counsel for the Underwriters, the Prospectus is no longer
required by law to be delivered in connection with sales by an Underwriter or
dealer (the "Prospectus Delivery Period"), as many copies of the Prospectus and
any amendments and supplements thereto (including any documents incorporated or
deemed incorporated by reference therein) as the Representatives may request.

(f) INSURANCE. The Company shall, and Phoenix shall use its best efforts to
cause the Company to, (i) obtain Directors and Officers liability insurance in
the minimum amount of $10 million which shall apply to the offering contemplated
hereby and (ii) cause Robertson Stephens to be added to such policy such that up
to $500,000 of its expenses pursuant to section 7(a) shall be paid directly by
such insurer.

(g) NOTICE OF SUBSEQUENT EVENTS. If at any time during the ninety (90) day
period after the Registration Statement becomes effective, any rumor,
publication or event relating to or affecting the Company shall occur as a
result of which in your opinion the market price of the Company Shares has been
or is likely to be materially affected (regardless of whether such rumor,
publication or event necessitates a supplement to or amendment of the
Prospectus), the Company forthwith shall, after written notice from you advising
the Company to the effect set forth above, consult with the Representatives in
good faith regarding the possibility of preparing and disseminating a press
release or other public statement responding to or commenting on such rumor,
publication or event.

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(h) USE OF PROCEEDS. The Company shall apply the net proceeds from the sale
of the Shares sold by it in the manner described under the caption "Use of
Proceeds" in the Prospectus.

(i) TRANSFER AGENT. The Company shall engage and maintain, at its expense,
a registrar and transfer agent for the Company Shares.

(j) EARNINGS STATEMENT. As soon as practicable, the Company shall make
generally available to its security holders and to the Representatives an
earnings statement (which need not be audited) covering the twelve-month period
ending on the date of the end of the Company's first quarter ending after one
year following the "effective date of the Registration Statement" (as defined in
Rule 158(c) under the Securities Act) that satisfies the provisions of Section
11(a) of the Securities Act.

(k) PERIODIC REPORTING OBLIGATIONS. During the Prospectus Delivery Period
the Company shall file, on a timely basis, with the Commission and the Nasdaq
National Market all reports and documents required to be filed under the
Exchange Act and/or the rules and regulations of the NASD.

(l) AGREEMENT NOT TO OFFER OR SELL ADDITIONAL SECURITIES. The Company shall
not, and Phoenix shall use its best efforts to cause the Company not to, sell or
contract to sell, or otherwise dispose of or enter into any transaction which is
designed to, or could be expected to, result in the disposition (whether by
actual disposition or effective economic disposition due to cash settlement or
otherwise by the Company or any affiliate of the Company or any person in
privity with the Company or any affiliate of the Company) directly or
indirectly, or announce the offering of, any other Common Shares or any
securities convertible into, or exchangeable for, Common Shares; provided,
however, that the Company may (i) issue and sell Common Shares pursuant to any
director or employee stock option plan, stock ownership plan or dividend
reinvestment plan of the Company in effect at the date of the Prospectus and
described in the Prospectus so long as none of those shares may be transferred
and the Company shall enter stop transfer instructions with its transfer agent
and registrar against the transfer of any such Common Shares and (ii) the
Company may issue Common Shares issuable upon the exercise of the Warrant or
conversion of securities outstanding at the date of the Prospectus and described
in the Prospectus. These restrictions terminate after the close of trading of
the Shares on the 180th day of (and including) the day the Shares commenced
trading on the Nasdaq National Market (the "Lock-Up Period").

(m) FUTURE REPORTS TO THE REPRESENTATIVES. During the period of five years
hereafter the Company shall furnish to the Representatives (i) as soon as
practicable after the end of each fiscal year, copies of the Annual Report of
the Company containing the balance sheet of the Company as of the close of such
fiscal year and statements of income, stockholders' equity and cash flows for
the year then ended and the opinion thereon of the Company's independent public
or certified public accountants; (ii) as soon as practicable after the filing
thereof, copies of each proxy statement, Annual Report on Form 10-K, Quarterly
Report on Form 10-Q, Current Report on Form 8-K or other report filed by the
Company with the Commission, the NASD or any securities exchange; and (iii) as
soon as available, copies of any report or communication of the Company mailed
generally to holders of its capital stock.

(n) DIRECTED SHARE PROGRAM. The Company (i) will indemnify Robertson
Stephens for any losses incurred in connection with the Directed Share Program,
(ii) will comply with all applicable securities and other applicable laws, rules
and regulations in each jurisdiction in

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which the Directed Shares are offered in connection with the Directed Share
Program and (iii) will pay all reasonable fees and disbursements of counsel
incurred by the Underwriters in connection with the Directed Share Program and
any stamp duties, similar taxes or duties or other taxes, if any, incurred by
the underwriters in connection with the Directed Share Program.

(o) COMPLIANCE WITH AND ENFORCEMENT OF INTERCOMPANY AGREEMENTS. Phoenix
shall in good faith comply with its obligations to the Company under the
Intercompany Agreements. The Company shall in good faith enforce its rights
against Phoenix under the Intercompany Agreements unless otherwise determined by
a vote of a majority of the independent members of its Board of Directors.

SECTION 4. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS.

The obligations of the several Underwriters to purchase and pay for the
Shares as provided herein on the First Closing Date and, with respect to the
Option Shares, the Second Closing Date, shall be subject to the accuracy of the
representations and warranties on the part of the Company and Phoenix set forth
in Section 1 hereof as of the date hereof and as of the First Closing Date as
though then made and, with respect to the Option Shares, as of the Second
Closing Date as though then made, to the timely performance by the Company and
Phoenix of their respective covenants and other obligations hereunder, and to
each of the following additional conditions:

(a) COMPLIANCE WITH REGISTRATION REQUIREMENTS; NO STOP ORDER; NO OBJECTION
FROM THE NASD. The Registration Statement shall have become effective prior to
the execution of this Agreement, or at such later date as shall be consented to
in writing by Robertson Stephens; and no stop order suspending the effectiveness
thereof shall have been issued and no proceedings for that purpose shall have
been initiated or, to the knowledge of the Company, Phoenix, or any Underwriter,
threatened by the Commission, and any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the satisfaction of counsel to the
Underwriters; and the NASD shall have delivered a letter to the Representatives
stating that it intends not to raise any objection to the fairness and
reasonableness of the underwriting terms and arrangements.

(b) CORPORATE PROCEEDINGS. All corporate proceedings and other legal
matters in connection with this Agreement, the form of Registration Statement
and the Prospectus, and the registration, authorization, issue, sale and
delivery of the Shares, shall have been reasonably satisfactory to counsel to
the Underwriters, and such counsel shall have been furnished with such papers
and information as they may reasonably have requested to enable them to pass
upon the matters referred to in this Section.

(c) NO MATERIAL ADVERSE CHANGE. Subsequent to the execution and delivery of
this Agreement and prior to the First Closing Date, or the Second Closing Date,
as the case may be, there shall not have been any Material Adverse Change in the
condition (financial or otherwise), earnings, operations, business or business
prospects of the Company and its subsidiaries, considered as one enterprise,
from that set forth in the Registration Statement or Prospectus, which, in the
sole judgment of Robertson Stephens, is material and adverse and that makes it,
in the sole judgment of Robertson Stephens, impracticable or inadvisable to
proceed with the public offering of the Shares as contemplated by the
Prospectus.

(d) OPINION OF COUNSEL FOR THE COMPANY. The Underwriters shall have
received on the First Closing Date, or the Second Closing Date, as the case may
be, an opinion of Orrick,

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Herrington & Sutcliffe LLP, counsel for the Company substantially in the form of
EXHIBIT B attached hereto, dated the First Closing Date, or the Second Closing
Date, addressed to the Underwriters and with reproduced copies or signed
counterparts thereof for each of the Underwriters. Counsel rendering the opinion
contained in EXHIBIT B may rely as to questions of law not involving the laws of
the United States or the States of California and Delaware upon opinions of
local counsel, and as to questions of fact upon representations or certificates
of officers of the Company and of government officials, in which case their
opinion is to state that they are so relying and that they have no knowledge of
any material misstatement or inaccuracy in any such opinion, representation or
certificate. Copies of any opinion, representation or certificate so relied upon
shall be delivered to the Underwriters, and to counsel to the Underwriters.

(e) OPINION OF INTELLECTUAL PROPERTY COUNSEL FOR THE COMPANY. The
Underwriters shall have received on the First Closing Date, or the Second
Closing Date, as the case may be, an opinion of Wildman, Harrold, Allen & Dixon,
intellectual property counsel for the Company substantially in the form of
EXHIBIT C attached hereto.

(f) OPINION OF COUNSEL FOR THE UNDERWRITERS. The Underwriters shall have
received on the First Closing Date or the Second Closing Date, as the case may
be, an opinion of O'Melveny & Myers LLP, in form and substance satisfactory to
the Representatives, with respect to the sufficiency of all such corporate
proceedings and other legal matters relating to this Agreement and the
transactions contemplated hereby as the Representatives may reasonably require.
The Company shall have furnished to such counsel such documents as they may have
reasonably requested for the purpose of enabling them to pass upon such matters.

(g) ACCOUNTANTS' COMFORT LETTER. The Underwriters shall have received on
the First Closing Date and on the Second Closing Date, as the case may be, a
letter from Ernst & Young, LLP and PriceWaterhouseCoopers LLP, addressed to the
Underwriters, dated the First Closing Date or the Second Closing Date, as the
case may be, confirming that they are independent certified public accountants
with respect to the Company or Sand Microelectronics, Inc., as the case may be,
within the meaning of the Act and the applicable published Rules and Regulations
and based upon the procedures described in such letter delivered to the
Underwriters concurrently with the execution of this Agreement (herein called
the "Original Letter"), but carried out to a date not more than four (4)
business days prior to the First Closing Date or the Second Closing Date, as the
case may be, (i) confirming, to the extent true, that the statements and
conclusions set forth in the Original Letter are accurate as of the First
Closing Date or the Second Closing Date, as the case may be, and (ii) setting
forth any revisions and additions to the statements and conclusions set forth in
the Original Letter which are necessary to reflect any changes in the facts
described in the Original Letter since the date of such letter, or to reflect
the availability of more recent financial statements, data or information. The
letter shall not disclose any change in the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company from that
set forth in the Registration Statement or Prospectus, which, in the sole
judgment of the Robertson Stephens, is material and adverse and that makes it,
in the sole judgment of the Robertson Stephens, impracticable or inadvisable to
proceed with the public offering of the Shares as contemplated by the
Prospectus. The Original Letter from Ernst & Young, LLP and
PriceWaterhouseCoopers LLP shall be addressed to or for the use of the
Underwriters in form and substance satisfactory to the Underwriters and shall
(i) represent, to the extent true, that they are independent certified public
accountants with respect to the Company or Sand Microelectronics, Inc., as the
case may be, within the meaning of the Act and the applicable published Rules
and Regulations, (ii) set forth their opinion with

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<PAGE>

respect to their examination of the consolidated balance sheet of the Company as
of September 30, 1999 and December 31, 1999, and related consolidated statements
of operations, shareholders' equity, and cash flows for the twelve (12) months
ended September 30, 1999, and the three (3) months ended December 31, 1999, and
address other matters agreed upon by Ernst & Young, LLP, PriceWaterhouseCoopers
LLP, and the Representatives. In addition, you shall have received from Ernst &
Young, LLP and PriceWaterhouseCoopers LLP, a letter addressed to the Company and
made available to you for the use of the Underwriters stating that their review
of the Company's system of internal accounting controls, to the extent they
deemed necessary in establishing the scope of their examination of the Company's
consolidated financial statements as of December 31, 1999, did not disclose any
weaknesses in internal controls that they considered to be material weaknesses.

(h) COMPANY CERTIFICATE. The Representatives shall have received on the
First Closing Date and the Second Closing Date, as the case may be, a
certificate of the Company, dated the First Closing Date or the Second Closing
Date, as the case may be, signed by the Chief Executive Officer and Chief
Financial Officer of the Company, to the effect that, and you shall be satisfied
that:

(i) The representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the First Closing
Date or the Second Closing Date, as the case may be, and the Company has
complied with all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the First Closing Date or
the Second Closing Date, as the case may be;

(ii) No stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or threatened under the Act;

(iii) When the Registration Statement became effective and at all
times subsequent thereto up to the delivery of such certificate, the
Registration Statement and the Prospectus, and any amendments or
supplements thereto contained all material information required to be
included therein by the Securities Act and in all material respects
conformed to the requirements of the Securities Act, the Registration
Statement and the Prospectus, and any amendments or supplements thereto,
did not and does not include any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; and, since the effective date
of the Registration Statement, there has occurred no event required to be
set forth in an amended or supplemented Prospectus which has not been so
set forth; and

(iv) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, there has not been (a)
any material adverse change in the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company and its
subsidiaries, considered as one enterprise, (b) any transaction that is
material to the Company, except transactions entered into in the ordinary
course of business, (c) any obligation, direct or contingent, that is
material to the Company, incurred by the Company, except obligations
incurred in the ordinary course of business, (d) any change in the capital
stock or outstanding indebtedness of the Company that is material to the
Company other than the offering, (e) any dividend or distribution of any
kind declared, paid or made on the capital stock of the Company, or (f) any
loss or damage (whether or not insured) to the property of the Company
which

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<PAGE>

has been sustained or will have been sustained which has a material adverse
effect on the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company and its subsidiaries
considered as one enterprise.

(i) PHOENIX CERTIFICATE. The Representatives shall have received on the
First Closing Date and the Second Closing Date, as the case may be, a
certificate of Phoenix, dated the First Closing Date or the Second Closing Date,
as the case may be, signed by the Chief Executive Officer and Chief Financial
Officer of Phoenix, to the effect that, and you shall be satisfied that the
representations and warranties of Phoenix in this Agreement are true and
correct, as if made on and as of the First Closing Date or the Second Closing
Date, as the case may be, and Phoenix has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to the First Closing Date or the Second Closing Date, as the case may be.

(j) LOCK-UP AGREEMENT FROM CERTAIN STOCKHOLDERS OF THE COMPANY. The Company
shall have obtained and delivered to the Representatives an agreement
substantially in the form of EXHIBIT A attached hereto from each officer and
director of the Company, and from Phoenix and any other beneficial owner of one
or more percent of the outstanding issued share capital of the Company.

(k) INTERCOMPANY AGREEMENTS. Each of the Intercompany Agreements shall have
been executed and delivered and shall be in full force and effect and
unmodified; and a true and correct copy of each of them shall have been
delivered to counsel for the Underwriters.

(l) CONTRIBUTION FROM PHOENIX TO THE COMPANY. Any transfers or other
contributions of rights or assets from Phoenix to the Company required by the
Intercompany Agreements to occur at or prior to the Closing shall have occurred
to the reasonable satisfaction of the Representatives.

(m) STOCK EXCHANGE LISTING. The Shares shall have been approved for
inclusion on the Nasdaq National Market, subject only to official notice of
issuance.

(n) COMPLIANCE WITH PROSPECTUS DELIVERY REQUIREMENTS. The Company shall
have complied with the provisions of Sections 2(g) and 3(e) hereof with respect
to the furnishing of Prospectuses.

(o) ADDITIONAL DOCUMENTS. On or before each of the First Closing Date and
the Second Closing Date, as the case may be, the Representatives and counsel for
the Underwriters shall have received such information, documents and opinions as
they may reasonably require for the purposes of enabling them to pass upon the
issuance and sale of the Shares as contemplated herein, or in order to evidence
the accuracy of any of the representations and warranties, or the satisfaction
of any of the conditions or agreements, herein contained.

If any condition specified in this Section 4 is not satisfied when and as
required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company at any time on or prior to the First
Closing Date and, with respect to the Option Shares, at any time prior to the
Second Closing Date, which termination shall be without liability on the part of
any party to any other party, except that Section 5 (Payment of Expenses),
Section 6 (Reimbursement of Underwriters' Expenses), Section 7 (Indemnification
and Contribution) and Section 10 (Representations and Indemnities to Survive
Delivery) shall at all times be effective and shall survive such termination.

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<PAGE>

SECTION 5. PAYMENT OF EXPENSES.

The Company agrees to pay all costs, fees and expenses incurred in
connection with the performance of its obligations hereunder and in connection
with the transactions contemplated hereby, including without limitation (i) all
expenses incident to the issuance and delivery of the Common Shares (including
all printing and engraving costs), (ii) all fees and expenses of the registrar
and transfer agent of the Common Stock, (iii) all necessary issue, transfer and
other stamp taxes in connection with the issuance and sale of the Shares to the
Underwriters, (iv) all fees and expenses of the Company's counsel, independent
public or certified public accountants and other advisors, (v) all costs and
expenses incurred in connection with the preparation, printing, filing, shipping
and distribution of the Registration Statement (including financial statements,
exhibits, schedules, consents and certificates of experts), each preliminary
prospectus and the Prospectus, and all amendments and supplements thereto, and
this Agreement, (vi) all filing fees, attorneys' fees and expenses incurred by
the Company or the Underwriters in connection with qualifying or registering (or
obtaining exemptions from the qualification or registration of) all or any part
of the Shares for offer and sale under the state securities or blue sky laws or
the provincial securities laws of Canada or any other country, and, if requested
by the Representatives, preparing and printing a "Blue Sky Survey," an
"International Blue Sky Survey" or other memorandum, and any supplements
thereto, advising the Underwriters of such qualifications, registrations and
exemptions, (vii) the filing fees incident to, and the reasonable fees and
expenses of counsel for the Underwriters in connection with, the NASD review and
approval of the Underwriters' participation in the offering and distribution of
the Common Shares, (viii) the fees and expenses associated with including the
Common Shares on the Nasdaq National Market, (ix) all costs and expenses
incident to the travel and accommodation of the Company's employees on the "road
show" preparations to be made to prospective investors, and (x) all other fees,
costs and expenses referred to in Item 13 of Part II of the Registration
Statement. Except as provided in this Section 5, Section 6, and Section 7
hereof, the Underwriters shall pay their own expenses, including the fees and
disbursements of their counsel. This Section 5 shall not affect or modify any
separate, valid agreement relating to the allocation of payment of expenses
between the Company, on the one hand, and Phoenix, on the other hand.

SECTION 6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES.

If this Agreement is terminated by the Representatives pursuant to Section
4, Section 7, Section 8, Section 9, or if the sale to the Underwriters of the
Shares on the First Closing Date is not consummated because of any refusal,
inability or failure on the part of the Company to perform any agreement herein
or to comply with any provision hereof, the Company and Phoenix agree to
reimburse the Representatives and the other Underwriters (or such Underwriters
as have terminated this Agreement with respect to themselves), severally, upon
demand for all out-of-pocket expenses that shall have been reasonably incurred
by the Representatives and the Underwriters in connection with the proposed
purchase and the offering and sale of the Shares, including but not limited to
fees and disbursements of counsel, printing expenses, travel expenses, postage,
facsimile and telephone charges.

SECTION 7. INDEMNIFICATION AND CONTRIBUTION.

(a) INDEMNIFICATION OF THE UNDERWRITERS.

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<PAGE>

(i) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
and hold harmless each Underwriter, its officers and employees, and each
person, if any, who controls any Underwriter within the meaning of the
Securities Act and the Exchange Act against any loss, claim, damage,
liability or expense, as incurred, to which such Underwriter or such
controlling person may become subject, under the Securities Act, the
Exchange Act or other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the Company, which
consent shall not be unreasonably withheld), insofar as such loss, claim,
damage, liability or expense (or actions in respect thereof as contemplated
below) arises out of or is based (i) upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement, or any amendment thereto, including any information deemed to be
a part thereof pursuant to Rule 430A under the Securities Act, or the
omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading;
or (ii) upon any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; or (iii) in whole or in part upon any inaccuracy in the
representations and warranties of the Company contained herein; or (iv) in
whole or in part upon any failure of the Company to perform its obligations
hereunder or under law; or (v) any untrue statement or alleged untrue
statement of any material fact contained in any audio or visual materials
provided by the Company or based upon written information furnished by or
on behalf of the Company including, without limitation, slides, videos,
films or tape recordings, used in connection with the marketing of the
Shares; or (vi) any act or failure to act or any alleged act or failure to
act by any Underwriter in connection with, or relating in any manner to,
the Shares or the offering contemplated hereby, and which is included as
part of or referred to in any loss, claim, damage, liability or action
arising out of or based upon any matter covered by clause (i), (ii), (iii),
(iv) or (v) above, provided that the Company shall not be liable under this
clause (vi) to the extent that a court of competent jurisdiction shall have
determined by a final judgment that such loss, claim, damage, liability or
action resulted directly from any such acts or failures to act undertaken
or omitted to be taken by such Underwriter through its bad faith or willful
misconduct; and to reimburse each Underwriter and each such controlling
person for any and all expenses (including the fees and disbursements of
counsel chosen by Robertson Stephens) as such expenses are reasonably
incurred by such Underwriter or such controlling person in connection with
investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that the
foregoing indemnity agreement shall not apply to any loss, claim, damage,
liability or expense to the extent, but only to the extent, arising out of
or based upon any untrue statement or alleged untrue statement or omission
or alleged omission made in reliance upon and in conformity with written
information furnished to the Company by the Representatives expressly for
use in the Registration Statement, any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto); and provided, further,
that with respect to any preliminary prospectus, the foregoing indemnity
agreement shall not inure to the benefit of any Underwriter from whom the
person asserting any loss, claim, damage, liability or expense purchased
Shares, or any person controlling such Underwriter, if copies of the
Prospectus were timely delivered to the Underwriter pursuant to Section 2
and a copy of the Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was not

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<PAGE>

sent or given by or on behalf of such Underwriter to such person, if
required by law so to have been delivered, and if the Prospectus (as so
amended or supplemented) would have cured the defect giving rise to such
loss, claim, damage, liability or expense. The indemnity agreement set
forth in this Section 7(a)(i) shall be in addition to any liabilities
that the Company may otherwise have.

(iii) INDEMNIFICATION BY PHOENIX. Phoenix agrees to indemnify and hold
harmless each Underwriter, its officers and employees, and each person, if
any, who controls any Underwriter within the meaning of the Securities Act
and the Exchange Act against any loss, claim, damage, liability or expense,
as incurred, to which such Underwriter or such controlling person may
become subject, under the Securities Act, the Exchange Act or other federal
or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected
with the written consent of the Company, which consent shall not be
unreasonably withheld), insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises out of
or is based (i) upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, or any amendment
thereto, including any information deemed to be a part thereof pursuant to
Rule 430A under the Securities Act, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading; or (ii) upon any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or (iii) in whole
or in part upon any inaccuracy in the representations and warranties of
Phoenix contained herein; or (iv) in whole or in part upon any failure of
Phoenix to perform its obligations hereunder or under law; or (v) any
untrue statement or alleged untrue statement of any material fact contained
in any audio or visual materials provided by the Company or based upon
written information furnished by or on behalf of the Company including,
without limitation, slides, videos, films or tape recordings, used in
connection with the marketing of the Shares; or (vi) any act or failure to
act or any alleged act or failure to act by any Underwriter in connection
with, or relating in any manner to, the Shares or the offering contemplated
hereby, and which is included as part of or referred to in any loss, claim,
damage, liability or action arising out of or based upon any matter covered
by clause (i), (ii), (iii), (iv) or (v) above, provided that Phoenix shall
not be liable under this clause (vi) to the extent that a court of
competent jurisdiction shall have determined by a final judgment that such
loss, claim, damage, liability or action resulted directly from any such
acts or failures to act undertaken or omitted to be taken by such
Underwriter through its bad faith or willful misconduct; and to reimburse
each Underwriter and each such controlling person for any and all expenses
(including the fees and disbursements of counsel chosen by Robertson
Stephens) as such expenses are reasonably incurred by such Underwriter or
such controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action; provided, however, that the foregoing indemnity
agreement shall not apply to any loss, claim, damage, liability or expense
to the extent, but only to the extent, arising out of or based upon any
untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with written information
furnished to the Company by the Representatives expressly for use in the
Registration Statement, any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto); and provided, further, that with
respect to any preliminary

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<PAGE>

prospectus, the foregoing indemnity agreement shall not inure to the
benefit of any Underwriter from whom the person asserting any loss, claim,
damage, liability or expense purchased Shares, or any person controlling
such Underwriter, if copies of the Prospectus were timely delivered to the
Underwriter pursuant to Section 2 and a copy of the Prospectus (as then
amended or supplemented if the Company shall have furnished any amendments
or supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if required by law so to have been delivered,
and if the Prospectus (as so amended or supplemented) would have cured the
defect giving rise to such loss, claim, damage, liability or expense. The
indemnity agreement set forth in this Section 7(a)(ii) shall be in addition
to any liabilities that Phoenix may otherwise have.

(iii) LIMITATION OF PHOENIX'S LIABILITY. Phoenix shall not be liable
under clauses (i), (ii), (v) or (vi) of Section 7(a)(ii) above unless (1)
the indemnified party shall have been notified of a loss, claim, damage,
liability or expense at a time when Phoenix owned at least 50% of the
outstanding Common Shares of the Company, and (2) the indemnified party has
made a demand on the Company for payment under clauses (i), (ii), (v) or
(vi) of Section 7(a)(i) above and such demanded sums have gone unpaid for a
period of 60 days after payment is due with respect thereto.

(b) INDEMNIFICATION OF THE COMPANY, ITS DIRECTORS AND OFFICERS, PHOENIX AND
THEIR RESPECTIVE CONTROL PERSONS. Each Underwriter agrees, severally and not
jointly, to indemnify and hold harmless the Company, each of its directors, each
of its officers who signed the Registration Statement, Phoenix and each person,
if any, who controls the Company or Phoenix within the meaning of the Securities
Act or the Exchange Act, against any loss, claim, damage, liability or expense,
as incurred, to which the Company, Phoenix or any such director, officer or
controlling person may become subject, under the Securities Act, the Exchange
Act, or other federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of such Underwriter), insofar as such loss,
claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or arises out of or is based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement, any preliminary
prospectus, the Prospectus (or any amendment or supplement thereto), in reliance
upon and in conformity with written information furnished to the Company by the
Representatives expressly for use therein; and to reimburse the Company, Phoenix
or any such director, officer or controlling person for any legal and other
expense reasonably incurred by the Company, Phoenix or any such director,
officer or controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action. The indemnity agreement set forth in this Section 7(b) shall
be in addition to any liabilities that each Underwriter may otherwise have.

(c) INFORMATION PROVIDED BY THE UNDERWRITERS. Each of the Company and
Phoenix and each person, if any, who controls the Company or Phoenix, within the
meaning of the Securities Act or the Exchange Act, hereby acknowledges that the
only information that the Underwriters have furnished to the Company expressly
for use in the Registration Statement, any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) are the statements set forth
in (i) the table in the paragraph entitled "General," (ii) the paragraph
entitled "Concessions

23
<PAGE>

and Reallowances," (iii) the paragraph entitled "Stabilization" and (iv) the
paragraph entitled "Passive Market Making," in each case under the caption
"Underwriting" in the Prospectus; and the Underwriters confirm that such
statements are correct.

(d) NOTIFICATIONS AND OTHER INDEMNIFICATION PROCEDURES. Promptly after
receipt by an indemnified party under this Section 7 of notice of the
commencement of any action, such indemnified party shall, if a claim in respect
thereof is to be made against an indemnifying party under this Section 7, notify
the indemnifying party in writing of the commencement thereof, but the omission
so to notify the indemnifying party shall not relieve it from any liability
which it may have to any indemnified party for contribution or otherwise than
under the indemnity agreement contained in this Section 7 or to the extent it is
not prejudiced as a proximate result of such failure. In case any such action is
brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
shall be entitled to participate in, and, to the extent that it shall elect,
jointly with all other indemnifying parties similarly notified, by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of such indemnifying
party's election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party shall not be liable to such
indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel (together with local counsel), approved by the
indemnifying party (Robertson Stephens in the case of Section 7(b) and Section
8), representing the indemnified parties who are parties to such action), (ii)
the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action, or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party, in each of which cases the fees and expenses of counsel
shall be at the expense of the indemnifying party.

(e) SETTLEMENTS. The indemnifying party under this Section 7 shall not be
liable for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld, but if settled with
such consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party against any loss, claim, damage,
liability or expense by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by Section 7(d) hereof, the indemnifying party agrees
that it shall be liable for any settlement of any proceeding effected without
its written consent if (i) such settlement is entered into more than 30 days
after receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to

24
<PAGE>

the date of such settlement. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement, compromise or
consent to the entry of judgment in any pending or threatened action, suit or
proceeding in respect of which any indemnified party is or could have been a
party and indemnity was or could have been sought hereunder by such indemnified
party, unless such settlement, compromise or consent includes (i) an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such action, suit or proceeding and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act by or on behalf of any indemnified party.

(f) CONTRIBUTION. If the indemnification provided for in this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 7(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) then each
indemnifying party shall contribute to the aggregate amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect the
relative benefits received by the Company and Phoenix on the one hand and the
Underwriters on the other from the offering of the Shares. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law then each indemnifying party shall contribute to such amount paid
or payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company and Phoenix on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, (or actions or proceedings in respect thereof),
as well as any other relevant equitable considerations. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or Phoenix on the
one hand or the Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.

The Company and Underwriters agree that it would not be just and equitable
if contributions pursuant to this Section 7(f) were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7(f). The amount paid
or payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to above in
this Section 7(f) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (f), (i) no Underwriter shall be required to contribute any amount in
excess of the underwriting discounts and commissions applicable to the Shares
purchased by such Underwriter and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this Section 7(f)
to contribute are several in proportion to their respective underwriting
obligations and not joint.

(g) TIMING OF ANY PAYMENTS OF INDEMNIFICATION. Any losses, claims, damages,
liabilities or expenses for which an indemnified party is entitled to
indemnification or contribution under this Section 7 shall be paid by the
indemnifying party to the indemnified party as such losses, claims, damages,
liabilities or expenses are incurred, but in all cases, no later than forty-five
(45) days of invoice to the indemnifying party.

25
<PAGE>

(h) SURVIVAL. The indemnity and contribution agreements contained in this
Section 7 and the representation and warranties of the Company and Phoenix set
forth in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Underwriter or
any person controlling any Underwriter, the Company, Phoenix, their directors or
officers or any persons controlling the Company or Phoenix, (ii) acceptance of
any Shares and payment therefor hereunder, and (iii) any termination of this
Agreement. A successor to any Underwriter, or to the Company, Phoenix, their
directors or officers, or any person controlling the Company or Phoenix, shall
be entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 7.

(i) ACKNOWLEDGEMENTS OF PARTIES. The parties to this Agreement hereby
acknowledge that they are sophisticated business persons who were represented by
counsel during the negotiations regarding the provisions of this Agreement
including, without limitation, the provisions of this Section 7, and are fully
informed regarding said provisions. They further acknowledge that the provisions
of this Section 7 fairly allocate the risks in light of the ability of the
parties to investigate the Company and its business in order to assure that
adequate disclosure is made in the Registration Statement and Prospectus as
required by the Securities Act and the Exchange Act.

(j) INDEMNIFICATION FOR DIRECTED SHARE PROGRAM. The Company agrees to
indemnify and hold harmless Robertson Stephens and its affiliates and each
person, if any, who controls Robertson Stephens or its affiliates within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act ("Robertson Stephens Entities"), from and against any and all losses,
claims, damages and liabilities (including, without limitation, any legal or
other expenses reasonably incurred in connection with defending or investigating
any such action or claim) (i) caused by any untrue statement or alleged untrue
statement of a material fact contained in any material prepared by or with the
consent of the Company for distribution to participants in connection with the
Directed Share Program, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading; (ii) related to, arising out of, or in
connection with the failure of any participant to pay for and accept delivery of
Directed Shares that the participant has agreed to purchase; or (iii) related
to, arising out of, or in connection with the Directed Share Program; provided,
however, that the Company and Phoenix shall not be liable for any loss, claim,
damage, liability or expense under this Section 7(j) to the extent that a court
of competent jurisdiction shall have determined by a final judgment that such
loss, claim, damage, liability or expense resulted directly from any acts or
failures to act undertaken or omitted to be taken by such Underwriter through
its bad faith or willful misconduct; and provided, further, that with respect to
any preliminary prospectus, the foregoing indemnity agreement shall not inure to
the benefit of any Underwriter from whom the person asserting any loss, claim,
damage, liability or expense purchased Shares, or any person controlling such
Underwriter, if copies of the Prospectus were timely delivered to the
Underwriter pursuant to Section 2 and a copy of the Prospectus (as then amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Underwriter
to such person, if required by law so to have been delivered, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage, liability or expense. The indemnity agreement
set forth in this Section 7(j) shall be in addition to any liabilities that the
Company may otherwise have.

26
<PAGE>

SECTION 8. DEFAULT OF ONE OR MORE OF THE SEVERAL UNDERWRITERS.

If, on the First Closing Date or the Second Closing Date, as the case may
be, any one or more of the several Underwriters shall fail or refuse to purchase
Shares that it or they have agreed to purchase hereunder on such date, and the
aggregate number of Common Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase does not exceed 10% of the
aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated, severally, in the proportions that the number
of Firm Common Shares set forth opposite their respective names on SCHEDULE A
bears to the aggregate number of Firm Shares set forth opposite the names of all
such non-defaulting Underwriters, or in such other proportions as may be
specified by the Representatives with the consent of the non-defaulting
Underwriters, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date. If, on the
First Closing Date or the Second Closing Date, as the case may be, any one or
more of the Underwriters shall fail or refuse to purchase Shares and the
aggregate number of Shares with respect to which such default occurs exceeds 10%
of the aggregate number of Shares to be purchased on such date, and arrangements
satisfactory to the Representatives and the Company for the purchase of such
Shares are not made within 48 hours after such default, this Agreement shall
terminate without liability of any party to any other party except that the
provisions of Section 5 and Section 7 shall at all times be effective and shall
survive such termination. In any such case either the Representatives or the
Company shall have the right to postpone the First Closing Date or the Second
Closing Date, as the case may be, but in no event for longer than seven days, in
order that the required changes, if any, to the Registration Statement and the
Prospectus or any other documents or arrangements may be effected.

As used in this Agreement, the term "Underwriter" shall be deemed to
include any person substituted for a defaulting Underwriter under this Section
8. Any action taken under this Section 8 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.

SECTION 9. TERMINATION OF THIS AGREEMENT.

Prior to the First Closing Date, this Agreement may be terminated by the
Representatives by notice given to the Company if (a) at any time after the
execution and delivery of this Agreement and prior to the First Closing Date (i)
trading or quotation in any of the Company's securities shall have been
suspended or limited by the Commission or by the Nasdaq Stock Market, or trading
in securities generally on either the Nasdaq Stock Market or the New York Stock
Exchange shall have been suspended or limited, or minimum or maximum prices
shall have been generally established on any of such stock exchanges by the
Commission or the NASD; (ii) a general banking moratorium shall have been
declared by any of federal, New York, Delaware or California authorities; (iii)
there shall have occurred any outbreak or escalation of national or
international hostilities or any crisis or calamity, or any change in the United
States or international financial markets, or any substantial change or
development involving a prospective change in United States' or international
political, financial or economic conditions, as in the judgment of the
Representatives is material and adverse and makes it impracticable or
inadvisable to market the Common Shares in the manner and on the terms
contemplated in the Prospectus or to enforce contracts for the sale of
securities; (iv) in the judgment of the Representatives there shall have
occurred any Material Adverse Change; or (v) the Company shall have sustained a
loss by strike, fire, flood, earthquake, accident or other calamity of such
character as in the judgment of the Representatives may interfere materially

27
<PAGE>

with the conduct of the business and operations of the Company regardless of
whether or not such loss shall have been insured, or (b) in the case of any of
the events specified 9(a)(i)-(v), such event singly or together with any other
event, makes it, in your judgment, impracticable to market the Common Shares in
the manner and on the terms contemplated in the Prospectus. Any termination
pursuant to this Section 9 shall be without liability on the part of (x) the
Company or Phoenix to any Underwriter, except that the Company and Phoenix shall
be jointly or severally obligated to reimburse the expenses of the
Representatives and the Underwriters pursuant to Sections 5 and 6 hereof, (y)
any Underwriter to the Company or Phoenix or any person controlling the Company
or Phoenix, or (z) any party hereto to any other party except that the
provisions of Section 7 shall at all times be effective and shall survive such
termination.

SECTION 10. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY.

The respective indemnities, agreements, representations, warranties and
other statements of the Company, its officers, Phoenix or any person controlling
the Company or Phoenix and of the several Underwriters set forth in or made
pursuant to this Agreement shall remain in full force and effect, regardless of
any investigation made by or on behalf of any Underwriter or the Company or
Phoenix or any of its or their partners, officers or directors or any
controlling person, as the case may be, and shall survive delivery of and
payment for the Shares sold hereunder and any termination of this Agreement.

SECTION 11. NOTICES.

All communications hereunder shall be in writing and shall be mailed, hand
delivered or telecopied and confirmed to the parties hereto as follows:

If to the Representative, to:

FleetBoston Robertson Stephens Inc.
555 California Street
San Francisco, California 94104
Facsimile: (415) 676-2696
Attention: General Counsel

with a copy to:

O'Melveny & Myers LLP
275 Battery Street, Suite 2600
San Francisco, CA 94111-3305
Facsimile: (415) 984-8701
Attention: Peter T. Healy, Esq.

If to the Company, to:

inSilicon Corporation
411 East Plumeria Drive
San Jose, CA 95134
Facsimile: (408) 570-1238
Attention: Mr. Wayne Cantwell
cc: David J. Power, Esq.

28
<PAGE>

If to Phoenix, to:

Phoenix Technologies, Ltd.
411 East Plumeria Drive
San Jose, CA 95134
Facsimile: (408) 570-1238
Attention: Mr. Albert E. Sisto

In each case, with a copy to:

Orrick, Herrington & Sutcliffe, LLP
400 Sansome Street
San Francisco, CA 94111-3143
Facsimile: (415) 773-5759
Attention: Alan Talkington, Esq.

Any party hereto may change the address for receipt of communications by giving
written notice to the others.

SECTION 12. SUCCESSORS.

This Agreement shall inure to the benefit of and be binding upon the
parties hereto, including any substitute Underwriters pursuant to Section 9
hereof, and to the benefit of the employees, officers and directors and
controlling persons referred to in Section 7, and to their respective
successors, and personal representatives, and no other person shall have any
right or obligation hereunder. The term "successors" shall not include any
purchaser of the Shares as such from any of the Underwriters merely by reason of
such purchase.

SECTION 13. PARTIAL UNENFORCEABILITY.

The invalidity or unenforceability of any Section, paragraph or provision
of this Agreement shall not affect the validity or enforceability of any other
Section, paragraph or provision hereof. If any Section, paragraph or provision
of this Agreement is for any reason determined to be invalid or unenforceable,
there shall be deemed to be made such minor changes (and only such minor
changes) as are necessary to make it valid and enforceable.

SECTION 14. GOVERNING LAW PROVISIONS.

(a) GOVERNING LAW. This agreement shall be governed by and construed in
accordance with the internal laws of the state of New York applicable to
agreements made and to be performed in such state.

(b) CONSENT TO JURISDICTION. Any legal suit, action or proceeding arising
out of or based upon this Agreement or the transactions contemplated hereby
("Related Proceedings") may be instituted in the federal courts of the United
States of America located in the City and County of San Francisco or the courts
of the State of California in each case located in the City and County of San
Francisco (collectively, the "Specified Courts"), and each party irrevocably
submits to the exclusive jurisdiction (except for proceedings instituted in
regard to the

29
<PAGE>

enforcement of a judgment of any such court (a "Related Judgment"), as to which
such jurisdiction is non-exclusive) of such courts in any such suit, action or
proceeding. Service of any process, summons, notice or document by mail to such
party's address set forth above shall be effective service of process for any
suit, action or other proceeding brought in any such court. The parties
irrevocably and unconditionally waive any objection to the laying of venue of
any suit, action or other proceeding in the Specified Courts and irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such suit, action or other proceeding brought in any such court has been brought
in an inconvenient forum.

SECTION 15. GENERAL PROVISIONS.

This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter
hereof. This Agreement may be executed in two or more counterparts, each one of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement may not be amended or
modified unless in writing by all of the parties hereto, and no condition herein
(express or implied) may be waived unless waived in writing by each party whom
the condition is meant to benefit. The Table of Contents and the Section
headings herein are for the convenience of the parties only and shall not affect
the construction or interpretation of this Agreement.

[The remainder of this page has been intentionally left blank.]

30
<PAGE>

If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company the enclosed copies hereof, whereupon this
instrument, along with all counterparts hereof, shall become a binding agreement
in accordance with its terms.

Very truly yours,

INSILICON CORPORATION

By:
---------------------------------------------
David J. Power
Vice President and General Counsel

PHOENIX TECHNOLOGIES, LTD.

By:
---------------------------------------------
Albert E. Sisto
Chief Executive Officer and Chairman of the
Board

The foregoing Underwriting Agreement is hereby confirmed and accepted by
the Representatives as of the date first above written.

FLEETBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
NEEDHAM & COMPANY, INC.

On their behalf and on behalf of each of the several underwriters named in
SCHEDULE A hereto.

BY: FLEETBOSTON ROBERTSON STEPHENS INC.

By:
--------------------------------
AUTHORIZED SIGNATORY

S-1
<PAGE>

SCHEDULE A

UNDERWRITERS TABLE

NUMBER OF FIRM COMMON
UNDERWRITER SHARES TO BE PURCHASED
- --------------------------------------------------------------------------------
<S> <C>
FleetBoston Robertson Stephens Inc...................... [___]

Prudential Securities, Incorporated..................... [___]

Needham & Company, Inc.................................. [___]

[___]................................................... [___]

- --------------------------------------------------------------------------------
TOTAL.......................................... 3,500,000

</TABLE>

Schedule A
<PAGE>

SCHEDULE B

CERTAIN INTELLECTUAL PROPERTY RIGHTS

TRADEMARKS/SERVICEMARKS

1. Trademark in the name "inSilicon"
2. TymeWare/TymeWare logo (ITU Filed: U.S.)
3. SmartBridge (ITU Filed: U.S.)
4. Virtual Chips (Serial No.75/443,757 )
5. USBAccess (U.S Reg. No. 2,223,403)
6. FireACCESS (U.S. Serial No. 75/401,291)
7. PlugWorks (commaon law mark)
8. Rapidscript (Serial no. 75-371736)
9. "Are You inSilicon?" (ITU Filed: U.S.)

PATENTS/PATENT APPLICATIONS

10. Dynamic Software Model for Hardware (U.S. 5,715,433)
11. Method for Performance Optimization of Integrated Circuit Design (U.S.
5, 752, 002)
12. Communication Interface Between Two Finite State Machines Operating at
Different Clock Domains (Asynchronious PCI) (Serial No. 09/049, 967
(allowed))
13. Selective Data Transfer Between Storage Media Using Dynamic Memory
Allocation (Serial No. 09/ 045, 055)
14. Method for Compressing System Read (Serial No. 08/ 987, 177)
15. Test Environment for Device and a Protocol (Serial No. 09/ 174, 250)
16. Ethernet MAC 110 Core (Serial No. 09/387,558)
17. Power saving in USB Peripherals (To be Assigned by USPTO)
18. Virtual Component On-Chip Interface (Application in draft)
19. On Chip Bus Interface (Application in draft)
20. SOC Verification Framework (Application in draft)

Schedule B
<PAGE>

EXHIBIT A

LOCK-UP AGREEMENT

FleetBoston Robertson Stephens Inc.
Prudential Securities Incorporated
Needham & Company, Inc.
As Representatives of the Several Underwriters
c/o FleetBoston Robertson Stephens Inc.
555 California Street, Suite 2600
San Francisco, California 94104

Re: INSILICON CORPORATION (THE "COMPANY")

Ladies & Gentlemen:

The undersigned is an owner of record or beneficially of certain shares of
Common Stock of the Company ("Common Stock) or securities convertible into or
exchangeable or exercisable for Common Stock. The Company proposes to carry out
a public offering of Common Stock (the "Offering") for which you will act as the
representatives (the "Representatives") of the underwriters. The undersigned
recognizes that the Offering will be of benefit to the undersigned and will
benefit the Company by, among other things, raising additional capital for its
operations. The undersigned acknowledges that you and the other underwriters are
relying on the representations and agreements of the undersigned contained in
this letter in carrying out the Offering and in entering into underwriting
arrangements with the Company with respect to the Offering.

In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not offer to sell, contract to sell, or otherwise sell, dispose
of, loan, pledge or grant any rights with respect to (collectively, a
"Disposition") any shares of Common Stock, any options or warrants to purchase
any shares of Common Stock or any securities convertible into or exchangeable
for shares of Common Stock (collectively, "Securities") now owned or hereafter
acquired directly by such person or with respect to which such person has or
hereafter acquires the power of disposition, otherwise than (i) as a bona fide
gift or gifts, provided the donee or donees thereof agree in writing to be bound
by this restriction, (ii) as a distribution to partners or shareholders of such
person, provided that the distributees thereof agree in writing to be bound by
the terms of this restriction, (iii) with respect to sales or purchases of
Common Stock acquired on the open market or (iv) with the prior written consent
of FleetBoston Robertson Stephens Inc. The foregoing restrictions will terminate
after the close of trading of the Common Stock on the 180th day of (and
including) the day the Common Stock commenced trading on the Nasdaq National
Market (the "Lock-Up" Period). The foregoing restriction has been expressly
agreed to preclude the holder of the Securities from engaging in any hedging or
other transaction which is designed to or reasonably expected to lead to or
result in a Disposition of Securities during the Lock-up Period, even if such
Securities would be disposed of by someone other than such holder. Such
prohibited hedging or other transactions would include, without limitation, any
short sale (whether or not against the box) or any purchase, sale or grant of
any right (including, without limitation, any put or call option) with respect
to any Securities or with respect to any security (other than a broad-based
market basket or index) that included, relates to or derives any significant
part of its value from Securities. The undersigned also agrees and consents to
the entry of stop transfer instructions with the Company's transfer agent and

A-1
<PAGE>

registrar against the transfer of shares of Common Stock or Securities held by
the undersigned except in compliance with the foregoing restrictions.

This agreement is irrevocable and will be binding on the undersigned and
the respective successors, heirs, personal representatives, and assigns of the
undersigned. In the event the Offering has not occurred on or before
____________, this Lock-Up Agreement shall be of no further force or effect.

Dated:
----------------------------------------

----------------------------------------------
PRINTED NAME OF HOLDER

By:
-------------------------------------------
SIGNATURE

----------------------------------------------
PRINTED NAME OF PERSON SIGNING*

*(AND INDICATE CAPACITY OF PERSON SIGNING IF
SIGNING AS CUSTODIAN, TRUSTEE, OR ON BEHALF OF
AN ENTITY)

A-2
<PAGE>

EXHIBIT B

MATTERS TO BE COVERED IN THE OPINION OF COMPANY COUNSEL

(i) Each of the Company and each of its Significant Subsidiaries (as
that term is defined in Regulation S-X of the Act) has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation. Phoenix has been
duly organized and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation. The Company and
each of its Significant Subsidiaries has the corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Prospectus;

(ii) To our knowledge, the Company does not directly or indirectly,
own more than 50% of the outstanding voting securities of any corporation,
association or other entity other than [list subsidiaries];

(iii) The Company and each of its Significant Subsidiaries is duly
qualified to do business as a foreign corporation and is in good standing
in each jurisdiction, if any, in which the ownership or leasing of its
properties or the conduct of its business requires such qualification,
except where the failure to be so qualified or be in good standing would
not have a Material Adverse Effect;

(iv) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus under the caption
"Capitalization" as of the dates stated therein, the issued and outstanding
shares of capital stock of the Company have been duly and validly issued
and are fully paid and nonassessable and will not have been issued in
violation of or subject to any preemptive right arising under the
certificate of incorporation or Delaware General Corporation Law, or to
such counsel's knowledge any co-sale right, registration right, right of
first refusal or other similar right;

(v) All issued and outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable and have not been issued in violation of or subject to any
preemptive right arising under the certificate of incorporation or Delaware
General Corporation Law or, to such counsel's knowledge, after inquiry,
co-sale right, registration right, right of first refusal or other similar
right;

(vi) All issued and outstanding shares of capital stock of each
Significant Subsidiary of the Company have been duly authorized and validly
issued and are fully paid and nonassessable, and have not been issued in
violation of or subject to any preemptive right arising under the
certificate of incorporation or the General Corporation Law of such
Subsidiary's jurisdiction of incorporation, or to such counsel's knowledge,
after inquiry, any co-sale right, right of first refusal or other similar
right;

(vii) It is not necessary in connection with the sale of the Series A
Preferred Shares from the Company to Phoenix or the conversion of the
Series A Preferred

B-1
<PAGE>

Shares into Common Shares at the closing of the offering to register either
the Series A Preferred Shares or the underlying Common Shares under the
Securities Act or to qualify the offer or sale thereof under the California
Corporate Securities Law;

(viii) The Firm Shares or the Option Shares, as the case may be, to be
issued by the Company pursuant to the terms of this Agreement have been
duly authorized and, upon issuance and delivery against payment therefor in
accordance with the terms of the Underwriting Agreement, will be duly and
validly issued and fully paid and nonassessable, and will not have been
issued in violation of or subject to any preemptive right arising under the
certificate of incorporation or Delaware General Corporation Law, or to
such counsel's knowledge, after inquiry, any co-sale right, registration
right, right of first refusal or other similar right;

(ix) Each of the Company and Phoenix has the corporate power and
authority to enter into the Underwriting Agreement and each of the
Intercompany Agreements (as defined in the Underwriting Agreement) and to
perform their obligations thereunder, including, in the case of the
Company, the corporate power and authority to issue, sell and deliver to
the Underwriters the Shares to be issued and sold by it under the
Underwriting Agreement;

(x) Each of the Underwriting Agreement and the Intercompany Agreements
has been duly authorized by all necessary corporate action on the part of
the Company and Phoenix and has been duly executed and delivered by the
Company and Phoenix and (assuming, in the case of the Underwriting
Agreement, due authorization, execution and delivery by you) is a valid and
binding agreement of the Company and Phoenix, enforceable against each of
them in accordance with its terms, except as rights to indemnification
under the Underwriting Agreement, the Registration Rights Agreement and the
Initial Public Offering Agreement for liability arising under the federal
securities laws may be limited by applicable law and except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting creditors' rights
generally or by general equitable principles (whether relief is sought in a
proceeding at law or equity);

(xi) The Registration Statement has become effective under the Act
and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or
threatened under the Securities Act;

(xii) The 8-A Registration Statement complied as to form in all
material respects with the requirements of the Exchange Act; the 8-A
Registration Statement has become effective under the Exchange Act; and the
Firm Shares or the Option Shares have been validly registered under the
Securities Act and the Rules and Regulations of the Exchange Act and the
applicable rules and regulations of the Commission thereunder;

(xiii) The Registration Statement and the Prospectus, and each
amendment or supplement thereto (other than the financial statements
(including supporting schedules) and financial data derived therefrom as to
which such counsel need express no opinion),

B-2
<PAGE>

as of the effective date of the Registration Statement, complied as to form
in all material respects with the requirements of the Act and the
applicable Rules and Regulations;

(xiv) The information in the Prospectus under the caption "Description
of Capital Stock" and "Arrangements Between inSilicon Corporation and
Phoenix Technologies Ltd." to the extent that it constitutes matters of law
or legal conclusions, has been reviewed by such counsel and is a fair
summary of such matters and conclusions; and the forms of certificates
evidencing the Common Stock and filed as exhibits to the Registration
Statement comply with Delaware law;

(xv) The description in the Registration Statement and the Prospectus
of the charter and bylaws of the Company and of statutes are accurate and
fairly present the information required to be presented by the Securities
Act;

(xvi) To such counsel's knowledge, there are no agreements, contracts,
leases or documents to which the Company is a party of a character required
to be described or referred to in the Registration Statement or Prospectus
or to be filed as an exhibit to the Registration Statement which are not
described or referred to therein or filed as required;

(xvii) The execution, delivery and performance of each of the
Underwriting Agreement and the Intercompany Agreements and the consummation
of the transactions contemplated therein (other than performance of the
indemnification obligations under the Underwriting Agreement, the
Registration Rights Agreement and the Initial Public Offering Agreement for
liability arising under the federal securities laws, concerning which no
opinion need be expressed) by each of the Company and Phoenix will not (a)
result in any violation of the charter or bylaws of the Company or Phoenix
or (b) result in a material breach or violation of any of the terms and
provisions of, or constitute a default under, or require the consent of any
other party to, any licensing agreement, service and maintenance agreement
or limited use agreement, or any bond, debenture, note or other evidence of
indebtedness, or any lease, indenture, mortgage, deed of trust, loan
agreement or joint venture agreement, or any other contract, agreement or
instrument, in each case to which the Company or Phoenix is a party or by
which their properties are bound, and that is (1) listed as material in the
Officers' Certificates of Phoenix and the Company attached to such opinion
or (2) otherwise known to such counsel, except for such third-party
consents as have been obtained, or (c) result in any material violation of
any applicable statute, rule or regulation known to such counsel or, (d)
result in any violation of any order, writ or decree of any court,
government or governmental agency or body having jurisdiction over the
Company or Phoenix or over any of their properties or operations that is
(1) listed in the Officers' Certificates of Phoenix and the Company
attached to such opinion or (2) otherwise known to such counsel;

(xviii) No consent, approval, authorization or order of or
qualification with any court, government or governmental agency or body
having jurisdiction over the Company or Phoenix, or over any of their
properties or operations is necessary in connection with the consummation
by the Company or Phoenix of the transactions contemplated by the
Underwriting Agreement and the Intercompany Agreements (other than the
Technology Distributor Agreement), except (i) such as have been obtained
under the Securities Act, (ii) such as may be required under state or other
securities or

B-3
<PAGE>

Blue Sky laws in connection with the purchase and the distribution of the
Shares by the Underwriters, (iii) such as may be required by the NASD and
(iv) such as may be required under the federal or provincial securities
laws of Canada or other foreign jurisdictions in which the Shares are
offered and sold;

(xix) To such counsel's knowledge, there are no legal or governmental
proceedings pending or threatened against the Company of a character
required to be disclosed in the Registration Statement or the Prospectus by
the Securities Act, other than those described therein;

(xx) To such counsel's knowledge, neither the Company nor Phoenix is
presently (a) in material violation of its charter or bylaws, or (b) in
material breach of any applicable statute, rule or regulation known to such
counsel or any order, writ or decree of any court or governmental agency or
body having jurisdiction over the Company, or over any of its properties or
operations;

(xxi) To such counsel's knowledge, except as set forth in the
Registration Statement and Prospectus, no holders of Company Shares or
other securities of the Company have registration rights with respect to
securities of the Company and, except as set forth in the Registration
Statement and Prospectus, all holders of securities of the Company having
rights known to such counsel to registration of such shares of Company
Shares or other securities, because of the filing of the Registration
Statement by the Company have, with respect to the offering contemplated
thereby, waived such rights or such rights have expired by reason of lapse
of time following notification of the Company's intent to file the
Registration Statement or have included securities in the Registration
Statement pursuant to the exercise of and in full satisfaction of such
rights; and

(xxii) Each of the Company and Phoenix is not and, after giving effect
to the offering and the sale of the Shares and the application of the
proceeds thereof as described in the Prospectus, will not be, an
"investment company" as such term is defined in the Investment Company Act
of 1940, as amended.

In addition, such counsel shall state that such counsel has participated in
conferences with officials and other representatives of the Company, the
Representatives, Underwriters' Counsel and the independent certified public
accountants of the Company, at which such conferences the contents of the
Registration Statement and Prospectus and related matters were discussed, and
although they have not verified the accuracy or completeness of the statements
contained in the Registration Statement or the Prospectus, nothing has come to
the attention of such counsel which leads them to believe that, at the time the
Registration Statement became effective and at all times subsequent thereto up
to and on the First Closing Date or Second Closing Date, as the case may be, the
Registration Statement and any amendment or supplement thereto (other than the
financial statements including supporting schedules and other financial and
statistical information derived therefrom, as to which such counsel need express
no comment) contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or at the First Closing Date or the Second
Closing Date, as the case may be, the Registration Statement, the Prospectus and
any amendment or supplement thereto

B-4
<PAGE>

(except as aforesaid) contained any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.

B-5
<PAGE>

EXHIBIT C

MATTERS TO BE COVERED IN THE OPINION OF
INTELLECTUAL PROPERTY COUNSEL FOR THE COMPANY

Such counsel are familiar with the technology used by the Company in its
business and the manner of its use thereof and have read the Registration
Statement and the Prospectus, including particularly the portions of the
Registration Statement and the Prospectus referring to patents, trade secrets,
trademarks, service marks or other proprietary information or materials and:

(i) As to the statements under the captions "Risk Factors--Our business
will suffer if we are not able to protect our intellectual property adequately,"
"--Third parties may claim we are infringing their intellectual property rights,
and we could suffer significant litigation or licensing expenses or be prevented
from selling products," and "Business--Proprietary Technology and Intellectual
Property," nothing has come to the attention of such counsel which caused them
to believe that the above-mentioned sections of the Registration Statement and
any amendment or supplement thereto made available and reviewed by such counsel,
at the time the Registration Statement became effective and at all times
subsequent thereto up to and on the Closing Date and on any later date on which
Option Stock are to be purchased, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;

(ii) Such counsel knows of no material action, suit, claim or proceeding
relating to patents, patent rights or licenses, trademarks or trademark rights,
copyrights, collaborative research, licenses or royalty arrangements or
agreements or trade secrets, know-how or proprietary techniques, including
processes and substances, owned by or affecting the business or operations of
the Company which are pending or threatened against the Company or any of its
officers or directors;

(iii) The Company is listed in the records of the United States Patent and
Trademark Office as the holder of record of the patents listed on a schedule to
such opinion (the "Patents") and each of the applications listed on a schedule
to such opinion (the "Applications"). To the knowledge of such counsel, there
are no claims of third parties to any ownership interest or lien with respect to
any of the Patents or Applications. Such counsel is not aware of any material
defect in form in the preparation or filing of the Applications on behalf of the
Company. To the knowledge of such counsel, the Applications are being pursued by
the Company. To the knowledge of such counsel, the Company owns as its sole
property the Patents and pending Applications;

(iv) The Company is listed in the records of the appropriate foreign
offices as the sole holder of record of the foreign patents listed on a schedule
to such opinion (the "Foreign Patents.) and each of the applications listed on a
schedule to such opinion (the "Foreign Applications"). Such counsel knows of no
claims of third parties to any ownership interest or lien with respect to the
Foreign Patents or Foreign Applications. Such counsel is not aware of any
material defect of form in the preparation or filing of the Foreign Applications
on behalf of the Company. To the knowledge of such counsel, the Foreign
Applications are being pursued by the Company. To the knowledge of such counsel,
the Company owns as its sole property the Foreign Patents and pending Foreign
Applications;

C-1
<PAGE>

(v) Such counsel knows of no reason why the Patents or Foreign Patents are
not valid as issued. Such counsel has no knowledge of any reason why any patent
to be issued as a result of any Application or Foreign Application would not be
valid or would not afford the Company useful patent protection with respect
thereto;

(vi) All of the licenses [described in Section __ of the Contribution
Agreement][identified in Schedule __ to the Contribution Agreement] have been
validly and effectively assigned to the Company. [Note: Company counsel to
complete];

(vii) No consent, approval, authorization or order of or qualification with
any court, government or governmental agency or body having jurisdiction over
the Company or Phoenix, or over any of their properties or operations is
necessary in connection with the consummation by the Company or Phoenix of the
transactions contemplated by the Technology Distributor Agreement, except (i)
such as have been obtained under the Securities Act, (ii) such as may be
required under state or other securities or Blue Sky laws in connection with the
purchase and the distribution of the Shares by the Underwriters, (iii) such as
may be required by the NASD and (iv) such as may be required under the federal
or provincial laws of Canada; and

(viii) The Company owns or possesses sufficient trademarks, trade names,
patent rights, copyrights, licenses, approvals, trade secrets and other similar
rights (collectively, "Intellectual Property Rights") reasonably necessary to
conduct its business as now conducted, including, without limitation, a
trademark in the name "inSilicon"; and the expected expiration of any such
Intellectual Property Rights would not result in a Material Adverse Effect. To
such counsel's knowledge, after inquiry, the Company has not received any notice
of infringement or conflict with asserted Intellectual Property Rights of
others, which infringement or conflict, if the subject of an unfavorable
decision, would result in a Material Adverse Effect. To such counsel's
knowledge, the Company's discoveries, inventions, products, or processes
referred to in the Registration Statement or Prospectus do not infringe or
conflict with any right or patent which is the subject of a patent application
known to the Company.

C-2

<PAGE>

RESTATED CERTIFICATE OF INCORPORATION
OF
INSILICON CORPORATION
A DELAWARE CORPORATION

inSilicon Corporation, a corporation organized and existing under the
General Corporation Law of the State of Delaware which was originally
incorporated in the State of Delaware on November 1, 1999, DOES HEREBY CERTIFY:

The Restated Certificate of Incorporation of inSilicon Corporation in
the form attached hereto as EXHIBIT A has been duly adopted in accordance with
the provisions of Sections 245, 242, 141(f) and 228 of the General Corporation
Law of the State of Delaware by the unanimous written consents of (i) each of
the directors and (ii) the sole stockholder of the Corporation.

The Restated Certificate of Incorporation so adopted reads in full as
set forth in EXHIBIT A attached hereto and incorporated herein by this
reference.

IN WITNESS WHEREOF, we have hereunto set our hands as President and
Secretary, respectively, of inSilicon Corporation and hereby affirm under
penalties of perjury that the foregoing is our act and deed and the facts
herein stated are true, and accordingly have hereunto set forth our hands this
day of __________, 2000.

--------------------------------
Wayne Cantwell, President

ATTEST: -----------------------------
-----------------, Secretary

<PAGE>

EXHIBIT A

RESTATED CERTIFICATE OF INCORPORATION
OF
INSILICON CORPORATION
A DELAWARE CORPORATION

ARTICLE I

NAME

The name of the corporation is inSilicon Corporation (the
"Corporation").

ARTICLE II

REGISTERED OFFICE AND AGENT

The address of the registered office of the Corporation in the State
of Delaware is The Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of its registered agent at that
address is The Corporation Trust Company.

ARTICLE III

PURPOSES

The purpose of the Corporation shall be to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware as the same exists or may hereafter be
amended.

ARTICLE IV

CAPITAL STOCK

The Corporation shall be authorized to issue two classes of stock to
be designated, respectively, "Common Stock" and "Preferred Stock." The total
number of shares of both classes of stock which the Corporation has authority
to issue is one hundred fifteen million (115,000,000) shares, consisting of:
one hundred million (100,000,000) shares of Common Stock, $0.001 par value per
share, and fifteen million (15,000,000) shares of Preferred Stock, $0.001 par
value per share.

The Board of Directors of the Corporation (the "Board of Directors")
is authorized, subject to limitations prescribed by applicable law and the
provisions of this Article IV, to provide for the issuance of the shares of
Preferred Stock from time to time in one or more series, each of which series
shall have such distinctive designation or title as shall be fixed by the Board
of Directors prior to the issuance of any shares thereof. Each such series of
Preferred Stock shall have such voting powers, shall consist of such number of
shares, shall be issued for such consideration and shall otherwise have such
powers, designations, preferences and relative,

<PAGE>

participating, optional or other rights, if any, and such qualifications,
limitations or restrictions, if any, as shall be stated in such resolution or
resolutions providing for the issue of such series of Preferred Stock as may be
adopted from time to time by the Board of Directors prior to the issuance of
any shares thereof pursuant to the authority hereby expressly vested in it, all
in accordance with applicable law.

The number of authorized shares of any class or classes of stock may
be increased or decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of the holders of at least a majority of
the voting power of the then outstanding Voting Stock, voting together as a
single class.

The Common Stock shall be subject to the express terms of the
Preferred Stock and any series thereof. Except as may be provided in this
Certificate of Incorporation or in any Certificate of Designation designating
any series of Preferred Stock pursuant to the foregoing provisions of this
Article IV that shall be in effect under the General Corporation Law of the
State of Delaware (a "Preferred Stock Designation"), the holders of shares of
Common Stock shall be entitled to one vote for each such share upon all
questions presented to the stockholders, the Common Stock shall have the
exclusive right to vote for the election of directors and for all other
purposes, and holders of Preferred Stock shall not be entitled to receive
notice of any meeting of stockholders at which they are not entitled to vote.

The Corporation shall be entitled to treat the person in whose name
any share of its stock is registered as the owner thereof for all purposes and
shall not be bound to recognize any equitable or other claim to, or interest
in, such share on the part of any other person, whether or not the Corporation
shall have notice thereof, except as expressly provided by applicable law.

ARTICLE V

ELECTION OF DIRECTORS

Subject to the rights of the holders of any series of Preferred Stock
to elect additional directors under specified circumstances, the number of
directors of the Corporation shall be fixed from time to time exclusively by
the Board of Directors pursuant to a resolution adopted by a majority of the
then authorized number of directors of the Corporation, but in no event shall
the number of directors be fewer than three. The directors, other than those
who may be elected solely by the holders of any series of Preferred Stock
(unless the relevant Preferred Stock Designation shall so provide), shall be
divided into three classes, as nearly equal in number as possible, designated
"Class I," "Class II" and "Class III." Directors of each class shall serve for
a term ending on the third annual meeting of stockholders following the annual
meeting at which such class was elected, except that the term of office of the
initial Class I

<PAGE>

director shall expire on the date of the annual meeting in 2001, the term of
office of the initial Class II directors shall expire on the date of the annual
meeting in 2002 and the term of office of the initial Class III directors shall
expire on the date of the annual meeting in 2003. The foregoing
notwithstanding, each director shall serve until his or her successor shall
have been duly elected and qualified, unless such director shall die, resign,
retire or be disqualified or removed.

At all elections of directors, the directors chosen to succeed those
directors whose terms then expire shall be identified as being of the same
class as the directors they succeed. If for any reason the number of directors
in the various classes shall not be as nearly equal as possible, the Board of
Directors may redesignate any director into a different class in order that the
balance of directors in such classes shall be as nearly equal as possible.

Subject to the rights of the holders of any series of Preferred Stock
to elect additional directors under specified circumstances, and unless the
Board of Directors otherwise determines, vacancies in the Board of Directors
resulting from one or more directors' death, resignation, retirement,
disqualification, removal from office or other cause, and newly created
directorships resulting from any increase in the authorized number of
directors, shall be filled only by the affirmative vote of a majority of the
remaining directors, though less than a quorum of the Board of Directors, or by
a sole remaining director, and directors so chosen shall hold office for a term
expiring at the annual meeting of stockholders at which the term of office of
the class to which they have been elected expires and until such director's
successor shall have been duly elected and qualified. No decrease in the
number of authorized directors constituting the Board of Directors shall
shorten the term of any incumbent director.

Subject to the rights of the holders of any series of Preferred Stock
to elect additional directors under specified circumstances, any director may
be removed from office at any time, with or without cause and by the
affirmative vote of the holders of at least a majority of the voting power of
the then-outstanding Voting Stock, voting together as a single class, at a
meeting called for that purpose; PROVIDED, HOWEVER, that effective as of the
date on which Phoenix Technologies Ltd. ("Phoenix") and its affiliates cease to
be the beneficial owner of an aggregate of at least a majority of the then
outstanding shares of common stock (the "Trigger Date"), subject to the rights
of the holders of any series of Preferred Stock to elect additional directors
under specified circumstances, any director may be removed from office at any
time, but only for cause and only by the affirmative vote of the holders of at
least a majority of the voting power of the then-outstanding Voting Stock,
voting together as a single class, at a meeting called for that purpose.

Elections of directors of the Corporation need not be by written
ballot except and to the extent the by-laws of the Corporation (the "By-Laws")
so provide.

Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, and in addition to approval by the Board of
Directors, the affirmative vote of the holders of at least 80% of the voting
power of the then outstanding Voting Stock, voting together as a single class,
shall be required to amend, repeal or adopt any provision inconsistent with
this Article V. For purposes of this Certificate of Incorporation, "Voting
Stock" shall mean the

<PAGE>

outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors.

ARTICLE VI

POWERS OF THE BOARD OF DIRECTORS

In furtherance and not in limitation of the powers conferred by
applicable law, the Board of Directors shall have the power to (1) adopt, amend
or repeal By-Laws, subject to the power of the stockholders of the Corporation
under the General Corporation Law of the State of Delaware to adopt, amend or
repeal any By-Law; PROVIDED, HOWEVER, that, notwithstanding any other provision
of this Certificate of Incorporation or any provision of law which might
otherwise permit a lesser vote or no vote, but in addition to any affirmative
vote of the holders of any series of Preferred Stock required by applicable
law, this Certificate of Incorporation or any Preferred Stock Designation, the
affirmative vote of the holders of at least 80% of the voting power of the
then outstanding Voting Stock, voting together as a single class, shall be
required for stockholders to adopt, amend or repeal any provision of the
By-Laws; and (2) from time to time determine whether and to what extent, and at
what times and places, and under what conditions and regulations, the accounts
and books of the Corporation, or any of them, shall be open to inspection of
stockholders; and, except as so determined or as expressly provided in this
Certificate of Incorporation or in any Preferred Stock Designation, no
stockholder shall have any right to inspect any account, book or document of
the Corporation other than such rights as may be conferred by applicable law.
Notwithstanding anything contained in this Certificate of Incorporation to the
contrary, and in addition to approval by the Board of Directors, the
affirmative vote of the holders of at least 80% of the voting power of the then
outstanding Voting Stock, voting together as a single class, shall be required
to amend, repeal or adopt any provision inconsistent with clause (1) of the
preceding sentence. The Corporation may in its By-Laws confer powers upon its
Board of Directors in addition to the powers and authorities expressly
conferred upon it by applicable law.

ARTICLE VII

LIABILITY OF DIRECTORS

To the fullest extent permitted by the General Corporation Law of the
State of Delaware, as it exists on the date hereof or as it may hereafter be
amended, no director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director of the Corporation. Without limiting the effect of the
preceding sentence, if the General Corporation Law of the State of Delaware is
hereafter amended to authorize the further elimination or limitation of the
liability of a director, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the General
Corporation Law of the State of Delaware, as so amended.

Neither any amendment nor repeal of this Article VII, nor the
adoption of any provision of this Certificate of Incorporation inconsistent
with this Article VII, shall eliminate, reduce or otherwise adversely affect
any limitation on the personal liability of a director of the Corporation
existing at the time of such amendment, repeal or adoption of such an
inconsistent provision.

<PAGE>

ARTICLE VIII

INDEMNIFICATION

Each person who is or was a director or officer of the Corporation,
or each such person who is or was serving at the request of the Corporation as
a director, officer, employee or agent of another corporation, limited
liability company, partnership, joint venture, trust or other enterprise
(including the heirs, executor, administrators or estate of such person),
including service with respect to employee benefit plans, shall be indemnified
and held harmless by the Corporation to the fullest extent permitted by the
General Corporation Law of the State of Delaware as the same exists or may
hereafter be amended (but, if permitted by applicable law, in the case of any
such amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than said law permitted the
Corporation to provide prior to such amendment) and any other applicable laws
as presently or hereafter in effect. The Corporation may, by action of the
Board of Directors, provide indemnification to employees and agents of the
Corporation, and to any such persons serving as directors, officers, employees
or agents of another corporation, limited liability company, partnership, joint
venture, trust or other enterprise, including service with respect to employee
benefit plans, at the request of the Corporation, with the same scope and
effect as the foregoing indemnification of directors and officers. The
Corporation shall be required to indemnify any person seeking indemnification
in connection with any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "proceeding") (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Board of Directors or is a proceeding to enforce such person's right to
indemnification pursuant to the rights granted by this Certificate of
Incorporation or otherwise by the Corporation. Without limiting the generality
or the effect of the foregoing, the Corporation may enter into one or more
agreements with any person which provide for indemnification greater than or
different from that provided in this Article VIII.

ARTICLE IX

ACTION BY STOCKHOLDERS

Any corporate action required or permitted to be taken at any annual
or special meeting of stockholders may be taken without a meeting, without
prior notice and without a vote, if a consent or consents in writing, setting
forth the action so taken, shall be signed by the holders of outstanding stock
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to vote
thereon were present and voted and shall be delivered to the Corporation
(either by hand or by certified or registered mail, return receipt requested)
at its registered office in the State of Delaware or its principal place of
business, or to an officer or agent of the Corporation having custody of the
book in which proceedings of meetings of stockholders are recorded; PROVIDED,
HOWEVER, that effective as of the Trigger Date, a corporate action required or
permitted to be taken by the stockholders of the Corporation must be effected
only at a duly called annual or special meeting of stockholders and may not be
effected by written consent in lieu of such a meeting.

Effective as of the Trigger Date, unless otherwise prescribed by law
and subject to any preferential rights of any outstanding series of Preferred
Stock, special meetings of the stockholders of the Corporation for any purpose
or purposes may be called at any time by the

<PAGE>

Chairman of the Board of Directors, the President or, at the request in writing
of a majority of the members of the Board of Directors, any officer of the
Corporation, and effective as of the Trigger Date, any power of the
stockholders of the Corporation to call a special meeting is specifically
denied.

Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, the affirmative vote of the holders of at least
80% of the Common Stock, voting as a single class, shall be required to amend,
repeal or adopt any provision inconsistent with this Article IX.

ARTICLE X

AMENDMENTS

Except as may be expressly provided in this Certificate of
Incorporation, the Corporation reserves the right at any time and from time to
time to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation or a Preferred Stock Designation, and any other
provisions authorized by the laws of the State of Delaware at the time in force
may be added or inserted, in the manner now or hereafter prescribed herein or
by applicable law, and all rights, preferences and privileges of whatsoever
nature conferred upon stockholders, directors or any other persons whomsoever
by and pursuant to this Certificate of Incorporation in its present form or as
hereafter amended are granted subject to the right reserved in this Article X;
PROVIDED, HOWEVER, that any amendment or repeal of Article VII or Article VIII
of this Certificate of Incorporation shall not adversely affect any right or
protection existing hereunder in respect of any act or omission occurring prior
to such amendment or repeal; and PROVIDED FURTHER that no Preferred Stock
Designation shall be amended after the issuance of any shares of the series of
Preferred Stock created thereby, except in accordance with the terms of such
Preferred Stock Designation and the requirements of applicable law.

<PAGE>

BY-LAWS
OF
INSILICON CORPORATION
A DELAWARE CORPORATION

As adopted on _________, 2000

<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I OFFICES. . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Section 1. Registered Office . . . . . . . . . . . . . . . . . . .1
Section 2. General Office and Other Offices. . . . . . . . . . . .1

ARTICLE II STOCKHOLDERS' MEETINGS . . . . . . . . . . . . . . . . . . . .1

Section 3. Annual Meeting. . . . . . . . . . . . . . . . . . . . .1
Section 5. Special Meetings. . . . . . . . . . . . . . . . . . . .2
Section 6. Place of Meetings . . . . . . . . . . . . . . . . . . .3
Section 7. Notice of Meetings. . . . . . . . . . . . . . . . . . .3
Section 8. Nominations of Directors. . . . . . . . . . . . . . . .3
Section 9. List of Stockholders. . . . . . . . . . . . . . . . . .4
Section 10. Quorum. . . . . . . . . . . . . . . . . . . . . . . . .4
Section 11. Voting and Required Vote. . . . . . . . . . . . . . . .5
Section 12. Proxies . . . . . . . . . . . . . . . . . . . . . . . .5
Section 13. Inspectors of Election; Polls . . . . . . . . . . . . .5
Section 14. Organization. . . . . . . . . . . . . . . . . . . . . .5

ARTICLE III BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . .6

Section 15. General Powers, Number, Term of Office. . . . . . . . .6
Section 16. Vacancies . . . . . . . . . . . . . . . . . . . . . . .6
Section 17. Chairman of the Board . . . . . . . . . . . . . . . . .6
Section 18. Regular Meetings. . . . . . . . . . . . . . . . . . . .7
Section 19. Special Meetings. . . . . . . . . . . . . . . . . . . .7
Section 20. Notices . . . . . . . . . . . . . . . . . . . . . . . .7
Section 21. Conference Telephone Meetings . . . . . . . . . . . . .7
Section 22. Quorum. . . . . . . . . . . . . . . . . . . . . . . . .7
Section 23. Organization. . . . . . . . . . . . . . . . . . . . . .8
Section 24. Resignations. . . . . . . . . . . . . . . . . . . . . .8
Section 25. Action Without a Meeting. . . . . . . . . . . . . . . .8
Section 26. Location of Books . . . . . . . . . . . . . . . . . . .8
Section 27. Dividends . . . . . . . . . . . . . . . . . . . . . . .8
Section 28. Compensation. . . . . . . . . . . . . . . . . . . . . .8
Section 29. Additional Powers . . . . . . . . . . . . . . . . . . .8

ARTICLE IV COMMITTEES OF DIRECTORS. . . . . . . . . . . . . . . . . . . .9

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<PAGE>

Section 30. Designation, Power, Alternate Members . . . . . . . . .9
Section 31. Quorum, Manner of Acting. . . . . . . . . . . . . . . .9
Section 32. Minutes . . . . . . . . . . . . . . . . . . . . . . . .9

ARTICLE V OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Section 33. Designation . . . . . . . . . . . . . . . . . . . . . .9
Section 34. Election and Term . . . . . . . . . . . . . . . . . . 10
Section 35. Removal . . . . . . . . . . . . . . . . . . . . . . . 10
Section 36. Resignations. . . . . . . . . . . . . . . . . . . . . 10
Section 37. Vacancies . . . . . . . . . . . . . . . . . . . . . . 10
Section 38. President . . . . . . . . . . . . . . . . . . . . . . 10
Section 39. Vice Presidents . . . . . . . . . . . . . . . . . . . 10
Section 40. Secretary . . . . . . . . . . . . . . . . . . . . . . 10
Section 41. Assistant Secretaries . . . . . . . . . . . . . . . . 11
Section 42. Chief Financial Officer . . . . . . . . . . . . . . . 11
Section 44. Assistant Treasurers. . . . . . . . . . . . . . . . . 11
Section 45. Controller. . . . . . . . . . . . . . . . . . . . . . 11
Section 46. Assistant Controllers . . . . . . . . . . . . . . . . 11

ARTICLE VI CONTRACTS, INSTRUMENTS AND PROXIES . . . . . . . . . . . . . 12

Section 47. Contracts and Other Instruments . . . . . . . . . . . 12
Section 48. Proxies . . . . . . . . . . . . . . . . . . . . . . . 12

ARTICLE VII CAPITAL STOCK. . . . . . . . . . . . . . . . . . . . . . . . 12

Section 49. Stock Certificates; Book-Entry Accounts . . . . . . . 12
Section 50. Record Ownership. . . . . . . . . . . . . . . . . . . 12
Section 51. Record Dates. . . . . . . . . . . . . . . . . . . . . 13
Section 52. Transfer of Stock . . . . . . . . . . . . . . . . . . 13
Section 53. Lost, Stolen or Destroyed Certificates. . . . . . . . 13
Section 54. Terms of Preferred Stock. . . . . . . . . . . . . . . 13

ARTICLE VIII INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . 14

Section 55. Right of Indemnification Generally. . . . . . . . . . 14
Section 56. Written Request; Determination of Entitlement . . . . 14
Section 57. Recovery of Unpaid Claim. . . . . . . . . . . . . . . 15
Section 58. Exclusivity; Subsequent Modification. . . . . . . . . 15

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Section 59. Insurance . . . . . . . . . . . . . . . . . . . . . . 15
Section 60. Other Persons Granted Right of Indemnification. . . . 15
Section 61. Illegality; Unenforceability. . . . . . . . . . . . . 16
Section 62. Form and Delivery of Communications . . . . . . . . . 16

ARTICLE IX MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . 16

Section 63. Corporate Seal. . . . . . . . . . . . . . . . . . . . 16
Section 64. Fiscal Year . . . . . . . . . . . . . . . . . . . . . 16
Section 66. Waiver of Notice. . . . . . . . . . . . . . . . . . . 16

ARTICLE X AMENDMENT TO BY-LAWS . . . . . . . . . . . . . . . . . . . . 17

Section 67. Amendments. . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>

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<PAGE>

BY-LAWS
OF
INSILICON CORPORATION
A DELAWARE CORPORATION

As adopted on _____, 2000

ARTICLE I

OFFICES

Section 1. REGISTERED OFFICE. The name of the registered agent of
inSilicon Corporation (the "Corporation") is The Corporation Trust Company and
the registered office of the Corporation shall be located in the City of
Wilmington, County of New Castle, State of Delaware.

Section 2. GENERAL OFFICE AND OTHER OFFICES. The Corporation shall
have its General Offices in the City of San Jose, State of California (the
"General Offices"), and may also have offices at such other places in or outside
the State of Delaware as the Board of Directors of the Corporation (the "Board
of Directors") may from time to time designate or the business of the
Corporation may require.

ARTICLE II

STOCKHOLDERS' MEETINGS

Section 3. ANNUAL MEETING. An annual meeting of stockholders shall be
held on such day and at such time as may be designated by the Board of Directors
for the purpose of electing directors and for the transaction of such other
business as properly may come before such meeting. Any previously scheduled
annual meeting of the stockholders may be postponed by resolution of the Board
of Directors upon public notice given on or prior to the date previously
scheduled for such annual meeting of stockholders.

Section 4. BUSINESS TO BE CONDUCTED AT ANNUAL MEETING.

(a) At an annual meeting of stockholders, only such business
shall be conducted as shall have been brought before the meeting (i) pursuant to
the Corporation's notice of the meeting, (ii) by or at the direction of the
Board of Directors or (iii) by any stockholder of the Corporation who is a
stockholder of record at the time of giving of the notice provided for in this
By-Law, who shall be entitled to vote at such meeting and who shall have
complied with the notice procedures set forth in this By-Law.

(b) For business to be properly brought before an annual
meeting by a stockholder pursuant to clause (a)(iii) of this By-Law, notice
in writing must be delivered or mailed to the Secretary and received at the
General Offices, not less than 60 days nor more than

<PAGE>

90 days prior to the first anniversary of the date on which the Corporation
first mailed its proxy materials for the preceding year's annual meeting of
stockholders; PROVIDED, HOWEVER, that in the event that the date of the
meeting is advanced by more than 30 days or delayed by more than 60 days from
such meeting's anniversary date, notice by the stockholder must be received
not earlier than the 90th day prior to such date of mailing proxy materials
and not later than the close of business on the later of the 60th day prior
to such date of mailing of proxy materials or the 10th day following the day
on which public announcement of the date of the annual meeting is first made.
Such stockholder's notice shall set forth as to each matter the stockholder
proposes to bring before the annual meeting (i) a brief description of the
business to be brought before the annual meeting and the reasons for
conducting such business at such meeting; (ii) the name and address, as they
appear on the Corporation's books, of the stockholder proposing such
business, and the name and address of the beneficial owner, if any, on whose
behalf the proposal is made; (iii) the class and number of shares of the
Corporation's stock which are beneficially owned by the stockholder, and by
the beneficial owner, if any, on whose behalf the proposal is made; and (iv)
any material interest of the stockholder, and of the beneficial owner, if
any, on whose behalf the proposal is made, in such business. For purposes of
these By-Laws , "public announcement" shall mean disclosure in a press
release reported by the Dow Jones News Service, Associated Press or
comparable news service or in a document publicly filed by the Corporation
with the Securities and Exchange Commission pursuant to Section 13, 14 or
15(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act").

(c) Notwithstanding anything in these By-Laws to the contrary,
no business shall be conducted at an annual meeting except in accordance with
the procedures set forth in this By-Law. The chairman of the meeting may, if
the facts warrant, determine that the business was not properly brought before
the meeting in accordance with the provisions of this By-Law; and if the
chairman should so determine, the chairman shall so declare to the meeting, and
any such business not properly brought before the meeting shall not be
transacted. Notwithstanding the foregoing provisions of this By-Law, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this By-Law. Nothing in this By-Law shall be deemed to affect any
rights of stockholders to request inclusion of proposals in the Corporation's
proxy statement pursuant to Rule 14a-8 under the Exchange Act, and any such
proposal so included shall be deemed timely given for purposes of this By-Law.

Section 5. SPECIAL MEETINGS. Special meetings of stockholders for any
proper purpose or purposes, unless otherwise provided by the General Corporation
Law of the State of Delaware or in any Certificate of Designation designating
any series of preferred stock pursuant to Article IV of the Restated Certificate
of Incorporation of the Corporation (the "Certificate of Incorporation") that
shall be in effect under the General Corporation Law of the State of Delaware (a
"Preferred Stock Designation"), may be called by the Chairman of the Board or
the President, or in the absence of each of them, by the Secretary at the
written request of a majority of the directors. Business transacted at a
special meeting of stockholders shall be confined to the purpose or purposes of
the meeting as stated in the notice of the meeting. Any previously scheduled
special meeting of the stockholders may be postponed by resolution of the Board
of Directors upon notice by public announcement given on or prior to the date
previously scheduled for such special meeting of stockholders.

<PAGE>

Section 6. PLACE OF MEETINGS. All meetings of stockholders shall be
held at such place as may be determined by resolution of the Board of Directors.

Section 7. NOTICE OF MEETINGS. Except as otherwise required by
applicable law, notice of each meeting of the stockholders, whether annual or
special, shall be given to each stockholder of record entitled to vote at the
meeting at least 10 days but not more than 60 days before the date of the
meeting, by mailing such notice in the U.S. mail, postage prepaid, addressed to
such stockholder at such stockholder's address as the same appears on the
records of the Corporation. Such notice shall state the place, date and hour of
the meeting, and in the case of a special meeting, shall also state the purpose
or purposes thereof.

Section 8. NOMINATIONS OF DIRECTORS.

(a) Only persons who are nominated in accordance with the
procedures set forth in these By-Laws shall be eligible for election as
directors. Nominations of persons for election to the Board of Directors may
be made at a meeting of stockholders (i) by or at the direction of the Board
of Directors, (ii) by any stockholder of the Corporation who is a stockholder
of record at the time of giving of the notice provided for in this By-Law,
who shall be entitled to vote for the election of directors at the meeting
and who complies with the notice procedures set forth in this By-Law or (iii)
prior to the Triggger Date (as defined in the Certificate of Incorporation)
by Phoenix Technologies or any of its affiliates that is a stockholder of the
Corporation.

(b) Nominations by stockholders shall be made pursuant to
notice in writing, delivered or mailed to the Secretary and received at the
General Offices (i) in the case of an annual meeting, not less than 60 days
nor more than 90 days prior to the first anniversary of the date on which the
Corporation first mailed its proxy materials for the preceding year's annual
meeting of stockholders; PROVIDED, HOWEVER, that in the event that the date
of the meeting is advanced by more than 30 days or delayed by more than 60
days from such anniversary date, notice by the stockholder must be received
not earlier than the 90th day prior to such date of mailing of proxy
materials and not later than the close of business on the later of the 60th
day prior to such date of mailing of proxy materials or the 10th day
following the day on which public announcement of the date of the meeting is
first made; or (ii) in the case of a special meeting at which directors are
to be elected, not earlier than the 90th day prior to such special meeting
and not later than the close of business on the later of the 60th day prior
to such special meeting or the 10th day following the day on which public
announcement of the date of the meeting and of the nominees proposed by the
Board of Directors to be elected at such meeting is first made. In the case
of a special meeting of stockholders at which directors are to be elected,
stockholders may nominate a person or persons (as the case may be) for
election only to such position(s) as are specified in the Corporation's
notice of meeting as being up for election at such meeting. Such
stockholder's notice shall set forth (i) as to each person whom the
stockholder proposes to nominate for election or reelection as a director,
all information relating to such person that would be required to be
disclosed in solicitations of proxies for election of directors, or is
otherwise required, in each case pursuant to Regulation 14A under the
Exchange Act (including such person's written consent to being named as a
nominee and to serving as a Director if elected); (ii) as to the stockholder
giving the notice, the name and address, as they appear on the Corporation's
books, of such stockholder and the class and number of shares of the

3
<PAGE>

Corporation's stock which are beneficially owned by such stockholder; and (iii)
as to any beneficial owner on whose behalf the nomination is made, the name and
address of such person and the class and number of shares of the Corporation's
stock which are beneficially owned by such person. At the request of the Board
of Directors, any person nominated by the Board of Directors for election as a
director shall furnish to the Secretary that information required to be set
forth in a stockholder's notice of nomination that pertains to the nominee.
Notwithstanding anything in this By-Law to the contrary, in the event that
the number of directors to be elected to the Board of Directors of the
Corporation is increased and there is no public statement naming all the
nominees for Director or specifying the size of the increased Board of
Directors made by the Corporation at least 70 days prior to the first
anniversary of the preceding year's annual meeting, a stockholder's notice
required by this By-Law shall also be considered timely, but only with
respect to nominees for any new positions created by such increase, if it
shall be delivered to the Secretary at the General Offices not later than the
close of business on the 10th day following the day on which such public
announcement is first made by the Corporation.

(c) No person shall be eligible for election as a director of
the Corporation unless nominated in accordance with the procedures set forth in
these By-Laws. The chairman of the meeting may, if the facts warrant, determine
that a nomination was not made in accordance with the procedures prescribed in
this By-Law; and if the chairman should so determine, the chairman shall so
declare to the meeting, and the defective nomination shall be disregarded.
Notwithstanding the foregoing provisions of this By-Law, a stockholder shall
also comply with all applicable requirements of the Exchange Act, and the rules
and regulations thereunder with respect to the matters set forth in this By-Law.

Section 9. LIST OF STOCKHOLDERS.

(a) The Secretary of the Corporation shall prepare, at least 10
days before each meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing the
address of each stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least 10 days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.

(b) The stock ledger of the Corporation shall be the only
evidence as to the identity of the stockholders entitled (i) to vote in person
or by proxy at any meeting of stockholders, or (ii) to exercise the rights in
accordance with applicable law to examine the stock ledger, the list required by
this By-Law or the books and records of the Corporation.

Section 10. QUORUM. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum for the transaction of any business at all
meetings of the stockholders, except as otherwise provided by applicable law, by
the Certificate of Incorporation or by these By-Laws. The stockholders present
at any duly organized meeting may continue to transact business until

4
<PAGE>

adjournment, notwithstanding the withdrawal of sufficient stockholders
to render the remaining stockholders less than a quorum. Whether or not a
quorum is present, either the chairman of the meeting or a majority of the
stockholders entitled to vote thereat, present in person or by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting. If the adjournment is for more than 30 days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting. At such adjourned meeting at which the
requisite amount of Voting Stock shall be present or represented, any business
may be transacted which might have been transacted at the meeting as originally
noticed. For purposes of these By-Laws, "Voting Stock" shall mean the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors.

Section 11. VOTING AND REQUIRED VOTE. Subject to the provisions of the
Certificate of Incorporation, each stockholder shall, at every meeting of
stockholders, be entitled to one vote for each share of capital stock held by
such stockholder. Subject to the provisions of the Certificate of Incorporation
and applicable law, directors shall be chosen by the vote of a plurality of the
shares present in person or represented by proxy at the meeting; and all other
questions shall be determined by the affirmative vote of the majority of shares
present in person or represented by proxy at the meeting. Election of directors
shall be by written ballot.

Section 12. PROXIES. Each stockholder entitled to vote at a meeting of
stockholders may authorize another person or persons to act for such stockholder
by proxy, provided the instrument authorizing such proxy to act shall have been
executed in writing in the manner prescribed by applicable law. No proxy shall
be voted or acted upon after three years from its date, unless the proxy
provides for a longer period.

Section 13. INSPECTORS OF ELECTION; POLLS. Before each meeting of
stockholders, the Chairman of the Board or another officer of the Corporation
designated by resolution of the Board of Directors shall appoint one or more
inspectors of election for the meeting and may appoint one or more inspectors to
replace any inspector unable to act. If any of the inspectors appointed shall
fail to attend, or refuse or be unable to serve, substitutes shall be appointed
by the chairman of the meeting. Each inspector shall have such duties as are
provided by applicable law, and shall take and sign an oath faithfully to
execute the duties of inspector with strict impartiality and according to the
best of such person's ability. The chairman of the meeting shall fix and
announce at the meeting the date and time of the opening and closing of the
polls for each matter upon which the stockholders will vote at the meeting.

Section 14. ORGANIZATION. The Chairman of the Board of Directors, or
in the Chairman's absence, the Vice Chairman of the Board of Directors or the
President, or in the absence of each of them, a chairman chosen by a majority of
the directors present, shall act as chairman of the meetings of the
stockholders, and the Secretary or, in the Secretary's absence, an Assistant
Secretary or any individual appointed by the chairman of the meeting, shall act
as secretary of the meeting. The order of business and the procedure at any
meeting of stockholders shall be determined by the chairman of the meeting.

<PAGE>

ARTICLE III

BOARD OF DIRECTORS

Section 15. GENERAL POWERS, NUMBER, TERM OF OFFICE. The business of
the Corporation shall be managed under the direction of its Board of Directors.
Subject to the rights of the holders of any series of preferred stock, $0.001
par value per share, of the Corporation ("Preferred Stock") to elect additional
directors under specified circumstances, the number of directors of the
Corporation shall be fixed from time to time exclusively by resolution of a
majority of the then authorized number of directors of the Corporation (the
number of then authorized directors of the Corporation is referred to herein as
the "Whole Board"), but in no event shall the number of directors be fewer than
three. The directors, other than those who may be elected solely by the holders
of any series of Preferred Stock (unless the relevant Preferred Stock
Designation shall so provide), shall be divided into three classes, as nearly
equal in number as possible, designated "Class I," "Class II" and "Class III."
Directors of each class shall serve for a term ending on the third annual
meeting of stockholders following the annual meeting at which such class was
elected, except that the term of office of the initial Class I director shall
expire on the date of the annual meeting in 2001, the term of office of the
initial Class II directors shall expire on the date of the annual meeting in
2002 and the term of office of the initial Class III directors shall expire on
the date of the annual meeting in 2003. The foregoing notwithstanding, each
director shall serve until his or her successor shall have been duly elected and
qualified, unless such director shall die, resign, retire or be disqualified or
removed. At all elections of directors, the directors chosen to succeed those
directors whose terms then expire shall be identified as being of the same class
as the directors they succeed. If for any reason the number of directors in the
various classes shall not be as nearly equal as possible, the Board of Directors
may redesignate any director into a different class in order that the balance of
directors in such classes shall be as nearly equal as possible.

Section 16. VACANCIES. Subject to the rights of the holders of any
series of Preferred Stock to elect additional directors under specified
circumstances, and unless the Board of Directors otherwise determines, vacancies
resulting from death, resignation, retirement, disqualification, removal from
office or other cause, and newly created directorships resulting from any
increase in the authorized number of directors, may be filled only by the
affirmative vote of a majority of the remaining directors, though less than a
quorum of the Board of Directors, or by a sole remaining director. Directors so
chosen shall hold office for a term expiring at the annual meeting of
stockholders at which the term of office of the class to which they have been
elected expires and until such director's successor shall have been duly elected
and qualified. No decrease in the number of authorized directors constituting
the Board of Directors shall shorten the term of any incumbent director.

Section 17. CHAIRMAN OF THE BOARD. The Chairman of the Board of
Directors shall be chosen from among the directors. The Chairman of the Board
shall preside at all meetings of the stockholders and of the Board of Directors,
except as may be otherwise required under applicable law. The Chairman shall
act in an advisory capacity with respect to matters of policy and other matters
of importance pertaining to the affairs of the Corporation. The Chairman, alone
or with the President and/or the Secretary shall sign and send out reports and
other messages which are to be sent to stockholders from time to time. The
Chairman shall also

<PAGE>

perform such other duties as may be assigned to the Chairman by these By-Laws
or the Board of Directors. The Board of Directors may also choose a Vice
Chairman of the Board of Directors from among the directors, which Vice
Chairman if chosen shall perform such duties as may be assigned by these
By-Laws, the Board of Directors, or the Chairman of the Board.

Section 18. REGULAR MEETINGS. Following the annual meeting of
stockholders, the first meeting of each newly elected Board of Directors may be
held, without notice, on the same day and at the same place as such
stockholders' meeting. The Board of Directors by resolution may provide for the
holding of regular meetings and may fix the times and places at which such
meetings shall be held. Notice of regular meetings shall not be required;
provided that whenever the time or place of regular meetings shall be fixed or
changed, notice of such action shall be given promptly to each director, as
provided in Section 20 below, who was not present at the meeting at which such
action was taken.

Section 19. SPECIAL MEETINGS. Special meetings of the Board of
Directors shall be held whenever called by the Chairman of the Board of
Directors, the President, or in the absence of each of them, by the Secretary at
the written request of a majority of the directors.

Section 20. NOTICES. Notice of any special meeting of the Board of
Directors shall be addressed to each director at such director's residence or
business address and shall be sent to such director by mail, electronic mail,
telecopier, telegram or telex or telephoned or delivered to such director
personally. If such notice is sent by mail, it shall be sent not later than
three days before the day on which the meeting is to be held. If such notice
is sent by electronic mail, telecopier, telegram or telex, it shall be sent
not later than 12 hours before the time at which the meeting is to be held.
If such notice is delivered personally, it shall be received not later than
12 hours before the time at which the meeting is to be held. If such notice
is telephoned, it shall be to such telephone number or numbers of which the
director from time to time shall advise the Secretary for receiving such
notice. If given by telephone call, notice shall be deemed given to a
director when a message stating the time, place and purpose of the meeting is
left with a person answering the telephone at any such number with a request
that the director be so informed, or if no such telephone number is answered,
then when at least two attempts have been made to reach each telephone number
designated by the director for receiving telephonic notice, with an interval
of not less than one hour. A certification shall be prepared and filed with
the minutes stating the date, time and results of telephonic notice given to
any director not present at a meeting with respect to which his waiver of
notice of meeting is not filed with the minutes. In all cases, such notice
shall state the time, place and purpose or purposes of the meeting.

Section 21. CONFERENCE TELEPHONE MEETINGS. Members of the Board of
Directors or any committee thereof may participate in a meeting of the Board of
Directors or such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such meeting.

Section 22. QUORUM. One-half of the total number of directors
constituting the Whole Board, but not less than two, shall constitute a quorum
for the transaction of business at any meeting of the Board of Directors, but if
less than such required number of directors for a quorum is present at a
meeting, a majority of the directors present may adjourn the meeting from

<PAGE>

time to time without further notice. Except as otherwise specifically
provided by applicable law, the Certificate of Incorporation or these
By-Laws, the act of a majority of the directors present at a meeting at which
a quorum is present shall be the act of the Board of Directors.

Section 23. ORGANIZATION. At each meeting of the Board of Directors,
the Chairman of the Board or, in the Chairman's absence, the Vice Chairman of
the Board or the President, if a member of the Board of Directors, or, in the
absence of each of them, a chairman chosen by a majority of the directors
present, shall act as chairman of the meeting, and the Secretary or, in the
Secretary's absence, an Assistant Secretary or any individual appointed by the
chairman of the meeting, shall act as secretary of the meeting.

Section 24. RESIGNATIONS. Any director may resign at any time by
giving written notice to the Chairman of the Board, the President, or the
Secretary of the Corporation. Such resignation shall take effect upon receipt
thereof or at any later time specified therein and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.

Section 25. ACTION WITHOUT A MEETING. Unless otherwise restricted by
the Certificate of Incorporation or these By-Laws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if all members of the Board of
Directors or committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the Board of
Directors or committee.

Section 26. LOCATION OF BOOKS. Except as otherwise provided by
resolution of the Board of Directors and subject to applicable law, the books of
the Corporation may be kept at the General Offices and at such other places as
may be necessary or convenient for the business of the Corporation.

Section 27. DIVIDENDS. Subject to the provisions of the Certificate of
Incorporation and applicable law, dividends upon the capital stock of the
Corporation may be declared by the Board of Directors at any regular or special
meeting. Dividends may be paid in cash, in property, or in shares of the
Corporation's capital stock.

Section 28. COMPENSATION. Unless otherwise restricted by the
Certificate of Incorporation or these By-Laws, the Board of Directors shall have
the authority to fix from time to time the compensation of directors. The
directors may be paid their expenses, if any, from attendance at each Board of
Directors or committee meeting and for the performance of their responsibilities
as directors. Directors may also be paid a fixed sum for attendance at each
Board of Directors or committee meeting and/or a stated salary as director. No
such payment shall preclude any director from serving the Corporation or its
parent or subsidiary corporations in any other capacity and receiving
compensation therefor.

Section 29. ADDITIONAL POWERS. In addition to the powers and
authorities by these By-Laws expressly conferred upon it, the Board of Directors
may exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute or by the Certificate of

<PAGE>

Incorporation or by these By-Laws directed or required to be exercised or
done by the stockholders.

ARTICLE IV

COMMITTEES OF DIRECTORS

Section 30. DESIGNATION, POWER, ALTERNATE MEMBERS. The Board of
Directors may, by resolution or resolutions passed by a majority of the Whole
Board, designate an Executive Committee and one or more additional committees,
each committee to consist of one or more of the directors of the Corporation.
Any such committee, to the extent provided in said resolution or resolutions and
subject to any limitations provided by applicable law, shall have and may
exercise the powers of the Board of Directors in the management of the business
and affairs of the Corporation. The Board of Directors may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. If at a meeting of any
committee one or more of the members thereof is absent or disqualified, and if
either the Board of Directors has not so designated any alternate member or
members, or the number of absent or disqualified members exceeds the number of
alternate members who are present at such meeting, then the member or members of
such committee (including alternates) present at any meeting and not
disqualified from voting, whether or not they constitute a quorum, may
unanimously appoint another Director to act at the meeting in the place of such
absent or disqualified member. The term of office of the members of each
committee shall be as fixed from time to time by the Board of Directors;
PROVIDED, HOWEVER, that any committee member who ceases to be a member of the
Board of Directors shall automatically cease to be a committee member.

Section 31. QUORUM, MANNER OF ACTING. At any meeting of a committee,
the presence of one-half of its members then in office shall constitute a quorum
for the transaction of business; and the act of a majority of the members
present at a meeting at which a quorum is present shall be the act of the
committee. Each committee may provide for the holding of regular meetings, make
provision for the calling of special meetings and, except as otherwise provided
in these By-Laws or by resolution of the Board of Directors, make rules for the
conduct of its business.

Section 32. MINUTES. The committees shall keep minutes of their
proceedings and report the same to the Board of Directors when required; but
failure to keep such minutes shall not affect the validity of any acts of the
committee or committees.

ARTICLE V

OFFICERS

Section 33. DESIGNATION. The officers of the Corporation shall be the
President and a Secretary. The Board of Directors may also elect a Chief
Financial Officer, one or more Vice Presidents, Assistant Secretaries, Assistant
Treasurers, a Controller, one or more Assistant Controllers and such other
officers as it shall deem necessary. Any number of offices may be held by the
same person.

<PAGE>

Section 34. ELECTION AND TERM. At its first meeting after each annual
meeting of stockholders, the Board of Directors shall elect the officers of the
Corporation and at any time thereafter the Board of Directors may elect
additional officers of the Corporation, and each such officer shall hold office
until the officer's successor is elected and qualified or until the officer's
earlier death, resignation or removal. Alternatively, at the last regular
meeting of the Board of Directors prior to an annual meeting of stockholders,
the Board of Directors may elect the officers of the Corporation, contingent
upon the election of the persons nominated to be directos by the Board of
Directors; and each such officer so elected shall hold such office until the
officer's successor is elected and qualified or until the officer's earlier
death, resignation or removal.

Section 35. REMOVAL. Any officer shall be subject to removal or
suspension at any time, for or without cause, by the affirmative vote of a
majority of the Whole Board.

Section 36. RESIGNATIONS. Any officer may resign at any time by giving
written notice to the Chairman of the Board, the President or to the Secretary.
Such resignation shall take effect upon receipt thereof or at any later time
specified therein; and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.

Section 37. VACANCIES. A vacancy in any office because of death,
resignation, removal or any other cause may be filled for the unexpired portion
of the term by the Board of Directors.

Section 38. PRESIDENT. Subject to such supervisory powers, if any, as
may be given to the Board of Directors to the Chairman of the Board, the
President shall be the chief executive officer of the Corporation and shall have
the general and active management and supervision of the business of the
Corporation. The President, if a member of the Board of Directors, shall, in
the absence of the Chairman of the Board, preside at all meetings of the
stockholders and of the Board of Directors. The President shall see that all
orders and resolutions of the Board of Directors are carried into effect. The
President shall also perform such other duties as may be assigned to the
President by these By-Laws or the Board of Directors. The President shall
designate who shall perform the duties of the chief executive officer in the
President's absence.

Section 39. VICE PRESIDENTS. Each Vice President shall perform the
duties and functions and exercise the powers assigned to such Vice President by
the Board of Directors or the President.

Section 40. SECRETARY. The Secretary shall attend all meetings of the
Board of Directors and of the stockholders and record all votes and the minutes
of all proceedings in a book to be kept for that purpose. The Secretary shall
give, or cause to be given, notice of all meetings of the stockholders and
special meetings of the Board of Directors and, when appropriate, shall cause
the corporate seal to be affixed to any instruments executed on behalf of the
Corporation. The Secretary shall also perform all duties incident to the office
of Secretary and such other duties as may be assigned to the Secretary by these
By-Laws, the Board of Directors, the Chairman of the Board or the President.

<PAGE>

Section 41. ASSISTANT SECRETARIES. The Assistant Secretaries shall,
during the absence of the Secretary, perform the duties and functions and
exercise the powers of the Secretary. Each Assistant Secretary shall perform
such other duties as may be assigned to such Assistant Secretary by the Board of
Directors, the Chairman of the Board, the President or the Secretary.

Section 42. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall
have overall responsibility for causing (1) the funds and securities of the
Corporation to be deposited in the name and to the credit of the Corporation in
such depositories as may be designated by the Board of Directors or by any
officer or officers authorized by the Board of Directors to designate such
depositories; (2) the disbursement of funds of the Corporation when properly
authorized by vouchers prepared and approved by the Controller; (3) the
investment of funds of the Corporation when authorized by the Board of Directors
or a committee thereof; and (4) to be kept full and accurate account of receipts
and disbursements in books of the Corporation. The Chief Financial Officer
shall render to the Board of Directors or the President, whenever requested, an
account of all transactions as Chief Financial Officer and shall also perform
all duties incident to the office of Chief Financial Officer and such other
duties as may be assigned to the Chief Financial Officer by these By-Laws, the
Board of Directors, or the President.

Section 43. TREASURER. The Treasurer shall have custody of the funds
and securities of the Corporation and shall deposit them in the name and to the
credit of the Corporation in such depositories as may be designated by the Board
of Directors or by any officer or officers authorized by the Board of Directors
to designate such depositories; disburse funds of the Corporation when properly
authorized by vouchers prepared and approved by the Controller; and invest funds
of the Corporation when authorized by the Board of Directors or a committee
thereof. The Treasurer shall render to the Board of Directors, the President,
or the Chief Financial Officer, whenever requested, an account of all
transactions as Treasurer and shall also perform all duties incident to the
office of Treasurer and such other duties as may be assigned to the Treasurer by
these By-Laws, the Board of Directors, the President or the Chief Financial
Officer.

Section 44. ASSISTANT TREASURERS. The Assistant Treasurers shall,
during the absence of the Chief Financial Officer, perform the duties and
functions and exercise the powers of the Chief Financial Officer. Each
Assistant Treasurer shall perform such other duties as may be assigned to such
Assistant Treasurer by the Board of Directors, the President or the Chief
Financial Officer.

Section 45. CONTROLLER. The Controller shall serve as the principal
accounting officer of the Corporation and shall keep full and accurate account
of receipts and disbursements in books of the Corporation and render to the
Board of Directors, the President or the Chief Financial Officer, whenever
requested, an account of all transactions as Controller and of the financial
condition of the Corporation. The Controller shall also perform all duties
incident to the office of Controller and such other duties as may be assigned to
the Controller by these By-Laws, the Board of Directors, the President or the
Chief Financial Officer.

Section 46. ASSISTANT CONTROLLERS. The Assistant Controllers shall,
during the absence of the Controller, perform the duties and functions and
exercise the powers of the Controller.

<PAGE>

Each Assistant Controller shall perform such other duties as may be assigned
to such Assistant Controller by the Board of Directors, the President, the
Chief Financial Officer or the Controller.

ARTICLE VI

CONTRACTS, INSTRUMENTS AND PROXIES

Section 47. CONTRACTS AND OTHER INSTRUMENTS. Except as otherwise
required by applicable law, the Certificate of Incorporation or these By-Laws,
any contracts or other instruments may be signed by such person or persons as
from time to time may be designated by the Board of Directors or by any officer
or officers authorized by the Board of Directors to designate such signers; and
the Board of Directors or such officer or officers may determine that the
signature of any such authorized signer may be facsimile. Such authority may be
general or confined to specific instances as the Board of Directors or such
officer or officers may determine.

Section 48. PROXIES. Except as otherwise provided by resolution of the
Board of Directors, any officer of the Corporation shall each have full power
and authority, on behalf of the Corporation, to exercise any and all rights of
the Corporation with respect to any meeting of stockholders of any corporation
in which the Corporation holds stock, including the execution and delivery of
proxies therefor, and to consent in writing to action by such corporation
without a meeting.

ARTICLE VII

CAPITAL STOCK

Section 49. STOCK CERTIFICATES; BOOK-ENTRY ACCOUNTS. The interest of
each stockholder of the Corporation shall be evidenced by (1) certificates
signed by, or in the name of the Corporation by, the Chairman of the Board, the
President, any Vice President, the Chief Financial Officer or the Treasurer, and
by the Secretary or any Assistant Secretary of the Corporation, certifying the
number of shares owned by such holder in the Corporation, or (2) registration in
book-entry accounts without certificates for shares of stock in such form as the
appropriate officers of the Corporation may from time to time prescribe. Any of
or all the signatures on a stock certificate may be a facsimile. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the Corporation with the same effect as if such person were such officer,
transfer agent or registrar at the date of issue.

Section 50. RECORD OWNERSHIP. The Corporation shall be entitled to
treat the person in whose name any share, right or option is registered as the
owner thereof, for all purposes, and shall not be bound to recognize any
equitable or other claim to or interest in such share, right or option on the
part of any other person, whether or not the Corporation shall have notice
thereof, except as otherwise provided by applicable law.

<PAGE>

Section 51. RECORD DATES. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix a record
date, which shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors and which shall not be more
than 60 nor less than 10 days before the date of such meeting, nor more than 60
days prior to any other action.

Section 52. TRANSFER OF STOCK. Transfers of shares of stock of the
Corporation shall be made only on the books of the Corporation by the registered
holder thereof, or by the registered holder's attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary or a transfer agent
of the Corporation, and on surrender of the certificate or certificates for such
shares properly endorsed and the payment of all taxes thereon, or by appropriate
book-entry procedures.

Section 53. LOST, STOLEN OR DESTROYED CERTIFICATES. The Board of
Directors may authorize a new certificate or certificates to be issued in place
of any certificate or certificates theretofore issued by the Corporation alleged
to have been lost, stolen or destroyed, upon the making of an affidavit of the
fact by the person claiming the certificate of stock to be lost, stolen or
destroyed. When authorizing such issue of a new certificate or certificates, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or the owner's legal representative, to give the
Corporation a bond sufficient to indemnify it against any claim that may be made
against the Corporation on account of the alleged loss, theft or destruction of
such certificate or the issuance of such new certificate.

Section 54. TERMS OF PREFERRED STOCK. The provisions of these By-Laws,
including those pertaining to voting rights, election of directors and calling
of special meetings of stockholders, are subject to the terms, preferences,
rights and privileges of any then outstanding class or series of Preferred Stock
as set forth in the Certificate of Incorporation, any Preferred Stock
Designation and in any resolutions of the Board of Directors providing for the
issuance of such class or series of Preferred Stock; PROVIDED, HOWEVER, that the
provisions of any such Preferred Stock shall not affect or limit the authority
of the Board of Directors to fix, from time to time, the number of directors
which shall constitute the Whole Board as provided in Section 16 above, subject
to the right of the holders of any class or series of Preferred Stock to elect
additional directors as and to the extent specifically provided by the
provisions of such Preferred Stock.

<PAGE>

ARTICLE VIII

INDEMNIFICATION

Section 55. RIGHT OF INDEMNIFICATION GENERALLY.

(a) DIRECTORS AND OFFICERS. Each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit,
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she or a person
of whom he or she is the legal representative is or was a director or officer of
the Corporation or is or was serving at the request of the Corporation as a
legal representative, director, officer, employee or agent of another
corporation or of a limited liability company, partnership, joint venture, trust
or other enterprise, including service with respect to employee benefit plans,
shall be indemnified and held harmless by the Corporation to the fullest extent
permitted by the General Corporation Law of the State of Delaware, as the same
exists or may hereafter be amended (but, if permitted by applicable law, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than such law permitted
the Corporation to provide prior to such amendment), and any other applicable
laws as presently or hereafter in effect, against all expense, liability and
loss (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith; PROVIDED, HOWEVER, that except
as provided in Section 57 below, the Corporation shall indemnify any such person
seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors.

(b) ADVANCE OF EXPENSES. Each person referred to in paragraph
(a) of this By-Law shall be paid by the Corporation the expenses incurred in
connection with any proceeding described in paragraph (a) of this By-Law in
advance of its final disposition upon receipt by the Corporation of an
undertaking by or on behalf of such person, to repay all amounts so advanced if
it shall ultimately be determined that such person is not entitled to be
indemnified under this Article VII or otherwise.

Section 56. WRITTEN REQUEST; DETERMINATION OF ENTITLEMENT. To obtain
indemnification under this Article VII, a claimant shall submit to the
Corporation a written request, including therein or therewith such documentation
and information as is reasonably available to the claimant and is reasonably
necessary to determine whether and to what extent the claimant is entitled to
indemnification. Any determination regarding whether indemnification of any
person is proper in the circumstances because such person has met the applicable
standard of conduct set forth in the General Corporation Law of the State of
Delaware shall be made, at the option of the person seeking indemnification, by
the directors as set forth in the General Corporation Law of the State of
Delaware or by independent legal counsel selected by such person with the
consent of the Corporation (which consent shall not unreasonably be withheld).

<PAGE>

Section 57. RECOVERY OF UNPAID CLAIM. If a claim under Section 55
above is not paid in full by the Corporation within 60 days after a written
claim pursuant to Section 56 above has been received by the Corporation, the
claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in whole or in part,
the claimant shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than actions brought to
enforce a claim for expenses incurred in defending any proceeding in advance of
its final disposition where the required undertaking, if any is required, has
been tendered to the Corporation) that the claimant has not met the standard of
conduct which makes it permissible under the General Corporation Law of the
State of Delaware for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its directors, independent
legal counsel or stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the General Corporation Law of the State of Delaware, nor an actual
determination by the Corporation (including its directors, independent legal
counsel or stockholders) that the claimant has not met such applicable standard
of conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.

Section 58. EXCLUSIVITY; SUBSEQUENT MODIFICATION. The right to
indemnification and the payment of expenses incurred in connection with a
proceeding in advance of its final disposition conferred in this Article VII
shall not be exclusive of any other right which any person may have or hereafter
acquire under any statute, provision of the Certificate of Incorporation,
By-Laws, agreement, vote of stockholders or directors or otherwise. No
repeal or modification of this Article VII shall in any way diminish or
adversely affect the rights hereunder of any director, officer or employee or
of any agent who has been expressly granted indemnification by the
Corporation pursuant to Section 60 below in respect of any occurrence or
matter arising prior to any such repeal or modification.

Section 59. INSURANCE. The Corporation may maintain insurance, at its
expense, to protect itself and any legal representative, director, officer,
employee or agent of the Corporation or another corporation, limited liability
company, partnership, joint venture, trust or other enterprise against any
expense, liability or loss, whether or not the Corporation would have the power
to indemnify such person against such expense, liability or loss under the
General Corporation Law of the State of Delaware or otherwise. To the extent
that the Corporation maintains any policy or policies providing such insurance,
each such legal representative, director, officer or employee, and each such
agent to which rights to indemnification have been granted as provided in
Section 60 below shall be covered by such policy or policies in accordance with
its or their terms to the maximum extent of the coverage thereunder for any such
legal representative, director, officer, employee or agent.

Section 60. OTHER PERSONS GRANTED RIGHT OF INDEMNIFICATION. The
Corporation may, to the extent authorized from time to time by the Board of
Directors, grant rights to indemnification, and rights to be paid by the
Corporation the expenses incurred in defending any proceeding in advance of its
final disposition, to any agent of the Corporation to the fullest extent of the
provisions of this Article VII with respect to the indemnification and
advancement of expenses of directors, officers and employees of the Corporation.

<PAGE>

Section 61. ILLEGALITY; UNENFORCEABILITY. If any provision or
provisions of this Article VII shall be held to be invalid, illegal or
unenforceable for any reason whatsoever: (1) the validity, legality and
enforceability of the remaining provisions of this Article VII (including,
without limitation, each portion of any Section or subsection of this Article
VII containing any such provision held to be invalid, illegal or unenforceable,
that is not itself held to be invalid, illegal or unenforceable) shall not in
any way be affected or impaired thereby; and (2) to the fullest extent possible,
the provisions of this Article VII (including, without limitation, each such
portion of any Section or subsection of this Article VII containing any such
provision held to be invalid, illegal or unenforceable that is not itself held
to be invalid, illegal or unenforceable) shall be construed so as give effect to
the intent manifested by the provision held invalid, illegal or unenforceable.

Section 62. FORM AND DELIVERY OF COMMUNICATIONS. Any notice, request
or other communication required or permitted to be given to the Corporation
under this Article VII shall be in writing and either delivered in person or
sent by telecopy, telex, telegram, overnight mail or courier service, or
certified or registered mail, postage prepaid, return receipt requested, to the
Secretary of the Corporation.

ARTICLE IX

MISCELLANEOUS

Section 63. CORPORATE SEAL. The seal of the Corporation shall be
circular in form, containing the words "inSilicon Corporation" and the word
"Delaware" on the circumference surrounding the word "Seal." Said seal may be
used by causing it or a facsimile thereof to be impressed or affixed or in any
other manner reproduced.

Section 64. FISCAL YEAR. The fiscal year of the Corporation shall end
on September 30 of each year.

Section 65. AUDITORS. The Board of Directors shall select certified
public accountants to audit the books of account and other appropriate corporate
records of the Corporation annually and at such other times as the Board of
Directors shall determine by resolution.

Section 66. WAIVER OF NOTICE. Whenever notice is required to be given
pursuant to applicable law, the Certificate of Incorporation or these By-Laws, a
written waiver thereof, signed by the person entitled to notice, whether before
or after the time stated therein, shall be deemed equivalent to notice.
Attendance of a person at a meeting of stockholders or the Board of Directors or
a committee thereof shall constitute a waiver of notice of such meeting, except
when the stockholder or director attends such meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
stockholders or the Board of Directors or committee thereof need be specified in
any written waiver of notice unless so required by the Certificate of
Incorporation or by these By-Laws.

<PAGE>

ARTICLE X

AMENDMENT TO BY-LAWS

Section 67. AMENDMENTS. These By-Laws may be altered, amended or
repealed, and new By-Laws may be adopted by the affirmative vote of the holders
of at least 80% of the Voting Stock then outstanding, voting together as a
single class or (b) by the affirmative vote of a majority of the Whole Board.

<PAGE>

INSILICON CORPORATION

2000 STOCK PLAN

EFFECTIVE AS OF [EFFECTIVE DATE]

<PAGE>

TABLE OF CONTENTS
<TABLE>
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SECTION 1. INTRODUCTION..........................................................................1

SECTION 2. DEFINITIONS...........................................................................1

(a) "Affiliate"...........................................................................1

(b) "Award"...............................................................................1

(d) "Change In Control"...................................................................1

(e) "Code"................................................................................2

(f) "Committee"...........................................................................2

(g) "Common Stock"........................................................................2

(h) "Company".............................................................................2

(i) "Consultant"..........................................................................2

(j) "Director"............................................................................2

(k) "Disability"..........................................................................2

(l) "Employee"............................................................................2

(m) "Exchange Act"........................................................................3

(n) "Exercise Price"......................................................................3

(o) "Fair Market Value"...................................................................3

(p) "Grant"...............................................................................3

(q) "Incentive Stock Option" or "ISO".....................................................3

(r) "Key Employee"........................................................................3

(s) "Non-Employee Director"...............................................................3

(t) "Nonstatutory Stock Option" or "NSO"..................................................3

(u) "Option"..............................................................................3

(v) "Optionee"............................................................................3

(w) "Parent"..............................................................................3

(x) "Participant".........................................................................4

(y) "Plan"................................................................................4

(z) "Restricted Stock"....................................................................4

(aa) "Restricted Stock Agreement"..........................................................4

(bb) "Securities Act"......................................................................4

(cc) "Service".............................................................................4

(dd) "Share"...............................................................................4
</TABLE>
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<TABLE>
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(ee) "Stock Option Agreement"..............................................................4

(ff) "Subsidiary"..........................................................................4

(gg) "10-Percent Shareholder"..............................................................4

SECTION 3. ADMINISTRATION........................................................................4

(a) Committee Composition.................................................................4

(b) Authority of the Committee............................................................5

SECTION 4. ELIGIBILITY...........................................................................6

(a) General Rules.........................................................................6

(b) Incentive Stock Options...............................................................6

SECTION 5. SHARES SUBJECT TO PLAN................................................................7

(a) Basic Limitation......................................................................7

(b) Annual Addition.......................................................................7

(d) Dividend Equivalents..................................................................7

(e) Limits on Options.....................................................................7

(f) Limits on Restricted Stock............................................................7

SECTION 6. TERMS AND CONDITIONS OF OPTIONS.......................................................7

(a) Stock Option Agreement................................................................7

(b) Number of Shares......................................................................7

(d) Exercisability and Term...............................................................8

(e) Modifications or Assumption of Options................................................8

(f) Transferability of Options............................................................8

(g) No Rights as Stockholder..............................................................8

(h) Restrictions on Transfer..............................................................8

SECTION 7. PAYMENT FOR OPTION SHARES.............................................................9

(a) General Rule..........................................................................9

(b) Surrender of Stock....................................................................9

(d) Other Forms of Payment................................................................9
</TABLE>
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<TABLE>
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<S> <C>
SECTION 8. TERMS AND CONDITIONS FOR AWARDS OF RESTRICTED STOCK...................................9

(a) Time, Amount and Form of Awards.......................................................9

(b) Restricted Stock Agreement............................................................9

(d) Vesting Conditions....................................................................9

(e) Assignment or Transfer of Restricted Stock...........................................10

(f) Trusts...............................................................................10

(g) Voting and Dividend Rights...........................................................10

SECTION 9. PROTECTION AGAINST DILUTION..........................................................10

(a) Adjustments..........................................................................10

(b) Participant Rights...................................................................11

SECTION 10. EFFECT OF A CHANGE IN CONTROL........................................................11

(a) Merger or Reorganization.............................................................11

(b) Acceleration.........................................................................11

SECTION 11. LIMITATIONS ON RIGHTS................................................................11

(a) Retention Rights.....................................................................11

(b) Stockholders' Rights.................................................................11

SECTION 12. WITHHOLDING TAXES....................................................................12

(a) General..............................................................................12

(b) Share Withholding....................................................................12

SECTION 13. DURATION AND AMENDMENTS..............................................................12

(a) Term of the Plan.....................................................................12

(b) Right to Amend or Terminate the Plan.................................................12

SECTION 14. EXECUTION............................................................................13
</TABLE>

-iii-
<PAGE>

INSILICON CORPORATION

2000 STOCK PLAN

EFFECTIVE AS OF [EFFECTIVE DATE]

SECTION 1. INTRODUCTION.

The Company's Board of Directors adopted the inSilicon Corporation
2000 Stock Plan on January 18, 2000 and the Company's stockholder
approved the Plan on January 18, 2000. The Plan is effective on
[EFFECTIVE DATE], the date of the Company's initial public offering.

The purpose of the Plan is to promote the long-term success of the
Company and the creation of shareholder value by offering Key
Employees an opportunity to acquire a proprietary interest in the
success of the Company, or to increase such interest, and to
encourage such selected persons to continue to provide services to
the Company and to attract new individuals with outstanding
qualifications.

The Plan seeks to achieve this purpose by providing for Options
(which may constitute Incentive Stock Options or Nonstatutory Stock
Options) and Awards of Restricted Stock.

The Plan shall be governed by, and construed in accordance with, the
laws of the State of California (except its choice-of-law
provisions). Capitalized terms shall have the meaning provided in
Section 2 unless otherwise provided in this Plan or Stock Option
Agreement or Restricted Stock Agreement.

SECTION 2. DEFINITIONS.

(a) "AFFILIATE" means any entity other than a Subsidiary, if the
Company and/or one or more Subsidiaries own not less than 50% of
such entity. For purposes of determining an individual's "Service,"
this definition shall include any entity other than a Subsidiary, if
the Company, a Parent and/or one or more Subsidiaries own not less
than 50% of such entity.

(b) "AWARD" means any award of an Option or Restricted Stock
under the Plan.

(d) "CHANGE IN CONTROL" except as may otherwise be provided in
the Stock Option Agreement or Restricted Stock Agreement, means the
occurrence of any of the following:

(i) The consummation of a merger or
consolidation of the Company with or into another entity or
any other corporate reorganization, if more than

<PAGE>

50% of the combined voting power of the continuing or
surviving entity's securities outstanding immediately
after such merger, consolidation or other reorganization
is owned by persons who were not stockholders of the
Company immediately prior to such merger, consolidation
or other reorganization;

(ii) The sale, transfer or other disposition
of all or substantially all of the Company's assets;

(iii) Any transaction as a result of which any
person becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing at least 20% of the
total voting power represented by the Company's then
outstanding voting securities. For purposes of this
Paragraph (iii), the term "person" shall have the same
meaning as when used in sections 13(d) and 14(d) of the
Exchange Act but shall exclude:

(A) A trustee or other fiduciary
holding securities under an employee benefit plan
of the Company or a subsidiary of the Company;

(B) A corporation owned directly or
indirectly by the stockholders of the Company in
substantially the same proportions as their
ownership of the common stock of the Company; and

A transaction shall not constitute a Change of Control if
its sole purpose is to change the state of the Company's
incorporation or to create a holding company that will be owned in
substantially the same proportions by the persons who held the
Company's securities immediately before such transactions.

(e) "CODE" means the Internal Revenue Code of 1986, as amended.

(f) "COMMITTEE" means a committee consisting of one or more
members of the Board that is appointed by the Board (as described
in Section 3) to administer the Plan.

(g) "COMMON STOCK" means the Company's common stock.

(h) "COMPANY" means inSilicon Corporation, a Delaware
corporation.

(i) "CONSULTANT" means an individual who performs bona fide
services to the Company, a Parent, a Subsidiary or an Affiliate
other than as an Employee or Director or Non-Employee Director.

(j) "DIRECTOR" means a member of the Board who is also an
Employee.

(k) "DISABILITY" means that the Key Employee is unable to
engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment

2
<PAGE>

which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than 12
months.

(l) "EMPLOYEE" means any individual who is a common-law
employee of the Company, a Parent, a Subsidiary or an Affiliate.

(m) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.

(n) "EXERCISE PRICE" means the amount for which a Share may be
purchased upon exercise of such Option, as specified in the
applicable Stock Option Agreement.

(o) "FAIR MARKET VALUE" means the market price of Shares,
determined by the Committee as follows:

(i) If the Shares were traded over-the-counter on the
date in question but were not classified as a national
market issue, then the Fair Market Value shall be equal to
the mean between the last reported representative bid and
asked prices quoted by the NASDAQ system for such date;

(ii) If the Shares were traded over-the-counter on the
date in question and were classified as a national market
issue, then the Fair Market Value shall be equal to the
last-transaction price quoted by the NASDAQ system for such
date;

(iii) If the Shares were traded on a stock exchange on
the date in question, then the Fair Market Value shall be
equal to the closing price reported by the applicable
composite transactions report for such date; and

(iv) If none of the foregoing provisions is applicable,
then the Fair Market Value shall be determined by the
Committee in good faith on such basis as it deems
appropriate.

Whenever possible, the determination of Fair Market Value by the
Committee shall be based on the prices reported in the WALL STREET
JOURNAL. Such determination shall be conclusive and binding on all
persons.

(p) "GRANT" means any grant of an Option under the Plan.

(q) "INCENTIVE STOCK OPTION" or "ISO" means an incentive stock
option described in Code section 422(b).

(r) "KEY EMPLOYEE" means an Employee, Director, Non-Employee
Director or Consultant who has been selected by the Committee to
receive an Award under the Plan.

(s) "NON-EMPLOYEE DIRECTOR" means a member of the Board who is
not an Employee.

(t) "NONSTATUTORY STOCK OPTION" or "NSO" means a stock option
that is not an ISO.

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<PAGE>

(u) "OPTION" means an ISO or NSO granted under the Plan
entitling the Optionee to purchase Shares.

(v) "OPTIONEE" means an individual, estate or other entity that
holds an Option.

(w) "PARENT" means any corporation (other than the Company) in
an unbroken chain of corporations ending with the Company, if each
of the corporations other than the Company owns stock possessing
fifty percent (50%) or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.
A corporation that attains the status of a Parent on a date after
the adoption of the Plan shall be considered a Parent commencing as
of such date.

(x) "PARTICIPANT" means an individual or estate or other entity
that holds an Award.

(y) "PLAN" means this inSilicon Corporation 2000 Stock Plan as
it may be amended from time to time.

(z) "RESTRICTED STOCK" means a Share awarded under the Plan.

(aa) "RESTRICTED STOCK AGREEMENT" means the agreement described
in Section 8 evidencing each Award of Restricted Stock.

(bb) "SECURITIES ACT" means the Securities Act of 1933, as
amended.

(cc) "SERVICE" means service as an Employee, Director,
Non-Employee Director or Consultant.

(dd) "SHARE" means one share of Common Stock.

(ee) "STOCK OPTION AGREEMENT" means the agreement described in
Section 6 evidencing each Grant of an Option.

(ff) "SUBSIDIARY" means any corporation (other than the Company)
in an unbroken chain of corporations beginning with the Company, if
each of the corporations other than the last corporation in the
unbroken chain owns stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one of
the other corporations in such chain. A corporation that attains the
status of a Subsidiary on a date after the adoption of the Plan
shall be considered a Subsidiary commencing as of such date.

(gg) "10-PERCENT SHAREHOLDER" means an individual who owns more
than ten percent (10%) of the total combined voting power of all
classes of outstanding stock of the Company, its Parent or any of
its subsidiaries. In determining stock ownership, the attribution
rules of section 424(d) of the Code shall be applied.

4
<PAGE>

SECTION 3. ADMINISTRATION.

(a) COMMITTEE COMPOSITION. A Committee appointed by the Board
shall administer the Plan. The Board shall designate one of the
members of the Committee as chairperson. If no Committee has been
approved, the entire Board shall constitute the Committee. Members
of the Committee shall serve for such period of time as the Board
may determine and shall be subject to removal by the Board at any
time. The Board may also at any time terminate the functions of the
Committee and reassume all powers and authority previously delegated
to the Committee.

With respect to officers or directors subject to Section 16 of the
Exchange Act, the Committee shall consist of those individuals who
shall satisfy the requirements of Rule 16b-3 (or its successor)
under the Exchange Act with respect to Awards granted to persons who
are officers or directors of the Company under Section 16 of the
Exchange Act.

The Board may also appoint one or more separate committees of the
Board, each composed of one or more directors of the Company who
need not qualify under Rule 16b-3, who may administer the Plan with
respect to Key Employees who are not considered officers or
directors of the Company under Section 16 of the Exchange Act, may
grant Awards under the Plan to such Key Employees and may determine
all terms of such Awards.

Notwithstanding the foregoing, the Board shall constitute the
Committee and shall administer the Plan with respect to Options
granted to Non-Employee Directors under Section 4(c).

(b) AUTHORITY OF THE COMMITTEE. Subject to the provisions of
the Plan, the Committee shall have full authority and discretion to
take any actions it deems necessary or advisable for the
administration of the Plan. Such actions shall include:

(i) selecting Key Employees who are to receive Awards
under the Plan;

(ii) determining the type, number, vesting
requirements and other features and conditions of such
Awards;

(iii) interpreting the Plan; and

(iv) making all other decisions relating to the
operation of the Plan.

The Committee may adopt such rules or guidelines, as it deems
appropriate to implement the Plan. The Committee's determinations
under the Plan shall be final and binding on all persons.

(c) INDEMNIFICATION. Each member of the Committee, or of the
Board, shall be indemnified and held harmless by the Company against
and from (i) any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him or her in connection with
or resulting from any claim, action, suit, or proceeding to which he
or she may be a party or in which he or she may be involved by
reason of any action taken or failure to act under the Plan or any
Stock Option Agreement or any Restricted Stock Agreement, and (ii)
from any and all amounts paid by him or her in settlement thereof,

5
<PAGE>

with the Company's approval, or paid by him or her in satisfaction
of any judgment in any such claim, action, suit, or proceeding
against him or her, provided he or she shall give the Company an
opportunity, at its own expense, to handle and defend the same
before he or she undertakes to handle and defend it on his or her
own behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such
persons may be entitled under the Company's Certificate of
Incorporation or Bylaws, by contract, as a matter of law, or
otherwise, or under any power that the Company may have to indemnify
them or hold them harmless.

SECTION 4. ELIGIBILITY.

(a) GENERAL RULES. Only Employees, Directors, Non-Employee
Directors and Consultants shall be eligible for designation as Key
Employees by the Committee.

(b) INCENTIVE STOCK OPTIONS. Only Key Employees who are
common-law employees of the Company, a Parent or a Subsidiary shall
be eligible for the grant of ISOs. In addition, a Key Employee who
is a 10-Percent Shareholder shall not be eligible for the grant of
an ISO unless the requirements set forth in section 422(c)(5) of the
Code are satisfied.

(c) NON-EMPLOYEE DIRECTORS. Non-Employee Directors shall also
be eligible to receive Options as described in this Section 4(c)
from and after the date the Board has determined to implement this
provision.

(i) Each eligible Non-Employee Director shall
automatically be granted an NSO to purchase 20,000 Shares (subject
to adjustment under Section 9) as a result of his or her initial
election or appointment as a Non-Employee Director. Upon the
conclusion of each regular annual meeting of the Company's
stockholders following his or her initial appointment, each eligible
Non-Employee Director who will continue serving as a member of the
Board thereafter shall receive an NSO to purchase 7,500 Shares
(subject to adjustment under Section 9). In addition, upon his or
her appointment to the Audit Committee or Compensation Committee of
the Board, each Non-Employee Director will receive an NSO to
purchase 5,000 Shares (subject to adjustment under Section 9). All
NSOs granted pursuant to this Section 4 shall vest and become
exercisable at the rate of six and twenty-five hundredths percent
(6.25%) of the Shares subject to the Options per quarter grant from
the date of grant, provided the Non-Employee Director is serving as
a director of the Company as of the vesting date.

(ii) All NSOs granted to Non-Employee Directors under
this Section 4(c) shall become exercisable in full in the event of
Change in Control with respect to the Company while the Director is
providing service.

(iii) The Exercise Price under all NSOs granted to a
Non-Employee Director under this Section 4(c) shall be equal to one
hundred percent (100%) of the Fair Market Value of a Common Share on
the date of grant, payable in one of the forms described in Section
7.

6
<PAGE>

(iv) All NSOs granted to a Non-Employee Director under
this Section 4(c) shall terminate on the earlier of:

(1) The 10th anniversary of the date of grant;
or

(2) The date ninety (90) days after the
termination of such Non-Employee Director's service for
any reason.

SECTION 5. SHARES SUBJECT TO PLAN.

(a) BASIC LIMITATION. The stock issuable under the Plan shall be
authorized but unissued Shares or treasury Shares. The aggregate
number of Shares reserved for Awards under the Plan shall not exceed
1,300,000 plus such number of shares as shall be available for grant
under the Company's 1999 Stock Plan on the Effective Date of the
Plan. The foregoing limit is subject to adjustment pursuant to
Section 9.

(b) ANNUAL ADDITION. Beginning with the first fiscal year of the
Company beginning after the Effective Date, on the first day of each
fiscal year, Shares will be added to the Plan equal to the lesser of
(i) 2,000,000 Shares, or (ii) five percent (5%) of the outstanding
shares in the last day of the prior fiscal year.

(c) ADDITIONAL SHARES. If Awards are forfeited or terminate for
any other reason before being exercised, then the Shares underlying
such Awards shall again become available for Awards under the Plan.

(d) DIVIDEND EQUIVALENTS. Any dividend equivalents distributed
under the Plan shall not be applied against the number of Shares
available for Awards.

(e) LIMITS ON OPTIONS. No Key Employee shall receive Options to
purchase Shares during any fiscal year covering in excess of
2,000,000 Shares; provided, however, a newly hired Key Employee may
receive Options to purchase up to 1,000,000 Shares during the fiscal
year of his or her date of hire.

(f) LIMITS ON RESTRICTED STOCK. No Key Employee shall receive
Award(s) of Restricted Stock during any fiscal year covering in
excess of 200,000 Shares.

SECTION 6. TERMS AND CONDITIONS OF OPTIONS.

(a) STOCK OPTION AGREEMENT. Each Grant under the Plan shall be
evidenced by a Stock Option Agreement between the Optionee and the
Company. Such Option shall be subject to all applicable terms and
conditions of the Plan and may be subject to any other terms and
conditions that are not inconsistent with the Plan and that the
Committee deems appropriate for inclusion in a Stock Option
Agreement. The provisions of the various Stock Option Agreements
entered into under the Plan need not be identical. A Stock Option
Agreement may provide that new Options will be granted automatically
to

7
<PAGE>

the Optionee when he or she exercises the prior Options. The Stock
Option Agreement shall also specify whether the Option is an ISO or
an NSO.

(b) NUMBER OF SHARES. Each Stock Option Agreement shall specify
the number of Shares that are subject to the Option and shall
provide for the adjustment of such number in accordance with Section
9.

(c) EXERCISE PRICE. An Option's Exercise Price shall be
established by the Committee and set forth in a Stock Option
Agreement. To the extent required by applicable law the Exercise
Price of an ISO shall not be less than 100% of the Fair Market Value
(110% for 10-Percent Shareholders) of a Share on the date of Grant.
In the case of an NSO, a Stock Option Agreement may specify an
Exercise Price that varies in accordance with a predetermined
formula while the NSO is outstanding.

(d) EXERCISABILITY AND TERM. Each Stock Option Agreement shall
specify the date when all or any installment of the Option is to
become exercisable. The Stock Option Agreement shall also specify
the term of the Option; provided that the term of an ISO shall in no
event exceed ten (10) years from the date of Grant. An ISO that is
granted to a 10-Percent Shareholder shall have a maximum term of
five (5) years. No Option can be exercised after the expiration date
provided in the applicable Stock Option Agreement. A Stock Option
Agreement may provide for accelerated exercisability in the event of
the Optionee's death, disability or retirement or other events and
may provide for expiration prior to the end of its term in the event
of the termination of the Optionee's service. A Stock Option
Agreement may permit an Optionee to exercise an Option before it is
vested, subject to the Company's right of repurchase over any Shares
acquired under the unvested portion of the Option (an "early
exercise"), which right of repurchase shall lapse at the same rate
the Option would have vested had there been no early exercise. In no
event shall the Company be required to issue fractional Shares upon
the exercise of an Option.

(e) MODIFICATIONS OR ASSUMPTION OF OPTIONS. Within the
limitations of the Plan, the Committee may modify, extend or assume
outstanding options or may accept the cancellation of outstanding
options (whether granted by the Company or by another issuer) in
return for the grant of new Options for the same or a different
number of Shares and at the same or a different Exercise Price. The
foregoing notwithstanding, no modification of an Option shall,
without the consent of the Optionee, alter or impair his or her
rights or obligations under such Option.

(f) TRANSFERABILITY OF OPTIONS. Except as otherwise provided in
the applicable Stock Option Agreement and then only to the extent
permitted by applicable law, no Option shall be transferable by the
Optionee other than by will or by the laws of descent and
distribution. Except as otherwise provided in the applicable Stock
Option Agreement, an Option may be exercised during the lifetime of
the Optionee only or by the guardian or legal representative of the
Optionee. No Option or interest therein may be assigned, pledged or
hypothecated by the Optionee during his lifetime, whether by
operation of law or otherwise, or be made subject to execution,
attachment or similar process.

8
<PAGE>

(g) NO RIGHTS AS STOCKHOLDER. An Optionee, or a transferee of
an Optionee, shall have no rights as a stockholder with respect to
any Common Stock covered by an Option until such person becomes
entitled to receive such Common Stock by filing a notice of exercise
and paying the Exercise Price pursuant to the terms of such Option.

(h) RESTRICTIONS ON TRANSFER. Any Shares issued upon exercise
of an Option shall be subject to such rights of repurchase, rights
of first refusal and other transfer restrictions as the Committee
may determine. Such restrictions shall apply in addition to any
restrictions that may apply to holders of Shares generally and shall
also comply to the extent necessary with applicable law.

SECTION 7. PAYMENT FOR OPTION SHARES.

(a) GENERAL RULE. The entire Exercise Price of Shares issued
upon exercise of Options shall be payable in cash at the time when
such Shares are purchased, except as follows:

(i) In the case of an ISO granted under the Plan,
payment shall be made only pursuant to the express provisions of the
applicable Stock Option Agreement. The Stock Option Agreement may
specify that payment may be made in any form(s) described in this
Section 7.

(ii) In the case of an NSO granted under the Plan, the
Committee may in its discretion, at any time accept payment in any
form(s) described in this Section 7.

(b) SURRENDER OF STOCK. To the extent that this Section 7(b) is
applicable, payment for all or any part of the Exercise Price may be
made with Shares which have already been owned by the Optionee for
such duration as shall be specified by the Committee. Such Shares
shall be valued at their Fair Market Value on the date when the new
Shares are purchased under the Plan.

(c) PROMISSORY NOTE. To the extent that this Section 7(c) is
applicable, payment for all or any part of the Exercise Price may be
made with a full-recourse promissory note.

(d) OTHER FORMS OF PAYMENT. To the extent that this Section
7(d) is applicable, payment may be made in any other form that is
consistent with applicable laws, regulations and rules.

SECTION 8. TERMS AND CONDITIONS FOR AWARDS OF RESTRICTED STOCK.

(a) TIME, AMOUNT AND FORM OF AWARDS. Awards under the Plan may
be granted in the form of Restricted Stock.

(b) RESTRICTED STOCK AGREEMENT. Each Award of Restricted Stock
under the Plan shall be evidenced by a Restricted Stock Agreement
between the Participant and the Company. Such Award shall be subject
to all applicable terms and conditions of the Plan and may be
subject to any other terms and conditions that are not inconsistent
with the

9
<PAGE>

Plan and that the Committee deems appropriate for inclusion in a
Restricted Stock Agreement. The provisions of the various Restricted
Stock Agreements entered into under the Plan need not be identical.

(d) VESTING CONDITIONS. Each Award of Restricted Stock shall
become vested, in full or in installments, upon satisfaction of the
conditions specified in the Restricted Stock Agreement. A Restricted
Stock Agreement may provide for accelerated vesting in the event of
the Participant's death, Disability or retirement or other events.

(e) ASSIGNMENT OR TRANSFER OF RESTRICTED STOCK. Except as
provided in Section 12, or in a Restricted Stock Agreement, or as
required by applicable law, a Restricted Stock granted under the
Plan shall not be anticipated, assigned, attached, garnished,
optioned, transferred or made subject to any creditor's process,
whether voluntarily, involuntarily or by operation of law. Any act
in violation of this Section 8(e) shall be void. However, this
Section 8(e) shall not preclude a Participant from designating a
beneficiary who will receive any outstanding Restricted Stocks in
the event of the Participant's death, nor shall it preclude a
transfer of Restricted Stocks by will or by the laws of descent and
distribution.

(f) TRUSTS. Neither this Section 8 nor any other provision of
the Plan shall preclude a Participant from transferring or assigning
Restricted Stock to (a) the trustee of a trust that is revocable by
such Participant alone, both at the time of the transfer or
assignment and at all times thereafter prior to such Participant's
death, or (b) the trustee of any other trust to the extent approved
in advance by the Committee in writing. A transfer or assignment of
Restricted Stock from such trustee to any person other than such
Participant shall be permitted only to the extent approved in
advance by the Committee in writing, and Restricted Stock held by
such trustee shall be subject to all of the conditions and
restrictions set forth in the Plan and in the applicable Restricted
Stock Agreement, as if such trustee were a party to such Agreement.

(g) VOTING AND DIVIDEND RIGHTS. The holders of Restricted Stock
awarded under the Plan shall have the same voting, dividend and
other rights as the Company's other stockholders. A Restricted Stock
Agreement, however, may require that the holders of Restricted Stock
invest any cash dividends received in additional Restricted Stock.
Such additional Restricted Stock shall be subject to the same
conditions and restrictions as the Award with respect to which the
dividends were paid. Such additional Restricted Stock shall not
reduce the number of Shares available under Section 5.

SECTION 9. PROTECTION AGAINST DILUTION.

(a) ADJUSTMENTS. In the event of a subdivision of the
outstanding Shares, a declaration of a dividend payable in Shares, a
declaration of a dividend payable in a form other than Shares in an
amount that has a material effect on the price of Shares, a
combination or consolidation of the outstanding Shares (by
reclassification or otherwise) into a lesser

10
<PAGE>

number of Shares, a recapitalization, a spin-off or a similar
occurrence, the Committee shall make such adjustments as it, in its
sole discretion, deems appropriate in one or more of:

(i) the number of Shares available for future Awards
and the per-person Share limits under Section 5;

(ii) the number of Shares covered by each outstanding
Award;

(iii) the Exercise Price under each outstanding Option;
or

(iv) the number of Shares subject to Option grants
under Section 4(c).

(b) PARTICIPANT RIGHTS. Except as provided in this Section 9, a
Participant shall have no rights by reason of any issue by the
Company of stock of any class or securities convertible into stock
of any class, any subdivision or consolidation of shares of stock of
any class, the payment of any stock dividend or any other increase
or decrease in the number of shares of stock of any class.

SECTION 10. EFFECT OF A CHANGE IN CONTROL.

(a) MERGER OR REORGANIZATION. In the event that the Company is
a party to a merger or other reorganization, outstanding Awards
shall be subject to the agreement of merger or reorganization. Such
agreement may provide, without limitation, for the assumption of
outstanding Awards by the surviving corporation or its parent, for
their continuation by the Company (if the Company is a surviving
corporation), for accelerated vesting or for their cancellation with
or without consideration, in all cases without the consent of the
Participant.

(b) ACCELERATION. The Committee may determine, at the time of
granting an Award or thereafter, that such Award shall become fully
vested as to all Shares subject to such Award in the event that a
Change in Control occurs with respect to the Company.

SECTION 11. LIMITATIONS ON RIGHTS.

(a) RETENTION RIGHTS. Neither the Plan nor any Award granted
under the Plan shall be deemed to give any individual a right to
remain an employee, consultant or director of the Company, a Parent,
a Subsidiary or an Affiliate. The Company and its Parents and
Subsidiaries and Affiliates reserve the right to terminate the
Service of any person at any time, and for any reason, subject to
applicable laws, the Company's Certificate of Incorporation and
Bylaws and a written employment agreement (if any).

(b) STOCKHOLDERS' RIGHTS. A Participant shall have no dividend
rights, voting rights or other rights as a stockholder with respect
to any Shares covered by his or her Award prior to the issuance of a
stock certificate for such Shares. No adjustment shall be made for

11
<PAGE>

cash dividends or other rights for which the record date is prior to
the date when such certificate is issued, except as expressly
provided in Section 9.

(c) REGULATORY REQUIREMENTS. Any other provision of the Plan
notwithstanding, the obligation of the Company to issue Shares under
the Plan shall be subject to all applicable laws, rules and
regulations and such approval by any regulatory body as may be
required. The Company reserves the right to restrict, in whole or in
part, the delivery of Shares pursuant to any Award prior to the
satisfaction of all legal requirements relating to the issuance of
such Shares, to their registration, qualification or listing or to
an exemption from registration, qualification or listing.

SECTION 12. WITHHOLDING TAXES.

(a) GENERAL. A Participant shall make arrangements satisfactory
to the Company for the satisfaction of any withholding tax
obligations that arise in connection with his or her Award. The
Company shall not be required to issue any Shares or make any cash
payment under the Plan until such obligations are satisfied.

(b) SHARE WITHHOLDING. If a public market for the Company's
Shares exists, the Committee may permit a Participant to satisfy all
or part of his or her withholding or income tax obligations by
having the Company withhold all or a portion of any Shares that
otherwise would be issued to him or her or by surrendering all or a
portion of any Shares that he or she previously acquired. Such
Shares shall be valued at their Fair Market Value on the date when
taxes otherwise would be withheld in cash. Any payment of taxes by
assigning Shares to the Company may be subject to restrictions,
including, but not limited to, any restrictions required by rules of
the Securities and Exchange Commission.

SECTION 13. DURATION AND AMENDMENTS.

(a) TERM OF THE PLAN. The Plan, as set forth herein, shall
become effective on the date of its adoption by the Board, subject
to the approval of the Company's stockholders. No Options shall be
exercisable until such stockholder approval is obtained. In the
event that the stockholders fail to approve the Plan within twelve
(12) months after its adoption by the Board, any Awards made shall
be null and void and no additional Awards shall be made. To the
extent required by applicable law, the Plan shall terminate on the
date that is ten (10) years after its adoption by the Board and may
be terminated on any earlier date pursuant to Section 13(b).

(b) RIGHT TO AMEND OR TERMINATE THE PLAN. The Board may amend
or terminate the Plan at any time and for any reason. The
termination of the Plan, or any amendment thereof, shall not affect
any Award previously granted under the Plan. No Awards shall be
granted under the Plan after the Plan's termination. An amendment of
the Plan shall be subject to the approval of the Company's
stockholders only to the extent required by applicable laws,
regulations or rules.

12
<PAGE>

SECTION 14. EXECUTION.

To record the adoption of the Plan by the Board, the Company has
caused its duly authorized officer to execute this Plan on behalf of
the Company.

INSILICON CORPORATION

By /s/ David J. Power
------------------------------------
Title Vice President, General Counsel
---------------------------------

<PAGE>

INSILICON CORPORATION

2000 EMPLOYEE STOCK PURCHASE PLAN

<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>

PAGE
----
<S> <C>
Section 1 PURPOSE....................................................................................1

Section 2 DEFINITIONS................................................................................1

2.1 "1934 Act".....................................................................................1

2.2 "Board"........................................................................................1

2.3 "Code".........................................................................................1

2.4 "Committee"....................................................................................1

2.5 "Common Stock".................................................................................1

2.6 "Company"......................................................................................1

2.7 "Compensation".................................................................................1

2.8 "Eligible Employee"............................................................................1

2.9 "Employee".....................................................................................2

2.10 "Employer" or "Employers"......................................................................2

2.11 "Enrollment Date"..............................................................................2

2.12 "Grant Date"...................................................................................2

2.13 "Participant"..................................................................................2

2.14 "Plan".........................................................................................2

2.15 "Purchase Date"................................................................................2

2.16 "Subsidiary"...................................................................................2

Section 3 SHARES SUBJECT TO THE PLAN.................................................................2

3.1 Number Available...............................................................................2

3.2 Adjustments....................................................................................3

Section 4 ENROLLMENT.................................................................................3

4.1 Participation..................................................................................3

4.2 Payroll Withholding............................................................................3

Section 5 OPTIONS TO PURCHASE COMMON STOCK...........................................................3

5.1 Grant of Option................................................................................3

5.2 Duration of Option.............................................................................3

5.3 Number of Shares Subject to Option.............................................................4

5.4 Other Terms and Conditions.....................................................................4
</TABLE>

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<PAGE>

TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>

PAGE
----
<S> <C>
Section 6 PURCHASE OF SHARES.........................................................................4

6.1 Exercise of Option.............................................................................4

6.2 Delivery of Shares.............................................................................5

6.3 Exhaustion of Shares...........................................................................5

Section 7 WITHDRAWAL.................................................................................5

7.1 Withdrawal.....................................................................................5

Section 8 CESSATION OF PARTICIPATION.................................................................5

8.1 Termination of Status as Eligible Employee.....................................................5

Section 9 DESIGNATION OF BENEFICIARY.................................................................5

9.1 Designation....................................................................................5

9.2 Changes........................................................................................5

9.3 Failed Designations............................................................................6

Section 10 ADMINISTRATION.............................................................................6

10.1 Plan Administrator.............................................................................6

10.2 Actions by Committee...........................................................................6

10.3 Powers of Committee............................................................................6

10.4 Decisions of Committee.........................................................................7

10.5 Administrative Expenses........................................................................7

10.6 Eligibility to Participate.....................................................................7

10.7 Indemnification................................................................................7

Section 11 AMENDMENT, TERMINATION, AND DURATION.......................................................7

11.1 Amendment, Suspension, or Termination..........................................................7

11.2 Duration of the Plan...........................................................................8

Section 12 GENERAL PROVISIONS.........................................................................8

12.1 Participation by Subsidiaries..................................................................8

12.2 Inalienability.................................................................................8

12.3 Severability...................................................................................8

12.4 Requirements of Law............................................................................8

12.5 Compliance with Rule 16b-3.....................................................................8

12.6 No Enlargement of Employment Rights............................................................9

12.7 Apportionment of Costs and Duties..............................................................9
</TABLE>

-ii-
<PAGE>

TABLE OF CONTENTS
(CONTINUED)

PAGE
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<S> <C>
12.8 Construction and Applicable Law................................................................9

12.9 Captions.......................................................................................9

EXECUTION ...........................................................................................9
</TABLE>

-iii-
<PAGE>

INSILICON CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
(AS ADOPTED ON JANUARY 18, 2000)

SECTION 1
PURPOSE

inSilicon Corporation hereby establishes the inSilicon
Corporation 2000 Employee Stock Purchase Plan, effective as of the first
Enrollment Date, in order to provide eligible employees of the Company and
its participating Subsidiaries with the opportunity to purchase Common Stock
through payroll deductions. The Plan is intended to qualify as an employee
stock purchase plan under Section 423(b) of the Code.

SECTION 2
DEFINITIONS

2.1 "1934 ACT" means the Securities Exchange Act of 1934,
as amended. Reference to a specific Section of the 1934 Act or regulation
thereunder shall include such Section or regulation, any valid regulation
promulgated under such Section, and any comparable provision of any future
legislation or regulation amending, supplementing or superseding such Section
or regulation.

2.2 "BOARD" means the Board of Directors of the Company.

2.3 "CODE" means the Internal Revenue Code of 1986, as
amended. Reference to a specific Section of the Code or regulation thereunder
shall include such Section or regulation, any valid regulation promulgated
under such Section, and any comparable provision of any future legislation or
regulation amending, supplementing or superseding such Section or regulation.

2.4 "COMMITTEE" shall mean the committee appointed by
the Board to administer the Plan. Any member of the Committee may resign at
any time by notice in writing mailed or delivered to the Secretary of the
Company. As of the effective date of the Plan, the Plan shall be administered
by the Compensation Committee of the Board.

2.5 "COMMON STOCK" means the common stock of the Company.

2.6 "COMPANY" means inSilicon Corporation, a Delaware
corporation.

2.7 "COMPENSATION" means a Participant's regular wages.
The Committee, in its discretion, may (on a uniform and nondiscriminatory
basis) establish a different definition of Compensation prior to an
Enrollment Date for all options to be granted on such Enrollment Date.

2.8 "ELIGIBLE EMPLOYEE" means every Employee of an
Employer, except (a) any Employee who immediately after the grant of an
option under the Plan, would own stock and/or hold outstanding options to
purchase stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of stock of the Company or of any
Subsidiary

<PAGE>

of the Company (including stock attributed to such Employee pursuant to
Section 424(d) of the Code), or (b) as provided in the following sentence.
The Committee, in its discretion, from time to time may, prior to an
Enrollment Date for all options to be granted on such Enrollment Date,
determine (on a uniform and nondiscriminatory basis) that an Employee shall
not be an Eligible Employee if he or she: (1) has not completed at least two
years of service since his or her last hire date (or such lesser period of
time as may be determined by the Committee in its discretion), (2)
customarily works not more than 20 hours per week (or such lesser period of
time as may be determined by the Committee in its discretion), (3)
customarily works not more than 5 months per calendar year (or such lesser
period of time as may be determined by the Committee in its discretion), or
(4) is an officer or other manager.

2.9 "EMPLOYEE" means an individual who is a common-law
employee of any Employer, whether such employee is so employed at the time
the Plan is adopted or becomes so employed subsequent to the adoption of the
Plan.

2.10 "EMPLOYER" or "EMPLOYERS" means any one or all of
the Company, and those Subsidiaries which, with the consent of the Board,
have adopted the Plan.

2.11 "ENROLLMENT DATE" means such dates as may be
determined by the Committee (in its discretion and on a uniform and
nondiscriminatory basis) from time to time.

2.12 "GRANT DATE" means any date on which a Participant
is granted an option under the Plan.

2.13 "PARTICIPANT" means an Eligible Employee who (a)
has become a Participant in the Plan pursuant to Section 4.1 and (b) has not
ceased to be a Participant pursuant to Section 8 or Section 9.

2.14 "PLAN" means the inSilicon Corporation 2000
Employee Stock Purchase Plan, as set forth in this instrument and as
hereafter amended from time to time.

2.15 "PURCHASE DATE" means such dates as may be
determined by the Committee (in its discretion and on a uniform and
nondiscriminatory basis) from time to time prior to an Enrollment Date for
all options to be granted on such Enrollment Date.

2.16 "SUBSIDIARY" means any corporation in an unbroken
chain of corporations beginning with the Company if each of the corporations
other than the last corporation in the unbroken chain then owns stock
possessing fifty percent (50%) or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.

SECTION 3
SHARES SUBJECT TO THE PLAN

3.1 NUMBER AVAILABLE. A maximum of 250,000 shares of
Common Stock shall be available for issuance pursuant to the Plan. Beginning
with the first fiscal year of the Company beginning after the effective date
of the Plan, on the first day of each fiscal year of the Company, Shares will
be added to the Plan equal to the lesser of (a) 0.3125% of the outstanding

2
<PAGE>

Shares on the last day of the prior fiscal year, or (b) 100,000 Shares.
Shares sold under the Plan may be newly issued shares or treasury shares.

3.2 ADJUSTMENTS. In the event of any reorganization,
recapitalization, stock split, reverse stock split, stock dividend,
combination of shares, merger, consolidation, offering of rights or other
similar change in the capital structure of the Company, the Board may make
such adjustment, if any, as it deems appropriate in the number, kind and
purchase price of the shares available for purchase under the Plan and in the
maximum number of shares subject to any option under the Plan.

SECTION 4
ENROLLMENT

4.1 PARTICIPATION. Each Eligible Employee may elect to
become a Participant by enrolling or re-enrolling in the Plan effective as of
any Enrollment Date. In order to enroll, an Eligible Employee must complete,
sign and submit to the Company an enrollment form in such form, manner and by
such deadline as may be specified by the Committee from time to time (in its
discretion and on a nondiscriminatory basis). Any Participant whose option
expires and who has not withdrawn from the Plan automatically will be
re-enrolled in the Plan on the Enrollment Date immediately following the
Purchase Date on which his or her option expires. Any Participant whose
option has not expired and who has not withdrawn from the Plan automatically
will be deemed to be un-enrolled from the Participant's current option and be
enrolled as of a subsequent Enrollment Date if the price per Share on such
subsequent Enrollment Date is lower than the price per Share on the
Enrollment Date relating to the Participant's current option.

4.2 PAYROLL WITHHOLDING. On his or her enrollment form,
each Participant must elect to make Plan contributions via payroll
withholding from his or her Compensation. Pursuant to such procedures as the
Committee may specify from time to time, a Participant may elect to have
withholding equal to a whole percentage from 1% to 15% (or such lesser
percentage that the Committee may establish from time to time for all options
to be granted on any Enrollment Date). A Participant may elect to increase or
decrease his or her rate of payroll withholding by submitting a new
enrollment form in accordance with such procedures as may be established by
the Committee from time to time. A Participant may stop his or her payroll
withholding by submitting a new enrollment form in accordance with such
procedures as may be established by the Committee from time to time. In order
to be effective as of a specific date, an enrollment form must be received by
the Company no later than the deadline specified by the Committee, in its
discretion and on a nondiscriminatory basis, from time to time. Any
Participant who is automatically re-enrolled in the Plan will be deemed to
have elected to continue his or her contributions at the percentage last
elected by the Participant.

SECTION 5
OPTIONS TO PURCHASE COMMON STOCK

5.1 GRANT OF OPTION. On each Enrollment Date on which
the Participant enrolls or re-enrolls in the Plan, he or she shall be granted
an option to purchase shares of Common Stock.

3
<PAGE>

5.2 DURATION OF OPTION. Each option granted under the
Plan shall expire on the earliest to occur of (a) the completion of the
purchase of shares on the last Purchase Date occurring within 27 months of
the Grant Date of such option, (b) such shorter option period as may be
established by the Committee from time to time prior to an Enrollment Date
for all options to be granted on such Enrollment Date, or (c) the date on
which the Participant ceases to be such for any reason. Until otherwise
determined by the Committee for all options to be granted on an Enrollment
Date, the period referred to in clause (b) in the preceding sentence shall
mean the period from the applicable Enrollment Date through the last business
day prior to the immediately following Enrollment Date.

5.3 NUMBER OF SHARES SUBJECT TO OPTION. The number of
shares available for purchase by each Participant under the option will be
established by the Committee from time to time prior to an Enrollment Date
for all options to be granted on such Enrollment Date.

5.4 OTHER TERMS AND CONDITIONS. Each option shall be
subject to the following additional terms and conditions:

(a) payment for shares purchased under the option shall
be made only through payroll withholding under Section 4.2;

(b) purchase of shares upon exercise of the option will
be accomplished only in accordance with Section 6.1;

(d) the option in all respects shall be subject to such
other terms and conditions (applied on a uniform and nondiscriminatory
basis), as the Committee shall determine from time to time in its
discretion.

SECTION 6
PURCHASE OF SHARES

6.1 EXERCISE OF OPTION. Subject to Section 6.2, on each
Purchase Date, the funds then credited to each Participant's account shall be
used to purchase whole shares of Common Stock. Any cash remaining after whole
shares of Common Stock have been purchased shall be carried forward in the
Participant's account for the purchase of shares on the next Purchase Date.
The price per Share of the Shares purchased under any option granted under
the Plan shall be eighty-five percent (85%) of the lower of:

(a) the closing price per Share on the Grant Date for
such option on the NASDAQ National Market System; or

(b) the closing price per Share on the Purchase Date
on the NASDAQ National Market System;

provided, however, that with respect to any Grant Date under the Plan that
coincides with the date of the final prospectus for the initial public
offering of the Common Stock, the price in

4
<PAGE>

clause (a) above shall be the price per Share at which shares of Common Stock
are initially offered for sale to the public by the Company's underwriters in
such offering.

6.2 DELIVERY OF SHARES. As directed by the Committee in
its sole discretion, shares purchased on any Purchase Date shall be delivered
directly to the Participant or to a custodian or broker (if any) designated
by the Committee to hold shares for the benefit of the Participants. As
determined by the Committee from time to time, such shares shall be delivered
as physical certificates or by means of a book entry system.

6.3 EXHAUSTION OF SHARES. If at any time the shares
available under the Plan are over-enrolled, enrollments shall be reduced
proportionately to eliminate the over-enrollment. Such reduction method shall
be "bottom up", with the result that all option exercises for one share shall
be satisfied first, followed by all exercises for two shares, and so on,
until all available shares have been exhausted. Any funds that, due to
over-enrollment, cannot be applied to the purchase of whole shares shall be
refunded to the Participants (without interest thereon).

SECTION 7
WITHDRAWAL

7.1 WITHDRAWAL. A Participant may withdraw from the
Plan by submitting a completed enrollment form to the Company. A withdrawal
will be effective only if it is received by the Company by the deadline
specified by the Committee (in its discretion and on a uniform and
nondiscriminatory basis) from time to time. When a withdrawal becomes
effective, the Participant's payroll contributions shall cease and all
amounts then credited to the Participant's account shall be distributed to
him or her (without interest thereon).

SECTION 8
CESSATION OF PARTICIPATION

8.1 TERMINATION OF STATUS AS ELIGIBLE EMPLOYEE. A
Participant shall cease to be a Participant immediately upon the cessation of
his or her status as an Eligible Employee (for example, because of his or her
termination of employment from all Employers for any reason). As soon as
practicable after such cessation, the Participant's payroll contributions
shall cease and all amounts then credited to the Participant's account shall
be distributed to him or her (without interest thereon). If a Participant is
on a Company-approved leave of absence, his or her participation in the Plan
shall continue for so long as he or she remains an Eligible Employee and has
not withdrawn from the Plan pursuant to Section 7.1.

SECTION 9
DESIGNATION OF BENEFICIARY

9.1 DESIGNATION. Each Participant may, pursuant to such
uniform and nondiscriminatory procedures as the Committee may specify from
time to time, designate one or more Beneficiaries to receive any amounts
credited to the Participant's account at the time of his or her death.
Notwithstanding any contrary provision of this Section 9, Sections 9.1 and
9.2 shall be operative only after (and for so long as) the Committee
determines (on a uniform and nondiscriminatory basis) to permit the
designation of Beneficiaries.

5
<PAGE>

9.2 CHANGES. A Participant may designate different
Beneficiaries (or may revoke a prior Beneficiary designation) at any time by
delivering a new designation (or revocation of a prior designation) in like
manner. Any designation or revocation shall be effective only if it is
received by the Committee. However, when so received, the designation or
revocation shall be effective as of the date the designation or revocation is
executed (whether or not the Participant still is living), but without
prejudice to the Committee on account of any payment made before the change
is recorded. The last effective designation received by the Committee shall
supersede all prior designations.

9.3 FAILED DESIGNATIONS. If a Participant dies without
having effectively designated a Beneficiary, or if no Beneficiary survives
the Participant, the Participant's Account shall be payable to his or her
estate.

SECTION 10
ADMINISTRATION

10.1 PLAN ADMINISTRATOR. The Plan shall be administered
by the Committee. The Committee shall have the authority to control and
manage the operation and administration of the Plan.

10.2 ACTIONS BY COMMITTEE. Each decision of a majority
of the members of the Committee then in office shall constitute the final and
binding act of the Committee. The Committee may act with or without a meeting
being called or held and shall keep minutes of all meetings held and a record
of all actions taken by written consent.

10.3 POWERS OF COMMITTEE. The Committee shall have all
powers and discretion necessary or appropriate to supervise the
administration of the Plan and to control its operation in accordance with
its terms, including, but not by way of limitation, the following
discretionary powers:

(a) To interpret and determine the meaning and validity
of the provisions of the Plan and the options and to determine any
question arising under, or in connection with, the administration,
operation or validity of the Plan or the options;

(b) To determine any and all considerations affecting
the eligibility of any employee to become a Participant or to remain
a Participant in the Plan;

(d) To determine the time or times when, and the number
of shares for which, options shall be granted;

(e) To establish and revise an accounting method or
formula for the Plan;

(f) To designate a custodian or broker to receive shares
purchased under the Plan and to determine the manner and form in which
shares are to be delivered to the designated custodian or broker;

6
<PAGE>

(g) To determine the status and rights of Participants
and their Beneficiaries or estates;

(h) To employ such brokers, counsel, agents and
advisers, and to obtain such broker, legal, clerical and other
services, as it may deem necessary or appropriate in carrying out
the provisions of the Plan;

(i) To establish, from time to time, rules for
the performance of its powers and duties and for the administration
of the Plan;

(j) To adopt such procedures and subplans as are
necessary or appropriate to permit participation in the Plan by
employees who are foreign nationals or employed outside of the
United States;

(k) To delegate to any one or more of its members or
to any other person, severally or jointly, the authority to perform
for and on behalf of the Committee one or more of the functions of
the Committee under the Plan.

10.4 DECISIONS OF COMMITTEE. All actions,
interpretations, and decisions of the Committee shall be conclusive and
binding on all persons, and shall be given the maximum possible deference
allowed by law.

10.5 ADMINISTRATIVE EXPENSES. All expenses incurred in
the administration of the Plan by the Committee, or otherwise, including
legal fees and expenses, shall be paid and borne by the Employers, except any
stamp duties or transfer taxes applicable to the purchase of shares may be
charged to the account of each Participant. Any brokerage fees for the
purchase of shares by a Participant shall be paid by the Company, but fees
and taxes (including brokerage fees) for the transfer, sale or resale of
shares by a Participant, or the issuance of physical share certificates,
shall be borne solely by the Participant.

10.6 ELIGIBILITY TO PARTICIPATE. No member of the
Committee who is also an employee of an Employer shall be excluded from
participating in the Plan if otherwise eligible, but he or she shall not be
entitled, as a member of the Committee, to act or pass upon any matters
pertaining specifically to his or her own account under the Plan.

10.7 INDEMNIFICATION. Each of the Employers shall, and
hereby does, indemnify and hold harmless the members of the Committee and the
Board, from and against any and all losses, claims, damages or liabilities
(including attorneys' fees and amounts paid, with the approval of the Board,
in settlement of any claim) arising out of or resulting from the
implementation of a duty, act or decision with respect to the Plan, so long
as such duty, act or decision does not involve gross negligence or willful
misconduct on the part of any such individual.

SECTION 11
AMENDMENT, TERMINATION, AND DURATION

11.1 AMENDMENT, SUSPENSION, OR TERMINATION. The Board,
in its sole discretion, may amend or terminate the Plan, or any part thereof,
at any time and for any reason.

7
<PAGE>

If the Plan is terminated, the Board, in its discretion, may elect to
terminate all outstanding options either immediately or upon completion of
the purchase of shares on the next Purchase Date, or may elect to permit
options to expire in accordance with their terms (and participation to
continue through such expiration dates). If the options are terminated prior
to expiration, all amounts then credited to Participants' accounts which have
not been used to purchase shares shall be returned to the Participants
(without interest thereon) as soon as administratively practicable.

11.2 DURATION OF THE PLAN. The Plan shall commence on
the date specified herein, and subject to Section 11.1 (regarding the Board's
right to amend or terminate the Plan), shall remain in effect for ten (10)
years from the effective date.

SECTION 12
GENERAL PROVISIONS

12.1 PARTICIPATION BY SUBSIDIARIES. One or more
Subsidiaries of the Company may become participating Employers by adopting
the Plan and obtaining approval for such adoption from the Board. By adopting
the Plan, a Subsidiary shall be deemed to agree to all of its terms,
including (but not limited to) the provisions granting exclusive authority
(a) to the Board to amend the Plan, and (b) to the Committee to administer
and interpret the Plan. An Employer may terminate its participation in the
Plan at any time. The liabilities incurred under the Plan to the Participants
employed by each Employer shall be solely the liabilities of that Employer,
and no other Employer shall be liable for benefits accrued by a Participant
during any period when he or she was not employed by such Employer.

12.2 INALIENABILITY. In no event may either a
Participant, a former Participant or his or her Beneficiary, spouse or estate
sell, transfer, anticipate, assign, hypothecate, or otherwise dispose of any
right or interest under the Plan; and such rights and interests shall not at
any time be subject to the claims of creditors nor be liable to attachment,
execution or other legal process. Accordingly, for example, a Participant's
interest in the Plan is not transferable pursuant to a domestic relations
order.

12.3 SEVERABILITY. In the event any provision of the
Plan shall be held illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining parts of the Plan, and the Plan
shall be construed and enforced as if the illegal or invalid provision had
not been included.

12.4 REQUIREMENTS OF LAW. The granting of options and
the issuance of shares shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or securities
exchanges as the Committee may determine are necessary or appropriate.

12.5 COMPLIANCE WITH RULE 16b-3. Any transactions under
this Plan with respect to officers (as defined in Rule 16a-1 promulgated
under the 1934 Act) are intended to comply with all applicable conditions of
Rule 16b-3. To the extent any provision of the Plan or action by the
Committee fails to so comply, it shall be deemed null and void, to the extent
permitted by law and deemed advisable by the Committee. Notwithstanding any
contrary

8
<PAGE>

provision of the Plan, if the Committee specifically determines that
compliance with Rule 16b-3 no longer is required, all references in the Plan
to Rule 16b-3 shall be null and void.

12.6 NO ENLARGEMENT OF EMPLOYMENT RIGHTS. Neither the
establishment or maintenance of the Plan, the granting of options, the
purchase of shares, nor any action of any Employer or the Committee, shall be
held or construed to confer upon any individual any right to be continued as
an employee of the Employer nor, upon dismissal, any right or interest in any
specific assets of the Employers other than as provided in the Plan. Each
Employer expressly reserves the right to discharge any employee at any time,
with or without cause.

12.7 APPORTIONMENT OF COSTS AND DUTIES. All acts
required of the Employers under the Plan may be performed by the Company for
itself and its Subsidiaries, and the costs of the Plan may be equitably
apportioned by the Committee among the Company and the other Employers.
Whenever an Employer is permitted or required under the terms of the Plan to
do or perform any act, matter or thing, it shall be done and performed by any
officer or employee of the Employers who is thereunto duly authorized by the
Employers.

12.8 CONSTRUCTION AND APPLICABLE LAW. The Plan is
intended to qualify as an "employee stock purchase plan" within the meaning
of Section 423(b) of the Code. Any provision of the Plan which is
inconsistent with Section 423(b) of the Code shall, without further act or
amendment by the Company or the Committee, be reformed to comply with the
requirements of Section 423(b). The provisions of the Plan shall be
construed, administered and enforced in accordance with such Section and with
the laws of the State of California (excluding California's conflict of laws
provisions).

12.9 CAPTIONS. The captions contained in and the table
of contents prefixed to the Plan are inserted only as a matter of
convenience, and in no way define, limit, enlarge or describe the scope or
intent of the Plan nor in any way shall affect the construction of any
provision of the Plan.

EXECUTION

IN WITNESS WHEREOF, inSilicon Corporation, by its duly
authorized officer, has executed this Plan.

INSILICON CORPORATION

Dated: January 18, 2000 By: /s/ David J. Power
----------------------------------
Title: Vice President,
General Counsel

<PAGE>

AMENDED AND RESTATED
INITIAL PUBLIC OFFERING AGREEMENT

dated as of March 15, 2000

between

PHOENIX TECHNOLOGIES LTD.

and

INSILICON CORPORATION

<PAGE>

TABLE OF CONTENTS

PAGE

<S> <C>
ARTICLE I DEFINITIONS................................................................................1

Section 1.1. Definitions.......................................................................1

ARTICLE II THE INITIAL PUBLIC OFFERING................................................................4

Section 2.1. Cooperation Before to the Initial Public Offering.................................4

Section 2.2. Conditions Precedent to the Initial Public Offering...............................5

ARTICLE III INDEMNIFICATION............................................................................6

Section 3.1. Release of Claims.................................................................6

Section 3.2. Indemnification by inSilicon......................................................7

Section 3.3. Indemnification by Phoenix........................................................8

Section 3.4. Notice and Payment of Claims......................................................8

Section 3.5. Notice and Defense of Third-Party Claims..........................................9

Section 3.6. Insurance Proceeds...............................................................10

Section 3.7. Contribution.....................................................................10

Section 3.8. Subrogation......................................................................10

Section 3.9. No Third-Party Beneficiaries.....................................................11

Section 3.10. Remedies Cumulative..............................................................11

Section 3.11. Survival of Indemnities..........................................................11

Section 3.12. After-Tax Indemnification Payments...............................................11

ARTICLE IV CERTAIN ADDITIONAL MATTERS................................................................11

Section 4.1. Company Officers and Board of Directors..........................................11

Section 4.2. The Company Certificate of Incorporation and Bylaws..............................11

Section 4.3. Insurance Policies and Claims Administration.....................................11

Section 4.4. Non-Solicitation of Employees....................................................13

ARTICLE V ACCESS TO INFORMATION.....................................................................14

Section 5.1. Agreement For Exchange of Information............................................14

Section 5.2. Auditors and Audits; Annual and Quarterly Statements and Accounting..............15

Section 5.3. Confidentiality; Protection......................................................17

Section 5.4. Mail.............................................................................17

ARTICLE VI DISPUTE RESOLUTION........................................................................18

Section 6.1. Dispute Resolution...............................................................18

</TABLE>

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<TABLE>
<CAPTION>
TABLE OF CONTENTS
(CONTINUED)
<S> <C>

Section 6.2. Continuity of Service and Performance............................................19

ARTICLE VII STANDSTILL; COVENANT NOT TO COMPETE.......................................................19

Section 7.1. Standstill.......................................................................19

Section 7.2. Non-Compete......................................................................19

ARTICLE VIII MISCELLANEOUS.............................................................................20

Section 8.1. Termination......................................................................20

Section 8.2. Expenses.........................................................................20

Section 8.3. Notices..........................................................................21

Section 8.4. Amendment and Waiver.............................................................21

Section 8.5. Counterparts.....................................................................21

Section 8.6. Governing Law....................................................................22

Section 8.7. Entire Agreement.................................................................22

Section 8.8. Assignment.......................................................................22

Section 8.9. Parties in Interest..............................................................22

Section 8.10. Tax Sharing Agreement............................................................22

Section 8.11. Exhibits and Schedules...........................................................22

Section 8.12. Legal Enforceability.............................................................22

Section 8.13. Titles and Headings..............................................................23

Section 8.14. Conflicting Agreements...........................................................23

</TABLE>

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<PAGE>

AMENDED AND RESTATED
INITIAL PUBLIC OFFERING AGREEMENT

This Amended and Restated Initial Public Offering Agreement (this
"Agreement") is entered into effective as of March 15, 2000 by and between
Phoenix Technologies, Ltd., a Delaware corporation ("Phoenix"), and inSilicon
Corporation, a Delaware corporation and a wholly owned subsidiary of Phoenix
("inSilicon").

RECITALS

WHEREAS, the Board of Directors of Phoenix has determined that it is in the
best interests of Phoenix to separate the business and operations of Phoenix
engaged in the development and licensing of semiconductor intellectual property
cores, silicon subsystems, firmware stocks and drivers (the "Business") from
Phoenix's other operations by transferring the assets of the Business to
inSilicon and causing inSilicon to assume the liabilities of the Business (the
"Separation");

WHEREAS, the parties have determined that it is desirable and in the best
interests of inSilicon to obtain funds for the operation of the Business by
causing inSilicon to sell, in an initial public offering (the "Initial Public
Offering"), additional shares of its common stock, par value $.001 per share
("Common Stock");

WHEREAS, it is appropriate and desirable to set forth certain agreements
that will govern certain matters relating to the Separation and the Initial
Public Offering and the relationship of Phoenix and inSilicon and their
respective subsidiaries after the Initial Public Offering.

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, provisions and covenants contained
in this Agreement, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1. DEFINITIONS. As used herein, the following terms have the
following meanings:

"ACTION" means any claim, suit, arbitration, inquiry, proceeding or
investigation by or before any court, governmental or regulatory or
administrative agency or commission or any other tribunal or other Governmental
Authority.

"AFFILIATE" of any specified Person means any other Person that, directly
or indirectly, controls, is controlled by or is under common control with such
specified Person.

"AGREEMENT" has the meaning set forth in the preamble, as such agreement
may be amended and supplemented from time to time in accordance with its terms.

<PAGE>

"ANCILLARY AGREEMENTS" means each of the following agreements between
Phoenix and inSilicon dated as of November 30, 1999, as the same may be amended
from time to time: the Services and Cost-Sharing Agreement, the Employee Matters
Agreement, the Tax-Sharing Agreement, the Registration Rights Agreement and the
Technology Distributor Agreement.

"BUSINESS" has the meaning set forth in the first recital of this
Agreement.

"CLOSING DATE" means the first time at which any shares of Common Stock are
sold to the Underwriters pursuant to the Initial Public Offering in accordance
with the terms of the Underwriting Agreement.

"COMMISSION" means the Securities and Exchange Commission.

"COMMON STOCK" has the meaning set forth in the second recital of this
Agreement.

"COMPANY BYLAWS" means the bylaws of inSilicon in the form to take effect
immediately prior to the Closing Date filed as an exhibit to the Registration
Statement.

"COMPANY CERTIFICATE" means the restated certificate of incorporation of
inSilicon in the form to take effect immediately prior to the Closing Date filed
as an exhibit to the Registration Statement.

"CONTRIBUTION AGREEMENT" means that certain Contribution Agreement between
inSilicon and Phoenix dated as of November 30, 1999, as the same may be amended
from time to time.

"DISPUTES" has the meaning set forth in Section 6.1.

"EFFECTIVE INITIAL PUBLIC OFFERING DATE" means the date on which the
Registration Statement is declared effective by the Commission.

"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

"GOVERNMENTAL AUTHORITY" means any federal, state, local, foreign or
international court, government, department, commission, board, bureau, agency,
official or other regulatory, administrative or governmental authority.

"INDEMNIFIED PARTY" has the meaning set forth in Section 3.4.

"INDEMNIFYING PARTY" has the meaning set forth in Section 3.4.

"INFORMATION" means information, whether or not patentable or
copyrightable, in written, oral, electronic or other tangible or intangible
forms, stored in any medium, including studies, reports, records, books,
contracts, instruments, surveys, discoveries, ideas, concepts, know-how,
techniques, designs, specifications drawings, blueprints, diagrams, models,
prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes,
computer programs or other software, marketing plans, customer names,
communications by or to attorneys (including attorney-client privileged
communications), memos and other materials prepared by attorneys or under their

2
<PAGE>

direction (including attorney work product), and other technical, financial,
employee or business information or data.

"INITIAL PUBLIC OFFERING" has the meaning set forth in the second recital
of this Agreement.

"INSILICON CONTRACT" shall have the meaning set forth in the Contribution
Agreement.

"INSILICON INDEMNITEES" has the meaning set forth in Section 3.3.

"INSILICON'S AUDITORS" has the meaning set forth in Section 5.2(a).

"INSURANCE CHARGES" has the meaning set forth in Section 4.3(c).

"LIABILITY" shall have the meaning set forth in the Contribution Agreement.

"PERSON" means an individual, a general or limited partnership, a
corporation, a trust, a joint venture, an unincorporated organization, a limited
liability entity, any other entity and any Governmental Authority.

"PHOENIX'S AUDITORS" has the meaning set forth in Section 5.2(b).

"PHOENIX GROUP" means Phoenix and each Person (other than inSilicon and its
subsidiaries) that is an Affiliate of Phoenix immediately after the Separation
Date.

"PHOENIX INDEMNITEES" has the meaning set forth

"POLICY" has the meaning set forth in Section 4.3(a).

"PROSPECTUS" means each preliminary, final or supplemental prospectus
forming a part of the Registration Statement.

"REGISTRATION STATEMENT" means the registration statement on Form S-1 filed
by inSilicon with the Commission to effect the registration of the Common Stock
pursuant to the Securities Act, as such registration statement may be amended
from time to time.

"SECURITIES ACT" means the Securities Act of 1933, as amended.

"SEMICONDUCTOR INTELLECTUAL PROPERTY LIABILITIES" shall have the meaning
set forth in the Contribution Agreement.

"SEPARATION" has the meaning set forth in the second recital of this
Agreement.

"SEPARATION DATE" means November 30, 1999.

"TAX" or "TAXES" has the meaning set forth in the Tax-Sharing Agreement.

"THIRD-PARTY CLAIM" has the meaning set forth in Section 3.5.

3
<PAGE>

"UNDERWRITERS" means the Persons listed as "underwriters" in the final
Prospectus.

"UNDERWRITING AGREEMENT" has the meaning set forth in Section 3.2.

Unless otherwise specified, any reference to any "subsidiary" or
"subsidiaries" of Phoenix shall not include inSilicon.

ARTICLE II

THE INITIAL PUBLIC OFFERING

Section 2.1. COOPERATION BEFORE TO THE INITIAL PUBLIC OFFERING. (a)
TRANSACTIONS BEFORE THE INITIAL PUBLIC OFFERING.

(i) Subject to the conditions specified in Section 3.3, Phoenix and
inSilicon shall use their reasonable efforts to consummate the Initial
Public Offering. Such actions shall include, but not necessarily be limited
to, those specified in this Section 2.1.

(ii) inSilicon shall file the Registration Statement, and such
amendments or supplements thereto, as may be necessary in order to cause
the same to become and remain effective as required by law or by the
Underwriters, including, but not limited to, filing such amendments to the
Registration Statement as may be required by the Underwriting Agreement,
the Commission or federal, state or foreign securities laws. inSilicon also
shall prepare, file with the Commission and cause to become effective a
registration statement registering the Common Stock under the Exchange Act,
and any registration statements or amendments thereof which are required to
reflect the establishment of, or amendments to, any employee benefit and
other plans necessary or appropriate in connection with the Separation and
the Initial Public Offering or the other transactions contemplated by this
Agreement and the Ancillary Agreements.

(iii) inSilicon shall enter into the Underwriting Agreement, in form
and substance reasonably satisfactory to inSilicon and shall comply with
its obligations thereunder.

(iv) Phoenix and inSilicon shall consult with each other and the
Underwriters regarding the timing, pricing and other material matters with
respect to the Initial Public Offering.

(v) inSilicon shall use its best efforts to take all such action as
may be necessary or appropriate under state securities and blue sky laws of
the United States (and any comparable laws under any foreign jurisdictions)
in connection with the Initial Public Offering.

(vi) inSilicon shall prepare, file and use best efforts to seek to
make effective, a listing application for quotation of the Common Stock
issued in the Initial Public Offering in the Nasdaq National Market,
subject to official notice of issuance.

4
<PAGE>

(vii) inSilicon shall participate in the preparation of materials and
presentations as the Underwriters shall deem necessary or desirable.

(viii) inSilicon shall pay the costs and expenses set forth in Section
8.2.

(b) PROCEEDS OF THE INITIAL PUBLIC OFFERING. The Initial Public Offering
will consist of a primary offering of Common Stock by inSilicon. inSilicon will
receive the net proceeds of the Initial Public Offering, but shall remain
subject to any obligations to Phoenix under this Agreement, the Contribution
Agreement or any Ancillary Agreement required to be paid therefrom.

Section 2.2. CONDITIONS PRECEDENT TO THE INITIAL PUBLIC OFFERING. In no
event shall the Initial Public Offering occur unless the following conditions
shall, unless waived by Phoenix in its sole discretion, have been satisfied:

(a) The Registration Statement shall have been filed and declared effective
by the Commission, and there shall be no stop-order in effect with respect
thereto.

(b) The actions and filings with regard to state securities and blue sky
laws of the United States (and any comparable laws under any foreign
jurisdictions) described in Section 2.1 shall have been taken and, where
applicable, have become effective or been accepted.

(c) inSilicon's Board of Directors, as named in the Registration Statement,
shall have been elected by Phoenix, as sole stockholder of inSilicon, and the
Company Certificate and Company Bylaws shall be in effect.

(d) inSilicon and Phoenix shall have entered into the Underwriting
Agreement and all conditions to the obligations of inSilicon and the
Underwriters shall have been satisfied or waived.

(e) The Common Stock shall have been approved for quotation in the Nasdaq
National Market, subject to official notice of issuance.

(f) Each of the Ancillary Agreements, in form and substance satisfactory to
Phoenix, shall have been executed by the parties thereto and shall remain in
full force and effect and each of the transactions contemplated by the Ancillary
Agreements to be consummated on or before the Effective Initial Public Offering
Date shall have been consummated.

(g) No preliminary or permanent injunction or other order, decree or ruling
issued by a court of competent jurisdiction or by a government, regulatory or
administrative agency or commission, and no statute, rule, regulation or
executive order promulgated or enacted by any Governmental Authority, shall be
in effect preventing the Initial Public Offering or any of the other
transactions contemplated by this Agreement or any Ancillary Agreement shall be
in effect.

(h) Phoenix shall have been released from any Liabilities, guarantees or
other obligations with respect to any indebtedness or otherwise of inSilicon or
its subsidiaries.

5
<PAGE>

(i) Such other actions as the parties may, based upon the advice of
counsel, reasonably request to be taken before the Initial Public Offering in
order to assure the successful completion of the Initial Public Offering and the
other transactions contemplated by this Agreement shall have been taken.

(j) This Agreement shall not have been terminated.

ARTICLE III

INDEMNIFICATION

Section 3.1. RELEASE OF CLAIMS. (a) Except as provided in Section 3.1(c),
effective as of the Separation Date, inSilicon does hereby, for itself and its
Affiliates (other than any member of the Phoenix Group), successors and assigns,
and all Persons who at any time prior to the Separation Date have been
stockholders, directors, officers, agents or employees of inSilicon (in each
case, in their respective capacities as such), remise, release and forever
discharge Phoenix and each member of the Phoenix Group, their respective
successors and assigns, and all Persons who at any time prior to the Separation
Date have been stockholders, directors, officers, agents or employees of Phoenix
or any member of the Phoenix Group (in each case, in their respective capacities
as such), and their respective heirs, executors, administrators, successors and
assigns, from any and all Liabilities whatsoever, whether at law or in equity
(including any right of contribution), whether arising under any contract or
agreement, by operation of law or otherwise, existing or arising from any facts
or events occurring or failing to occur or alleged to have occurred or to have
failed to occur or any conditions existing or alleged to have existed on or
before the Separation Date, including in connection with the transactions and
all other activities to implement the Separation and the Initial Public
Offering.

(b) Except as provided in Section 3.1(c), effective as of the Separation
Date, Phoenix does hereby, for itself and each member of the Phoenix Group,
successors and assigns, and all Persons who at any time prior to the Separation
Date have been stockholders, directors, officers, agents or employees of Phoenix
or any member of the Phoenix Group (in each case, in their respective capacities
as such), remise, release and forever discharge inSilicon and its subsidiaries,
their respective successors and assigns, and all Persons who at any time prior
to the Separation Date have been stockholders, directors, officers, agents or
employees of inSilicon or any of its subsidiaries (in each case, in their
respective capacities as such), and their respective heirs, executors,
administrators, successors and assigns, from any and all Liabilities whatsoever,
whether at law or in equity (including any right of contribution), whether
arising under any contract or agreement, by operation of law or otherwise,
existing or arising from any facts or events occurring or failing to occur or
alleged to have occurred or to have failed to occur or any conditions existing
or alleged to have existed on or before the Separation Date, including in
connection with the transactions and all other activities to implement the
Separation and the Initial Public Offering.

(c) Nothing contained in Sections 3.1(a) or (b) shall impair any right of
any Person to enforce this Agreement, the Contribution Agreement or any
Ancillary Agreement. Nothing contained in Sections 3.1(a) and (b) shall release
any Person from:

6
<PAGE>

(i) any Liability, contingent or otherwise, assumed, transferred or
assigned to such Person in accordance with, or any other Liability of any
Person under, this Agreement, the Contribution Agreement or any Ancillary
Agreement;

(ii) any Liability that the parties may have with respect to
indemnification or contribution pursuant to this Agreement for claims
brought against the parties by third Persons, which Liability shall be
governed by the provisions of this Article III and, if applicable, the
appropriate provisions of the Contribution Agreement or the Ancillary
Agreements; or

(iii) any Liability the release of which would result in the release
of any Person other than a Person released pursuant to this Section 3.1;
provided that the parties agree not to bring suit or permit any of their
subsidiaries to bring suit against any Person with respect to any Liability
to the extent that such Person would be released with respect to such
Liability by this Section 3.1 but for the provision of this clause (iii).

(d) inSilicon shall not make, and shall not permit any of its subsidiaries
to make, any claim or demand or commence any Action asserting any claim or
demand, including any claim of contribution or indemnification, against Phoenix
or any member of the Phoenix Group or any other Person released pursuant to
Section 3.1(a), with respect to any Liabilities released pursuant to Section
3.1(a). Phoenix shall not make, and shall not permit any member of the Phoenix
Group to make, any claim or demand or commence any Action asserting any claim or
demand, including any claim of contribution or indemnification, against
inSilicon or any of its subsidiaries or any other Person released pursuant to
Section 3.1(b), with respect to any Liabilities released pursuant to Section
3.1(b).

(e) It is the intention of each of Phoenix and inSilicon by virtue of the
provisions of this Section 3.1 to provide for a full and complete release and
discharge of all Liabilities existing or arising from all acts and events
occurring or failing to occur or alleged to have occurred or failed to occur and
all conditions existing or alleged to have existed on or before the Separation
Date, between or among inSilicon or any of its subsidiaries, on the one hand,
and Phoenix or any member of the Phoenix Group, on the other hand (including any
contractual agreements or arrangements existing or alleged to exist between or
among such Persons on or before the Separation Date), except as expressly set
forth in Section 3.1(c). At any time, at the request of the other party, each
party shall execute and deliver, or shall cause such other appropriate Persons
to execute and deliver, releases reflecting the provisions hereof.

Section 3.2. INDEMNIFICATION BY INSILICON. Except as provided in Section
3.5 and except as otherwise expressly provided in the Contribution Agreement or
any of the Ancillary Agreements, from and after the Separation Date, inSilicon
shall indemnify, defend and hold harmless Phoenix, each member of the Phoenix
Group and each of their respective directors, officers, employees and agents and
each of the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "Phoenix Indemnitees") from and against any and all
Liabilities of the Phoenix Indemnitees arising out of, relating to or resulting
from any of the following items (without duplication):

7
<PAGE>

(a) the failure of inSilicon or any other Person to pay, perform or
otherwise promptly discharge any Semiconductor Intellectual Property Liability
or inSilicon Contract in accordance with their respective terms, whether before
or after the Separation Date;

(b) the Business, any Semiconductor Intellectual Property Liability or any
inSilicon Contract;

(c) any breach by inSilicon or any of its subsidiaries of this Agreement,
the Contribution Agreement or any of the Ancillary Agreements;

(d) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, or any amendment thereto, including any
information deemed to be a part thereof pursuant to Rule 430A under the
Securities Act, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, other than information pertaining solely to Phoenix that is supplied
by Phoenix;

(e) any untrue statement or alleged untrue statement of a material fact
contained in any Prospectus (or any supplement thereto), or the omission or
alleged omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, other than information pertaining solely to Phoenix that
is supplied by Phoenix;

(f) in whole or in part, any inaccuracy in the representations and
warranties of inSilicon contained in the underwriting agreement between
inSilicon and the Underwriters (the "Underwriting Agreement");

(g) in whole or in part upon any failure of inSilicon to perform its
obligations under the Underwriting Agreement or under law;

(h) any untrue statement or alleged untrue statement of any material fact
contained in any audio or visual materials provided by inSilicon or based upon
written information furnished by or on behalf of inSilicon including, without
limitation, slides, videos, films or tape recordings, used in connection with
the marketing of the shares of Common Stock sold pursuant to the Prospectus; and

(i) any act or failure to act or any alleged act or failure to act by any
Underwriter in connection with, or relating in any manner to, the shares of
Common Stock sold pursuant to the Prospectus or the offering contemplated by the
Registration Statement, and which is included as part of or referred to in any
loss, claim, damage, liability or action arising out of or based upon any matter
covered by clause (d), (e), (f), (g) or (h) above.

Section 3.3. INDEMNIFICATION BY PHOENIX. Except as provided in Section 3.5
and except as otherwise expressly provided in the Contribution Agreement or any
of the Ancillary Agreements, from and after the Separation Date, Phoenix shall
indemnify, defend and hold harmless inSilicon and each of its subsidiaries and
each of their respective directors, officers, employees and agents and each of
the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "inSilicon Indemnitees") from and against any and all
Liabilities of

8
<PAGE>

the inSilicon Indemnitees arising out of, relating to or resulting from any of
the following items (without duplication):

(a) the failure of Phoenix or any other member of the Phoenix Group or any
other Person to pay, perform or otherwise promptly discharge any Liability of
the Phoenix Group other than the Semiconductor Intellectual Property Liabilities
in accordance with its terms, whether before or after the Separation Date;

(b) any Liability of any member of the Phoenix Group other than the
Semiconductor Intellectual Property Liabilities and the business of any member
of the Phoenix group other than the Business;

(c) any breach by Phoenix or any member of the Phoenix Group of this
Agreement, the Contribution Agreement or any of the Ancillary Agreements;

(d) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, or any amendment thereto, including any
information deemed to be a part thereof pursuant to Rule 430A under the
Securities Act, pertaining solely to Phoenix that is supplied by Phoenix, or the
omission or alleged omission therefrom of a material fact pertaining solely to
Phoenix required to be stated therein or necessary to make the statements
therein not misleading; and

(e) any untrue statement or alleged untrue statement of a material fact
contained in any Prospectus (or any supplement thereto), or the omission
pertaining solely to Phoenix that is supplied by Phoenix or alleged omission
therefrom of a material fact pertaining solely to Phoenix necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.

Section 3.4. NOTICE AND PAYMENT OF CLAIMS. If any Phoenix Indemnitee or
inSilicon Indemnitee (the "Indemnified Party") determines that it is or may be
entitled to indemnification under this Article III (other than in connection
with any Action subject to Section 3.5), the Indemnified Party shall deliver to
the Person from whom such indemnification is sought (the "Indemnifying Party"),
a written notice specifying, to the extent reasonably practicable, the basis for
its claim for indemnification and the amount for which the Indemnified Party
reasonably believes it is entitled to be indemnified. After the Indemnifying
Party shall have been notified of the amount for which the Indemnified Party
seeks indemnification, the Indemnifying Party shall, within 30 days after
receipt of such notice, either (i) pay the Indemnified Party such amount in cash
or other immediately available funds (or reach agreement with the Indemnified
Party as to a mutually agreeable alternative payment schedule) or (ii) object to
the claim for indemnification or the amount thereof by giving the Indemnified
Party written notice setting forth the grounds therefor. Any objection shall be
resolved in accordance with Article VI. If the Indemnifying Party does not give
such notice within such 30-day period, the Indemnifying Party shall be deemed to
have acknowledged its liability for such claim and the Indemnified Party may
exercise any and all of its rights under applicable law to collect such amount.

Section 3.5. NOTICE AND DEFENSE OF THIRD-PARTY CLAIMS. Promptly following
the earlier of (A) receipt of written notice of the commencement by a third
party of any Action against or

9
<PAGE>

otherwise involving any Indemnified Party or (B) receipt of written information
from a third party alleging the existence of a claim against an Indemnified
Party, in either case, with respect to which indemnification may be sought
pursuant to this Agreement (a "Third-Party Claim"), the Indemnified Party shall
give the Indemnifying Party prompt written notice thereof. Failure of the
Indemnified Party to give notice as provided in this Section 3.5 shall not
relieve the Indemnifying Party of its obligations under this Agreement, except
to the extent that the Indemnifying Party is prejudiced by such failure to give
notice. Such notice shall describe the Third-Party Claim in reasonable detail.

(a) Within 30 days after receipt of such notice, the Indemnifying Party
may by giving written notice thereof to the Indemnified Party, (i) elect to
assume the defense of such Third-Party Claim at its sole cost and expense or
(ii) object to the claim of indemnification for such Third-Party Claim
setting forth the grounds therefor. Any objection shall be resolved in
accordance with Article VI. If the Indemnifying Party does not give such
notice within such 30-day period, the Indemnifying Party shall be deemed to
have acknowledged its liability for such Third-Party Claim.

(b) Any defense of a Third-Party Claim as to which the Indemnifying Party
has elected to assume the defense shall be conducted by counsel employed by the
Indemnifying Party and reasonably satisfactory to Phoenix in the case of Phoenix
Indemnitees and inSilicon in the case of inSilicon Indemnitees. The Indemnified
Party shall have the right to participate in such proceedings and to be
represented by counsel of its own choosing at the Indemnified Party's sole cost
and expense; PROVIDED that if the defendants or parties against which relief is
sought in any such claim include both the Indemnifying Party and one or more
Indemnified Parties and, in the reasonable judgment of Phoenix in the case of
Phoenix Indemnitees and inSilicon in the case of inSilicon Indemnitees, a
conflict of interest between such Indemnified Parties and such Indemnifying
Party exists in respect of such claim, such Indemnified Parties shall have the
right to employ one firm of counsel selected by Phoenix for Phoenix Indemnitees
or inSilicon for inSilicon Indemnitees and in that event the reasonable fees and
expenses of such separate counsel (but not more than one separate counsel
reasonably satisfactory to the Indemnifying Party) shall be paid by such
Indemnifying Party. If the Indemnifying Party assumes the defense of a
Third-Party Claim, the Indemnifying Party may settle or compromise the claim
without the prior written consent of the Indemnified Party; PROVIDED that
without the prior written consent of Phoenix in the case of Phoenix Indemnitees
and inSilicon in the case of inSilicon Indemnitees, the Indemnifying Party may
not agree to any such settlement unless as a condition to such settlement the
Indemnified Party receives a written release from any and all liability relating
to such Third-Party Claim and such settlement or compromise does not include any
remedy or relief to be applied to or against the Indemnified Party, other than
monetary damages for which the Indemnifying Party shall be responsible
hereunder.

(c) If the Indemnifying Party does not assume the defense of a Third-Party
Claim for which it has acknowledged liability for indemnification under this
Article III, Phoenix in the case of Phoenix Indemnitees and inSilicon in the
case of inSilicon Indemnitees may pursue the defense of such Third-Party Claim
and choose one firm of counsel in connection therewith. The Indemnifying Party
is required to reimburse Phoenix or inSilicon, as the case may be, on a current
basis for its reasonable expenses of investigation, reasonable attorneys' fees
and reasonable out-of-pocket expenses incurred by Phoenix in the case of Phoenix
Indemnitees and

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inSilicon in the case of inSilicon Indemnitees in defending against such
Third-Party Claim and the Indemnifying Party shall be bound by the result
obtained with respect thereto, PROVIDED that the Indemnifying Party shall not be
liable for any settlement effected without the consent of the Indemnifying
Party, which consent shall not be unreasonably withheld.

(d) The Indemnifying Party shall pay to the Indemnified Party in cash the
amount for which the Indemnified Party is entitled to be indemnified (if any) no
later than the later of (i) the date on which the Indemnified Party makes any
payment in satisfaction (partial or otherwise) of the Third-Party Claim or (ii)
the date on which such Indemnifying Party's objection, if any, to its
responsibility for indemnification under this Article III has been resolved
pursuant to Article VI or by settlement or compromise or the final nonappealable
judgment of a court of competent jurisdiction.

Section 3.6. INSURANCE PROCEEDS. The amount that any Indemnifying Party is
or may be required to pay to any Indemnified Party pursuant to this Article III
shall be reduced (including, without limitation, retroactively) by any insurance
proceeds or other amounts actually recovered by or on behalf of such Indemnified
Parties in reduction of the related Liability. If an Indemnified Party shall
have received the payment required by this Agreement from an Indemnifying Party
in respect of a Liability and shall subsequently actually receive insurance
proceeds, or other amounts in respect of such Liability as specified above, then
such Indemnified Party shall pay to such Indemnifying Party a sum equal to the
amount of such insurance proceeds or other amounts actually received after
deducting therefrom all of the Indemnifying Party's costs and expenses
associated with such Liability.

Section 3.7. CONTRIBUTION. If the indemnification provided for in this
Article III is unavailable to an Indemnified Party in respect of any Liability
arising out of or related to information contained in or omitted from the
Registration Statement or the Prospectus, then the inSilicon Indemnitees, or
Phoenix Indemnitees, as the case may be, in lieu of indemnifying the Phoenix
Indemnitees or inSilicon Indemnitees, as the case may be, shall contribute to
the amount paid or payable by the Phoenix Indemnitees or inSilicon Indemnitees,
as the case may be, as a result of such Liability in such proportion as is
appropriate to reflect the relative fault of inSilicon, on the one hand, and
Phoenix, on the other hand, in connection with the statements or omissions which
resulted in such Liability. If the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information pertaining solely to Phoenix, then Phoenix shall bear any
resulting Liability; otherwise, inSilicon shall bear any resulting Liability.

Section 3.8. SUBROGATION. In the event of payment by an Indemnifying Party
to any Indemnified Party in connection with any Third-Party Claim, such
Indemnifying Party shall be subrogated to and shall stand in the first place of
such Indemnified Party as to any events or circumstances in respect of which
such Indemnified Party may have any right or claim relating to such Third-Party
Claim. Such Indemnified Party shall cooperate with such Indemnifying Party in a
reasonable manner, and at the cost and expense of such Indemnifying Party, in
prosecuting any subrogated right or claim.

Section 3.9. NO THIRD-PARTY BENEFICIARIES. This Article III shall inure to
the benefit of, and be enforceable by Phoenix, the Phoenix Indemnitees,
inSilicon and the inSilicon Indemnitees

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and their respective successors and permitted assigns. The indemnification
provided for by this Article III shall not inure to the benefit of any other
third party or parties and shall not relieve any insurer who would otherwise be
obligated to pay any claim of the responsibility with respect thereto or, solely
by virtue of the indemnification provisions hereof, provide any subrogation
rights with respect thereto and each party agrees to waive such rights against
the other to the fullest extent permitted.

Section 3.10. REMEDIES CUMULATIVE. The remedies provided in this Article
III shall be cumulative and shall not preclude assertion by any Indemnified
Party of any other rights or the seeking of any and all other remedies against
an Indemnifying Party. The procedures set forth in this Article III, however,
shall be the exclusive procedures governing any indemnity action brought under
this Article III or otherwise relating to Liabilities.

Section 3.11. SURVIVAL OF INDEMNITIES. The rights and obligations of each
of Phoenix and inSilicon and their respective Indemnitees under this Article III
shall survive the sale or other transfer by it of any assets or businesses or
the assignment by it of any Liabilities.

Section 3.12. AFTER-TAX INDEMNIFICATION PAYMENTS. Except as otherwise
expressly provided in this Agreement, the Contribution Agreement or in an
Ancillary Agreement, indemnification payments made by either party under this
Article shall give effect to, and be reduced by the value of, any and all
applicable deductions, losses, credits, offsets or other items for Federal,
state or other Tax purposes attributable to the payment of the indemnified
Liability by the Indemnified Party.

ARTICLE IV

CERTAIN ADDITIONAL MATTERS

Section 4.1. COMPANY OFFICERS AND BOARD OF DIRECTORS. On or prior to the
Closing Date, Phoenix shall take and shall cause inSilicon to take all actions
necessary to appoint as officers and directors of inSilicon those persons named
in the Registration Statement to constitute the officers and directors of
inSilicon on the Closing Date.

Section 4.2. THE COMPANY CERTIFICATE OF INCORPORATION AND BYLAWS. Prior to
the Closing Date, Phoenix shall take all action necessary to cause the Company
Certificate and Company Bylaws to be amended and restated substantially in the
form attached to the Registration Statement as exhibits thereto.

Section 4.3. INSURANCE POLICIES AND CLAIMS ADMINISTRATION.

(a) MAINTENANCE OF INSURANCE COVERAGE PRIOR TO SEPARATION DATE. Phoenix and
inSilicon shall use reasonable efforts to maintain in full force and effect at
all times up to and including the Separation Date and for the periods set forth
in the Services and Cost-Sharing Agreement, its current property and casualty
insurance programs, including, without limitation, primary and excess general
liability, automobile, workers' compensation, property and crime insurance
policies (collectively, the "Policies" and individually, a "Policy"). inSilicon
and its subsidiaries shall retain with respect to any insured claims relating to
periods before the

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Separation Date or termination of the applicable period set forth in the
Services and Cost-Sharing Agreement with respect to each such Policy (whichever
is later), all of their respective rights, benefits and privileges, if any,
under such Policies. To the extent not already provided for by the terms of a
Policy, Phoenix shall use reasonable efforts to cause inSilicon and its
subsidiaries, as appropriate, to be named as additional insureds under such
Policy in respect of Covered Claims arising or relating to periods prior to the
Separation Date or termination of the applicable period set forth in the
Services and Cost-Sharing Agreement with respect to each such Policy (whichever
is later); PROVIDED, however, that nothing contained herein shall be construed
to require Phoenix or any of its subsidiaries to pay any additional premium or
other charges in respect to, or waive or otherwise limit any of its rights,
benefits or privileges under, any such Policy to effect the naming of inSilicon
and its subsidiaries as such additional insureds except as required by the
Services and Cost-Sharing Agreement and then only to the extent the charge, if
any, is borne by inSilicon.

(b) COMPANY RESPONSIBLE FOR ESTABLISHING INSURANCE COVERAGE ON AND AFTER
SEPARATION DATE. Except as provided under the Services and Cost-Sharing
Agreement or any other Ancillary Agreement, commencing on and as of the
Separation Date, inSilicon and each of its subsidiaries shall be responsible for
establishing and maintaining its own separate insurance programs (including,
without limitation, primary and excess general liability, automobile, workers,
compensation, property, director and officer liability, fire, crime, surety and
other similar insurance policies) for activities and claims relating to any
period on or after the Separation Date involving inSilicon or any of its
subsidiaries. Notwithstanding any other agreement or understanding to the
contrary, except as set forth in the Services and Cost-Sharing Agreement or any
such Ancillary Agreement or Section 4.3(c) with respect to claims administration
and financial administration of the Policies, neither Phoenix nor any of its
subsidiaries shall have any responsibility for or obligation to inSilicon or its
subsidiaries relating to liability and casualty insurance matters for any
period, whether before, at or after the Separation Date except to the extent set
forth in the Services and Cost-Sharing Agreement.

(c) ADMINISTRATION AND PROCEDURE. (i) Phoenix or a subsidiary of Phoenix,
as appropriate, shall be responsible for the claims administration and financial
administration of all Policies for insured claims relating to the assets,
ownership or operation of the Business prior to the Separation Date or
termination of the applicable period set forth in the Services and Cost-Sharing
Agreement with respect to each such Policy (whichever is later); PROVIDED,
HOWEVER, that such retention by Phoenix of the Policies and the responsibility
for claims administration and financial administration of the Policies are in no
way intended to limit, inhibit or preclude any right to insurance coverage for
any insured claims under the Policies by inSilicon. Phoenix shall direct each
insurance carrier to pay to inSilicon any proceeds for the insured claims of
inSilicon or, if Phoenix receives such proceeds, it shall forward them promptly
to inSilicon. inSilicon or a subsidiary thereof, as appropriate, shall be
responsible for all administrative and financial matters relating to insurance
policies established and maintained by inSilicon and its subsidiaries for claims
relating to any period on or after the Separation Date involving inSilicon or
any of its subsidiaries.

(ii) inSilicon shall notify Phoenix of any insured claim relating to
inSilicon or a subsidiary thereof under one or more of the Policies, and
inSilicon agrees to cooperate and coordinate with Phoenix concerning any
strategy Phoenix may reasonably elect to

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pursue to secure coverage and payment for such insured claim by the
appropriate insurance carrier. Notwithstanding the foregoing, Phoenix shall
not be entitled to settle any insured claim relating to inSilicon or a
subsidiary thereof without inSilicon's consent, which consent will not be
unreasonably withheld.

(iii) inSilicon or an appropriate subsidiary thereof shall assume
responsibility for, and shall pay to the appropriate insurance carriers or
otherwise, any premiums, retrospectively-rated premiums, defense costs,
indemnity payments, deductibles, retentions or other charges, as
appropriate (collectively, "Insurance Charges"), whenever arising, which
shall become due and payable under the terms and conditions of any
applicable Policy in respect of any liabilities, losses, claims, actions or
occurrences, whenever arising or becoming known, involving or relating to
any of the assets, businesses, operations or liabilities of inSilicon or
any of its subsidiaries, to the extent set forth in Section 4.3(a) and any
such charges that relate to the period after the Separation Date or, if
later, termination of the applicable period set forth in the Services and
Cost-Sharing Agreement with respect to each such Policy. To the extent that
the terms of any applicable Policy provide that Phoenix or a subsidiary
thereof, as appropriate, shall have an obligation to pay or guarantee the
payment of any Insurance Charges, Phoenix or such subsidiary shall be
entitled to demand that inSilicon or a subsidiary thereof make such payment
directly to the Person entitled thereto. In connection with any such
demand, Phoenix shall submit to inSilicon or a subsidiary thereof a copy of
any invoice received by Phoenix or a subsidiary pertaining to such
Insurance Charges, together with appropriate supporting documentation, if
available. In the event that inSilicon or its subsidiary fails to pay any
Insurance Charges when due and payable, whether at the request of the party
entitled to payment or upon demand by Phoenix or a subsidiary of Phoenix,
Phoenix or a subsidiary of Phoenix may (but shall not be required to) pay
such Insurance Charges for and on behalf of inSilicon or its subsidiary
and, thereafter, inSilicon or its subsidiary shall forthwith reimburse
Phoenix or such subsidiary of Phoenix for such payment.

Section 4.4. NON-SOLICITATION OF EMPLOYEES. Each party agrees not to
directly solicit or recruit the other party's employees for a period of one year
after the Separation Date if such solicitation or recruitment would be
disruptive or damaging or would interfere with the operation or business of the
other party. This prohibition on solicitation does not apply to actions taken by
a party (i) as a result of an employee's affirmative response to a general
recruitment effort carried out through a public solicitation or a general
solicitation or (ii) as a result of an employee's initiative.

ARTICLE V

ACCESS TO INFORMATION

Section 5.1. AGREEMENT FOR EXCHANGE OF INFORMATION. Each of Phoenix and
inSilicon agrees to provide, or cause to be provided, to each other, at any time
before or after the Separation Date, as soon as reasonably practicable after
written request therefor, any Information in the possession or under the control
of such party that the requesting party reasonably needs (i)

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to comply with reporting, disclosure, filing or other requirements imposed on
the requesting party (including under applicable securities laws) by a
Governmental Authority having jurisdiction over the requesting party, (ii) for
use in any other judicial, regulatory, administrative or other proceeding or in
order to satisfy audit, accounting, claims, regulatory, litigation or other
similar requirements, (iii) to comply with its obligations under this Agreement,
the Contribution Agreement or any ancillary Agreement or (iv) in connection with
the ongoing businesses of Phoenix or inSilicon, as the case may be; provided,
however, that in the event that any party determines that any such provision of
Information could be commercially detrimental, violate any law or agreement, or
waive any attorney-client privilege, the parties shall take all reasonable
measures to permit the compliance with such obligations in a manner that avoids
any such harm or consequence.

(a) INTERNAL ACCOUNTING CONTROLS; FINANCIAL INFORMATION. Except as provided
in the Services and Cost-Sharing Agreement, after the Separation Date, (i) each
party shall maintain in effect at its own cost and expense adequate systems and
controls for its business to the extent necessary to enable the other party to
satisfy its reporting, accounting, audit and other obligations, and (ii) each
party shall provide, or cause to be provided, to the other party and its
subsidiaries in such form as such requesting party shall request, at no charge
to the requesting party, all financial and other data and information as the
requesting party determines necessary or advisable in order to prepare its
financial statements and reports or filings with any Governmental Authority.

(b) OWNERSHIP OF INFORMATION. Any Information owned by a party that is
provided to a requesting party pursuant to this Section 5.1 shall be deemed to
remain the property of the providing party. Unless specifically set forth
herein, nothing contained in this Agreement shall be construed as granting or
conferring rights of license or otherwise in any such Information.

(c) RECORD RETENTION. To facilitate the possible exchange of Information
pursuant to this Section 5.1 and other provisions of this Agreement after the
Separation Date, each party agrees to use its reasonable commercial efforts to
retain all Information in their respective possession or control on the
Separation Date substantially in accordance with the policies of Phoenix as in
effect on the Separation Date. However, except as set forth in the Tax Sharing
Agreement, at any time after the Separation Date, each party may amend their
respective record retention policies at such party's discretion; PROVIDED,
however, that if a party desires to effect the amendment within three (3) years
after the Separation Date, the amending party must give thirty (30) days prior
written notice of such change in the policy to the other party to this
Agreement. No party will destroy, or permit any of its subsidiaries to destroy,
any Information that exists on the Separation Date (other than Information that
is permitted to be destroyed under the current record retention policy of
Phoenix) without first using its reasonable commercial efforts to notify the
other party of the proposed destruction and giving the other party the
opportunity to take possession of such Information prior to such destruction.

(d) LIMITATION OF LIABILITY. No party shall have any liability to any other
party in the event that any Information exchanged or provided pursuant to this
Section 5.1 is found to be inaccurate, in the absence of willful misconduct by
the party providing such Information. No party shall have any liability to any
other party if any Information is destroyed or lost after reasonable commercial
efforts by such party to comply with the provisions of Section 5.1(c).

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(e) OTHER AGREEMENTS PROVIDING FOR EXCHANGE OF INFORMATION. The rights and
obligations granted under this Section 5.1 are subject to any specific
limitations, qualifications or additional provisions on the sharing, exchange or
confidential treatment of Information set forth in this Agreement, the
Contribution Agreement and any Ancillary Agreement.

(f) PRODUCTION OF WITNESSES; RECORDS; COOPERATION. After the Separation
Date, except in the case of a legal or other proceeding by one party against the
other party, each party shall use its reasonable commercial efforts to make
available to the other party, upon written request, the former, current and
future directors, officers, employees, other personnel and agents of such party
as witnesses and any books, records or other documents within its control or
which it otherwise has the ability to make available, to the extent that any
such Person (giving consideration to business demands of such directors,
officers, employees, other personnel and agents) or books, records or other
documents may reasonably be required in connection with any legal,
administrative or other proceeding in which the requesting party may from time
to time be involved, regardless of whether such legal, administrative or other
proceeding is a matter with respect to which indemnification may be sought
hereunder. The requesting party shall bear all costs and expenses in connection
therewith.

Section 5.2. AUDITORS AND AUDITS; ANNUAL AND QUARTERLY STATEMENTS AND
ACCOUNTING. Each party agrees that, for so long as Phoenix is required in
accordance with United States generally accepted accounting principles to
consolidate inSilicon's results of operations and financial position:

(a) SELECTION OF AUDITORS. inSilicon shall not select a different
accounting firm than Ernst & Young LLP (or its successors) to serve as its (and
its subsidiaries') independent certified public accountants ("inSilicon's
Auditors") for purposes of providing an opinion on its consolidated financial
statements without Phoenix's prior written consent (which shall not be
unreasonably withheld).

(b) DATE OF AUDITORS' OPINION AND QUARTERLY REVIEWS. inSilicon shall use
its reasonable commercial efforts to enable the inSilicon Auditors to complete
their audit such that they will date their opinion on inSilicon's audited annual
financial statements on the same date that Phoenix's independent certified
public accountants ("Phoenix's Auditors") date their opinion on Phoenix's
audited annual financial statements, and to enable Phoenix to meet its timetable
for the printing, filing and public Dissemination of Phoenix's annual financial
statements. inSilicon shall use its reasonable commercial efforts to enable the
inSilicon Auditors to complete their quarterly review procedures such that they
will provide clearance on inSilicon's quarterly financial statements on the same
date that Phoenix's Auditors provide clearance on Phoenix's quarterly financial
statements.

(c) ANNUAL AND QUARTERLY FINANCIAL STATEMENTS. inSilicon shall provide to
Phoenix on a timely basis all Information that Phoenix reasonably requires to
meet its schedule for the preparation, printing, filing, and public
dissemination of Phoenix's annual and quarterly financial statements. Without
limiting the generality of the foregoing, inSilicon will provide all required
financial Information with respect to inSilicon and its subsidiaries to
inSilicon's Auditors in a sufficient and reasonable time and in sufficient
detail to permit inSilicon's Auditors to take all steps and perform all reviews
necessary to provide sufficient assistance to Phoenix's Auditors

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<PAGE>

with respect to Information to be included or contained in Phoenix's annual and
quarterly financial statements. Similarly, Phoenix shall provide to inSilicon on
a timely basis all Information that inSilicon reasonably requires to meet its
schedule for the preparation, printing, filing, and public dissemination of
inSilicon's annual and quarterly financial statements. Without limiting the
generality of the foregoing, Phoenix will provide all required financial
Information with respect to Phoenix and its subsidiaries to Phoenix's Auditors
in a sufficient and reasonable time and in sufficient detail to permit Phoenix's
Auditors to take all steps and perform all reviews necessary to provide
sufficient assistance to inSilicon's Auditors with respect to Information to be
included or contained in inSilicon's annual and quarterly financial statements.

(d) IDENTITY OF PERSONNEL PERFORMING THE ANNUAL AUDIT AND QUARTERLY
REVIEWS. inSilicon shall authorize inSilicon's Auditors to make available to
Phoenix's Auditors both the personnel who performed or are performing the annual
audits and quarterly reviews of inSilicon and work papers related to the annual
audits and quarterly reviews of inSilicon, in all cases within a reasonable time
prior to inSilicon's Auditors' opinion date, so that Phoenix's Auditors are able
to perform the procedures they consider necessary to take responsibility for the
work of inSilicon's Auditors as it relates to Phoenix's Auditors' report on
Phoenix's financial statements, all within sufficient time to enable Phoenix to
meet its timetable for the printing, filing and public dissemination of
Phoenix's annual and quarterly statements. Similarly, Phoenix shall authorize
Phoenix's Auditors to make available to inSilicon's Auditors both the personnel
who performed or are performing the annual audits and quarterly reviews of
Phoenix and work papers related to the annual audits and quarterly reviews of
Phoenix, in all cases within a reasonable time prior to the Auditors' opinion
date, so that inSilicon's Auditors are able to perform the procedures they
consider necessary to take responsibility for the work of Phoenix's Auditors as
it relates to inSilicon's Auditors' report on inSilicon's statements, all within
sufficient time to enable inSilicon to meet its timetable for the printing,
filing and public dissemination of inSilicon's annual and quarterly financial
statements.

(e) ACCESS TO BOOKS AND RECORDS. inSilicon shall provide Phoenix's internal
auditors and their designees access to inSilicon's and its subsidiaries' books
and records so that Phoenix may conduct reasonable audits relating to the
financial statements provided by inSilicon pursuant hereto as well as to the
internal accounting controls and operations of inSilicon and its subsidiaries.
Similarly, Phoenix shall provide inSilicon's internal auditors and their
designees access to Phoenix's and its subsidiaries' books and records so that
inSilicon may conduct reasonable audits relating to the financial statements
provided by Phoenix pursuant hereto as well as to the internal accounting
controls and operations of Phoenix and its subsidiaries.

(f) NOTICE OF CHANGE IN ACCOUNTING PRINCIPLES. inSilicon shall give Phoenix
as much prior notice as reasonably practical of any proposed determination of,
or any significant changes in, its accounting estimates or accounting principles
from those in effect on the Separation Date. inSilicon will consult with Phoenix
and, if requested by Phoenix, inSilicon will consult with Phoenix's independent
public accountants with respect thereto. Phoenix shall give inSilicon as much
prior notice as reasonably practical of any proposed determination of, or any
significant changes in, its accounting estimates or accounting principles from
those in effect on the Separation Date.

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(g) CONFLICT WITH THIRD-PARTY AGREEMENTS. Nothing in Sections 5.1 and 5.2
shall require inSilicon to violate any agreement with any third parties
regarding the confidentiality of confidential and proprietary Information
relating to that third party or its business; PROVIDED, however, that in the
event that inSilicon is required under Sections 5.1 and 5.2 to disclose any such
Information, inSilicon shall use commercially reasonable efforts to seek to
obtain such customer's consent to the disclosure of such Information.

Section 5.3. CONFIDENTIALITY; PROTECTION.

(a) CONFIDENTIAL INFORMATION. Except as otherwise expressly provided in
this Agreement, each party and each of its subsidiaries shall hold and shall
cause its respective directors, officers, employees, agents, consultants and
advisors to hold, in strict confidence, unless compelled to disclose by judicial
or administrative process or, in the opinion of its counsel, by other
requirements of law, all Information concerning the other party (except to the
extent that such Information can be shown to have been (i) in the public domain
through no fault of such party, (ii) later lawfully acquired on a
non-confidential basis from other sources by the party to which it was
furnished, (iii) independently generated without reference to any proprietary or
confidential Information of the other party, or (iv) Information that may be
disclosed pursuant to any Ancillary Agreement). Neither party shall release or
disclose any such Information to any other Person, except its auditors,
attorneys, financial advisors, bankers and other consultants and advisors who
shall be advised of and agree to comply with the provisions of this Section 5.3.
For purposes of this Section 5.3, confidential Information of third parties that
is known to, in the possession of or acquired by a party shall be deemed
Information of that party.

(b) PROTECTIVE ARRANGEMENTS. In the event that either party (or any of its
subsidiaries) either determines on the advice of its counsel that it is required
to disclose any information pursuant to applicable law or receives any demand
under lawful process or from any Governmental Authority to disclose or provide
information of the other party (or any of its subsidiaries) that is subject to
the confidentiality provisions hereof, such party shall notify the other party
prior to disclosing or providing such Information and shall cooperate at the
expense of the requesting party in seeking any reasonable protective
arrangements requested by such other party. Subject to the foregoing, the Person
that received such request may thereafter disclose or provide Information to the
extent required by such law (as so advised by counsel) or by lawful process or
such Governmental Authority.

Section 5.4. MAIL. After the Separation Date, each of Phoenix and inSilicon
may receive mail and other communications properly belonging to the other.
Accordingly, at all times after the Separation Date, each of Phoenix and
inSilicon authorizes the other to receive and open all mail and other
communications received by it and not unambiguously intended for the other party
or any of the other party's officers or directors specifically in their
capacities as such, and to retain the same to the extent that they relate to the
business of the receiving party or, to the extent that they do not relate to the
business of the receiving party and do relate to the business of the other
party, or to the extent that they relate to both businesses, the receiving party
shall promptly contact the other party by telephone for delivery instructions
and such mail or other communications (or, in case the same relate to both
businesses, copies thereof) shall promptly be forwarded to the other party in
accordance with its delivery instructions. The foregoing

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provisions of this Section 5.4 shall constitute full authorization to the postal
authorities and courier companies and all other persons to make deliveries to
Phoenix or inSilicon, as the case may be, addressed to either of them or to any
of their officers or directors specifically in their capacities as such. The
provisions of this Section 5.4 are not intended to and shall not be deemed to
constitute an authorization by either Phoenix or inSilicon to permit the other
to accept service of process on its behalf, and neither party is or shall be
deemed to be the agent of the other for service of process purposes or for any
other purpose.

ARTICLE VI

DISPUTE RESOLUTION

Section 6.1. DISPUTE RESOLUTION. Except as otherwise set forth in any
Ancillary Agreement, resolution of any and all disputes arising from or in
connection with this Agreement, whether based on contract, tort, or otherwise
(collectively, "Disputes"), shall be exclusively governed by and settled in
accordance with the provisions of this Section 6.1.

(a) NEGOTIATION. The parties shall make a good faith attempt to resolve any
Dispute arising out of, relating to or resulting from this Agreement through
negotiation. Within thirty (30) days after notice of a Dispute is given by
either party to the other party, each party shall select a first tier
negotiating team comprised of vice president level employees of such party and
shall meet and make a good faith attempt to resolve such Dispute and shall
continue to negotiate in good faith in an effort to resolve the Dispute or
renegotiate the applicable section or provision without the necessity of any
formal proceedings. If the first tier negotiating teams are unable to agree
within thirty (30) days of their first meeting, then each party shall select a
second tier negotiating team comprised of the chief executive officers of such
party and shall meet within thirty (30) days after the end of the first thirty
(30) day negotiating period to attempt to resolve the matter. During the course
of negotiations under this Section 6.1(a), all reasonable requests made by one
party to the other for Information, including requests for copies of relevant
documents, will be honored. The specific format for such negotiations will be
left to the discretion of the designated negotiating teams but may include the
preparation of agreed upon statements of fact or written statements of position
furnished to the other party.

(b) NON-BINDING MEDIATION. In the event that any Dispute arising out of or
related to this Agreement is not settled by the parties within fifteen (15) days
after the first meeting of the second tier negotiating teams under Section
6.1(a), the parties will attempt in good faith to resolve such Dispute by
non-binding mediation in accordance with the American Arbitration Association
Commercial Mediation Rules. The mediation shall be held within thirty (30) days
of the end of such fifteen (15) day negotiation period of the second tier
negotiating teams. Except as provided below in Section 6.1(c), no litigation for
the resolution of such dispute may be commenced until the parties try in good
faith to settle the dispute by such mediation in accordance with such rules and
either party has concluded in good faith that amicable resolution through
continued mediation of the matter does not appear likely. The costs of mediation
shall be shared equally by the parties to the mediation. Any settlement reached
by mediation shall be recorded in writing, signed by the parties, and shall be
binding on them.

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(c) PROCEEDINGS. Nothing herein, however, shall prohibit either party from
initiating litigation or other judicial or administrative proceedings if such
party would be substantially harmed by a failure to act during the time that
such good faith efforts are being made to resolve the Dispute through
negotiation or mediation. In the event that litigation is commenced under this
Section 6.1(c), the parties agree to continue to attempt to resolve any Dispute
according to the terms of Sections 6.1(a) and 6.1(b) during the course of such
litigation proceedings under this Section 6.1(c).

(d) PAY AND DISPUTE. Except as provided herein or in any Ancillary
Agreement, in the event of any dispute regarding payment of a third-party
invoice (subject to standard verification of receipt of products or services),
the party named in a third party's invoice must make timely payment to such
third party, even if the party named in the invoice desires to pursue the
dispute resolution procedures outlined in this Section 6.1. If the party that
paid the invoice is found pursuant to this Section 6.1 to not be responsible for
such payment, such paying party shall be entitled to reimbursement, with
interest accrued at the prime interest rate announced by Bank of America NT&SA
plus one percent per annum compounded monthly for the period such amount remains
unpaid from the party found responsible for such payment.

Section 6.2. CONTINUITY OF SERVICE AND PERFORMANCE. Unless otherwise agreed
in writing, the parties will continue to provide service and honor all other
commitments under this Agreement and each Ancillary Agreement during the course
of dispute resolution pursuant to the provisions of this Article VI with respect
to all matters not subject to such Dispute.

ARTICLE VII

STANDSTILL; COVENANT NOT TO COMPETE

Section 7.1. STANDSTILL. Phoenix agrees that so long as Phoenix
beneficially owns, directly or indirectly, fifty percent (50%) or more of
inSilicon's outstanding voting securities, it shall not acquire by purchases in
"brokers' transactions" (as defined in the Securities Act) or in transactions
directly with a "market maker" (as defined in the Exchange Act) during any
twelve (12-) month period shares of Common Stock that exceed two percent (2%) of
the number of shares of Common Stock outstanding at the commencement of that
period, without inSilicon's prior consent.

Section 7.2. NON-COMPETE.

(a) During the "Phoenix Restricted Period," as defined below, Phoenix
agrees it will not carry on or become involved, directly or indirectly (whether
as owner, partner, agent, consultant or stockholder) in any business or activity
competitive with any business conducted by inSilicon as of the Separation Date
without the consent of inSilicon. For this purpose, the "Phoenix Restricted
Period" for any business or activity conducted by inSilicon as of the Separation
Date means the earliest of (i) November 30, 2004, (ii) the date Phoenix no
longer owns, directly or indirectly, ten percent (10%) or more of inSilicon's
outstanding voting securities and (iii) the date on which inSilicon no longer
engages in such business or activity.

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(b) During the "inSilicon Restricted Period," as defined below, inSilicon
agrees it will not carry on or become involved, directly or indirectly (whether
as owner, partner, agent, consultant or stockholder) in any business or activity
competitive with any business conducted by Phoenix as of the Separation Date
(other than the Business) without the consent of Phoenix. For this purpose, the
"inSilicon Restricted Period" for any business or activity conducted by Phoenix
as of the Separation Date means the earliest of (i) November 30, 2004, (ii) the
date Phoenix no longer owns, directly or indirectly, ten percent (10%) or more
of inSilicon's outstanding voting securities and (iii) the date on which Phoenix
no longer engages in such business or activity.

(c) Each of Phoenix and inSilicon agrees that it will not unreasonably
withhold its consent to any request by the other to carry on or become involved
in any business or activity competitive with any business conducted by the other
as of the Separation Date, which request relates to activities which occur
following a "change in control" of the requesting party. For this purpose, a
"change of control" shall be deemed to have occurred on the earliest date on or
by which (i) the beneficial ownership of the equity securities of the affected
party on the part of any Person or group (other than Phoenix in the case of
inSilicon), together with the beneficial ownership thereof on the part of the
affiliates and/or associates of such Person or group, first equals or exceeds
fifty percent (50%) of the equity securities of the affected party or (ii) any
Person or group acquires assets of the affected party, which together with any
assets acquired from such party by any affiliates and/or associates of such
Person or group constitute fifty percent (50%) or more of the assets of the
affected party. A party shall not be deemed to be "unreasonable" in withholding
its consent if the Person acquiring control of a party competes with the party
from which consent is sought.

ARTICLE VIII

MISCELLANEOUS

Section 8.1. TERMINATION. This Agreement may be terminated and/or the
Initial Public Offering may be deferred, modified or abandoned at any time prior
to the Closing Date by and in the sole discretion of the Board of Directors of
Phoenix without the approval of inSilicon. In the event of such termination, no
party hereto (or any of its respective directors or officers) shall have any
liability to any other party pursuant to this Agreement.

Section 8.2. EXPENSES. Except as specifically provided in Services and
Cost-Sharing Agreement or in this Agreement and except for the expenses of
Phoenix that are not third party expenses, all costs and expenses incurred in
connection with the interpretation, execution, delivery and implementation of
this Agreement and with the consummation of the transactions contemplated by
this Agreement shall be paid by inSilicon. The expenses payable by inSilicon
shall include without limitation the filing, legal, accounting, printing and
other out-of-pocket expenditures in connection with (i) the preparation,
printing and filing of the Registration Statement and (ii) sale of the shares of
Common Stock in the Initial Public Offering, including, without limitation,
third party costs, fees and expenses relating to the Initial Public Offering,
and all of the reimbursable expenses of the Underwriters pursuant to the
Underwriting Agreement, and all of the costs of producing, printing, mailing and
otherwise distributing the Prospectus.

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After the Closing Date, all costs and expenses that are not subject to the
Services and Cost-Sharing Agreement or any other agreement between the parties
shall be borne by the party incurring the expense.

Section 8.3. NOTICES. All notices and communications under this Agreement
shall be in writing and any communication or delivery hereunder shall be deemed
to have been duly given when received addressed as follows:

If to Phoenix, to:

411 East Plumeria Drive
San Jose, CA 94134
Attn: General Counsel

If to inSilicon, to:

411 East Plumeria Drive
San Jose, CA 94134
Attn: General Counsel

Any party may, by written notice so delivered to the other party, change
the address to which delivery of any notice shall thereafter be made.

Section 8.4. AMENDMENT AND WAIVER. This Agreement may not be altered or
amended, nor may rights hereunder be waived, except by an instrument in writing
executed by the party or parties to be charged with such amendment or waiver. No
waiver of any terms, provision or condition of or failure to exercise or delay
in exercising any rights or remedies under this Agreement, in any one or more
instances shall be deemed to be, or construed as, a further or continuing waiver
of any such term, provision, condition, right or remedy or as a waiver of any
other term, provision or condition of this Agreement. Notwithstanding the
foregoing, this Agreement may not be altered or amended, nor may rights
hereunder be waived by inSilicon after the Closing Date without the affirmative
vote or written consent of a majority of the directors of inSilicon who are not
Affiliates of Phoenix.

Section 8.5. COUNTERPARTS. This Agreement may be executed in counterparts
each of which shall be deemed an original instrument, but all of which together
shall constitute but one and the same Agreement.

Section 8.6. GOVERNING LAW. This Agreement shall be construed in accordance
with, and governed by, the laws of the State of California, without regard to
the conflicts of law rules of such state.

Section 8.7. ENTIRE AGREEMENT. This Agreement including the schedules and
the other agreements referenced specifically in this Agreement constitute the
entire understanding of the parties with respect to the subject matter of this
Agreement, superseding all negotiations, prior discussions and prior agreements
and understandings relating to such subject matter.

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Section 8.8. ASSIGNMENT.

(a) No party to this Agreement shall (i) consolidate with or merge into any
Person or permit any Person to consolidate with or merge into such party (other
than a merger or consolidation in which the party is the surviving or continuing
corporation), or (ii) sell, assign, transfer, lease or otherwise dispose of, in
one transaction or a series of related transactions, all or substantially all of
its assets, unless the resulting, surviving or transferee Person expressly
assumes, by instrument in form and substance reasonably satisfactory to the
other parties, all of the obligations of the party under this Agreement.

(b) Except as expressly provided in paragraph (a) above, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assignable, directly or indirectly, by any party without the prior written
consent of the party, and any attempt to so assign without such consent shall be
void.

Section 8.9. PARTIES IN INTEREST. Subject to Section 8.8, this Agreement
shall be binding upon, and shall inure to the benefit of, the parties hereto and
their respective successors and permitted assigns. Nothing contained in this
Agreement, express or implied, is intended to confer any benefits, rights or
remedies upon any person or entity other than Phoenix and inSilicon, and Phoenix
Indemnitees and inSilicon Indemnitees under Article III hereof.

Section 8.10. TAX SHARING AGREEMENT. Notwithstanding any other provision of
this Agreement to the contrary, any and all matters relating to Taxes shall be
exclusively governed by the Tax Sharing Agreement.

Section 8.11. EXHIBITS AND SCHEDULES. The Exhibits and Schedules shall be
construed with and as an integral part of this Agreement to the same extent as
if the same had been set forth verbatim herein.

Section 8.12. LEGAL ENFORCEABILITY. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. Without prejudice
to any rights or remedies otherwise available to any party hereto, each party
hereto acknowledges that damages would be an inadequate remedy for any breach of
the provisions of this Agreement and agrees that the obligations of the parties
hereunder shall be specifically enforceable.

Section 8.13. TITLES AND HEADINGS. Titles and headings to Sections herein
are inserted for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.

Section 8.14. CONFLICTING AGREEMENTS. In the event of conflict between this
Agreement and the Contribution Agreement, the provisions of this Agreement and
shall prevail.

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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date first above written.

PHOENIX TECHNOLOGIES LTD.

By: /s/ Linda V. Moore
-----------------------------------------
Name: Linda V. Moore
Title: Vice President, General Counsel and
Secretary

INSILICON CORPORATION

By: /s/ David J. Power
-----------------------------------------
Name: David J. Power
Title: Vice President, General Counsel

<PAGE>

Exhibit 21.1

List of Subsidiaries

inSilicon International -- Delaware
inSilicon KK -- Japan
inSilicon Ltd. -- UK

<PAGE>
EXHIBIT 23.1

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the reference of our firm under the caption "Experts" and to
the use of our report dated December 17, 1999, except for Notes 5 and 10 as to
which the date is February 11, 2000, in Amendment No. 3 to the Registration
Statement (Form S-1) and related Prospectus of inSilicon Corporation for the
registration of 3,500,000 shares of its common stock.

Our audits also included the financial statement schedule listed in
Item 16(b) of this Registration Statement. This schedule is the responsibility
of the Company's management. Our responsibility is to express an opinion based
on our audits. In our opinion, the financial statement schedule referred to
above, when considered in relation to the basic financial statements taken as a
whole, present fairly in all material respects the information set forth
therein.

/s/ ERNST & YOUNG LLP

San Jose, California
March 17, 2000

<PAGE>
EXHIBIT 23.2

CONSENT OF PRICEWATERHOUSECOOPERS LLP, INDEPENDENT ACCOUNTANTS

We hereby consent to the use in this Registration Statement on Form S-1 of
our report dated March 30, 1998, relating to the financial statements of Sand
Microelectronics, Inc., which appears in such Registration Statement. We also
consent to the reference to us under the heading "Experts" in such Registration
Statement.

/S/ PRICEWATERHOUSECOOPERS LLP

San Jose, California
March 17, 2000