PHOENIX TECHNOLOGIES LTD, DEF 14A, 2000-12-19

PHOENIX TECHNOLOGIES LTD
DEF 14A, 2000-12-19
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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

<TABLE>
<S> <C>
Filed by the Registrant /X/
Filed by a party other than the Registrant / /

Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, For Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Under Rule 14a-12

PHOENIX TECHNOLOGIES LTD.
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(Name of Registrant as Specified in Its Charter)

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(Name of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
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Payment of Filing Fee (Check the appropriate box):

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<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transactions
applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials:
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or
schedule and the date of its filing.
(1) Amount previously paid:
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(4) Date Filed:
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PHOENIX TECHNOLOGIES LTD.
411 EAST PLUMERIA DRIVE
SAN JOSE, CALIFORNIA 95134
(408) 570-1000

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

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 6, 2001

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

Notice is hereby given that the Annual Meeting of Stockholders of Phoenix
Technologies Ltd., (the "Company" or "Phoenix") will be held at the Company's
offices located at 411 East Plumeria Drive, San Jose, California 95134, on
February 6, 2001, at 10:00 a.m., California time, to consider and act upon the
following matters:

1. To elect two Class 2 Directors to the Board of Directors of the Company;

2. To approve an amendment to the Company's 1999 Stock Plan to increase the
number of shares reserved for issuance thereunder by 1,860,000 shares;

3. To approve an amendment to the Company's 1999 Director Stock Plan to
increase the number of shares reserved for issuance thereunder by 90,000
shares;

4. To ratify the selection by the Board of Directors of Ernst & Young LLP
as the Company's independent public accountants for the 2001 fiscal year;
and

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

Only stockholders of record at the close of business on December 11, 2000
will be entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof. The stock transfer books will not be closed between the
record date and the date of the Annual Meeting. A list of stockholders entitled
to vote at the Annual Meeting will be available for inspection at the Company's
offices for a period of ten days before the Annual Meeting.

All stockholders are cordially invited to attend the meeting. Whether or not
you plan to attend, please sign and return the enclosed proxy as promptly as
possible in the envelope provided. You may revoke your proxy at any time prior
to the Annual Meeting. If you attend and vote at the Annual Meeting, your proxy
will be automatically revoked and only your vote at the Annual Meeting will be
counted.

By Order of the Board of Directors

Linda V. Moore
SECRETARY

December 20, 2000
<PAGE>
PROXY STATEMENT

PHOENIX TECHNOLOGIES LTD.
411 East Plumeria Drive
San Jose, California 95134

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

PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 6, 2001

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

This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Phoenix Technologies Ltd. (the "Company" or "Phoenix") of
proxies for use at the Annual Meeting of Stockholders of the Company (the
"Meeting") to be held on February 6, 2001, at the Company's offices located at
411 East Plumeria Drive, San Jose, California, commencing at 10:00 a.m.,
California time, and at any adjournments thereof. All proxies are solicited for
the purposes set forth herein and in the Notice of Annual Meeting of
Stockholders that accompanies this Proxy Statement. The date of this Proxy
Statement is December 20, 2000, the approximate date on which this Proxy
Statement and the accompanying form of proxy were first sent or given to
stockholders.

We do not expect any matters not listed in the Proxy Statement to come
before this Meeting. If any other matter is presented, your signed proxy card
gives the individuals named as proxyholders the authority to vote your shares to
the extent authorized by Rule 14a-4(c) under the Securities Exchange Act of
1934, which would include matters that the proxyholders did not know were to be
presented 45 days before the anniversary of last year's proxy statement.

GENERAL INFORMATION

CERTAIN FINANCIAL INFORMATION. The Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 2000 is enclosed with this Proxy Statement.

VOTING SECURITIES. Only stockholders of record as of the close of business
on December 11, 2000 (the "Record Date") will be entitled to vote at the meeting
and any adjournment thereof. As of the Record Date, there were 25,263,243 shares
of the Company issued and outstanding. Stockholders may vote in person or by
proxy. Each holder of shares of Common Stock is entitled to one (1) vote on the
proposals presented in this Proxy Statement for each share of the stock held and
one vote for each director to be elected. There is no cumulative voting in
connection with the election of directors.

QUORUM. The required quorum for transacting business at the Annual Meeting
is a majority of the votes eligible to be cast by holders of shares of Common
Stock issued and outstanding on the Record Date. Shares that are voted "FOR",
"AGAINST" or "WITHHELD" from a matter are treated as being present at the Annual
Meeting for purposes of establishing a quorum and are also treated as shares
entitled to vote at the Annual Meeting (the "Votes Cast") with respect to such
matter.

ABSTENTIONS. While there is no definitive statutory or case law authority
in Delaware as to the proper treatment of abstentions, the Company believes that
abstentions should be counted for purposes of determining both (I) the presence
or absence of a quorum for the transaction of business and (II) the total number
of Votes Cast with respect to a proposal (other than the election of directors).
In the absence of controlling precedent to the contrary, the Company intends to
treat abstentions in this manner. Accordingly, abstentions will have the same
effect as a vote against the proposal.

BROKER NON-VOTES. Broker non-votes will be counted for purposes of
determining the presence or absence of a quorum for transacting business, but
will not be counted for purposes of determining the number of Votes Cast with
respect to the particular proposal on which the broker has expressly not
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voted. Accordingly, broker non-votes will not affect the outcome of the voting
on a proposal that requires a majority of the Votes Cast (such as the approval
of a plan).

SOLICITATION OF PROXIES. The cost of soliciting proxies will be borne by
the Company. In addition to soliciting stockholders by mail and through its
regular employees, the Company will request brokers, custodians, nominees and
other record holders to forward copies of the proxy and other soliciting
material to persons for whom they hold shares of Common Stock of the Company,
and to request authority for the exercise of proxies; in such cases, the
Company, upon request of the record holders, will reimburse such holders for
their reasonable expenses. The Company may use the services of its officers,
directors and others to solicit proxies personally or by telephone, facsimile or
electronic mail, without additional compensation. The Company has also retained
Morrow & Co., Inc. to assist in obtaining proxies for the Annual Meeting from
brokers, nominees of stockholders and institutional investors. The estimated fee
for such services, which is not contingent upon the outcome of the voting, is
$6,500 plus out-of-pocket expenses.

VOTING OF PROXIES. All valid proxies received prior to the Meeting will be
voted. All shares presented by a proxy will be voted, and where a stockholder
specifies by means of the proxy a choice with respect to any matter to be acted
upon, the shares will be voted in accordance with the specification so made. If
no choice is indicated on the proxy, the shares will be voted FOR all nominees,
FOR all other proposals described herein and as the proxy holders may determine
in their discretion with respect to any other matters that properly come before
the Meeting or any adjournments thereof. A stockholder giving a proxy has the
power to revoke his or her proxy, at any time prior to the time it is voted, by
delivering to the Secretary of the Company a written instrument revoking the
proxy or a duly executed proxy with a later date, or by attending the Meeting
and voting in person.

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PROPOSAL NO. 1
ELECTION OF DIRECTORS

The Company's nominees for election at the Annual Meeting of Stockholders to
Class 2 of the Board of Directors are Taher Elgamal and Anthony Sun (the
"Nominees"). Messrs. Elgamal and Sun presently are Class 2 Directors of the
Company. The Company expects each of the Nominees to be available to serve as a
Director. If, however, either of the Nominees is unable or declines to serve for
any reason, proxies may be voted for such substitute nominee as the Board of
Directors may designate.

The Company's Certificate of Incorporation provides for a classified Board
of Directors consisting of two Class 1 Directors (Messrs. Huang and Morris), two
Class 2 Directors (Messrs. Elgamal and Sun) and three Class 3 Directors
(Messrs. Sisto, Jensen and Yang). The Class 1, 2 and 3 Directors serve staggered
three-year terms. A stockholder may not cast votes for more than two nominees.
The two Class 2 directors to be elected at the 2001 Annual Meeting of
Stockholders will be elected to hold office until the Annual Meeting of
Stockholders in 2004 and until their successors have been elected and qualified.

NOMINEES AND OTHER DIRECTORS. The following table sets forth the name and
age of each nominee and each director of the Company whose term of office
continues after the Annual Meeting, the principal occupation of each during the
past five years and the period during which each has served as a director of the
Company. Each nominee is currently serving as a director of the Company. The
Directors whose names are followed by an asterisk (*) are members of the Audit
Committee or the Compensation Committee, or both.

<TABLE>
<CAPTION>
DIRECTOR
DIRECTOR NAME AGE SINCE POSITION AND CURRENT OFFICES WITH THE COMPANY
------------- -------- -------- ---------------------------------------------
<S> <C> <C> <C>
Taher Elgamal*.......................... 45 2000 Director
George C. Huang......................... 58 1998 Director; Vice Chairman
Edmund P. Jensen*....................... 63 2000 Director
Anthony P. Morris*...................... 54 1993 Director
Albert E. Sisto......................... 52 1999 Director; Chairman; President and Chief
Executive Officer
Anthony Sun*............................ 48 1998 Director
Shih-Chien Yang......................... 56 2000 Director
</TABLE>

Dr. Elgamal was appointed to the Board in January 2000. He is the founder,
President, Chief Executive Officer and a director of Securify, Inc. Prior to
founding Securify in 1998, Dr. Elgamal held the position of Chief Scientist of
Netscape Communications Corp. from 1995 to 1998, where he pioneered Internet
security technologies. From 1993 to 1995, Dr. Elgamal was Vice President of
Advanced Technologies at OKI Electric. From 1991 to 1993, Dr. Elgamal was the
Director of Engineering at RSA Security, Inc. where he produced the RSA
cryptographic toolkits. Dr. Elgamal also serves on the Boards of Directors of
RSA Security, Inc., hi/fn, Inc. and ValiCert, Inc.

Dr. Huang was appointed to the Board in November 1998 and was elected to
serve as Vice Chairman. From September 1998 to September 2000, Dr. Huang served
as the Company's Senior Vice President for Strategic Planning. He served as
Chairman of the Board of Directors, President, Chief Executive Officer and
Director of Award Software International, Inc. ("Award") from July 1993 until
Award merged with the Company in September 1998. Dr. Huang is Chairman of the
Board of Directors of GCH Systems, Inc. ("GCH"), and from January 1984 until
November 1994, he also served as Chief Executive Officer of GCH. From
February 1987 to the present, Dr. Huang has served as a Director of
GCH-SunSystems Company Ltd., a subsidiary of GCH. From January 1990 to
May 1996, Dr. Huang served as a Director of Fidelity Venture Capital
Corporation, a stockholder of GCH and Award.

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Mr. Jensen was appointed to the Board in January 2000. From 1994 to 1999 he
served as President and CEO of Visa International. From 1974 to 1994,
Mr. Jensen held a variety of positions with US Bancorp, most recently as
President. Previously, Mr. Jensen served as Group Vice President of National
Industries and was Director of Financial Planning and Analysis at Technicolor
Motion Picture Corporation. Mr. Jensen also served in the U.S. Army, where his
last rank was Captain.

Mr. Morris has served as a Director of the Company since 1993. Mr. Morris is
a principal with Morris & Associates, a management consulting and financial
advisory firm he founded in 1987. He is also an investor in a number of private
technology companies. Mr. Morris also serves on the Board of Directors of
Interact Commerce Corporation.

Mr. Sisto joined the Company as President and Chief Executive Officer and
was appointed to the Board in June 1999. He was formerly Chief Operating Officer
of RSA Security, Inc. from 1997 to 1999. He served as President, Chairman and
CEO of DocuMagix from 1994 to 1997. From 1989 to 1994 Mr. Sisto was the
President and CEO of PixelCraft, Inc. Mr. Sisto also serves on the Board of
Directors of Insignia Solutions, plc., hi/fn, Inc. and Tekgraf, Inc.

Mr. Sun was appointed to the Board in 1998. From 1979 to the present,
Mr. Sun has been a general partner at Venrock Associates, a venture capital
firm. Previously, Mr. Sun was employed by Hewlett Packard, TRW and Caere
Corporation. Mr. Sun served as a director of Award from October 1995 until Award
merged with the Company in September 1998. Mr. Sun is a director of Cognex
Corporation, Komag, Inc. and Ramp Networks, Inc.

Dr. Yang was appointed to the Board in September 2000. Dr. Yang served as
the Minister of State of the Republic of China in charge of science and
technology development from June 1996 to May 2000. Prior to his appointment as
Minister of State, Dr. Yang served the Taiwanese government for twenty-two years
as Senior Vice Minister and Vice Minister, Ministry of Economic Affairs; as
Director General of the Industrial Development Bureau, Ministry of Economic
Affairs; as Deputy Director General of the Science-based Industrial Park
Administration; as Director of the Planning and Evaluation Division, National
Science Council; and as Deputy Director and Senior Engineer of the Council for
Economic Planning and Development, Sectoral Planning Department.

MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

During the fiscal year ended September 30, 2000 (the "Last Fiscal Year"),
the Board of Directors held a total of four regularly scheduled meetings, four
special meetings and took additional actions by written consent. During fiscal
year 2000, Messrs. Huang, Morris, Sisto and Sun each attended at least 75% of
the aggregate number of meetings of the Board of Directors held during the year
and 100% of the total number of meetings held by all committees of the Board of
Directors on which he served during the Last Fiscal Year. Subsequent to their
respective appointments as Directors, Messrs. Elgamal, Jensen and Yang each
attended at least 75% of the aggregate number of meetings of the Board of
Directors held and 100% of the total number of meetings held by all committees
of the Board of Directors on which he served during the Last Fiscal Year.

The Board of Directors has an Audit Committee and a Compensation Committee.
The Company does not have a standing nominating committee of the Board of
Directors or a committee performing similar functions.

During the Last Fiscal Year, the Audit Committee, which consists of
Messrs. Jensen and Morris, met three times. The Audit Committee makes
recommendations to the Board regarding appointment of the Company's independent
public accountants, confers with the Company's independent public accountants
regarding the scope and the results of the audit of the Company's books and
accounts and reports the same to the Board of Directors, and establishes and
monitors policy relative to non-audit services provided by the independent
public accountants, approves services rendered by such

4
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accountants, reviews the activities and recommendations of the Company's
internal audit department, and reviews and evaluates the Company's accounting
systems, financial controls and financial personnel. For additional information
concerning the Audit Committee, see "REPORT OF THE AUDIT COMMITTEE".

During the Last Fiscal Year, the Compensation Committee, which consists of
Messrs. Sun, Elgamal and Morris, met twice and took additional actions by
written consent. The Compensation Committee reviews salaries and other
compensation arrangements for officers and other key employees of the Company,
reviews the administration of the Company's stock option and stock purchase
plans, and advises the Board on general aspects of the Company's compensation
and benefit policies. For additional information concerning the Compensation
Committee, see "EXECUTIVE COMPENSATION--Compensation Committee Interlocks and
Insider Participation" and "REPORT OF THE COMPENSATION COMMITTEE".

COMPENSATION OF DIRECTORS

Members of the Board who are not employees of the Company are paid an annual
retainer of $10,000, a fee of $1,000 for each meeting of the Board of Directors
they attend in person, a fee of $500 for each telephonic meeting of the Board of
Directors that they attend, a fee of $500 for each Committee meeting they attend
in person and a fee of $375 for each telephonic Committee meeting that they
attend. In addition, non-employee Directors who reside outside of the local area
receive reimbursement of travel expenses.

Outside Directors have received options to purchase Common Stock pursuant to
the Company's 1994, 1996, 1997, 1998 and 1999 Stock Plans and currently receive
options under the 1999 Director Option Plan. The actual number of shares to be
subject to the options granted for Board and committee service is established by
the Plan. In September 1999, the Board changed its stock grants to non-employee
Directors to include an initial grant of 40,000 shares for new non-employee
Directors and to grant options of 15,000 shares on each subsequent anniversary
of each non-employee Director's tenure on the Board. Board member options vest
and become exercisable for 100% of the shares on the date of grant and have a
term of ten years. During the Last Fiscal Year, the Company granted stock
options for 40,000 shares to each of Messrs. Elgamal, Jensen and Yang, and
30,000 shares to Mr. Sun, in each case having an exercise price equal to the
fair market value of the Company's Common Stock on the date of grant.

REQUIRED VOTE

If a quorum is present, Directors shall be elected by the affirmative vote
of the holders of a plurality of the shares of Common Stock present or
represented at the Meeting.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE ELECTION OF MESSRS. ELGAMAL AND SUN

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PROPOSAL NO. 2
APPROVAL OF THE AMENDMENTS TO THE 1999 STOCK PLAN

On November 13, 1998, the Board of Directors adopted the 1999 Stock Plan
(the "Plan") and reserved 1,100,000 shares of Common Stock for issuance
thereunder, subject to stockholder approval. In January 1999, the stockholders
approved the Plan. In November 1999, the Board of Directors amended the Plan to
increase the shares reserved by 700,000 shares (the "Amendment"). In
February 2000, the stockholders approved the Amendment. Subsequently, upon the
Board's termination of the Company's 1997 Nonstatutory Stock Option Plan and
1998 Stock Plan, a total of 1,010,000 shares that had been reserved but unissued
under those plans were transferred to and reserved for issuance under the Plan.

PROPOSAL

In October 2000, the Board of Directors amended the Plan to increase by
850,000 the shares reserved for issuance under the Plan. At the Meeting, the
stockholders are being asked to approve an amendment to increase the number of
shares reserved under the Plan by 1,860,000 shares. The total of 1,860,000
shares for which stockholder approval is sought is the sum of (I) the 1,010,000
shares previously authorized and reserved under the terminated 1997 and 1998
plans and subsequently transferred to the Plan, and (II) the increase of 850,000
additional new shares reserved by the Board in October 2000 for issuance under
the Plan.

1999 STOCK OPTION PLAN GRANTS TO OFFICERS AND DIRECTORS

As of November 30, 2000, 387,647 shares had been issued upon exercise of
options granted under the Plan, options to purchase 3,258,430 shares were
outstanding and (1,458,430) shares remained available for future grant. The
following table sets forth information with respect to the stock options granted
to the named executive officers, all current executive officers as a group, all
current directors who are not executive officers as a group, and all employees
and consultants (including all current officers who are not executive officers)
as a group under the Plan as of November 30, 2000.

<TABLE>
<CAPTION>
NUMBER OF SHARES SUBJECT TO WEIGHTED AVERAGE
OPTIONS GRANTED UNDER EXERCISE PRICE
NAME/POSITION THE 1999 STOCK OPTION PLAN PER SHARE
------------- --------------------------- ----------------
<S> <C> <C>
Albert E. Sisto, President and Chief Executive
Officer............................................. 695,000 $10.6553

Wayne C. Cantwell, President and Chief Executive
Officer, inSilicon Corporation(1)................... 0 0

George C. Huang, Sr. Vice President, Strategic
Planning............................................ 2,500 $ 0.0100

David A. Everett, Sr. Vice President and General
Manager, Platform Enabling Division................. 208,000 $10.9980

Harry Gierhart, Sr. Vice President and General
Manager, PhoenixNet Division........................ 229,000 $11.1151

All current executive officers as a group (8
persons)............................................ 1,651,000 $11.9905

All directors who are not executive officers (6
persons)............................................ 2,500 $ 0.0100

Nominees for Election as Directors

Taher Elgamal......................................... 0 0

Anthony Sun........................................... 0 0
</TABLE>

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<TABLE>
<CAPTION>
NUMBER OF SHARES SUBJECT TO WEIGHTED AVERAGE
OPTIONS GRANTED UNDER EXERCISE PRICE
NAME/POSITION THE 1999 STOCK OPTION PLAN PER SHARE
------------- --------------------------- ----------------
<S> <C> <C>
Associates of Directors, Executive Officers or
Nominees............................................ 0 0

Persons receiving 5% or more of options granted under
the 1999 Stock Option Plan.......................... 695,000 $10.6553

All employees and consultants (including all current
officers who are not executive officers) as a group
(778 persons)....................................... 2,769,201 $12.9819
</TABLE>

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(1) Until its initial public offering of shares in March 2000, the Company owned
98.6% of the outstanding shares of inSilicon's common stock. Prior to its
incorporation in November 1999, inSilicon operated as a division of the
Company.

SUMMARY OF THE 1999 STOCK PLAN

GENERAL. The purpose of the Plan is to attract and retain the best
available personnel, to provide additional incentive to the employees, directors
and consultants of the Company and to promote the success of the Company's
business. Options and stock purchase rights may be granted under the Plan.
Options granted under the Plan may be either "incentive stock options" as
defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or nonstatutory stock options.

ADMINISTRATION. The Plan may generally be administered by the Board or a
Committee appointed by the Board (as applicable, the "Administrator").

ELIGIBILITY; LIMITATIONS. Nonstatutory stock options and stock purchase
rights may be granted under the Plan to employees, directors and consultants of
the Company and any parent or subsidiary of the Company. Incentive stock options
may only be granted to employees. The Administrator, in its discretion, selects
the employees, directors, and consultants to whom options and stock purchase
rights may be granted, the time or times at which such options and stock shall
be granted, and the number of shares subject to each such grant.

Section 162(m) of the Code places limits on the deductibility for federal
income tax purposes of compensation paid to certain executive officers of the
Company. In order to preserve the Company's ability to deduct the compensation
income associated with options and stock purchase rights granted to such
persons, the Plan provides that no employee, director or consultant may be
granted, in any fiscal year of the Company, options and stock purchase rights to
purchase more than 125,000 shares of Common Stock. Notwithstanding this limit,
however, in connection with such individual's initial employment with the
Company, he or she may be granted options or stock purchase rights to purchase
up to an additional 125,000 shares of Common Stock.

TERMS AND CONDITIONS OF OPTIONS. Each option is evidenced by a stock option
agreement between the Company and the optionee, and is subject to the following
additional terms and conditions:

(a) EXERCISE PRICE. The Administrator determines the exercise price of
options at the time the options are granted. The exercise price of an
incentive stock option may not be less than 100% of the fair market value of
the Common Stock on the date such option is granted; provided, however, the
exercise price of an incentive stock option granted to a 10% shareholder may
not be less than 110% of the fair market value of the Common Stock on the
date such stock option is granted. The fair market value of the Common Stock
is generally determined with reference to the closing sale price for the
Common Stock (or the closing bid if no sales were reported) on the last
market trading day prior to the date the option is granted.

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(b) EXERCISE OF OPTION; FORM OF CONSIDERATION. The Administrator
determines when options become exercisable, and may, in its discretion,
accelerate the vesting of any outstanding option. Stock options granted
under the Plan generally vest and become exercisable over four years. The
means of payment for shares issued upon exercise of an option is specified
in each option agreement. The Plan permits payment to be made by cash,
check, promissory note, other shares of Common Stock of the Company (with
some restrictions), cashless exercises, a reduction in the amount of any
Company liability to the optionee, any other form of consideration permitted
by applicable law, or any combination thereof.

(c) TERM OF OPTION. The term of an incentive stock option may be no
more than ten (10) years from the date of grant; provided that in the case
of an incentive stock option granted to a 10% stockholder, the term of the
option may be not more than five (5) years from the date of grant. No option
may be exercised after the expiration of its term.

(d) TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP. If an
optionee's employment or consulting relationship terminates for any reason
other than death or disability, then all options held by such optionee under
the Plan expire on the earlier of (i) the date set forth in his or her
notice of grant (normally 90 days past termination) or (ii) the expiration
date of such option. To the extent the option is exercisable at the time of
such expiration, the optionee may exercise all or part of his or her option
at any time before expiration.

(e) DEATH OR DISABILITY. If an optionee's employment or consulting
relationship terminates as a result of death or disability, then all options
held by the optionee under the Plan expire on the earlier of (i) the date
set forth in her or her notice of grant (normally 12 months after death or
disability) or (ii) the expiration date of such option. The optionee (or the
optionee's estate or the person who acquires the right to exercise the
option by bequest or inheritance), may exercise all or part of the option at
any time before such expiration to the extent that the option was
exercisable at the time of such termination.

(f) NONTRANSFERABILITY OF OPTIONS. Options granted under the plan are
generally not transferable other than by will or the laws of descent and
distribution, and may be exercised during the optionee's lifetime only by
the optionee.

(g) OTHER PROVISIONS. The stock option agreement may contain other
terms, provisions and conditions not inconsistent with the Plan as may be
determined by the Administrator.

STOCK PURCHASE RIGHTS. In the case of Stock Purchase Rights, unless the
Administrator determines otherwise, the Restricted Stock Purchase Agreement
shall grant the Company a repurchase option exercisable upon the voluntary or
involuntarily termination of the purchaser's employment with the Company 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
indebtedness of the purchaser to the Company. The repurchase option shall lapse
at a rate determined by the Administrator.

ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event that the stock of
the Company changes by reason of any stock split, reverse stock split, stock
dividend, combination, reclassification or other similar change in the capital
structure of the Company effected without the receipt of consideration,
appropriate adjustments shall be made in the number and class of shares of stock
subject to the Plan, the number and class of shares of stock subject to any
option or stock purchase right outstanding under the Plan, and the exercise
price of any such outstanding option or stock purchase right.

In the event of a liquidation or dissolution, any unexercised options or
stock purchase rights will terminate. The Administrator may, in its discretion
provide that each optionee shall have the right to exercise all of the
optionee's options and stock purchase rights, including those not otherwise
exercisable, until the date ten (10) days prior to the consummation of the
liquidation or dissolution.

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In connection with any merger, consolidation, acquisition of assets or like
occurrence involving the Company, each outstanding option or stock purchase
right shall be assumed or an equivalent option or right substituted by the
successor corporation. If the successor corporation refuses to assume the
options and stock purchase rights or to substitute substantially equivalent
options and stock purchase rights, the optionee shall have the right to exercise
the option or stock purchase right as to all the optioned stock, including
shares not otherwise exercisable. In such event, the Administrator shall notify
the optionee that the option or stock purchase right is fully exercisable for
fifteen (15) days from the date of such notice and that the option or stock
purchase right terminates upon expiration of such period.

AMENDMENT AND TERMINATION OF THE PLAN. The Board may amend, alter, suspend
or terminate the Plan, or any part thereof, at any time and for any reason.
However, the Company shall obtain stockholder approval for any amendment to the
Plan to the extent necessary to comply with Section 162(m) and Section 422 of
the Code, or any similar rule or statute. No such action by the Board or
stockholders may alter or impair any option or stock purchase right previously
granted under the Plan without the written consent of the optionee. Unless
terminated earlier, the Plan shall terminate ten years from the date of its
approval by the stockholders or the Board of the Company, whichever is earlier.

FEDERAL INCOME TAX CONSEQUENCES

INCENTIVE STOCK OPTIONS. An optionee who is granted an incentive stock
option does not recognize taxable income at the time the option is granted or
upon its exercise, although the exercise may subject the optionee to liability
under the alternative minimum tax. Upon a disposition of the shares more than
two years after grant of the option and one year after exercise of the option,
any gain or loss is treated as long-term capital gain or loss. If these holding
periods are not satisfied, the optionee recognizes ordinary income at the time
of disposition equal to the difference between the exercise price and the lower
of (I) the fair market value of the shares at the date of the option exercise or
(II) the sale price of the shares. Any gain or any loss recognized on such a
premature disposition of the shares is treated as long-term or short-term
capital gain or loss, depending on the holding period. The Company is entitled
to a deduction in the same amount as the ordinary income recognized by the
optionee.

NONSTATUTORY STOCK OPTIONS. An optionee does not recognize any taxable
income at the time he or she is granted a nonstatutory stock option. Upon
exercise, the optionee recognizes taxable income generally measured by the
excess of the then fair market value of the shares over the exercise price. Any
taxable income recognized in connection with an option exercise by an employee
of the Company is subject to tax withholding by the Company. The Company is
entitled to a deduction in the same amount as the ordinary income recognized by
the optionee. Upon a disposition of such shares by the optionee, any difference
between the sale price and the optionee's exercise price, to the extent not
recognized as taxable income as provided above, is treated as long-term or
short-term capital gain or loss, depending on the holding period.

STOCK PURCHASE RIGHTS. Stock purchase rights will generally be taxed in the
same manner as nonstatutory stock options. However, restricted stock is
generally purchased upon the exercise of a stock purchase right. At the time of
purchase, restricted stock is subject to a "substantial risk of forfeiture"
within the meaning of Section 83 of the Code. As a result, the purchaser will
not recognize ordinary income at the time of purchase. Instead, the purchaser
will recognize ordinary income on the dates when a stock ceases to be subject to
a substantial risk of forfeiture. The stock will generally cease to be subject
to a substantial risk of forfeiture when it is no longer subject to the
Company's right to repurchase the stock upon the purchaser's termination of
employment with the Company. At such times, the purchaser will recognize
ordinary income measured as the difference between the purchase

9
<PAGE>
price and the fair market value of the stock on the date the stock is no longer
subject to a substantial risk of forfeiture.

The purchaser may accelerate to the date of purchase his or her recognition
of ordinary income, if any, and the beginning of any capital gain holding period
by timely filing an election pursuant to Section 83(b) of the Code. In such
event, the ordinary income recognized, if any, is measured as the difference
between the purchase price and the fair market value of the stock on the date of
purchase, and the capital gain holding period commences on such date. The
ordinary income recognized by a purchaser who is an employee will be subject to
tax withholding by the Company.

THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION
UPON OPTIONEES, HOLDERS OF STOCK PURCHASE RIGHTS AND THE COMPANY WITH RESPECT TO
THE GRANT AND EXERCISE OF OPTIONS AND STOCK PURCHASE RIGHTS UNDER THE PLAN. IT
DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT DISCUSS THE TAX CONSEQUENCES OF
THE EMPLOYEE'S OR CONSULTANT'S DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS OF
ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE EMPLOYEE OR CONSULTANT
MAY RESIDE.

REQUIRED VOTE

If a quorum is present, the affirmative vote of the holders of a majority of
the shares of Common Stock present or represented at the Meeting and voting on
the matter is required for approval of Proposal No. 2.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
APPROVAL OF THE AMENDMENT TO THE 1999 STOCK PLAN

10
<PAGE>
PROPOSAL NO. 3
APPROVAL OF THE AMENDMENT TO THE 1999 DIRECTOR STOCK PLAN

On November 10, 1999, the Board of Directors adopted the 1999 Director Stock
Plan (the "Director Plan") and reserved 150,000 shares of Common Stock for
issuance thereunder, subject to stockholder approval. In February 2000, the
stockholders approved the Director Plan.

PROPOSAL

In October 2000, the Board of Directors amended the Director Plan to
increase the shares reserved by 90,000 shares. At the Meeting, the stockholders
are being asked to approve the amendment to increase the number of shares
reserved under the Director Plan by 90,000 shares.

DIRECTOR PLAN GRANTS

The following table sets forth information with respect to the stock options
granted to the nonemployee directors of the Company (6 persons) as of
November 30, 2000. As discussed below, the executive officers of the Company and
the employees of the Company are not eligible for grants under the Director
Plan.

<TABLE>
<CAPTION>
NUMBER OF SHARES SUBJECT TO WEIGHTED AVERAGE
OPTIONS GRANTED UNDER EXERCISE PRICE
DIRECTOR THE DIRECTOR OPTION PLAN PER SHARE
-------- --------------------------- ----------------
<S> <C> <C>
Taher Elgamal................................. 40,000 $15.4375
George C. Huang............................... 15,000 16.0250
Edmund P. Jensen.............................. 40,000 15.4375
Anthony P. Morris............................. 22,000 16.0625
Anthony Sun................................... 45,000 13.0208
Shih-Chien Yang............................... 40,000 17.5000
</TABLE>

SUMMARY OF THE 1999 DIRECTOR OPTION PLAN

GENERAL. The purpose of the Director Plan is to attract and retain the best
available personnel, to provide additional incentive to the directors of the
Company and to promote the success of the Company's business. Stock options will
be automatically granted under the Plan.

ELIGIBILITY; LIMITATIONS. Stock options may be granted under the Director
Plan to non-employee directors of the Company and any parent or subsidiary of
the Company.

TERMS AND CONDITIONS OF OPTIONS. Each option is evidenced by a stock option
agreement between the Company and the optionee, and is subject to the following
additional terms and conditions:

(a) EXERCISE PRICE. The exercise price of a stock option may not be
less than 100% of the fair market value of the Common Stock on the date such
option is granted. The fair market value of the Common Stock is generally
determined with reference to the closing sale price for the Common Stock (or
the closing bid if no sales were reported) on the last market trading day
prior to the date the option is granted.

(b) EXERCISE OF OPTION; FORM OF CONSIDERATION. Options granted under
the Director Plan vest and become exercisable for 100% of the share on the
day of grant. The means of payment for shares issued upon exercise of an
option is specified in each option agreement. The Director Plan permits
payment to be made by cash, check, other shares of Common Stock of the
Company (with some restrictions), cashless exercises, any other form of
consideration permitted by applicable law, or any combination thereof.

11
<PAGE>
(c) TERM OF OPTION. The term of an Option may be no more than ten
(10) years from the date of grant. No option may be exercised after the
expiration of its term.

(d) TERMINATION OF SERVICE. If an optionee's service as an Outside
Director terminates for any reason other than death or disability, then all
options held by the optionee under the Director Plan expire on the earlier
of (i) the date set forth in his or her notice of grant (normally ninety
days past termination) or (ii) the expiration date of such option.

(e) DEATH OR DISABILITY. If an optionee's service as an Outside
Director terminates as a result of death or disability, then all options
held by such optionee under the Director Plan expire within 12 months
following termination of Outside Director's service. The optionee (or the
optionee's estate or the person who acquires the right to exercise the
option by bequest or inheritance), may exercise all or part of the option at
any time before such expiration to the extent that the option was
exercisable at the time of such termination.

(f) NONTRANSFERABILITY OF OPTIONS. Options granted under the Director
Plan are generally not transferable other than by will or the laws of
descent and distribution, and may be exercised during the optionee's
lifetime only by the optionee.

(g) OTHER PROVISIONS. The stock option agreement may contain other
terms, provisions and conditions not inconsistent with the Director Plan as
may be determined by the Administrator.

ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event that the stock of
the Company changes by reason of any stock split, reverse stock split, stock
dividend, combination, reclassification or other similar change in the capital
structure of the Company effected without the receipt of consideration,
appropriate adjustments shall be made in the number and class of shares of stock
subject to the Director Plan, the number and class of shares of stock subject to
any option or stock purchase right outstanding under the Director Plan, and the
exercise price of any such outstanding option or stock purchase right.

In the event of a liquidation or dissolution, any unexercised options or
stock purchase rights will terminate.

In connection with any merger, consolidation, acquisition of assets or like
occurrence involving the Company, each outstanding option or stock purchase
right may be assumed or an equivalent option substituted by the successor
corporation. If the successor corporation refuses to assume the options or to
substitute substantially equivalent options, the optionee shall have the right
to exercise the option as to all the optioned stock, including shares not
otherwise exercisable. In such event, the option is fully exercisable for thirty
(30) days from the date of such notice and the option terminates upon expiration
of such period.

AMENDMENT AND TERMINATION OF THE PLAN. The Board may amend, alter, suspend
or terminate the Director Plan, or any part thereof, at any time and for any
reason. However, the Company shall obtain stockholder approval for any amendment
to the Director Plan to the extent necessary to comply with Section 162(m) of
the Code, or any similar rule or statute. No such action by the Board or
stockholders may alter or impair any option or stock purchase right previously
granted under the Director Plan without the written consent of the optionee.
Unless terminated earlier, the Director Plan shall terminate ten years from the
date of its approval by the stockholders or the Board of the Company, whichever
is earlier.

FEDERAL INCOME TAX CONSEQUENCES

12
<PAGE>
Any taxable income recognized in connection with an option exercise by an
employee of the Company is subject to tax withholding by the Company. The
Company is entitled to a deduction in the same amount as the ordinary income
recognized by the optionee. Upon a disposition of such shares by the optionee,
any difference between the sale price and the optionee's exercise price, to the
extent not recognized as taxable income as provided above, is treated as
long-term or short-term capital gain or loss, depending on the holding period.

THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION
UPON OPTIONEES AND THE COMPANY WITH RESPECT TO THE GRANT AND EXERCISE OF OPTIONS
UNDER THE DIRECTOR PLAN. IT DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT
DISCUSS THE TAX CONSEQUENCES OF THE OPTIONEE'S DEATH OR THE PROVISIONS OF THE
INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE
OPTIONEE MAY RESIDE.

REQUIRED VOTE

THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE APPROVAL OF THE AMENDMENT TO THE 1999 DIRECTOR STOCK PLAN

13
<PAGE>
PROPOSAL NO. 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

The Board of Directors, on the recommendation of its Audit Committee, has
selected the firm of Ernst & Young LLP to continue to serve as the Company's
independent auditors for the fiscal year ending September 30, 2001 and is asking
stockholders to ratify this appointment. In the event the ratification of the
stockholders of the appointment of Ernst & Young LLP as the Company's
independent auditors is not obtained, the Board will reconsider such
appointment.

Representatives of Ernst & Young LLP are expected to be present at the
Meeting. They will have the opportunity to make a statement if they desire to do
so and are also expected to be available to respond to appropriate questions
from stockholders.

REQUIRED VOTE

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF APPOINTMENT OF
ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR
ENDING SEPTEMBER 30, 2001

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information as of November 30, 2000
with respect to the Common Stock owned beneficially by (I) any person who is
known to the Company to be the beneficial owner of more than five percent of its
Common Stock, (II) each director and director-nominee of the Company, (III) the
Chief Executive Officer and each other executive officer of the Company included
in the Summary Compensation Table (collectively, the "Named Officers"), and (IV)
all current directors and executive officers of the Company as a group. Except
as otherwise indicated in the footnotes to the table, to the Company's
knowledge, the persons named in the table have sole voting and investment power
with respect to all shares of Common Stock shown as beneficially owned by them,
subject to community property laws where applicable.

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF COMMON
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP STOCK OUTSTANDING(1)
------------------------ -------------------- --------------------
<S> <C> <C>
Intel Corporation(2) ................................... 1,968,936 7.8%
2200 Mission College Boulevard
Santa Clara, California 95052-8119
AXA Financial, Inc.(3) ................................. 1,491,300 6.0%
Alliance Capital Management, L.P.
1345 Avenue of the Americas
New York, New York 10105
George C. Huang(4),(7).................................. 884,909 3.5%
Taher Elgamal(7)........................................ 40,000 *
Anthony Sun(5),(7)...................................... 222,661 *
Edmund P. Jensen(7)..................................... 40,000 *
Albert E. Sisto(7)...................................... 221,250 *
Shih-Chien Yang(7)...................................... 40,000 *
Anthony P. Morris(6),(7)................................ 73,500 *
Wayne C. Cantwell(7).................................... 9,549 *
David A. Everett(7)..................................... 89,749 *
</TABLE>

14
<PAGE>

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF COMMON
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP STOCK OUTSTANDING(1)
------------------------ -------------------- --------------------
<S> <C> <C>
Harry Gierhart(7)....................................... 35,000 *
All current directors and executive officers as a group
(14 persons)(7)....................................... 1,652,847 6.5%
</TABLE>

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

* Ownership is less than 1%

(1) In computing the number of shares beneficially owned by a person and the
percentage ownership of that person, shares of Common Stock subject to
options or warrants held by that person that are currently exercisable or
exercisable within 60 days after November 30, 2000 are deemed outstanding.
Such shares, however, are not deemed outstanding for the purpose of
computing the percentage ownership of any other person.

(2) Based on information provided pursuant to Schedule 13D filed with the
Securities and Exchange Commission by Intel Corporation ("Intel"). Includes
1,073,965 shares with respect to which Intel may acquire beneficial
ownership at or within 60 days after November 30, 2000.

(3) Based on information provided pursuant to Schedule 13G/A filed on
November 8, 2000 and Schedule 13F-HR filed on November 20, 2000 with the
Securities and Exchange Commission by Sanford C. Bernstein & Co., Inc.
("Bernstein"). According to the November 20, 2000 filing, Bernstein had sole
dispositive power for 1,491,300 shares as of September 29, 2000. According
to the November 8, 2000 filing, on October 2, 2000, Alliance Capital
Management L.P., a wholly-owned subsidiary of AXA Financial, Inc., acquired
beneficial ownership of all of the shares of the Company's Common Stock that
had been beneficially owned by Bernstein.

(4) Includes (I) 17,862 shares held by Margaret Huang, Mr. Huang's spouse and
(II) 18,040 shares held by Dwight S. Huang, Mr. Huang's son, (III) 44,884
shares held by the George C. Huang and Margaret J. Huang Charitable
Foundation and (IV) 490,000 shares held by the Huang Living Trust. Also
includes 303,375 shares issuable pursuant to options exercisable within
60 days of November 30, 2000 by Mr. Huang. Mr. Huang disclaims beneficial
ownership of shares held by his son.

(5) Includes (I) 70,223 shares held by Venrock Associates ("Venrock") and (II)
31,859 shares held by Venrock Associates II, L.P.; Mr. Sun, a director of
Phoenix, is a general partner of Venrock and Venrock Associates II, L.P.
Mr. Sun disclaims beneficial ownership of shares held by such entities,
except to the extent of his pecuniary interest therein.

(6) Includes 5,000 shares owned by Mr. Morris and 5,000 shares held in a
custodial account for his minor daughters.

(7) Includes an aggregate of 960,517 shares as to which the named persons could
acquire beneficial ownership at or within 60 days after November 30, 2000.
As to each named person, such amounts are as follows: Mr. Sisto--221,250;
Mr. Huang--303,375; Mr. Elgamal--40,000; Mr. Jensen--40,000;
Mr. Morris--73,500; Mr. Sun--120,579; Mr. Yang--40,000;
Mr. Gierhart--35,000; and Mr. Everett--86,813.

15
<PAGE>
EXECUTIVE COMPENSATION

The following table sets forth information concerning the compensation of
(I) the Chief Executive Officer of the Company, and (II)the four other most
highly compensated executive officers of the Company (based on salary plus bonus
for the Last Fiscal Year) who were serving as such at the end of the Last Fiscal
Year:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION -----------------------------
------------------------------------------------- SECURITIES AWARDS
FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS (#) COMPENSATION($)
--------------------------- -------- --------- -------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Albert E. Sisto............ 2000 $350,000 $43,750 -- 15,000 --
President and 20,000(1)
Chief Executive Officer 1999 107,386 -- -- 530,000 --
1998 -- -- -- -- --

Wayne C. Cantwell.......... 2000 200,000 79,500 -- -- --
President and 474,999(1)
Chief Executive Officer, 1999 199,167 76,762 -- 66,000 1,000(3)
inSilicon Corporation(2) 1998 161,750 31,061 -- 26,000 16,595(4)

George C. Huang(5)......... 2000 233,646 35,607 -- 2,500 --
Sr. Vice President, 1999 265,173 71,250 -- 45,000 1,000(3)
Strategic Planning 1998 -- -- -- -- --

David A. Everett........... 2000 215,625 46,795 -- 4,000 3,262(3)
Sr. Vice President and 1999 -- -- -- -- --
General Manger, Platform 1998 -- -- -- -- --
Enabling Division

Harry Gierhart............. 2000 243,750 0 -- 229,000 --
Sr. Vice President and 1999 -- -- -- -- --
General Manager, 1998 -- -- -- -- --
PhoenixNet Division
</TABLE>

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

(1) Option grant for the specified number of shares of common stock of inSilicon
Corporation ("inSilicon"), a majority-owned subsidiary of the Company.

(2) Until inSilicon's initial public offering of shares in March 2000, the
Company owned 98.6% of the outstanding shares of inSilicon's common stock.
Prior to its incorporation in November 1999, inSilicon operated as a
division of the Company.

(3) Includes the sum contributed by the Company to the named individual's 401(k)
account.

(4) Includes $9,545 in relocation expenses and $7,050 automobile allowance.

(5) Mr. Huang joined the Company in September 1998 when Award was acquired by
the Company.

16
<PAGE>
A. STOCK OPTIONS GRANTED BY THE COMPANY

The following tables set forth the stock options granted to each of the
Named Officers under the Company's stock option plans and the options exercised
by such Named Officers during the fiscal year ended September 30, 2000.
Messrs. Sisto and Cantwell each received stock option grants from inSilicon that
are separately reflected in the table "Stock Options Granted by inSilicon in
Fiscal Year 2000". All of the stock options granted by the Company to
Mr. Cantwell as of December 21, 1999 were replaced by options granted by
inSilicon:

1. OPTION GRANTS BY THE COMPANY IN FISCAL YEAR 2000

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES % OF POTENTIAL REALIZABLE VALUE(3)
UNDERLYING TOTAL EXERCISE EXPIRATION -------------------------------------------
NAME OPTIONS(1) GRANTS PRICE(2) DATE @ 0% @ 5% @ 10%
---- ---------- -------- -------- ---------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Albert E. Sisto...... 15,000 0.6951 $ 0.01 10/19/09 $134,850.00 $ 219,750.77 $ 350,005.23
Wayne C. Cantwell.... 0 -- -- -- -- -- --
George C. Huang...... 2,500 0.1158 $ 0.01 10/19/09 $ 22,475.00 $ 36,625.13 $ 58,334.21
David A. Everett..... 4,000 0.1854 $ 0.01 10/19/09 $ 35,960.00 $ 58,600.21 $ 93,334.73
Harry Gierhart....... 225,000 10.4262 $11.3125 10/01/09 $ 0.00 $1,600,733.35 $4,056,572.61
4,000 0.1854 $ 0.01 10/19/09 $ 35,960.00 $ 58,600.21 $ 93,334.73
</TABLE>

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

(1) All of the options reflected in the above table are subject to the terms of
the Company's 1999 Stock Plan and are exercisable only as they vest. With
the exception of the option granted to Mr. Gierhart on October 1, 1999, all
of the stock options reflected in the table are restricted stock options.
The restricted stock options granted to each executive officer vested and
became exercisable as of October 19, 2000, provided the optionee met certain
performance objectives, and continues to be employed by the Company as of
the exercise date.

(2) The exercise price may be paid in cash, in shares of the Company's Common
Stock valued at fair market value on the exercise date, or through a
cashless exercise involving a same-day sale of all or part of the purchased
shares.

(3) These columns reflect the potential realizable value of each grant assuming
the market value of the Company's stock appreciates at 5% and 10% annually
from the date of grant over the term of the option. There is no assurance
that the actual stock price appreciation over the 10-year option term will
be at the assumed 5% or 10% levels or at any other level. Unless the market
price of the stock does in fact appreciate over the option term, no value
will be realized from the option grants.

17
<PAGE>
2. AGGREGATED OPTION EXERCISES IN FISCAL 2000
AND FISCAL YEAR-END OPTION VALUES
WITH RESPECT TO OPTION GRANTS BY THE COMPANY

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED ON OPTIONS AT FY END (#)(2) OPTIONS AT FY END ($)(3)
EXERCISE VALUE REALIZED --------------------------- -----------------------------
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Albert E. Sisto.......... 0 0 165,625 379,375 $ 817,773.44 $2,038,014.06
Wayne C. Cantwell(4)..... 0 0 -- -- -- --
George C. Huang.......... 0 0 270,813 76,812 $2,804,796.19 $ 742,202.25
David A. Everett......... 0 0 65,625 163,375 $ 399,023.44 $ 981,874.06
Harry Gierhart........... 0 0 4,000 225,000 $ 63,710.00 $1,040,625.00
</TABLE>

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

(1) These amounts represent the fair market value of the shares underlying the
stock options on the date of exercise less the stock option exercise price.

(2) These options were granted on various dates during fiscal years 1994 through
2000.

(3) These amounts represent the difference between the exercise price of the
stock options and the closing price of $15.9375 of Phoenix Common Stock on
September 30, 2000 for all options held by each Named Officer.

(4) All of the outstanding options granted by the Company to Mr. Cantwell were
replaced with inSilicon options pursuant to a predetermined conversion ratio
and were granted as of December 21, 1999.

18
<PAGE>
B. STOCK OPTIONS GRANTED BY INSILICON

The following tables set forth the stock options granted to each of the
Named Officers under inSilicon's stock option plans and the options exercised by
such Named Officers during the fiscal year ended September 30, 2000:

1. OPTION GRANTS BY INSILICON IN FISCAL YEAR 2000

<TABLE>
<CAPTION>
% OF POTENTIAL REALIZABLE VALUE(3)
NUMBER OF TOTAL EXERCISE EXPIRATION -------------------------------------------
NAME OPTIONS(1) GRANTS PRICE(2) DATE @ 0% @ 5% @ 10%
---- ---------- -------- -------- ---------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Albert E. Sisto...... 20,000 1.2749 $7.3600 12/21/09 $ 26,000.00 $ 134,924.55 $ 302,036.19
Wayne C. Cantwell.... 205,009 7.1161 $7.3600 12/21/09 $266,511.70 $1,383,037.35 $3,096,006.91
4,655(4) 0.1616 $3.6950 03/18/01 $ 14,802.90 $ 34,929.49 $ 65,807.64
13,965(4) 0.4847 $2.8195 05/04/04 $ 33,941.93 $ 80,050.13 $ 150,789.15
18,620(4) 0.6463 $3.8937 03/31/05 $ 62,494.31 $ 147,391.94 $ 277,641.57
4,655(4) 0.1616 $6.3776 12/06/05 $ 26,172.27 $ 61,302.33 $ 115,198.73
13,965(4) 0.4847 $6.3776 12/06/06 $ 78,516.82 $ 183,906.98 $ 345,596.18
5,586(4) 0.1939 $8.1230 03/31/07 $ 39,113.17 $ 92,247.38 $ 173,765.68
22,344(4) 0.7756 $7.9887 09/29/07 $153,867.49 $ 362,818.94 $ 683,349.81
14,896(4) 0.5171 $7.9887 09/30/07 $102,578.32 $ 241,927.54 $ 455,716.59
9,185(4) 0.3188 $6.4447 03/31/08 $ 51,026.80 $ 120,345.42 $ 226,693.80
1,987(4) 0.0690 $6.4447 03/31/08 $ 11,037.01 $ 26,030.52 $ 49,033.50
25,969(4) 0.9014 $3.0209 09/30/08 $ 67,625.87 $ 159,492.05 $ 300,432.80
11,271(4) 0.3912 $3.0209 09/30/08 $ 29,349.99 $ 69,220.41 $ 130,389.45
22,212(4) 0.7710 $4.5650 03/31/09 $ 108.67 $ 63,945.53 $ 161,883.81
35,510(4) 1.2326 $4.5650 03/31/09 $ 173.73 $ 102,228.79 $ 258,801.29
41,895(4)(5) 1.4542 $4.9946 07/01/09 $177,897.07 $ 421,371.01 $ 794,907.83
23,275(4)(5) 0.8079 $4.9946 07/01/09 $ 98,831.71 $ 234,095.01 $ 441,615.46
George C. Huang...... 0 0 -- -- -- -- --
David A. Everett..... 0 0 -- -- -- -- --
Harry Gierhart....... 0 0 -- -- -- -- --
</TABLE>

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

(1) All of the stock options reflected in the above table are subject to the
terms of the inSilicon 1999 Stock Plan and are exercisable only as they
vest. The options granted vest and become exercisable as of the date of
grant, provided the optionee continues to be employed by the Company.

(2) All options were granted at an exercise price equal to 85% of the fair
market value of inSilicon's common stock on the date of grant. The exercise
price may be paid in cash, in shares of the inSilicon common stock valued at
fair market value on the exercise date, or through a cashless exercise
involving a same-day sale of all or part of the purchased shares.

(3) These columns reflect the potential realizable value of each grant assuming
the market value of inSilicon's stock appreciates at 5% and 10% annually
from the date of grant over the term of the option. There is no assurance
that the actual stock price appreciation over the 10-year option term will
be at the assumed 5% or 10% levels or at any other level. Unless the market
price of the stock does in fact appreciate over the option term, no value
will be realized from the option grants.

(4) All of the outstanding options granted by the Company to Mr. Cantwell were
replaced with inSilicon options pursuant to a predetermined conversion ratio
and were granted as of December 21, 1999.

(5) These option grants to Mr. Cantwell were accelerated and are vested.

19
<PAGE>
2. AGGREGATED OPTION EXERCISES IN FISCAL 2000
AND FISCAL YEAR-END OPTION VALUES
WITH RESPECT TO OPTION GRANTS BY INSILICON

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
VALUE OPTIONS AT FY END (#)(2) OPTIONS AT FY END ($)(3)
SHARES ACQUIRED REALIZED --------------------------- -----------------------------
NAME ON EXERCISE (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ----------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Albert E. Sisto....... 0 0 3,750 16,250 $ 26,775.00 $ 116,025.00
Wayne C. Cantwell..... 73,109 $273,854.00 166,673 235,216 $1,479,783.87 $1,858,680.00
George C. Huang....... -- -- -- -- -- --
David A. Everett...... -- -- -- -- -- --
Harry Gierhart........ -- -- -- -- -- --
</TABLE>

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

(1) These amounts represent the fair market value of the shares underlying the
stock options on the date of exercise less the stock option exercise price.

(2) These options were granted on various dates during inSilicon's fiscal year
2000.

(3) These amounts represent the difference between the exercise price of the
stock options and the closing price of inSilicon common stock on
September 30, 2000 for all options held by each Named Officer.

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS

In June 1999, Mr. Sisto and the Company executed an offer letter setting
forth Mr. Sisto's terms of employment. The offer letter provided for a base
salary of $350,000 per year, eligibility for a performance bonus targeted at 50%
of base salary, a grant of 530,000 non-qualified stock options and eligibility
for employee benefit plans. The agreement also provides for accelerated vesting
of stock options in the event of change of control of the Company and severance
payments equal up to 18 months base pay.

REPORT OF THE COMPENSATION COMMITTEE

The Compensation Committee of the Board (the "Compensation Committee") has
responsibility for setting and administering the policies that govern executive
compensation for all executive officers of the Company. The Compensation
Committee is composed entirely of outside directors and reports its actions to
the full Board. The purpose of this report is to summarize the philosophical
principles, specific program objectives and other factors considered by the
Compensation Committee in reaching its determinations regarding the compensation
of the Company's executive officers.

GENERAL COMPENSATION PHILOSOPHY

The Committee has approved principals for management compensation that will:

- attract, and retain key personnel who contribute to long-term success of
the Company,

- encourage the development and achievement of strategic objectives that
enhance stockholder value,

- promote the Company's corporate values, and

- provide a compensation package that recognizes individual contributions,
group achievement, and Company performance.

COMPENSATION METHODOLOGY

The Company strives to provide a comprehensive executive compensation
program that is competitive and performance-based in order to attract and retain
superior executive talent. When

20
<PAGE>
establishing salaries, bonus levels and stock option awards, the Compensation
Committee reviews market data, assesses the Company's competitive position and
considers: (1) the Company's financial performance during the past fiscal year,
(2) the individual's performance during the past fiscal year including the
promotion and the maintenance of the Company's corporate values, and (3) the
compensation packages of executive officers in similar positions in companies of
comparable size, same geographic region or within the computer software
industry. With respect to executive officers other than the CEO, the
Compensation Committee places considerable weight upon the recommendation of the
CEO. In addition, consideration is also given to the particular objectives or
priorities that the CEO or the Board wishes the executive to focus on in the
coming year.

COMPONENTS OF COMPENSATION

BASE SALARY. Base salaries for all executive officer positions are targeted
to be competitive with the average salaries of comparable executives at
technology companies of similar size and are intended to reflect consideration
of an officer's experience, business judgment and role in developing and
implementing overall business strategy for the Company.

BONUSES. Bonuses for executive officers are intended to reflect the
Company's belief that a significant portion of the annual compensation of the
executive should be contingent upon the performance of the Company, as well as
the individual's contribution and the achievements of the executive's group,
division or business unit. Bonuses are paid on annual or quarterly bases and are
based on qualitative and subjective factors, including the pre-tax profitability
of the Company, business development, operational performance, earnings per
share and other measures of performance appropriate to the individual executive
officer.

LONG TERM INCENTIVES. Long term incentive-based compensation for executive
officers is realized through the granting of stock options. The stock option
program directly links a portion of compensation to the interests of
stockholders by providing an incentive to maximize stockholder value. Stock
options generally have value for the executive only if the price of the
Company's stock increases above the fair market value on the grant date and the
executive remains in the Company's employ for the period required for the shares
to vest. In addition, executive officers may be granted an incentive bonus
related to growth in revenue and in earnings per share as well as satisfaction
of individualized performance objectives.

COMPENSATION OF CHIEF EXECUTIVE OFFICER DURING FISCAL 2000

Compensation for the CEO is determined through a process similar to that
discussed above for executive officers in general. This pay-for-performance
program is most clearly exemplified in the compensation of the Company's Chief
Executive Officer. The CEO's compensation program is designed to reward
achievement of corporate financial goals and individual performance objectives
as well as other strategic objectives.

In setting compensation levels for the Chief Executive Officer, the
Compensation Committee reviewed competitive information reflecting the relevant
compensation data for chief executive officers of companies of comparable size
within the software industry. Mr. Sisto's compensation level was determined
using generally the same considerations described above.

MEMBERS OF THE COMPENSATION COMMITTEE

Taher Elgamal
Anthony P. Morris
Anthony Sun

21
<PAGE>
REPORT OF THE AUDIT COMMITTEE

The Audit Committee of the Board (the "Audit Committee") operates pursuant
to a charter approved and adopted by the Board on April 19, 2000. The Audit
Committee Charter is attached as Exhibit A. The Audit Committee, on behalf of
the Board, oversees the Company's financial reporting process. In fulfilling its
oversight responsibilities, the Audit Committee reviewed with management the
audited financial statements and the footnotes thereto in the Company's Fiscal
Year 2000 Annual Report to Shareholders and discussed with management the
quality, not just the acceptability, of the accounting principles, the
reasonableness of significant judgments and the clarity of disclosures in the
financial statements.

The Company's outside auditors are responsible for expressing an opinion on
the conformity of the Company's audited financial statements to generally
accepted accounting principles. The Audit Committee reviewed and discussed with
the outside auditors their judgments as to the quality, not just the
acceptability, of the Company's accounting principles and such other matters as
are required to be discussed by the Audit Committee with the Company's outside
auditors under SAS 61. The Company's outside auditors have expressed the opinion
that the Company's audited financial statements conform to generally accepted
accounting principles.

The Audit Committee discussed with the outside auditors the outside
auditors' independence from management and the Company, and received the written
disclosures concerning the outside auditors' independence required by the
Independence Standards Board to be made by the outside auditors to the Company.

The Audit Committee discussed with the Company's internal and outside
auditors the overall scope and plans for their respective audits. The Audit
Committee met with the internal and outside auditors to discuss the results of
their examinations, their evaluations of the Company's internal controls and the
overall quality of the Company's financial reporting.

In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board that the audited financial statements be
included in the Annual Report on Form 10-K for the year ended September 30,
2000, to be filed with the Securities and Exchange Commission. The Audit
Committee also recommended to the Board of Directors the selection of Ernst &
Young LLP to serve as the Company's outside auditors for Fiscal Year 2001.

MEMBERS OF THE AUDIT COMMITTEE

Edmund P. Jensen
Anthony P. Morris

CERTAIN TRANSACTIONS

INTEL CORPORATION: In December 1995, the Company and Intel Corporation
entered into two primary agreements: a technology agreement under which Phoenix
licensed certain of its software products for use by Intel on its motherboard
products for the desktop and server markets; and a Common Stock and Warrant
Purchase Agreement under which Intel agreed to purchase 894,971 shares of
Phoenix common stock and a warrant to purchase an additional 1,073,281 shares of
common stock. The aggregate purchase price for the shares and the warrant was
$10.8 million. The warrant vests and becomes exercisable in four installments
over a five year period from the date of the agreement; the exercise price of
the warrant increases annually from $12.88 to $15.22. The sale of the shares and
the warrant was concluded in February 1996 following the completion of certain
closing conditions.

22
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers, and persons who own more than 10%
of a registered class of the Company's equity securities to file with the
Securities and Exchange Commission ("SEC") reports of ownership and changes of
ownership of the Company's Common Stock and other equity securities. Executive
officers, directors and 10% stockholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.

Acting pursuant to a power of attorney granted by each director (except
Mr. Sun) and each executive officer, the Company undertakes on behalf of such
individuals the filing of reports to be filed with the SEC, except Mr. Sun. To
the Company's knowledge, based solely on review of the copies of such reports
(I) filed by the Company on behalf of such directors and officers and (II)
furnished to the Company by Mr. Sun and 10% beneficial owners during, and with
respect to, its most recent fiscal year and written representations that no
other reports were required, the Company believes the filing requirements of
Section 16(a) applicable to its executive officers, directors and 10% beneficial
owners were satisfied, except:

a. Mr. Sun failed to timely report an October 29, 1998 option grant for
30,000 shares on Form 5 during Fiscal Year 1999 but a Form 5 was
subsequently filed, and

b. the Company failed to timely file reports on behalf of the
individuals listed in this paragraph as follows: Mr. Sisto's June 10, 1999
option grant for 530,000 shares was not timely reported on a Form 5 during
Fiscal Year 2000, but was subsequently reported after the close of the
fiscal year; a May 6, 1999 option grant to Ms. Kathleen Newman for 10,000
shares was not timely reported on Form 5 during Fiscal Year 2000, but a
Form 5 with respect to the shares has since been filed; and two option
grants dated March 31, 1999 and one dated September 22, 1999 to Mr. David A.
Everett for 39,979, 35,021 and 150,000 shares, respectively, were not timely
reported during Fiscal Year 2000, but were subsequently reported on a
Form 5.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The members of the Compensation Committee of the Company's Board of
Directors during the Last Fiscal Year were Messrs. Elgamal, Morris and Sun, all
of whom are non-employee Directors. No member of the Compensation Committee or
executive officer of the Company has a relationship that would constitute an
interlocking relationship with executive officers or directors of another
entity.

COMPANY STOCK PRICE PERFORMANCE

The graph below compares the cumulative total stockholder return on the
Common Stock of the Company from September 30, 1995 to September 30, 2000 with
the cumulative total return on the Standard and Poor's 500 and the Standard and
Poor's Computer Software and Services market indices over the same period,
assuming the investment of $100 in the Company's Common Stock and in each of the
indices on September 30, 1995 and the reinvestment of all dividends.

23
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG PHOENIX TECHNOLOGIES LTD., THE STANDARD & POOR'S 500 INDEX
AND THE STANDARD & POOR'S COMPUTER SOFTWARE & SERVICES INDEX

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PHOENIX S & P COMPUTERS
<S> <C> <C> <C>
TECHNOLOGIES LTD. S & P 500 (SOFTWARE & SERVICES)
9/95 $100.00 $100.00 $100.00
9/96 $136.63 $120.34 $144.97
9/97 $117.82 $169.01 $238.70
9/98 $44.55 $184.30 $328.72
9/99 $88.61 $235.54 $533.21
9/00 $126.24 $266.83 $518.79
</TABLE>

* $100 INVESTED ON 9/30/95 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING SEPTEMBER 30.

<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
---------------------------------------------------------------
9/95 9/96 9/97 9/98 9/99 9/00
<S> <C> <C> <C> <C> <C> <C>
PHOENIX TECHNOLOGIES LTD........................ 100.00 136.63 117.82 44.55 88.61 126.24
S & P 500....................................... 100.00 120.34 169.01 184.30 235.54 266.83
S & P COMPUTERS (SOFTWARE & SERVICES)........... 100.00 144.97 238.70 328.72 533.21 518.76
</TABLE>

DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS

Proposals of stockholders intended to be presented at the 2002 Annual
Meeting of Stockholders must be received by the Company at its principal office
in San Jose, California, not later than August 20, 2001 for inclusion in the
proxy statement for that meeting.

By Order of the Board of Directors

/s/ LINDA V. MOORE
Linda V. Moore, SECRETARY

24
<PAGE>
San Jose, California
December 20, 2000

25
<PAGE>
EXHIBIT A

PHOENIX TECHNOLOGIES LTD.
AUDIT COMMITTEE CHARTER

The audit committee is a committee of at least three members of the board of
directors, each of whom is an independent director. Its primary function is to
assist the board of directors in fulfilling its oversight responsibilities by
reviewing the financial information that will be provided to the stockholders
and others, the systems of internal controls which management and the board of
directors have established, and the audit process.

In carrying out its responsibilities, the audit committee believes its
policies and procedures should remain flexible, in order to best react to
changing conditions and to ensure to the directors and stockholders that the
corporate accounting and reporting practices of the corporation are in
accordance with all requirements and are of the highest quality.

In meeting its responsibilities, the audit committee is expected to:

(i) Review, evaluate and recommend to the board of directors the
independent auditors to be selected to audit the financial statements
of the corporation and its divisions and subsidiaries, and where
appropriate, to recommend replacement of the independent auditors.

(ii) Ensure the receipt of, and review, a formal written statement from the
Company's independent auditors delineating all relationships between
the independent auditor and the Company, consistent with Independence
Standards Board Standard 1; discuss with the independent auditors
their independence from management and the Company and the matters
included in that written statement.

(iii) Meet with the independent auditors and financial management of the
corporation to review the scope of the proposed audit for the current
year and the audit procedures to be utilized, review the audit at its
conclusion, including any comments or recommendations of the
independent auditors.

(iv) Review and discuss with the independent auditors, the Company's
internal auditor, and financial and accounting personnel, the adequacy
and effectiveness of the accounting and financial controls of the
Company, and elicit any recommendations for the improvement of such
internal control procedures or particular areas where new or more
detailed controls or procedures are desirable. Particular emphasis
should be given to the adequacy of such internal controls to monitor
and manage business and legal and ethical compliance programs. The
audit committee should periodically review Company policy statements
to determine if they adhere to the Company's code of conduct.

(v) Discuss with the Company's independent auditors the quality of
accounting principles applied in the Company's financial statements and
the other matters required by SAS 61 (including amendments or
supplements), such as management judgments and accounting estimates
that affect financial statements, significant new accounting policies
and disagreements with management.

(vi) Review the internal audit function of the corporation including the
independence and authority of its reporting obligations, the proposed
audit plans for the coming year, and the coordination of such plans
with the independent auditors.

(vii) Review prior to each meeting, a summary of findings from completed
internal audits and a progress report on the proposed internal audit
plan, with explanations for any deviations from the original plan.

A-1
<PAGE>
(viii) Review the interim financial statements with management and the
independent auditors prior to the filing of the Company's Quarterly
Report on Form 10-Q.

(ix) Review the financial statements contained in the Company's Annual
Report on Form 10-K with management and the independent auditors to
determine that the independent auditors are satisfied with the
disclosure and content of the financial statements to be presented to
the stockholders. Any changes in accounting principles should be
reviewed.

(x) Provide sufficient opportunity for the internal and independent
auditors to meet with the members of the audit committee without
members of management present. Among the items to be discussed in these
meetings are the independent auditors' evaluation of the corporation's
financial, accounting, and auditing personnel, and the cooperation that
the independent auditors received during the course of the audit.

(xi) Review accounting and financial human resources and succession
planning within the Company.

(xii) Submit the minutes of all meetings of the audit committee to, or
discuss the matters addressed at the audit committee meetings with,
the board of directors.

(xiii) Investigate any matter brought to its attention within the scope of
its duties, with the power to retain outside counsel for this purpose,
if in its judgment, that is appropriate.

The duties and responsibilities of a member of the audit committee are in
addition to those duties set out for a member of the board of directors. To the
extent required, the audit committee also will prepare and sign a report for
inclusion in the Company's proxy statement for its annual meeting of
stockholders. In addition, the audit committee will undertake such other duties
as the board or directors delegates to it.

Finally, the audit committee will ensure that the independent auditors
understand both (i) their ultimate accountability to the board of directors and
to the audit committee, as representatives of the Company's stockholders, and
(ii) the board of directors' and the audit committee's ultimate authority and
responsibility to select, evaluate and, where appropriate in the exercise of
their business judgment, replace the Company's independent auditors (or to
nominate the independent auditor to be proposed for stockholder approval in any
proxy statement).

A-2
<PAGE>

DETACH HERE

PROXY

PHOENIX TECHNOLOGIES LTD.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned, revoking all prior proxies, hereby appoints John M. Greeley
and Linda V. Moore, and each of them, with power of substitution, as proxies
to represent and vote as designated herein all shares of stock of Phoenix
Technologies Ltd. (the "Company") which the undersigned would be entitled to
vote if personally present at the Annual Meeting of Stockholders of the
Company to be held on February 6, 2001 at the offices of the Company located
at 411 East Plumeria Drive, San Jose, California, at 10:00 a.m., California
time, and at any and all adjournments of that meeting.

THE PROXY, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN,
THIS PROXY WILL BE VOTED FOR ELECTION OF MESSRS. ELGAMAL AND SUN AND FOR
PROPOSALS 2, 3 AND 4. IN THEIR DISCRETION, THE PROXIES ARE ALSO AUTHORIZED TO
VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT OF THAT MEETING.

<TABLE>
<S> <C> <C>
/ SEE REVERSE / CONTINUED AND TO BE SIGNED ON REVERSE SIDE / SEE REVERSE /
/ SIDE / / SIDE /
</TABLE>

<PAGE>

DETACH HERE

/ X / PLEASE MARK
VOTES AS IN
THIS EXAMPLE.

<TABLE>
<S> <C>
1. To elect the following to the Board of Directors
as Class 2 Directors.

FOR WITHHELD FOR AGAINST ABSTAIN
(01) Taher Elgamal / / / / 2. To approve the amendment to the / / / / / /
1999 Stock Plan.

FOR WITHHELD
(02) Anthony Sun / / / / 3. To approve the amendment to the / / / / / /
1999 Director Stock Plan.

4. To ratify the selection of Ernst & / / / / / /
Young LLP as independent auditors
for the current fiscal year.

OTHER ______________________________________

MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /

Please sign exactly as name appears on stock certificates. If the
stock is registered in the names of two or more persons, each
should sign. Executors, administrators, trustees, guardians,
attorneys and corporate officers should add their titles.

Signature: _______________________________ Date: ____________ Signature: _______________________________ Date: _____________
</TABLE>